Archives For Transnet

AfricaMap_SADCThe following article titled ‘Cross-border projects dependent on cost’ was recently published by Transport World Africa. It deals essentially with cross border logistics and provides an insight into regional infrastructure and logistics projects – successes, failures and their impact on transport logistics. It emphasizes the need for greater and closer public and private partnerships, but alas sovereign states appear to be more focused inwardly on their domestic affairs. 

Implementers of projects have the knack of focusing on what they know very well, often leaving out what they do not know. Usually, this comes back to bite them. An example is in the integration of leadership. Countries in the Southern African Development Community (SADC) region compete with each other for demand and capacity provision, which results in the inflated cost of logistics.

Rather, countries should work together. Integrating ports and funding is relatively easy. What is not available is integrated leadership in the region (excluding heads of various states), agreeing that SADC is ‘one country’. Logistics planning is still done at the country level, which is not practical, because then supply chains are being developed that are competing with each other. The sector should be cautious about acceleration, and about what is funded. One example is Transnet, whose plans should fit into regional plans, but right now they do not.

The softer issues in project development often go ignored, but they are at times the most important. There should be a halt to focusing mainly on mega-projects, since they take time and money, as well as resulting in complications (excluding Grand Inga). Despite this, mega projects do create a common vision for a region. Do sponsors have the capacity to support these projects? Institutional capacity is certainly needed. At the political level, southern Africa has done well, top–down approaches are there, but things go off course when there is the attempt to get others to plug-in to this.

One-stop border posts are very important. It was cautioned that the region must be careful not to follow the architecture of colonial extraction, which means focusing on intra-Africa trade rather than too great a focus on ports and exports. Government and private sector must both drive natural winners and losers in markets. There is sufficient funding and policies, but project preparation is limited. What is needed is to decide how to make hubs of excellence, and decide who is going to do what.

The high-level work has been done, but now the sector is facing an implementation challenge. Governments do not do regional integration very well. The private sector does the regional integration, and they suffer most when it does not work. Regional infrastructure will not happen unless there is public support for it. The most successful cross-border project was a PPP: the M4 toll road. This had a large economic impact.

Also, the Port of Maputo has been successful in generating income. Ports without land side integration are useless. Projects need a soft-issue mediator; otherwise there are great ideas, but no implementation. The private sector should not see itself as a messiah, but should rather have a sense of responsibility for developing supply chains. There needs to be a clear understanding of soft issues, clear legal and policy understanding, and communication. SADC has been driving the implementation of harmonisation of vehicle load management for twenty years. A mediator between the public and private sector (such as Maputo Corridor Logistics Initiative (MCLI) is absolutely necessary.

It is a stark reality how little intra-African trade there is. To address this there should be a clear target for development in future. In Namibia, there are efforts to focus on the positives in regards to transport development, even with limited resources. Namibia has been independent for 25 years; 15 years ago the Walvis Bay Corridor was created as a focus on regional integration and regional development. There are 2.2 million people in Namibia, which means a small economy.

There is no real choice but to take into consideration the region and recognise the value Namibia can add. In regards to planning, in 1995 it developed its first transport master plan, and in 2014 it developed its second transport master plan (this was twenty years apart). In February 2015, it developed a logistics master plan to develop Namibia into a logistics hub in the region. It has focused on transport modes because it has a port emphasis. It started roads development.

Currently, Namibia is building its first dual-carriage road (65 km), which is a big step for such a small economy. It would like to do more with sufficient funding. Namibia is also looking into what to do with aviation. As a whole, the country is trying to develop as an alternative trade route for southern Africa. Five to seven years ago, Walvis Bay was just a fishing port, but now R500 million is coming into Namibia’s economy through this post (from zero rand 10 years ago). Namibia is trying to create a better alternative in the SADC region. Now it is looking to focus on developing the manufacturing sector. Namibia is working with South Africa to develop partnerships (excluding transport corridors to production corridors). Continue Reading…

Artistic impression - Durban Dig-out Port

Artistic impression – Durban Dig-out Port

An international ports expert has expressed serious reservations about Durban’s proposed dig-out port. He said plans for a dig-out port should be put on hold, with efforts rather directed at maximising the existing facilities and potential at Durban Harbour.

International adviser and expert on port development Jamie Simpson, of Canada, has warned Transnet and the eThekwini Municipality against pursuing the dig-out port, saying the current port has to “keep going”. Simpson was a guest speaker at a ports and cities dialogue with Durban businesses, hosted by the municipality’s Edge (Economic Development and Growth eThekwini) at the Moses Mabhida Stadium yesterday. His point of view was supported by two other speakers.

