Freight & Trading Weekly Feature Gauteng
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GAUTENG SPECIAL FEATURE AUGUST 2009 FREIGHT & TRADING WEEKLY Gauteng logistics costs cramping shippers’ style AEL’s Cook
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AEL’s Cook: Gauteng logistics costs cramping shippers’ style
Transcript of Freight & Trading Weekly Feature Gauteng
GAUTENG SPECIAL fEATUrE
AUGUST 2009frEIGHT & TrADING WEEKLY
Gauteng logistics costs cramping shippers’ style
AEL’s Cook
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Editor Joy OrlekConsulting Editor Alan PeatContributors Liesl Venter Advertising Carmel Levinrad (Manager)
Yolande Langenhoven Claire Storey Jodi Haigh
Managing Editor David Marsh
CorrespondentsDurban Terry Hutson
Tel: (031) 466 1683Cape Town Ray Smuts
Tel: (021) 434 1636 Carrie Curzon Tel: (021) 674 6935Port Elizabeth Ed Richardson
Tel: (041) 582 3750Swaziland James Hall
Advertising Co-ordinators Tracie Barnett, Paula SnellLayout & design Dirk VoorneveldCirculation [email protected] by JUKA Printing (Pty) Ltd
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Seafreight
Page 5 Signs of recovery in import volumes
Page 12 Gauteng office drives home ‘congestion-free’ message
Page 22 Value-added services at the centre of major retail award
Information Technology
Page 8 Sars’ paperless initiative gains momentum
Page 16 The ‘cradle’ of systems development in SA
Road and Rail
Page 2 TFR creates capacity in Kaserne
Page 3 ‘We’re not competing’
Page 14 TFR lands major contract
Page 15 Tolled freeways to begin next year
Page 17 Road operator adds rail alternative
Page 20 Refrigerated trucks serve Namibia-Gauteng route
Page 21 Accurate info on road volumes essential
Page 23 SAIL plans own Gauteng facility
Logistics
Page 4 Competition keeps operators on their toes
Page 7 High cost of labour is hurting global competitiveness
Page 9 New acquisition brings abnormal loads on board
Timber to Gauteng is big business for Swazi haulier
Page 11 Security is high on most business agendas
Sound understanding of customer needs is crucial
Groupage
Page 6 Infrastructure upgrades provide foundation for business growth
Insurance
Page 18 Insurance must adapt to industry’s changing needs
Importers and Exporters
Page 12 Gauteng exporter confident of rebound after volumes dive
Page 19 Volatile rand poses biggest challenge to exporters
Page 24 Excessive logistics costs restrict export potential
As Gauteng-based companies count the cost of the global recession, several believe that it’s close to bottoming out.
But no-one has emerged unscathed. Industry commentators provide their insights into the severity of the impact.
Bentley Cook, export operations manager AEL. See story on page 24. Photo: Tijana Huysamen.
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By Liesl Venter
Upgrading and improving capacity is part and parcel of Transnet Freight Rail’s plan to entice more
cargo to rail.According to Frans Seloane, operations
executive manager of the container and automotive division, plans include the development of a piece of land in Kaserne in Johannesburg that will see the new area Kaserne grow three times the current
size compared to City Deep Terminal.This infrastructural development, that
is expected to run into billions of rands, is awaiting development of a proper business case and board approval.
“Various feasibility and case studies will have to be conducted before we can start developing the area, but City Deep terminal remains the largest inland terminal.”
With capacity to handle some 5200 containers, City Deep has seen more
container demand in recent months than it has experienced in the past few years.
“We expect that demand to continue to grow,” says Seloane. “And to meet that demand it is necessary to create more capacity.”
In the meantime much refurbishment is happening at City Deep itself where R55 million is being spent on refurbishing four cranes. “We will also be resurfacing the tarmac in some places where it is cracking very badly. This is
due to the weight of containers it is taking at moment – the area was originally designed as a trailer-borne operation, but this will all be addressed in the refurbishing process.”
Seloane said with four gantry cranes and eight reach stackers on hand, City Deep is measuring up well to the increase in demand. “We are offloading at least four trains per day and loading another five. The plan is to increase this capacity to 12 trains a day.”
Demand growing as trains keep moving.
TFR creates capacity in Kaserne
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By Liesl Venter
There is no competition or battle for cargo in South Africa, say both Transnet Freight Rail and
the Road Freight Association.According to the RFA there is no
doubt that certain commodities are not only suited to rail, but should be transported that way.
“Single bulk goods on a long-haul one-way service like iron ore, coal, steel and vehicles are suited to rail and the overall cost to the economy would be better if they were transported
via rail,” says Gavin Kelly, RFA operations manager. “But at the same time there are many freight categories that are better suited to road transport and can be transported at a far lower rate than rail.”
Both parties agree though that to date the cost of moving goods around the country has been too high.
According to Kelly, the average transport cost factored into the price of an article is anything between 14% and 40% compared to the world average of 7%.
Bheka Xaba, sales and marketing executive manager for TFR’s container and automotive unit, is adamant that TFR is not competing with road.
“We cannot offer the same flexibility that road can, but certain commodities don’t need that flexibility and those commodities should be on rail. TFR is slowly but surely proving that it can take the commodities and offer a good, reliable service at a competitive rate.”
According to Xaba, TFR is still a work in progress. “We are not asking for all of the cargo being moved by road at the moment, but come and talk to us and give us a chance to move some of your cargo by train.”
‘We’re not competing’ Road and rail agree that logistics costs are too high
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Afnet expands service portfolioCompetition keeps operators on their toes
By Liesl Venter
The biggest challenge of doing business in Gauteng is being able to handle the competition,
says Billy Hoomoedt of Afnet.“Companies in Gauteng need to
remain competitive all the time in a market with no leniency. For us it is all about ensuring the best service around and having efficient and productive staff at hand while going the extra mile for clients.”
