South Africa should be feasting on the rerouting of ships around the Cape due to the conflict in the Strait of Hormuz and the Red Sea, but that’s not happening.
Bunkering service providers – which supply fuel to passing ships – used to offload around three million tonnes a year. We’re now down to a third of that – one million tonnes – as bigger ships with greater fuel capacity are able to pass South Africa without stopping.
That’s one reason. Another is ongoing port congestion in SA.
How SA can benefit
SA could be capturing a far larger share of this rerouted traffic, worth potentially $3 billion (R50 billion) a year, by fixing some of the equipment and regulatory bottlenecks at its ports.
Reuters reports that ship refuelling companies along Africa’s coastline are seeing a surge in business as more vessels divert around the Cape, although Transport Minister Barbara Creecy warned about overstating the benefits to SA.
“In a two-week period when we checked, there were perhaps seven additional vessels calling at our ports, three in Durban, two in Cape Town and the remainder in Eastern Cape ports,” Creecy told Freight News.
The comments have angered marine service providers, who view them as a sign of ministerial apathy.
“It’s not impossible to double bunkering volumes from one to two million tons a year with some investment in port equipment and focusing on reducing port congestion,” says one.
“If these comments were indeed made by the minister, they are concerning. South Africa is growing at less than 1% GDP and should be doing everything possible to attract more ships to our ports, not less.
“Every vessel call creates jobs, generates foreign exchange and supports a wide range of maritime services, from bunkering and ship agency work to logistics, repairs and surveying.”
Business bleeding away from SA ports
Ships passing the Cape are increasingly bunkering in Mauritius, West Africa and Tangier.
Port Louis in Mauritius and Walvis Bay in Namibia have set up bunkering operations to compete with Cape Town and Durban, and that has started to bleed business away from SA ports.
This loss of business is often the result of self-inflicted own goals.
Algoa Bay, once a brisk refuelling point for passing ships, saw traffic collapse in 2023 when the South African Revenue Service (Sars) detained five vessels over alleged breaches of the Customs and Excise Act.
Shipowners rerouted
Word got out, and shipowners started avoiding the port altogether for fear that their vessels would be seized, says Peter Besnard, CEO of the South African Association of Ship Operators and Agents.
In its zeal to collect its due, Sars – without any apparent thought to the economic damage its ship seizures would spawn – ended up chasing away dutiable vessel owners.
New customs rules were introduced in December 2024 to provide some clarity for importers and exporters of fuel, with more stringent oversight by regulators. There are signs of recovery, but nothing like what was expected.
Restrictive rules, lack of equipment throttle promised boom
In his 2024 State of the Nation address, President Cyril Ramaphosa talked up SA’s ability to service passing ships at a time when the Middle East crisis was heating up. While other African ports were cashing in, SA stood on the sidelines.
“We are two years down the line and regulatory uncertainty has proven our president wrong,” says a report from one of Algoa Bay’s bunker service providers Linsen Nambi.
Another marine services company operational in the area is Amsol, which has invested heavily in specialised tankers to revive bunkering at the port.
It’s not that the demand isn’t there. It is.
Algoa Bay
Algoa Bay is regarded as one of the safest and most reliable refuelling points globally, but unnecessarily restrictive regulations and a lack of equipment have throttled the promised boom.
The bay lacks the requisite tugboats to service large vessels, while helicopters used to ferry pilots to and from ships are often out of action.
Larger vessels often prefer offshore bunkering (where they do not have to enter port) due to the time and cost savings.
SA has eight commercial ports that could be pitching their services to the hundreds of vessels passing each month, but many are hampered by ageing or insufficient equipment, and in some cases weak port management.
Algoa Bay caters to the offshore bunkering market, while Richards Bay, Durban and Cape Town require berthing space for refuelling. That adds costs and delays.
Mauritius is cheaper for refuelling than SA, but getting to Port Louis comes at a costly route deviation. Algoa Bay is cheaper than Mauritius but has limited berths and its older-generation tugs cannot manage bad weather.
Diverting traffic from the Suez Canal around the Cape adds more than 3 000 nautical miles to the trip and delays of up to two weeks, increasing fuel consumption by 25-40%.
For large container ships, that can mean up to $2 million in extra fuel costs. Then there are less visible costs: extra crew wages, vessel depreciation, maintenance and lost productivity. That’s not counting higher insurance, which is through the roof for ships transiting Hormuz.
Insurance advisor Marsh Risk notes pre-war insurance premiums averaged 0.25% of the ship value. That’s jumped to between 1% and 5%, an increase of between 1 000% and 4 000%.
Security risks
The International Maritime Organisation (IMO) has warned of the security risks for seafarers transiting the Strait of Hormuz.
“I am increasingly concerned by reports that vessels continue to attempt to transit the Strait of Hormuz without any credible security guarantees, despite well‑established risks and the fact that seafarers have already been killed, injured, and others detained in recent incidents,” says IMO secretary-general Arsenio Dominguez in a statement.
“My primary concern is for the safety and lives of the seafarers being placed in these situations. They must not be exposed to conditions where the risks are known, significant, and clearly beyond mitigation.
“The current situation remains highly volatile, with no reliable security assurances in place. Under such circumstances, safe passage cannot be considered to exist.”
Surprising ROI
Bunkering offers a surprisingly attractive return on investment for the country.
Since commencing operations at Algoa Bay in October 2025, Linsen Nambi has generated customs of R65 million and created economic value of R55 million. Scale that across all eight SA ports, and the figures start to glow.
The company has committed to R750 million in capital expenditure and expects to hit annual revenue of more than R160 million when fully operational.
As the on-again, off-again conflict in the Strait of Hormuz kicked off again this week, SA will continue to wave at passing traffic rather than lure them to the shoreside.
This article was republished from Moneyweb. Read the original here.