However, Transnet group strategy general manager Irvindra Naidoo was adamant that the parastatal was forging ahead with the project, saying Durban was “running out of capacity” and had to expand.

Naidoo said: “The question was: ‘Okay, do we now go off somewhere else and develop a new maritime cluster around Richards Bay or somewhere else, or do we try to embed or strengthen the cluster… (by extending) the Durban port?’ That’s what this dig-out port really is about. It’s an extension of an existing cluster.”

The port, the continent’s busiest, caters for 2.6 million TEU (twenty-foot equivalent units) a year. These result in about 8 000 daily container-related heavy vehicle movements around the Bayhead area. Transnet has repeatedly said that the port will battle to provide the capacity for future demand.

Naidoo said with a dig-out port at the old Durban International Airport site, the containers could reach 8.2 million TEU by 2040, resulting in about 17 500 heavy vehicle movements daily in the South Durban Basin.

Simpson told the panel that the move “might not be a very good solution”. He said: “In view of the likely availability of financing – a lot of uncertainty – I think the port has to keep going and develop a capital investment plan and operational improvement plans to meet demand in the next five to 10 years.”

From there, he said, the parastatal could “weigh up” whether a bigger port “makes sense in view of market conditions… and availability of finance at the time”.

The first phase of construction of the dig-out port was expected to start between 2021 and 2025. A pre-feasibility study started in 2013. To read the full article click here! Source:

Old Durban airport - site for new Dig Out Port (Picture credit: ACSA)

Old Durban airport – site for new Dig Out Port (Picture credit: ACSA)

The first phase of Durban’s dig-out port, which was expected to generate hundreds of jobs and turn the city into the shipping hub of Africa, would not be ready by 2020 as planned, and the current harbour might have to be expanded to provide a short-term solution. This emerged at a KZN Freight Task Group meeting recently where Transnet dig-out port programme director Marc Descoins admitted that a new completion date was being investigated.

‘The actual start date of the new port is uncertain as we are still in the early design phase,’ Descoins said last night. Technical issues, such as the requirements for the construction of a new single buoy mooring to replace the existing one, were affecting timelines. Other factors affecting the development were being re-examined, but Descoins did not give further reasons for the delay.

Transnet was still tracking demand forecasts to ensure that capacity creation was aligned to demand, he said. Nevertheless it had other plans for port expansion to ensure capacity met this demand. If an alternative could be found to expand the capacity of the port, the dig-out port project at the old airport site could be set back by a few years, he said.

However, a previously discussed option – the expansion of the current port into the Bayhead area – was ruled out by Descoins, as complex problems involved in developing the area as an additional container terminal would take at least 15 years to resolve. Engineering and technical businesses in Bayhead did not appear shocked at the news yesterday, saying they knew expansion in the area would not happen.

One of the most seriously considered – and quickest – options would be for the container terminal on Pier 1 to be expanded in the direction of Salisbury Island. This would also provide Durban with increased container capacity. A decision on this could be made soon, but if this option was decided on, the dig-out port might be even further delayed as Transnet would not develop both projects and create unnecessary capacity in the short term.

However, the dig-out port project would not be cancelled, and preparations at the old airport site would continue, Descoins said. Transnet had warned that without the dig-out port Durban would not be able to meet medium- and long-term shipping capacity demand. The project would increase the volume of container trade at the Port of Durban from the current 2.69 million twenty-foot equivalent units (TEUs) to between 9 million and 12 million TEUs over 30 years.

Durban was also the first choice for a port upgrade because of its good infrastructure, although the road and rail systems need to be considerably upgraded. Completion of the feasibility study was scheduled for the end of 2015 followed by a four-year construction phase. The first ships were expected to come into the port in 2020. For this to have been achieved groundwork would have had to begin by the end of 2016. Transnet bought the old airport land in 2012 for R1.85 billion. Building the port was expected to cost R75bn to R100bn over the next 30 years.

Desmond D’Sa, chairman of the South Durban Community Environmental Alliance, was pleased with the delay, but said the project should be abandoned.

‘Why do we even need another port? It is only going to become another white elephant like the Coega Industrial Development Zone in the Eastern Cape.

‘This is all about people with big pockets, and the extra time will only allow corruption.’

Durban Chamber of Commerce and Industry chief executive Andrew Layman said imports and exports from the harbour were not accelerating as much as expected.

‘This is reflected in the international trading market. South Africa is not the flavour of the month.’

There had always been plans for expansion of the current harbour, he said.

‘This is because ships are bigger these days – it needs to be deepened and widened. So I don’t think it is a case of one or the other.

‘The need for the dig-out port is not as imminent as originally thought, and money is probably not as readily available either.’

