Tag / Rail transport

by Mike Poverello

Insight: Transnet import/ export delays harming SA’s competitiveness

The following article provides insight into prevailing problems concerning rail transport between Durban and Johannesburg, in particular containerised and bulk rail cargo. Again, private enterprise is ahead of the game, but must wait for the availability of reliable rail services to permit uninterrupted movement of goods. The bottom line – an under-performing and unreliable railway network to South Africa’s hinterland means the country’s road networks will remain under stress; and, will themselves fall into a state of disrepair. This contributes to the country’s lack of competitiveness. The article puts into perspective the announcement of the Distribution Junxion, Port of Gauteng which will be situated south of Ekurhuleni, where it borders conveniently on the Durban-Johannesburg railway line.

Article: Hurry up/Wait: Transnet import and export delays harming SA’s competitiveness, authored by Sasha Planting, Daily Maverick, 16 February, 2020

by Mike Poverello

Which country has the world’s longest railway network?

The United States has the world’s longest railway network, followed by China and Russia. Railway-technology.com profiles the 10 largest railway networks in the world based on total operating length. For full details of this analysis visit – www.rail-technology.com

by Mike Poverello

A review of South Africa’s road and rail infrastructure

Creamer Media have published 2012 Road and Rail – a comprehensive review and insight into South Africa’s road and rail transport infrastructure and network. This should be a must read for any serious investor and comes at a price just shy of R 2000,00. 

For the much of the six-and-a-half decades from 1910, South Africa’s rail sector was carefully nurtured and handsomely resourced by successive administrations. Growing competition from road was kept at bay by tough regulatory practices that ensured rail freight of a virtual monopoly.

From the mid-1970s, however, rail’s pre-eminent position in South Africa began to come under scrutiny. A series of National Transport Policy Studies reviewed worldwide trends in transport deregulation. The findings reinforced a growing belief that an overprotected rail industry and an over-regulated road-freight sector were detrimental to the overall South African economy. This was undoubtedly true – but as often happens in these matters, in the following decades, and indeed, right up to the recent present, the stick was then bent excessively in the opposite direction.

The net result is that, on the freight side, rail has massively lost market share to road over the past 20 to 25 years. Road transport has been allowed to grow, but without the implementation of an effective road transport quality system. This imbalance in the modal split has been a key contributing factor to high direct logistics costs in the economy. The disproportionate shift of freight to road has had many other perverse and costly impacts – the road freight industry (unlike Transnet Freight Rail) does not directly carry the cost of building and maintaining the public infrastructure it uses and this has resulted in an increase in road construction and maintenance costs, deteriorating road conditions, congestion problems and road collisions.

This report investigates South Africa’s road and rail infrastructure, including the country’s road and rail networks, maintenance and the challenges facing the sector, among others. For details as to the content of the report please click here! Source: Creamer Media

by Mike Poverello

Revisiting the national transit procedure – Part 2

You will recall a recent challenge by trade to SARS’ proposed implementation of mandatory clearance of national transit goods inland from port of initial discharge – refer to Revisiting the national transit procedure – Part 1.

First, some background

Now lets take a step back to look at the situation since the inception of containerisation in South Africa – some 30 years ago. Customs stance has always been that containerised goods manifested for onward delivery to a designated inland container terminal by rail would not require clearance upon discharge at initial port of entry. Containers were allowed to move ‘against the manifest’ (a ‘Through Bill’) to its named place of destination. This arrangement was designed to expedite the movement of containers from the port of discharge onto block trains operated by Transnet Freight Rail, formerly the South African Railways and Harbours (SAR&H) to the inland container terminal at City Deep. Since SAR&H operated both the national railway and the coastal and inland ports, the possibility of diversion was considered of little import to warrant any form of security over the movement of containers by rail. Moreover, container terminals were designed to allow the staging of trains with custom gantry cranes to load inland manifested containers within a ‘secure’ port precinct.

Over the years, rail freight lost market share to the emergence of cross-country road hauliers due to inefficiencies. The opening up of more inland terminals and supporting container unpack facilities, required Customs to review the matter. It was decided that road-hauled containers moved ‘in bond’ by road would lodge a customs clearance (backed with suitable surety) for purposes of national transit. Upon arrival of the bonded freight at destination, a formal home use declaration would be lodged with Customs. Notwithstanding the surety lodged to safeguard revenue, this has the effect of deferring payment of duties and taxes.

Diversification of container brokering, stuffing and multi-modal transport added to the complexity, with many customs administrations failing to maintain both control and understanding of the changing business model. Equally mystifying was the emergence of a new breed of ‘players’ in the shipping game. Initially there were so-called ‘approved container operators’ these being ocean carriers who at the same time leased containers. Then there were so-called non-approved container operators who brokered containers on behalf of the ocean carrier. These are more commonly known as non-vessel operating common carriers or NVOCCs. In the early days of containerisation there were basically two types of container stuffing – full container load (FCL) and less container load (LCL). The NVOCCs began ‘chartering’ space of their containers to other NVOCCs and shippers – this also helped in knocking down freight costs. This practice became known as ‘groupage’ and because such containers were filled to capacity the term FCL Groupage became a phenomenon. It is not uncommon nowadays for a single FCL Groupage container to have multiple co-loaders.