According to Hoomoedt there is no denying the importance of personal relationships in business as they always prevail by opening more avenues for better negotiations, which ultimately gives the end consumer a better service at a better rate.
“Gauteng tends to have a faster pace which forces the industry to be more efficient, and because the local portion of transport is reduced, turn-around times are quicker and more productive,” says Hoomoedt. “This however does not detract from the requirement of providing the same service to Durban or Cape Town-based clients.”
Afnet, a freight broking company, has full truck facilities and warehousing based in Boksburg. Able to handle and store full container loads, the company is registered with Customs and can do export documentation. Its service portfolio extends to air and sea freight as well as procurement.
“Gauteng is a very important market for us. It remains the hub of transport in the country and it is therefore necessary to be based in the province, particularly as most Durban export cargo needs to be handled here first.”
In addition, most of the country’s industry is based in the province, particularly when looking at the mining industry. Gauteng is the
first port of call when looking for transporters, Hoomoedt says.
“Companies with a strong foothold in the industry and in Gauteng have to continuously maintain their market share while looking at ways to expand. For that reason we have expanded our services to include the handling and storage of full containers. We have also extended our warehousing to accomodate breakbulk consolidated cargo.”
Billy Hoomoedt ... handling and storage of full containers on offer.
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Communication a key focus at Safmarine
Signs of recovery in import volumes
Safmarine is pulling out all the stops to increase import volumes in a diminished market.
That’s according to Sandy Long, recently appointed imports manager: operations for Safmarine Johannesburg.
A born-and-bred ‘Jo’burger’ who joined Safmarine 22 years ago, Long has made it a priority to strengthen the Safmarine Gauteng import unit by improving the team’s knowledge of the import process as well as data quality, invoicing and communication.
“The timelines for an inland port such as Johannesburg tend to be far more demanding then those for coastal ports. We work with up to 15 different cut-off times and deal with multiple coastal ports, which is why communication plays such a crucial role in the service we provide to customers.”
She says the global economic
downturn has put the country’s importers under severe pressure.
“All importers have been affected and we, as Safmarine, believe that improved communication is one of many ways we can support our import customers during these difficult times.”
Long says although Gauteng imports have begun to show signs of recovery, the exact reason for the pick-up is unknown.
“It is most likely driven by a need to restock exhausted inventories, particularly ahead of the 2009 Christmas season,” she says, expressing the hope that the upward trend will gain momentum towards the end of the year.
“We’ve not yet seen the benefits of the interest rate reductions made in early 2009, so we’re hoping these will begin to filter though to the market, leading to improved imports towards the end of 2009.”
Although import/export volumes into Gauteng have been more balanced in 2009 (as a result of the reduced imports), the challenge of an imbalanced trade – from an equipment point of view – remains.
“The majority of Gauteng exports tend to be heavy and therefore shipped
in 20 foot containers while 40 foot containers remain popular for ‘lighter’ imports – such as frozen foods, machinery, chemicals and automotive and allied goods – which are shipped
to Gauteng from China, Thailand, Brazil, USA and India.
“Finding the right export cargo to balance the trade continues to be a key priority for Safmarine,” she says.
Safmarine Johannesburg's import team, from left: Suren Naidoo, Ishan Naidoo, Mokgaetsi Malahlela, Sandy Long and Nivie Naidoo
‘The timelines for an inland port such as Johannesburg tend to be far more demanding than those for coastal ports.’
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By Liesl Venter
Infrastructure upgrades happening across Gauteng may be inconvenient at the moment, but
will go a long way to ensuring the province remains viable for business growth.
Martin Keck, managing director of CFR Freight, independent international sea and air consolidators, says the province remains the most powerful industrial hub in the country and in the entire region.
Keck says it remains important for CFR Freight to have a secure presence in Gauteng, as this is where most of its customers have their headquarters. “One must have a foothold here taking into account that the biggest export volumes of general cargo originate here and most decision-making takes place in Gauteng.
“It is also the South African airfreight hub and the gateway to many African countries. CFR Freight is continuously growing its airfreight product specifically into Africa – and imports as well.”
According to Keck various training initiatives have been launched within
CFR freight in an effort to ensure service levels are always optimal. “Good business relationships in Gauteng are often based on being able to deliver what you promise, staying in close contact with your customers and ensuring service of the
highest standard. “Training our staff means we are
enhancing our service levels to our customers which remains our focus.”
Skills shortages in Gauteng have been identified as a challenge, even with relatively low employment
numbers, says Keck.“While times have recently been
extremely tough due to the global economic climate, service levels and customer focus have become increasingly important as an integral element of business success.”
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High cost of labour is hurting global competitiveness‘Industry needs to reinvent themselves’
By Liesl Venter
Decreasing the costs of labour while creating more jobs is key if South Africa wants to remain globally
competitive in the export market.Even more so in Gauteng says Neil
Harris, managing director of Freightit. “Labour costs especially on the manufacturing side in Gauteng have increased steadily causing us to become uncompetitive in the export market with the likes of India, South America and China.”
Add to that the recent spate of strikes and workers getting above inflationary increases, and the situation becomes increasingly serious.
“It will have to be addressed along with job creation. Government will need to make a clear distinction between what is sustainable job creation and what jobs are just being created for the 2010 World Cup and will become obsolete following the World Cup.”
According to Harris it is extremely important for exporters and freight forwarding agents to be able to re-invent themselves continuously in these times to ensure they remain competitive and retain their market share. “Exporters and
freight forwarders, who are obviously joined at the hip, must actively build a market for themselves that is sustainable. They must continuously be looking for the “warm currents.”
He said exporters were extremely hard hit by the economic slowdown, with June and July being the worst months this year. “We are already seeing an improvement, but compounding the lack of demand for product internationally was the strength of the rand versus the US dollar in the main. Exports bloom anywhere from R9 to the dollar, and only then.”