Layman said it was not ‘a train smash’ as jobs had not been created yet, but it was unfortunate that job creation would be delayed.

‘It is understandable that it would be further delayed in the current climate.

‘It would be pre-emptive to start construction as the system still needs a lot of work, such as our tariffs, which are higher than most ports around the world, and our service delivery.’ Source: The Mercury

Related articles

5_triple-eFormer Head of Germanischer Lloyd and one of the first in the world to predict the arrival of 18,000 TEU ships, anticipates that container ships will eventually exceed 400m in length and will go beyond 19,000 TEU. “There is no technical limitation,” said Dr. Klein . But first, the ports need to be ready to handle the next generation of container ships. Although ship designers have been talking about vessels with a capacity up to 24,000 TEU, indications are that shipping lines were not looking beyond 19,000 TEU vessels as at present.

According to Ocean Shipping Consultants (OSC), a British firm of shipping consultants, preparations for 24,000-TEU sized ships are already underway and the first could be on the building blocks as early as 2016. Ships of this capacity, which is 5,000 TEU bigger than the Triple-E class, would be 430m in length and 62m in width but with a draught not exceeding 16m. OSC says that technical feasibility studies show that at-sea costs for a 24,000 TEU vessel would be 23.1% lower than that of a 12,500 TEU vessel and 17.4% lower than that of a 16,000 TEU vessel.

As reported by Ports & Ships, the appearance of these supersized ships will herald a surge in transshipment activity, which will have a detrimental effect on port terminal operators and ports alike which would have to cope with sudden increases in container activity. This would compound onto road and rail activity as well, placing further burdens on already creaking logistical systems. According to Transnet capital projects Marc Descoins, project director for the new Durban Dig Out Port, calculations that include ships of up to 22,000-TEU capacity have been factored in.

“Ships of this capacity won’t immediately be coming to South African ports,” he told Ports & Ships this week, adding that in consultation with Drewry, Transnet was advised that eventually the Triple-E class would cascade down onto North-South routes and that it would be wise to factor these in. “Our planning includes the likelihood that eventually ships of up to 22,000-TEU can be expected, so the new port will cater for this.”

Further afield – Remote-controlled ships: Can they be the future? Visualise a cargo ship with no crew and no bridge, operated remotely by a captain from a cabin on dry land. It could happen within a decade, believes the Vice President of Innovation in Marine Engineering and Technology at Rolls-Royce Holdings LLC. The technology solutions aren’t in place yet, but all the pieces are there. It is a matter of developing the technology and putting it together into systems. Rolls-Royce has been working on designs for remote-controlled cargo vessels as a first step toward overcoming widespread industry scepticism.

The European Union is funding a $ 4.8 million research project to study the feasibility of a ship operating autonomously until it nears port and a crew is taken aboard. The project, Maritime Unmanned Navigation through Intelligence in Networks, has the acronym MUNIN. In Nordic mythology, Munin was the raven sent out daily to fly around the world to gather information or the God Odin. For now though, remote-controlled cargo ships remain for beyond the horizon, unmanned ships may be technically possible, but they don’t fit a legal and regulatory environment that’s taken centuries to develop and would take years to change. Source: Ports & Ships and the Financial Times

South African Port Hanbook [SAOGA]Following a successful SAOGA (South African Oil & Gas Alliance) has launched the second edition of the South African Port Handbook at the Offshore Technology Conference in Houston during the first week of May 2014. The book is available in a user-friendly .pdf format on the internet. To view the online version in an e-book format please click the hyperlink – SA Port Handbook. For a downloadable (.pdf) version of the book please visit SAOGA’s website.

Rapid progress is being made on a multimillion rand contract awarded by Transnet Capital Projects to Concor Civils for the construction of new concrete paving, civil services and electrical lighting at its City Deep Container Terminal. The terminal is currently being upgraded as part of Transnet’s rolling capital investment programme.

The container terminal at City Deep is known to be the largest “dry port” in the world and the City Deep area has been declared an IDZ (Industrial Development Zone) by the Gauteng government. (?)

The contract is scheduled for completion in May 2014 and includes the removal of 36 500 m3 of existing concrete paving, 110 000 m3 of earthworks, the installation of a new drainage system and all service ducting and manholes for lighting, fire mains, CCTV equipment, 360 t of mesh reinforcing and the placing of approximately 146 000 m2 of concrete paving.