All of the above radically maximised the efficiency and distribution of cost of the cellular container, but at the same time complicated Customs ‘control’ in that it was not able to readily assess the ‘content’ and ownership of the goods conveyed in a multi-level groupage box. It also became a phenomenon for ‘customs brokers/clearing agents’ to enter this niche of the market. Customs traditionally licensed brokers for the tendering of goods declarations only. Nowadays, most brokers are also NVOCCs.  The law on the other hand provided for the hand-off of liability for container movements between the ocean carrier, container terminal operator and container depot operator. Nowhere was an NVOCC/Freight Forwarder held liable in any of this. A further phenomenon known as ‘carrier’ or ‘merchant’ haulage likewise added to the complexity and cause for concern over the uncontrolled inland movements of bonded cargoes. No doubt a disconnect in terms of Customs’ liability and the terms and conditions of international conveyance for the goods also helped create much of the confusion. Lets not even go down the INCOTERM route.

Internationally, customs administrations – under the global voice of the WCO – have conceded that the worlds administrations need to keep pace and work ‘smarter’ to address new innovations and dynamics in the international supply chain. One would need to look no further than the text of the Revised Kyoto Convention (RKC) to observe the governing body’s view on harmonisation and simplification. However, lets now consider SARS’ response in this matter.

SARS response to the Chamber of Business

Right of reply was subsequently afforded by FTW Online to SARS.

Concerns over Customs’ determination to have all goods cleared at the coast – expressed by Pat Corbin, past president of the Johannesburg Chamber of Commerce and Industry in last week’s FTW – have been addressed by SA Revenue Service.  “One of the main objectives of the Control Bill is the control of the movement of goods across South Africa’s borders to protect our citizens against health and safety risks and to protect the fiscus. “In order to effectively determine risk, SARS has to know the tariff classification, the value and the origin of imported goods. This information is not reflected on a manifest, which is why there is a requirement that all goods must be cleared at the first port of entry into the Republic.“It appears that Mr Corbin is under the impression that the requirement of clearance at the first port of entry has the effect that all goods have to be consigned to that first port of entry or as he puts it “to terminate vessel manifests at the coastal ports in all cases”. This is incorrect. “The statutory requirement to clear goods at the first port of entry and the contract of carriage have nothing to do with one another. Goods may still be consigned to, for example, City Deep or Zambia (being a landlocked country), but they will not be released to move in transit to City Deep or Zambia unless a declaration to clear the goods, containing the relevant information, is submitted and release is granted by Customs for the goods to move. The release of the goods to move will be based on the risk the consignment poses to the country.“It is definitely not the intention to clog up the ports but rather to facilitate the seamless movement of legitimate trade. If the required information is provided and the goods do not pose any risk, they will be released.”

So, where to from here?

The issue at hand concerns the issue of the ‘means’ of customs treatment of goods under national transit. In Part 3 we’ll consider a rational outcome. Complex logistics have and always will challenge ‘customs control’ and procedures. Despite the best of intentions for law not to ‘clog up the port’, one needs to consider precisely what controls the movement of physical cargo – a goods declaration or a cargo report? How influential are the guidelines, standards and recommendations of the WCO, or are they mere studies in intellectual theories?

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by Mike Poverello

Dry Ports – their growing role in international trade

Transnet Freight Rail

With rapid regional development of African port infrastructure and regional road corridors, the importance of inland multi-modal hubs is gaining traction. Increasing inter-African port competitiveness, with some countries happy to liberalize their economic trade engagements for increased foreign direct investment will put pressure on traditional emerging economies. In recent weeks there have been several public utterances concerning South Africa’s perceived demise as the ‘gateway to Africa’.

“If a gateway is supposed to be a transmission belt between global and regional markets and production facilities, the question should be whether South Africa can use its physical and material infrastructure to fulfil a connecting function between Africa and the rest of the world”, says Peter Draper senior fellow at the South African Institute for International Affairs. 

Global player General Electric recently chose Nairobi as its sub-Saharan hub – following companies like Coca Cola, Nestle and Heineken – and it based its decision partly, say trade academics, on South Africa’s unpredictable policy environment. With the rehabilitation of the East and West Coasts of Africa, some of it by resource companies needing to find more convenient export routes, trade patterns are starting to change in the region. In time, it is likely that Durban will be just one more port handling regional trade, rather than the main one.

A dry port is generally a rail terminal situated in an inland location with rail connections to one or more container seaports. Container freight trains run excursions between the seaports and the dry port, on a service timetable that is integrated with the schedules of the container ships arriving at the seaport.

Seaports have grown larger as world trade has increased, and they now lack space to expand and are restricted by congestion on the various routes into the port. While the access to the port from the sea may be highly efficient, with radar-guided systems for tracking the ships and sophisticated ship-to-shore facilities for speedy loading and unloading, land routes out of the seaport can be slow and congested.

The road and rail links are often too congested and inadequate to deal with the traffic from the port. This problem can be eased by a dry port consisting of rail and multi-modal terminals situated inland from the seaport.

In many instances, particularly in South Africa, port facilities are in close proximity to the center of the city, because historically the city grew up around the port. This means that road traffic both to and from the port has to make a circuit through the city along congested motorways or smaller roads. This problem can partially be overcome by the more efficient use of existing rail links to move the freight from the quayside to an inland dry port. The last two decades saw a decline in the ability of the rail service to meet increasing dry port to seaport needs. Over utilization of road transport not only deteriorates the roads but causes significant bottlenecks at sea port terminals.

The infrastructure available at the dry port is similar to that of a seaport in terms of the logistics and the facilities for importers and exporters. The dry port is equipped to handle cargo and transfer freight to warehouses or open storage.

Development of dry ports has become possible owing to the increase in multi-modal transit of goods utilising road, rail and sea. This in turn has become increasingly common due to the spread of containerisation which has facilitated the quick transfer of freight from sea to rail or from rail to road. Dry ports can therefore play an important part in ensuring the efficient transit of goods from a factory in their country of origin to a retail distribution point in the country of destination. Source: AllAfrica.com

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