He said Gauteng exporters would continue to tread water while demand starts lifting from the First World countries once again. “They were all much harder hit than South Africa, but we are all connected by the same global village in one way or another.
“With Gauteng being a major influence in terms of manufacturing and exporting reliance, it has been a tough year for the province, but we remain positive in anticipation of the recovery of the export market. Proactive exporters and freight forwarders have had the opportunity to rejuvenate their businesses.”
8 | AUGUST 2009
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Sars’ paperless initiative gains momentumAugust 1 was the implementation
deadline of mandatory electronic communication with Customs by
clearing and forwarding agents and other supply chain participants – including direct importers and exporters who currently submit more than 20 schedules or declarations a month.
“All CoreFreight clearing and forwarding clients were ready for the paperless environment,” says Glenn Lawson of Core Freight Systems, the South African specialist software service provider. “The change was relatively easy for us as existing clients already process literally thousands of paperless EDI submissions per month through the CoreFreight application. However the key to success of this initiative is for all parties in the chain to have systems able to receive and process the Sars messages, and this may take some time to achieve.”
The Transnet Port Terminals/National Ports Authority EDI link provides another opportunity for agents to pursue the paperless submission of cargo dues.
The benefits associated with a paperless environment, as identified by Sars include improved risk management, a reduction in error rates and vastly improved speed in processing transactions within the organisation. “The general advantages of EDI are however not restricted to this
aspect of the business,” Lawson points out. “The modern CoreFreight application design facilitates the transfer of data electronically with other applications used either internally by CoreFreight Users or their external partners. These have proved to be robust and reliable – with significant reductions in processing time reported by the users. EDI goes beyond Customs communications and all agents should consider its potential in their business.”
Glenn Lawson ... ‘The change was relatively easy for us.’
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New acquisition brings abnormal loads on boardBy Liesl Venter
A niche marketing strategy that draws on specialist knowledge and optimum understanding of the
client’s business is the philosophy behind OneLogix, says chief executive officer Ian Lourens.
Securely positioned in several high growth niche markets, the company has entrenched its brand and reputation, says Louwrens.
Having developed a firm set of criteria before purchasing any company, OneLogix offers broad-spectrum logistics in several niche markets including vehicle delivery, the media
and the courier industry.“We only purchase companies that are
in growth markets that have comparatively high barriers to entry, are profitable and have a management team that is strong and competitive.”
According to Lourens it is about being able to reasonably dominate the market while being very profitable and lucrative. “We also look for reliability and strong ethics before we take on a new company.”
Best known in the OneLogix stable is PostNet, primarily a courier company with some 230 stores countrywide. Vehicle Delivery Service and Commercial Vehicle Delivery Services have seen the company signing up clients that include Mercedes
Benz, BMW, Volkswagen and Porsche.Newly acquired RFB Logistics also
falls into this stable. “They are experts at moving abnormal loads and have really managed to diversify our mix of companies.”
Three of the remaining OneLogix companies are involved in the distribution of printed matter such as newspapers and magazines, while two companies transport bulk raw materials from mine to ports.
“We are highly entrepreneurial and look for companies that are easy to slot into our group. The management is empowered as far as possible while we ensure that the core administration functions take place at head office,” says Lourens.
Ian Lourens … offering broad-spectrum logistics in several niche markets.
Timber to Gauteng is big business for Swazi haulierBy James Hall
With more than 80% of the country’s consumer goods, manufacturing inputs, food and other imports originating from SA, Swaziland road freight firms are kept busy hauling goods from Gauteng. What is less well known is that Swaziland sends 60% of its exports to SA, and goods traffic is a two-way proposition.
“Gauteng is an important destination
for us,” said Sikelela Vilakati, managing director of Chrisilda Transport Company.
“This year we have a lot of work to do transporting Swazi timber to Gauteng for use in the mines,” said Vilakati.
Five trucks from the company’s fleet of over 30 cross-border vehicles is kept in service on a daily basis transporting timber from Swaziland’s commercial forests to where it is needed in Gauteng.
Chrisilda Transport’s expansive facility
anchors the southern tip of the ever-expanding Matsapha Industrial Estate. Shipping containers are stacked in the company’s own inland container depot – a road version of Swaziland Railway’s facility two kilometres away. Chrisilda Transport’s flat deck trucks offer a viable road alternative to container shipping by rail.
“It takes us one day to Durban. It’s a seven-hour drive. That is faster than rail,”
said Vilakati.“Ability and efficiency – it’s mainly
that; we maintain these, and customers come to rely on it. People wanting good service come knocking on our door,” said Vilakati.
Not restricted to Gauteng and Durban routes, company trucks serve any destinations in SA. But SA’s industrial heartland remains Swaziland’s lifeline, serviced by Chrisilda Transport
10 | AUGUST 2009
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‘Security is high on most business agendas’By Liesl Venter
More and more businesses are taking security seriously and appointing an expert to manage
risk, says Andre Du Venage, general manager of Secure Logistics. This not only allows them to focus on their core business, but also ensures high standards of security.
He’s also seen an increasing trend towards the implementation of international security standards like Tapa which demands re-evaluation on a continual basis.
While Gauteng may be the business hub of the country, it’s also the crime capital which is why security is paramount.
Du Venage says that as security changes constantly it is important to keep abreast of technology and to know the trends. “Criminal tactics change with time and so does the security technology and standards.”
Security does not make money for a company directly and is therefore often neglected, says Du Venage. “But it is important to spend money on good security if companies want to remain competitive. Mediocre security is like throwing good money in the water.
“Rather spend more and have a good security awareness and presence, and never accept that security cannot be improved or that your high standards will not be challenged at some stage. Do not ignore the small incidents.”
