DEVELOPMENT OF COASTAL SHIPPING
2.3 DEVELOPMENT OF COASTAL SHIPPING (1900 TO THE 1950s) Three significant events mark this era. The first is concerned with the establishment of
Cabotage murmurs that saw the formation of D’Urban Shipping Company in 1844 failed to gain momentum. Vessels continued to operate on the South and southern African coast regardless of where they were flagged. The “domestic goods on domestic fleet” campaign came to naught and the antecedent prevention of capital flight followed suit.
Therefore, there was no cabotage on the Southern African coast at the end of the 19th century. Calls to exclude vessels flagged outside a particular coast failed. We turn now to look at the period from the beginning to the middle of the 20th century.
2.3 DEVELOPMENT OF COASTAL SHIPPING (1900 TO THE 1950s)
Donald Currie’s Castle Mail Packets Company Limited amalgamated with the Union Steam Ship Company to form the Union Castle Line in 1900.58 The merger formed an even greater force to reckon with on the high seas and on the coast alike. It is no exaggeration that the merger made Union Castle a shipping colossus and gave it the right to take the first bite of the South African shipping trade cherry.59
The effect that Conference activity had on coastal trade cannot be overstated. First, any genuine efforts for coastal competition were stifled by the presence of the Conference, as it was the Conference’s modus operandi to preserve its share to the exclusion of other coastal participants, especially newcomers. Second, a “British shipping services provider” bias was firmly entrenched in South Africa over this period and this would have directly stunted the growth and development of international and coastwise trade in the interest of South Africa.
The environment that the Conference presence created set the scene for the Ocean Freight Agreement (OFA), which followed soon after the formation of the Union of South Africa in 1910. The OFA divided carriage of cargo in and out the country into three categories: Mail Contract, Northbound and Southbound. The government traditionally gave Union Castle, the only negotiator for the Conference, the right to carry mail to and from South Africa. In a manner that suggested an exchange, the Conference agreed to keep freight for export agricultural products down and to recover the shortfall against freight for consumer and capital imports. The OFA also obliged the government to informally discourage potential newcomers from competing with the Conference.60
58 All Conference chairmen were from Union Castle and the company also housed the Conference Secretariat although Conference members shared the expenses of running the office, for instance. Ibid.
4.
59 Berridge (note 56) 7 states that Union Castle had an annual subsidy and received priority berthing during times of port congestion.
60 Berridge (note 56) 5.
Solomon states that strictly speaking, there were three Conferences: The Outward Conference, the Homeward Conference, and the Coastwise Conference.61 The OFA was never intended to burden the coast or to subject it to Conference control. Therefore,
“coastal conference” terms would have been the illegitimate products from the Conference that the Union could never have intended but which clearly had the Union’s acquiescence. The argument is therefore that government hands were tied. The arrangement between the Union government and the Conference meant that the government could not promote coastal shipping because of the OFA.
Paul Dickinson states that there were 16 coastal vessels operating along the coast during this time. Thesens, Smith Coasters, African Coasters, Dart & Howes and others owned these vessels.62 Generally, coasters had staple cargo to sustain their business during this period. However, Thesens, Smith Coasters and African Coasters held a bigger share of the market.63 Precise cargo and route distribution patterns could not be verified.
However, it is clear that the routes were sustained by some means of informal route allocation, which prevented overlaps that could lead to excess tonnage available on any single route. This balance did not depend on any Conference arrangement.
Smith Coasters carried sugar from Durban to the Cape and returned with groceries, building materials, automotive cargo and canned foods. African Coasters traded on the same route transporting general cargo and newspaper print made from Natal wattle to Cape Town.64 These companies seem to have had settled informal terms not to compete.
Similarly, Thesens and Dart & Howes traded from Table Bay to the West African coast and along the south and eastern Cape. Thesens carried timber, general cargo and passengers. When road access improved between the Cape and Knysna, Thesens shifted its focus to the provision of service to fishing concerns (as well as seal-skin traders) and those in the mining of copper and diamonds, especially after diamond discovery near Port Nolloth. By the late 1930s, Thesens was carrying palm oil, timber and passengers up the west coast to Matadi in the then Belgian Congo.65
61 Solomon (note 54) 28.
62 Ibid.
63 Ibid.
64 Ingpen (note 49).
65 Ibid.
Dart and Howes traded in the Beaufort West/Table Bay port range. The outward carriage was made up of petrol drums and general cargo, while the return voyage consisted of bagged wheat, barrelled water, and in some instances, construction materials and fishing equipment.
However, the presence of the Conference had a destabilising effect on the further development of coastal trade. The OFA committed government cargo to the Conference for half a decade in the first period of its operation. The Union government effectively signed away the opportunity for domestic carriers to ship South African tonnage over that period. The position of foreign-owned shipping enterprises was thus enhanced and secured for 78 years.66 The effect of the OFA was that high-tariff, time-sensitive coastwise cargo was carried by foreign-owned fleets, the greatest objection to this practice being in respect of coastwise cargo from East London and Port Elizabeth.67 In the wake of the scuttling of one of its vessels, Captain Tonnesen of Thesens commented:
Owing to strong competition from overseas ships in the coastal trade, the South African coasters – excellent and efficient little vessels that they were – found that there was very little trade for them. Here we have the South African government subsidising68 a foreign shipping line while our own merchant fleet – small though it is – is left entirely in the cold. The coasters cannot possibly be expected to compete with the huge vessels sailing along the coast and if something is not done, other vessels will follow this one which would probably not have been sunk had things been better.69
Thesens were basically arguing for cabotage. The idea was then, as it is now, that the exclusion of foreign vessels from participating in coastal trades would stimulate growth of the domestic coastal fleet. The message was directed at government and the request was for government to protect coasters from international competition. The government did not heed the call but continued with the OFA, which entrenched foreign vessel domination.