The Concor Civils team is making use of as many emerging contractors as possible to supply services such as pipe laying, ducting and manholes and has undertaken to employ about 90 general workers at peak from the local community at a cost of some R10 million. These temporary workers will be given on the job training in basic technical skills, as well as in life skills. Source: Transport World Africa

THE FIRST two of 95 Class 20E dual-voltage electric locomotives being supplied to Transnet Freight Rail (TFR) by the CSR E-loco supply consortium was transferred from the port of Durban to the nearby depot at Umbilo on November 14 for commissioning.

The first 10 locomotives are being built by CSR Zhuzhou Electric Locomotive in China, while the remaining 85 units will be assembled in South Africa by Transnet Engineering. CSR is a 70% partner in CSR E-loco Supply, with local partner Matsetse Basadi holding the remaining 30%. The contract specifies a target of 60.5% for localised content.

The 3MW Class 20E is equipped for operation on 25kV ac and 3kV dc electrification systems and will be used by TFR’s general freight business.

Transnet says the two locomotives have been delivered a month earlier than expected, and it expects a second consignment of four units to arrive in South Africa next month. Source: (Pictures credits: FTW Online, and various)

Container vessel outside the Port of Cape Town

Container vessel outside the Port of Table Bay, Cape Town, South Africa. (Picture and article – Maritime-Executive)

A Port Control ships Pilot was set to be airlifted by helicopter to the ship and the ship will be moved to the Container Docks in the Port of Table Bay where they will be met by Cape Town Fire and Rescue Services who will board the ship to fight the blaze.

A (National Sea Rescue Institute) NSRI rescuer, Gavin Kode, was transferred onto the ship to make an evaluation and confirmed that no crew are injured and that they are The 222 meter fully laden container ship LILAC reported a fire in one of their holds, 1 nautical mile off the Port of Table Bay in South Africa on 28 September, with a total of 21 onboard.

The ship’s captain reported that his crew was fighting to contain the fire, and that at this stage he was not declaring an emergency. A ship’s officer reported that they were fighting the blaze with Co2 fire equipment.

The National Sea Rescue Institute (NSRI) deployed 4 rescue vessels, and remained close to the ship as a precautionary measure. On their arrival, light white smoke could be observed coming from the ship.

LILAC confirmed to the JOC (Joint Operations Control at the Transnet National Ports Authority) to allow an NSRI rescuer and a Cape Town Fire and Rescue Services engineer onboard the ship to make an assessment. Transnet National Ports Authority is requesting that the type of blaze be identified, any chemical fall out risk to be identified and then to assess the feasibility of having the ship brought to a mooring at Port where Fire and Rescue teams can board the ship to take over fighting the blaze and to contain the situation. Source: Maritime-Executive


SARS chief officer of legal and policy Kosie Louw (Picture: Robert Botha/Business Day Live)

SARS chief officer of legal and policy Kosie Louw (Picture: Robert Botha/Business Day Live)

The South African Revenue Service (SARS) has committed itself to further engagements with importers of all sizes in a bid to improve its proposals to transform the customs control regime.

Consultations have already taken place with organised business on the proposed Customs Duty Bill and the Customs Control Bill, and the process would now be taken to the level of traders to find out whether the proposals presented them with any problems. Amendments have also been proposed to the Customs and Excise Act to provide for the transition to the new system.

“We want to understand the situation at a micro level. We will sit around the table until we find a solution which will guarantee to us that we get the information we require but which will also facilitate trade.

“We do not want to clog up the ports,” SARS chief officer of legal and policy Kosie Louw said in an informal briefing on the proposals to Parliament’s standing committee on finance on Wednesday.

The customs bills are mainly concerned with improving the information about imported and exported goods so that customs officials can exercise greater control.

Business has expressed concern that the requirement of the Customs Control Bill that they submit a national in-transit declaration of goods at the first port of entry before they are sent to internal terminals, or depots such as City Deep, would cause delays.

The new declaration — of the nature, value, origin and duty payable on the goods — would replace the limited manifest used to declare goods and would include information on the tariff, value and origin of goods.

Business has argued that the manifest allowed goods to move seamlessly from the exporting country to the inland port or depot, and would change the contractual relationships between exporter and importer in terms of when duty is paid.

However, Mr Louw did not believe the provision would cause delays and had obtained legal advice that the contractual relationships and method of payment of duties would not change. The problem with manifests, he said, was that they provided very limited information and did not allow SARS to prevent the inflow of unwanted goods. Nevertheless, he said that SARS would discuss the matter with traders.

Mr Louw said the proposed system would “improve SARS’s ability to perform risk assessment and intervene in respect of potentially high risk, prohibited and restricted consignments at the ports”.

The bills have been in the pipeline for about four years and have been extensively canvassed with the Southern African Customs Union and business. They were needed, Mr Louw said, so that South Africa kept pace with global trends in trade, international conventions and advances in technology.