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‘Sound understanding of customer needs is crucial’By Liesl Venter
Gauteng is much more than just the economic hub of South Africa – it is also the springboard
into the rest of Africa. With its fast pace it demands speed to market, flexibility, a sound understanding of customer needs and variable solutions to these needs, says Grant Palmer, regional managing executive of GAC Laser International Logistics (GAC Laser).
Offering a complete supply chain solution, GAC Laser is a joint venture between the Dubai-based GAC Group and Laser International Logistics, one of the country’s leading logistics companies.
With at least 46% of its business
export-based, having a solid foothold in Gauteng is essential to business. “We are very strongly positioned in the province and equipped to service our market competitively. Add to that the fact that OR Tambo is the largest international airport on the continent, and the multitude of airlines now flying to and from this hub make our location ideally suited to take advantage of this airport and the lane segments it serves worldwide,” says Palmer. “The majority of corporate head offices are situated in Gauteng and this makes it critical to have a presence here.”
He says that a solid track record along with honesty and integrity remain key when doing business in Gauteng. “It is inherently part of our core quality
management programme and it ensures relationships are sincere, long lasting and based on these values.”
Palmer maintains having a “one-stop-
shop” is important for business. “Gauteng is very dynamic and decisions need to be made quickly. You need to be flexible, innovative and on top of your game all the time.”
He says that opportunities in Gauteng continue to present themselves in various forms. “I firmly believe that matching customer expectations with deliverables that are mutually accepted and realistic, combined with value added service is important for success.”
As interest rate cuts continue to stimulate the economy and many customers are seriously looking to outsource non-core supply chain functions, it has become a dynamic environment in which to operate, says Palmer.
Grant Palmer ... ‘Strongly positioned in the province.’
RFB purchase a ‘win-win’ for all involvedBy Liesl Venter
It was an all round win-win situation when OneLogix acquired RFB Logistics earlier this year.
According to OneLogix chief executive officer Ian Lourens, the buy-out was the result of a confluence of circumstances that resulted in a very positive turn of events.
“RFB Logistics has, in fact, since the purchase performed ahead of expectations and the relationship has just improved.”
OneLogix only operates in niche markets, and RFB Logistics was the perfect fit. “They had a strong management team that was prepared to stay on and take the business forward,” said Lourens. “It is an ethical company
that is brilliant at what it does. We believe that this has been a good move on both sides.”
As part of the OneLogix group, RFB Logistics can now get on with its core business while the head office in Johannesburg takes care of finance and administration as well as the payroll, strategy, marketing and communications.
“Practically it comes down to having
a ‘big daddy’ that ensures financial security,” says Lourens.
He said after hearing that RFB Logistics was on the market they immediately started negotiations, which resulted in the buy-out. “It was important that it was not engineered to work, but rather was something that all parties were happy with and it turned out brilliantly.”
12 | AUGUST 2009
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FTW1212sd
Gauteng exporter confident of rebound after volumes diveFrom 45 to 5 tons a month – but positive growth prospects on the horizon
By Joy Orlek
The impact of the global recession on the local export community is clearly reflected in figures
provided by Woodmead-based Metalloy Fibres.
At its peak the company, which
produces a polypropylene and steel fibre product as a safer form of concrete reinforcement for a range of overseas markets, was exporting 45 tons a month. Current volumes are down to 5 tons.
But manager Phil Walker is confident that volumes will be back to
Philip Walker … ‘Recession is close to bottoming out.’
Gauteng office drives home Walvis Bay’s ‘congestion-free’ messageBy James Hall
A year into the opening of the Walvis Bay Corridor Group (WBCG) office near O R Tambo International Airport, the Group is driving home its message to Gauteng shippers about the congestion-free road and sea infrastructure available for cargo heading to inland nations to the north and to overseas markets via Namibia’s ports.
“It is hard to quantify at this point how much new business has directly
resulted from the opening of our new office – because we have been seeing an upswing in corridor use from Gauteng for some years. There was also a marketing campaign aimed at Gauteng that preceded the office,” said WBCG marketing officer Agnetha Mouton.
Gauteng importers and exporters who choose to use Walvis Bay instead of Durban reap time savings. Although Durban is half the distance from Gauteng, port congestion ensures that trucks experience down time there
AUGUST 2009 | 13
their previous levels within a year and predicts 25% growth within the next two years.
“We’re slowly beginning to see enquiries coming in and although they haven’t turned to firm orders yet, supply chains are running dry,” Walker told FTW.
But since those peak times there’s a lot more Chinese competition, says Walker, “and we are affected in this country by raw material quality and availability.”
Metalloy is competitively priced against world class manufacturers but expensive against the Chinese, says Walker, who explains that there are two sides to the industry.
“High volume, bigger users will look at Chinese prices and material. But for the more demanding applications we are competing against the US and European producers. And there we’re losing out with the stronger rand. Where we previously had a 10% advantage landed in Europe – now that’s gone.”
Adding further challenge to the mix is the fact that in three years Chinese quality has improved, so it’s a tough new market to penetrate, says Walker.
Coping during a recession demands resilience and innovation – and for Metalloy the local market has compensated to a degree.
“Other products that sell locally have done well. With all the highway projects on the go, we have been selling into that market.”
And while for the current size and turnover it’s hard to justify spending R1m a year on travel and entertainment, the company is gradually meeting new distributors with a view to growing its exports.
Metalloy is part of the Nimag Group of Companies. With 80% of its business by value related to exports, it produces nickel alloys for the steel industry.
Metalloy fibres was originally set up to produce stainless steel fibres for the mining industry. “We then found the product was too expensive and there were other alternatives – but fortunately stainless steel casts fibres have been used in the refractory industry for many years. After a concerted marketing campaign we approached local companies and appointed distributors, and having captured the local market we found we had spare capacity and through websites and contacts started to export the product.”
At the start in 2002 the company was moving 10 tons a month, purely as LCL cargo. When Walker joined in 2006, demand was such that a new furnace was installed to cope with demand.
