Middle East conflict: African port upgrades will offer alternative to Red Sea supply routes

Speaking at a Pinsent Masons event on geopolitics and construction contracts for EMEA projects on Thursday, Johannesburg-based Angela Lawrence of Pinsent Masons said the current capacity crunch has arisen from the re-rerouting of ships from the Strait of Hormuz to around the Cape of Good Hope.

• Implications of the Middle East conflict for businesses

“With port closures and supply chain interruptions arising from the Middle East conflict, there is disruption to projects happening globally, with longer lead times for commodities, materials and equipment,” Lawrence said. “However, the broader issue is the sudden change in typical supply chain routes, with a significant re-rerouting of ships away from the Strait of Hormuz and a knock-on impact being felt at non-typical ports in southern Africa.”

According to Lawrence, it is not an issue of the number of ports – in South Africa, there are ports at Richards Bay, Durban, Coega and Cape Town, while there is Walvis Bay in Namibia, and Maputo and Beira in Mozambique – but rather the sudden change in shipping routes is putting a strain on the existing ports infrastructure.

Lawrence cited reports of a 112% surge in vessels into Cape Town port due directly to the disruption in the Middle East, which is adding between 10- and 14-days transit times and adding to fuel and insurance costs too. She said these delays and additional costs do not only create obvious commercial pressures, they place the feasibility of projects at risk too. Cape Town port is particularly important for the growing onshore wind industry in South Africa for receiving components like blades for wind turbines, she added.

“What the sudden surges confirm once again is that the maritime corridor around the tip of Africa is seen as a ‘fall back’ route rather than a strategic permanent route that can be used to diversify and spread supply chain risks,” Lawrence said. “And because these spikes are cyclical, the existing infrastructure just isn’t geared to take on the extra volume in a very short space of time.”

According to Lawrence, however, there is potential for all this to change in future.

“Very encouragingly, in 2025, the southern African regional bloc, SADC, for the first time endorsed a regional port development and integration policy framework,” Lawrence said. “What is anticipated from that in South Africa is the corporatisation and capitalisation of Transnet National Ports Authority in co-operation with the private sector and the World Bank.”

“This initiative is expected to deliver a separating of landlord and operator functions at ports in South Africa to improve competitiveness and transparency in concessions at those ports, which will in turn remove some of the regulatory hurdles previously experienced which caused congestion. It is also expected to lead to expansion of strategic fuel and energy infrastructure through the upgrading of storage and pipeline infrastructure, as well as the introduction of public-private co-funding models to modernise port operations and advance scheduling systems,” she said.

“There is no doubt that this represents a huge opportunity for attracting large-scale private investment in port concessions in southern Africa, and the Transnet National Ports Authority has already outlined a six-year, R18.8 billion ($1.13bn) capital investment programme, with R8.3 billion ($500 million) of that being allocated to be spent between 2027 and 2029,” she said.

“What we hope to see flowing from private investment accompanying the SADC initiative are the southern African ports becoming a more permanent supply chain choice rather than a fallback in times of geopolitical instability, and a related natural spread of supply chain risk with, for example, the potentially high-risk cargo for projects being routed around the Cape of Good Hope and lower-risk cargo still using the Red Sea routes. So geopolitical changes will not necessarily have as much of an impact on this aspect of project planning going forward,” Lawrence said.