66 The OFA lasted from 1912 well into the 1990s: Berridge (note 56) 4.
67 Ingpen (note 49) 28.
68 Berridge (note 56) 14 places such subsidy at £300 000 in 1945, all of which the government committed to British interests without making any provision for South African coasters.
69 Ingpen (note 49) 28.
Any party that did not have Conference approval found it quite difficult to trade on South African international routes or along the coast. Conference restrictions on international routes were to be expected. However, the Conference pursued control of the coast with just as much vigour. For instance, Thesens and Co was not part of the Conference and therefore had to contend with Conference opposition when the company started sailing70 between Port Elizabeth and Knysna.71
The parameters of the mail contract (to which Union Castle had exclusive rights) did not extend beyond the Cape. Rennie provided the mail service between the Cape and Natal, supplemented by passengers and other cargo.72 Rennie therefore provided feeder services that linked the two colonies for British ships using the Cape as the point of entry.73 Naturally the arrangement, particularly relating to the mail service, required confirmation from the Union Castle and the Conference. This becomes more evident when one considers the fact that when Rennie’s ships were wrecked (four years after commencing the inter-colony mail service), it was Union Castle who took over the service between the Cape and Natal.74
2.3.2 Sea Competitive Railway Rates
Coastal shipping faced an even bigger challenge than the Conference and its OFA during this time. The Union Government enacted the Sea Competitive Railway Rates (SCRR) in 1911. The SCRR was an adaptation of the policy first employed by the old Colonial Cape government through which it favoured transportation of cargo by rail.
Through the state-controlled South African Railways Administration, the Union extended this policy to cover a wider range of cargo.75 The SCRR applied to any freight moved between ports in the Union and the hinterland close to the coast.76 The policy set a rail charge below the sea freight rate to any competing port in the Union. The type
70 With the Clara.
71 Ingpen (note 49) 17, where he shows a copy of a letter from the Union Castle’s London office in which Union Castle stipulated who could trade on the coast and on what terms. The letter also reveals that an “attack” would ordinarily be launched against a competitor, whether or not such acts would improve efficiencies.
72 Ibid. 6.
73 Ibid. 16.
74 Ibid.
75 Ingpen (note 49) 27.
76 Ibid.
of cargo affected would typically be that which coasters would otherwise have carried at profitable rates.
The net effect of the SCRR was that coasters were left to lift low-value cargo such as paper and sugar.77 The whole object was to make it impossible for coastal vessels to compete with rail. As a state entity, the Railways Administration had no pressure to turn a profit. Therefore, it could afford to sustain the practice of undercutting shipping rates regardless of the fact that it was uneconomical for it to do so.78 The policy was maintained despite its glaring anomalies.79 The SCRR led to a significant decline in coastal tonnage.
2.3.3 Effects of the Depression and the World Wars
Coasters suffered a further setback during the First World War (1914 to 1918) and the Great Depression of 1930. Disruptions during the Second World War between 1939 and 1945 saw a significant depletion of the coastal fleet. During this time, ten of the sixteen coastal ships from South African operators were called up for wartime duties.80 Some of the commissioned tonnage was converted to troop vessels or set apart for the exclusive use as carriers of army stores and war supplies. At one stage of the war, only one vessel81 from Natal had not been commissioned for war out of the entire coastal fleet.82
Sustained market distortions caused by the unpredictability of wartime trade patterns eventually dried up coastal cargo. Shipping operators lost personnel to war call-ups which, as a consequence, stifled coastal operations.83 Therefore, whatever strides coastal shipping companies had made post the First World War and the Depression were lost during the Second World War.
77 Dickinson (note 38) 22.
78 Ingpen (note 49) 28. A similar policy applied with respect to road transport.
79 For example, Trevor Jones ‘Coastal Sea Transport and Intermodal Competition in South Africa’
(1985) cites instances in which railage charge was set higher on short than on long hauls. A typical example of this would be a charge for cargo from Cape to Durban by rail over about 2 106 kilometres set at a lower rate than a Cape to Durban port-to-port rate covering 1 474 kilometres.
80 Ingpen (note 49).
81 The Nahoon from Smith’s Coasters was still under repairs after an accident. She continued to ply her trade between Natal and the Cape but not without fear of being torpedoed.
82 Ingpen (note 49).
83 Ibid. (note 49) 33. Ingpen records that Walter Grindrod and Cecil Renaud received the military call- up to North Africa, where they would be stationed, which left the company in limbo during their absence.
2.3.4 Overview of the period
In all, coastal shipping suffered tremendously during this era from Conference interference and the OFA, implementation of the SCRR, and disruptions caused by the economic downturn and the two World Wars.
Natal was home to flourishing sugarcane fields, and the Cape was the hub for the manufacturing of canned foods, vineyard produce and confectionery. Sugar trade volumes recorded over this period were significant, particularly during the period 1916- 1917 and 1926-1927, as reflected in Figure 2.2 below. Therefore, it was the sugar industry that kept coastal shipping in business over this period, particularly on the main coastal route between the Cape and Natal.
Figure 2.2: Manufacturing industry’s sugar demand during the period from 1927 to the mid-1950s
(Source: Dickinson, 1988)
Arguably, the first half of the 20th century was among the most difficult for coastal shipping. However, a constant supply of cargo from the sugar industry propped coastal shipping up for a while until it could reinvent itself. Sugar continued to play an important role in the development of coastal shipping in the following era when the coastal fleet was rationalised.
0 20000 40000 60000 80000 100000 120000 140000
SUGAR CONSUMED BY MANUFACTURING:
1927/28–1952/53 (MEASURED IN TONS)
2.4 CONSOLIDATION AND RATIONALISATION OF THE COASTAL