The company exports mainly to Europe, Japan, Iran, Australia, which has huge potential, and small volumes to India. “The only market we haven’t managed to penetrate is the US – and that’s mainly because there are producers in the US and freight costs to that market are excessive.”
In terms of the transport leg, pricing is very important but so is good service, says Walker.
The cargo moves mainly by sea, with the occasional airfreight shipment in the case of an emergency.
And on the landside leg, it’s all railed from City Deep to Durban – which according to Walker works with clockwork precision.
Peaks and troughs are an inevitable part of the economic landscape and Walker believes that the recession is close to bottoming out, with growth prospects for the coming months looking promising.
It’s a view that echoes the sentiments of several industry sources who are optimistic that the green shoots are more than hopeful sentiment.
FTW1402
Gauteng exporter confident of rebound after volumes diveFrom 45 to 5 tons a month – but positive growth prospects on the horizon
Gauteng office drives home Walvis Bay’s ‘congestion-free’ messagecompared to congestion-free Walvis Bay. As for cargo headed to Botswana, Namibia, DRC and Zambia, the 1800-km Trans Kalahari Corridor has proved a boon for road transporters.
Announcing a new feeder service from the Far East to Walvis Bay, Maruba Container Lines noted “the importance of Walvis Bay as an import, export and transhipment hub to the rest of West Africa due to the well-developed infrastructure of Namibia in general, as well as the port. When viewed in general, the Port of Walvis
Bay is a leader in delivering service and space availability for transhipment volumes, offering little to no congestion in terms of berthing delays and cargo operations, making it a truly cost efficient port.”
Mouton said: “The Port of Walvis Bay has seen an increase in the number of international direct sailings and this has a direct relation to growth in corridor volumes serving Angola, Botswana, Democratic Republic of the Congo, Zambia, Zimbabwe, and the Gauteng region of South Africa.”
14 | AUGUST 2009
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TFR lands major contractfor valuable electronic goods
By Liesl Venter
Rail is once again becoming a viable option for the transport of containers as
Transnet Freight Rail gradually builds confidence in its abilities.
Having recently landed a major contract to move electronic equipment for a manufacturer from the Port of
Durban to Gauteng, TFR is showing it can meet the demand of the private sector.
According to Bheka Xaba, TFR’s sales and marketing executive manager for the container and automotive division, the organisation had to guarantee it could deliver within 72 hours of the vessel offloading.
“And we are meeting the demand and proving that rail in South Africa can be efficient,” he said. “Speed was very important to the client as well as security as the cargo is valuable technological goods. We have so far had no incidents of theft and have greatly minimised their exposure to risk.”
While many in South Africa
still remain sceptical about TFR’s ability to move cargo effectively and speedily, the parastatal is going about its business making inroads quietly and with very little fuss.
“It has been a very deliberate strategy not to market what we are doing,” says Ali Motala, TFR general manager. “It was important to first know, understand and align our volumes with our resource capacity. We have also designed and implemented new strategies and technology to improve our service delivery.”
A standard cargo train can now move from the City Deep terminal to the Port of Durban within 72 hours.
“We have also changed our export policy to five days’ free storage for exporters,” says Frans Seloane, executive manager operations in the containers and automotive division. “We are continuing to see more demand, especially on the KwaZulu Natal corridor, as we have cut out the middle man and gone directly to the shipping lines. They are bringing us more volume and the confidence levels in TFR are growing.”
Rail is once again becoming a viable option for the transportation of goods from the ports to the country’s economic hub in Gauteng.
AUGUST 2009 | 15
FTW0016SP
Tolled freeways to begin next yearBy Liesl Venter
Billions of rands are being invested by the South African National Roads Agency (Sanral)
in its drive to upgrade and improve critical road networks in the country, and especially Gauteng.
Tasked with the design, funding, maintenance, operation and rehabilitation of South Africa’s tolled and non-tolled national roads, much of the improvement is taking place on roads in Gauteng, the nation’s commercial and industrial capital.
Having raised debt finance of R4.6 billion in 2008, a further R25 billion is needed for its freeway construction projects over the next two years. Of the total money raised, it is expected that the Gauteng Freeway Improvement Project (GFIP) will absorb about R20-billion.
A spokesman for Sanral said that work was proceeding on schedule despite inclement weather conditions during the past few months. Road users in and around Gauteng have also by and large responded well to the ongoing roadworks. “We are confident that the ultimate result will be worth the wait,” said the spokesman.
Sanral chief executive officer Nazir Alli said all was on track to raise the necessary funds needed to undertake its programmes, which would see most of the civil works completed by October 2010.
“Economic conditions are certainly tougher than they were when we began issuing debt to finance the major projects now under way. However, indications are that investors will continue to be assured by our good market ratings and track record of efficiently maintaining the network and settling debt,” said Alli.
Post October 2010, the freeways making up the GFIP will be operated on the “user-pays principle.”
An Open Road tolling system will be used, requiring each vehicle to carry an electronic tag that will automatically trigger the electronic tolling system housed in 38 overhead gantries set about 10km apart across the Gauteng freeway system. Various options for billing the toll fees to motorists are still being considered. These could include linking tags to bank accounts, systems to recharge tags at retail outlets or internet-based products.
Although the GFIP is Sanral’s main focus, the capital investment
programme will also see improvements being made to the N2 Tsitsikamma Toll Road, the N17 East Toll Road Extension, the N1 South and R30 Bloemfontein-Kroonstad road. Other roads affected include the N1
Polokwane Bypass, the Marianhill Extension near Durban and the Dube Trade Port Interchange that will serve the new King Shaka International Airport on the KwaZulu Natal North Coast.
The Gauteng Freeway improvement Project will absorb about R20-bn.
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Gautengthe ‘cradle’ for systems development in SABy Alan Peat
Gauteng is the throbbing heart of SA’s airfreight market, according to Arnold Garber,
chairman of freight systems specialists, Compu-Clearing – and it probably handles three times as many airfreight shipments as the rest of SA put together.
