Marijuana can solve SA’s container imbalance problem and maybe even the land question – no I am not high
13 Mar 2019 - by Lance Pullan
South Africa has a structural container imbalance problem. This means more 20’ containers are exported than imported and more 40’ containers are imported than exported. As a result, shipping lines must constantly reposition empty containers to match variable trade flows. This is a very difficult exercise to get right and adds additional cost to the entire system. The graph below shows the magnitude of this problem:
South Africa exports 65 000 TEUs of empty containers on average each month
Source: TNPA statistics
The reason for this imbalance is because South Africa imports more finished goods than it exports which generally travel in 40’ containers; and then exports more raw materials than it imports which are usually shipped in 20’ containers. Essentially South Africa needs to convert more raw materials into finished goods through manufacturing processes rather than just shipping out raw materials.
Beneficiation of things like minerals and agricultural products is definitely the answer but this will take some time given the constraints like electricity supply and government policy certainty that will continue for the foreseeable future. Consequently, an interim or shorter-term solution is needed.
Marijuana or cannabis use has recently been decriminalized in South Africa as well as several other countries and could potentially provide the ‘silver bullet’ required. To explain this reasoning, tobacco from neighbouring countries like Zimbabwe and Malawi is baled and treated before being shipped out in 40’ containers. If cannabis cultivation is fully legalised, farmers would be able to grow large amounts of cannabis and could potentially export in the same fashion – particularly to countries that have recently legalised marijuana like Canada where growing conditions are limited to indoors.
It is in everyone’s best interests to resolve land ownership and distribution backlogs in this country as the economy can only develop at the pace of its lowest ability - a herd can only move as fast as the slowest member. The sooner everyone can actively participate in and positively contribute to society, the better for everyone as tax burdens will ease on the rich who will reinvest this relief, and a bigger tax base will provide government a larger purse to fund social development programmes.
Legalising the growing of marijuana exclusively for emerging black farmers would allow them an advantage in an immature global market. With cannabis products being primarily exported, this would generate foreign capital inflows as well as potential long-term investment by foreign buyers looking to integrate upstream. South Africa could potentially emerge as a global leader in the cannabis market, producing everything from raw cannabis to highly concentrated cannabis oil which unlocks opportunities for beneficiation in many downstream industries. All these products are generally shipped in 40’ containers so would go a long way to solving South Africa’s structural container imbalance.
Full commercial legalisation of marijuana and cannabis products could therefore potentially allow previously excluded groups in South Africa access to an immature global market with a significant competitive advantage. Additionally, it also reduces the social and financial pressure to address historical imbalances so that these can be implemented sustainably with the best long-term impact. This is pretty much the holy grail of socio-economic development so the only question should be, when do we fire this up?
Lance Pullan began his career in shipping by joining the Maersk International Shipping Education (MISE) graduate recruitment programme and has since held senior roles at Maersk Logistics, Damco, CSAV and “K” Line and most recently as country head of the merged “K” Line, NYK and MOL businesses. Lance is currently on a sabbatical and is assisting a data start-up called Linernet. Linernet is a data management, market analysis and consultancy company primarily servicing the shipping and logistics industry in southern Africa. It was launched in February 2018 by a group of professionals based in Durban with years of experience in the South African shipping industry as well as a keen interest in technology and big data.