Not that seafreight is a small matter. Exactly the opposite, according to Garber.
“It’s much more in tonnage terms. But in numbers of shipments, airfreight through OR Tambo airport still rules the roost as far as system demands are concerned.”
Garber also pointed to the international element that Johannesburg provides – linking by air directly with any number of overseas airports.
“It is also the main regional and international airfreight transhipment point on the Southern African sub-continent,” he said, “because it’s such a major airfreight hub.
“You are just as likely to get cargoes going from Libreville to Nairobi via Johannesburg as you are from Libreville to Singapore, via Johannesburg.”
And, with Gauteng far and away the industrial and business hub of SA, this also creates certain unusual system requirements.
All this has, of course, had a major impact on the freight systems industry – in both its strategic location and its hardware and software development.
“In terms of freight systems,” Garber said, “Gauteng is the cradle for systems development in SA.
“It’s where everything is tested and
implemented, and all the major systems providers are in the province. And, when customs wants to put legislation through its paces, they test it in Gauteng.”
The sheer vibrancy of this central SA province is immediately noticeable when you fly into Johannesburg, Garber told FTW.
“As you fly into any African city you see just that – a city.
“But as you fly into Johannesburg, you see a massive sprawl – of people, industry, buildings, streets, dams, mines, highways, traffic, and more people.
“It’s the business and industrial hub of Africa, and therefore the cargo movement hub for the southern part of the continent.
“It’s definitely what Compu-Clearing calls its business home.”
Arnold Garber ... ‘Gauteng is definitely what Compu-Clearing calls its business home.’
AUGUST 2009 | 17
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The ability to provide alternative modes of transport to and from Gauteng is paramount, particularly
in light of geographic considerations and insatiable demand of the province, says Regan Moodley, managing director of Shipping and General Transport.
With this in mind, the company recently acquired a rail account and the relevant port permits to collect FCL containers at the City Deep terminal.
“We also acquired a crane truck and a range of tail-lift equipment to enable us to fully service clients who do not have access to handling equipment,” says Moodley. “It is important in the fast-paced arena of Gauteng to be able to deliver a polished service that can be backed by measurables.”
Moodley also believes in the importance of a varied service if one wants to be successful in Gauteng. “We are a fully licensed hazchem carrier and an approved Customs carrier of goods in bond. The company can also handle full and empty containers, while we supply Tremcards and hazchem placards and labels.”
According to Moodley, there are still some challenges when dealing with Gauteng such as unsustainable rate slashing, chasing turnovers and disregarding profit yields. “Gauteng is no walk in the park in the realm of business. In fact she is a well-oiled machine and stops for no one – and in that is also the beauty of doing business in the province.”
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18 | AUGUST 2009
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Insurancemust adapt to industry’s changing needs‘Cradle to grave’ policy for international logistics
By Liesl Venter
Crime remains a challenge for insurance companies especially in Gauteng.
Susan Bester, marine marketing manager of Prestmarine International, says you can never under-estimate the importance of arranging adequate insurance cover.
“Gauteng moves at a very fast pace compared to the other provinces and it is wise to be cautious and not to be rushed into transactions and contracts before having read them carefully.”
She says often agents find themselves under pressure to enter into a transport contract and only later realise that it actually contravenes their standard trading conditions as well as terms and conditions of their insurance policies. This can result in major problems in the event of a claim if your insurer was unaware of these agreements.
“Hijackings and theft of commodities such as IT and communication equipment, clothing and foodstuffs remain very high on the agenda,” she said.
Experts agree that most hijackings of large cargo occur within a 200km radius
of Gauteng and criminals are becoming more fearless and extremely creative when it comes to skilful pilferage.
“In the present economic circumstances criminals focus strongly on employees to provide inside information to assist in fraudulent activities,” says Bester. “Continuous labour disputes and strikes also influence the general supply chain, resulting in unnecessary delays and even malicious damage.”
According to Bester constant communication and trust between client and insurer is paramount. “A huge part of our client base consists of freight operators and we offer facilities that add value to the service they provide to importers and exporters.”
She says as more clearing and forwarding agents are now combining picking, packing and storage into their service packages, Prestmarine has also adjusted its insurance products.
“We have a well-established commercial department and are therefore in a position to offer our clients a ‘cradle to grave’ policy which includes the international movement of cargo, warehousing and all operations that go with it – as well as distribution.”Susan Bester ... ‘Constant communication and trust between client and insurer is paramount.’
AUGUST 2009 | 19
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Volatile rand poses biggest challenge to exportersBy Liesl Venter
Successful exporting is all about having the correct company culture and
approach to exporting, says Paul Chappel, export sales manager of Pilot Crushtec.
“Having the correct product at the correct price and being able to compete on the world stage, is just as important.”
Pilot Crushtec, a supplier of mobile and semi-mobile crushing, screening and materials handling solutions, is involved in industries ranging from coal, diamonds and gold to aggregate and sand quarrying.
With an annual turnover exceeding R440 million, its products are marketed and available in more than 30 countries.
According to Chappel, the economic downturn has influenced the company’ s
international sales, due to the type of products it exports, but the biggest challenge of late for exporters in the commodity market has been the volatility of the South African rand.
“It did affect the company’s profitability as well as the competitive pricing of the products we market to the world. What seems cheap or well priced today can become expensive in a very short space of time.
“To overcome the currency f luctuations is completely out of our control and something we cannot change,” says Chappel.
Despite this, South African exporters can hold their heads high when they venture out into the global market place. “We do not need to stand back to anyone – our products are as good and our prices are competitive. South African exporters are right there on the world stage.”
20 | AUGUST 2009
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Refrigerated trucksserve Namibia-Gauteng routeFleet expansion plans on the cards
By Liesl Venter
With three brand new refrigerated trucks to transport fish and meat
from Namibia to various destinations in South Africa, having a foothold in Gauteng is key for Quality Airfreight Services.
Established in Cape Town in 1995 as a start-up owner run business, the company initially offered only airfreight between Cape Town and Windhoek in Namibia.
But, with unexpected growth, the company saw itself introducing road freight between the two destinations, becoming one of the biggest transporters of time-sensitive freight between Cape Town and Namibia today.
According to owner Gary Slamet, given the fact that Namibia imports 80% of its consumption, there is always opportunity in Gauteng, from which most of the country’s imports are generated. “It is important for us to have a strong foothold in the province as competition is stiff.”
In the past six months three
more refrigerated trucks have been bought after a gap in the market was identified. “These will be used to transport fish and meat from Namibia to Gauteng as well as Mpumalanga, Free State and KwaZulu Natal. The trucks will return to Namibia with dry goods that are not necessarily urgently required by our customers. Already the service has been welcomed with open arms,” said Slamet, who expects to expand the fleet in the near future.
He says Gauteng remains a challenge. “We have to pick up 150 plus parcels a day in the province for different clients, taking the usual quota of highway accidents and other traffic issues into account.”
One van leaves Cape Town every evening with around 2000 kg of express freight destined for various destinations in Namibia, while 8000kg of normal freight is moved once or twice a week.
“We have seen major growth in the past few years, and continue to do so,” says Slamet. “The economic downturn has had an impact on South Africa and Namibia, and our business, but not as severe as in manufacturing countries.”
Population: 10.5 million (21,5% of the national population)
Area: 17 010 sq km
Major Cities: Johannesburg (provincial capital)
Pretoria (national administrative capital)
Premier: Nomvula Mokonyane
% contribution to SA’s GDP: 35.1% (2007)
Gauteng GDP: R579bn (2006 estimate)
GDP per Capita: R61 000
Growth Rate: 5.7% (2001 – 2007)
Unemployment: 21.8% (2008)
Principle Languages: isiZulu, Afrikaans, Sesotho, English
Major Municipalities: Metros: City of Johannesburg, City of Tshwane, Ekurhuleni, West Rand, Metsweding
International Airports: OR Tambo International Airport (Ortia)
Information: GEDA
GAUtenG AT A GlANCE
AUGUST 2009 | 21
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Accurate info on road freight volumes essential for the provinceBy Liesl Venter
With Gauteng the only major industrial centre in the world not situated on a waterway,
its dependence on road transport makes it extremely important to measure road freight volumes.
But according to Vincent Parker, senior statistician at Statistics South Africa, this does not happen.
South Africa contributes 0.4% of the global GDP, with the volume of land freight transport in South Africa being about 2.2% of the global total.
Parker says for this reason the information on the cost of transport and the cost per unit remains essential not only to understand but to manage the economy.
“The Department of Transport needs data on volumes in order to plan and maintain the road network,” he says.
“None of the data sources available in South Africa however record freight volumes in tonne-kilometres, therefore means to estimate volumes in tonne-kilometres from the available parameters need to be sought.”
Parker said while the CSIR annually published an estimate of the road freight volumes, the country had no official statistics available on road freight volumes. “That is because the estimates are not regarded as official and the main obstacle to declaring them official is that the estimates have no measures of variance for the likes of confidence intervals or relative standard errors.”
Only once the measure of variance is determined will the country be able to produce an official road freight volume measurement, a necessity to a province such as Gauteng where nearly everything is brought in via road.
22 | AUGUST 2009
FTW4433
Miguel VieiraProduct managerfinancial systems
Nachi Mendelow Marketing representative
Waldo Coetsee Product manager
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Arnold GarberExecutive Chairman
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Value-added services at the centre of major retail awardBy Alan Peat
The industrial and commercial might of Gauteng needs to be matched with seafreight services of equal
muscle, according to Rhett van Zyl, MD of CMA CGM Shipping Agencies.
“With the volumes that move in and out of the province on a global basis,” he told FTW, “shipping lines have to be able to offer worldwide networks of services if they intend to make a serious impact in the marketplace.”
And he is confident that the agency’s principal, CMA CGM, fits this bill – it is currently the world’s third largest container shipping group and ranked number one in France.
“We operate a fleet of 370 vessels,” Van Zyl added, “serving over 400 ports
around the world. In 2008, we carried more than 9-million TEUs, and had a presence on all continents and in 150 countries.”
Service quality is also not a question, according to Van Zyl, who pointed out that the line was recently honoured with the 2008-2009 “Ocean Carrier of the Year award” by the giant US retail chain, Walmart.
“According to Walmart,” he said, “CMA CGM received the award based on its ability and willingness to provide efficient value added services and offer flexibility when needed.
“This high performance service was achieved thanks to the excellent co-ordination between CMA CGM’s worldwide agencies and the retailer’s head office, which together were able to come
up with tailor-made solutions even in this difficult economic climate.”
Although trade conditions in Gauteng are currently ham-strung by the global economic crisis, Van Zyl described the Gauteng-Durban route as
“well subscribed”.“In Gauteng,” he added, “we are still
getting good, steady and loyal support via Durban. CMA CGM/Delmas have also just launched a service from the Far East to Mozambique and we will also be targeting the Johannesburg market for this service. We believe if we can sort out rail issues, Maputo offers an excellent alternative to Durban.”
The line is also constantly investigating new services and doing viability studies to determine whether new routes will be opened in and out of SA.
And, although he has just taken over the helm of CMA-CGM Agencies in SA, Van Zyl feels that the line has to keep plans for future expansion firmly on the front burner, as the recession will not last for ever.
Rhett van Zyl ... ‘Expansion plans on the front-burner.’
Key projects identified to unlock growth in GautengThe Gauteng Economic Development Agency (GEDA) is streamlining its operations in order to better combat the effects of the current financial crisis and has identified some key projects that could unlock growth in the province.
The organisation is working on identifying and packaging a number of high-impact projects that can unlock manufacturing growth in certain key sectors.
These include an agricultural hub initiative (cut flower, mushrooms,
essential oils) where GEDA is working with partners to facilitate funding for previously disadvantaged individuals identified for participation.
Production of solar water-heating panels is another area of focus, where. GEDA is identifying and targeting
investors who have expressed an interest in investing in this industry.
The organisation has also launched an export portal which seeks to proactively market products of Gauteng-based companies to foreign markets.
AUGUST 2009 | 23
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SAIL plans own Gauteng facilityBy Alan Peat
As the rail transport side of its business develops, so SA Inland Logistics (Sail) gets closer to
establishing its own facilities in Gauteng, the industrial and business hub of SA.
And that’s very close, according to Sail’s marketing director, Gerald Naidu.
“We are becoming more and more involved in the rail side,” he told FTW, “currently moving cargoes out of Gauteng through an agent.
“And some of these are pretty big movements – especially the increasing number of project cargoes we are handling.”
Of course, in recent times the market has been nothing if not volatile.
“But,” said Naidu, “it has been picking up in recent weeks, and prices are going up for traffic from Johannesburg.”
Sail is presently moving increasing amounts of traffic by rail, and has a contract lined up with Transnet Freight Rail (TFR).
“It’s still only at the testing phase at the moment,” Naidu added. “But, if we find it comes good, we’ll move into rail in a bigger way. But a lot of our traffic will still move by road.”
SA Inland Logistics is also exploring an entry into the movement of hazardous cargo – where companies have to prove themselves in being able to comply with all the demands of the Hazchem regulations.
“We have acquired the specialised vehicles we need,” said Naidu, “and have instituted all the necessary specialist driver training.
“We have to be fully knowledgeable and compliant with the standards to ensure that our cargo is safe, and we are moving it properly.”
But Naidu is currently frustrated in his dealings with the Port of Durban.
“We want to be able to deal directly with them,” he said, “on matters of interest and concern.
“But, as long as they won’t talk to transporters, we just have to suffer all the problems and delays there are in the port.”
He also felt that achieving this level of communication might require further effort.
“We need to get in contact with the right people, those who can keep our trucks and cargoes moving. And, at the moment, we are proving pretty insistent on the need for closer communication with the port.”
‘Logistics management is all about adding value’Selling into the busy and highly competitive freight market in Gauteng needs a product that offers advantage to the customer, according to Deon Botha, owner of Globogistics and Services.
“Logistics moves and management of cargoes is not just about a move from point A to B, but ultimately value must be added to the process,” he said.
Put into practice at Globogistics is what Botha described as “a simple, yet effective” model.
“This,” he told FTW, “defines value-adding as a function of speed, quality and flexibility, at a specific cost. In others words, there are questions that we frequently have to ask ourselves.
“Are we increasing speed and quality and flexibility to our customers, while at the same time
reducing costs? If the answer is “Yes”, then keep on doing it and do more of that. But if the answer is “No”, then simply stop doing it.”
It is simply not good enough, explained Botha, to “go through the motions”.
A company has to constantly take the initiative and explore every new opportunity to add value. This, according to Botha, to not only ultimately meet the customer’s expectations, but in fact, to exceed them.
“Value-adding forms an integral part of each individual’s performance agreement.”
According to Botha’s calculations, on average, one new value-added initiative is implemented by his company every week.
“Cost saving initiatives implemented, for example, currently show that we are well on track to record a seven-digit saving for a major customer,” he said. “Given this, we are convinced that our value-added strategy is working.”
‘Value-adding forms an integral part of each individual’s performance agreement.’
24 | AUGUST 2009
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Excessive logistics costs restrict export potentialGauteng-based companies particularly vulnerable
By Joy Orlek
The high cost of logistics in South Africa is a particular burden for Gauteng shippers who have
been forced to come up with innovative solutions to counter the effects of the recessive global climate.
For major exporter AEL, becoming an international company has been key,
says export operations manager Bentley Cook.
In addition to the export of locally produced ammonium nitrate, the company is now sourcing product from around the world and supplying the likes of Indonesia and Egypt.
“We’ve had no option but to source internationally because of local logistics which has made us uncompetitive in certain markets,” he told FTW.
AEL’s principal exports include commercial explosives for mining, detonators and detonating systems – a field in which the company is a world leader – as well as ammonium nitrate, a raw material for mining.
With major competition from Australia, Spain, China and the USA, AEL moves substantial volumes of Class I and ammonium nitrate products. But the potential for ammonium nitrate is far greater, says Cook, if only inland logistics costs were more competitive.
“We transport most of the local product by road to Zambia, Zimbabwe and the Congo with other principal markets being Tanzania in East Africa, Ethiopia via Djibouti and the West African destinations of Nigeria Ghana and Equatorial Guinea.
And while inland logistics is one of the main challenges, Cook believes container rates could also improve. “The premium on one container of hazardous cargo ranges from five to 10 times the rate of general cargo – and still lines are reluctant to carry it.”
And their reluctance stems from a lack of knowledge, says Cook.
“The safety standards applied by
this company are impeccable and in line with international standards. There has never been a commercial explosives-related shipping incident – there have been explosions at plants but never at sea.”
Rates however are not the only challenge.
Along with his colleagues in the industry Cook believes the skills shortage at every level will be a major
obstacle in the years ahead.He would like to see greater
emphasis on staff education within the industry – particularly with regard to hazardous cargo.
“There’s a need for all role players in the country to form a single “TEAM South Africa” for the good of the whole country.”
Few would disagree that that’s the way to go.
‘The premium on one container of hazardous cargo ranges from five to 10 times the rate of general cargo – and still lines are reluctant to carry it.’
AEL’s bustling Longmeadow Business Estate office ... skills shortage will be a major obstacle in the years ahead.
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