Anti-avoidance provisions have also been introduced into the bill which sets out the offences and associated penalties for noncompliance and attempts to avoid paying customs duties.

SARS group executive for legislative research and development Franz Tomasek said the Customs Control Bill would introduce a new advance cargo loading notice for containerised cargo to prevent the loading of prohibited or restricted goods on board vessels bound for South Africa. However, to reduce the administrative burden on carriers, information submitted in advance will no longer be required on arrival or prior to departure. Source: Business Day Live


Inefficiency of road freight transport is one of the primary factors that hamper the economy of sub-Saharan Africa. Long delays experienced at border posts are the single biggest contributor towards the slow average movement of freight. Cross-border operations are complicated by the conflicting security objectives of customs and border authorities versus efficiency objectives of transport operators. It furthermore suffers from illegal practices involving truck drivers and border officials. In theory the efficiency of cross-border operations can be improved based on the availability of more accurate and complete information – the latter will be possible if different stakeholders can exchange data between currently isolated systems.

Cross-border trade basically comprises 3 distinct but interlinked layers –

An information layer – in which various trade documentation (purchase order, invoice), cargo and conveyance information (packing list, manifest), customs and government regulatory data (declaration, permits) are exchanged between various supply chain entities and the customs authority. These primarily attest to the legal ownership, contract of carriage, reporting and compliance with customs and other regulatory authority formalities (export and import), and delivery at destination.

A logistics layer – for the collection, consolidation, sealing and conveyance of physical cargo from point of despatch via at least two customs control points (export and import), to deconsolidation and delivery at point of destination.

A financial layer – which refers to the monetary exchange flow from buyer (importer) to seller (exporter) according to the terms and conditions of the sale (INCOTERMS). Hmm… no, this does not include ‘bribe’ money.

All three layers are inter-linked and prone to risk at any point of a given transaction. There is also no silver bullet solution to secure supply chains. Moreover, it is a fallacy that Customs and Border Agencies will ever conquer cross-border crime – simply because there are too many angles to monitor. Furthermore, in order to set up cross—border information exchange and joint enforcement operations it is both legally and politically time-consuming. Criminal elements are not hampered by these ‘institutions’, they simply spot the gaps and forge ahead.

One of the areas requiring customs attention is that of chain of custody. In short this implies the formal adoption of the World Customs Organisation’s SAFE Framework principles. Each party with data that needs to be filed with the government for Customs and security screening purposes has responsibilities. Those responsibilities include –

  • Protecting the physical goods from tampering, theft, and damage.
  • Providing appropriate information to government authorities in a timely and accurate manner for security screening purposes.
  • Protecting the information related to the goods from tampering and unauthorized access. This responsibility applies equally to times before, during and after having custody of the goods.

Tenacent RFID Tag

Tenacent RFID Tag

Security seals are an integral part of the chain of custody. The proper grade and application of the security seal is addressed below. Security seals should be inspected by the receiving party at each change of custody for a cargo-laden container. Inspecting a seal requires visual check for signs of tampering, comparison of the seal’s identification number with the cargo documentation, and noting the inspection in the appropriate documentation. More recently the emergence of certain e-seals and container security devices (CSDs) contribute even further to minimizing the amount of ‘physical’ verification required, as they are able to electronically notify the owner of the goods or government authority in the event of an incidence of tampering.

White Paper - GPS-RFID systems for cross-border management of freight consignments

White Paper – GPS-RFID systems for cross-border management of freight consignments

A group of South African specialist engineers have been working closely with transport authorities, logistics specialists, defense experts and customs authorities across the globe. Their e-seal is patented in no less than 16 high volume countries. It is produced in Singapore, China and Indonesia depending on politics, free-trade agreements and demand. May move some to Brazil and US in time. Proof of concept (POC) initiatives are currently underway in Brazil for rail cargo, US Marine Corps for their p-RFID program and other Department of Defense divisions in the USA, and will shortly be included in one of the GSA agreements making it available to any government department in the US. Further adrift, the e-seal is also currently enjoying interest in Guatemala, Mexico, Canada, Panama, Jordan, Italy, Spain, and Malaysia. Here, in South Africa, a POC was conducted at the 1st autogate at Durban Container Terminal, funded by the North West University, and overseen with successfully achieved objectives by Transnet Port Terminals. For technical details of the RFID seal, click here!

With much anticipated success abroad, how much support will this product attain in the local and sub-Saharan African scene? Government authorities, as well as logistics and supply chain operators are therefore encouraged to study the enclosed ‘white paper’ – Click Here!. It firstly quantifies the size of the problem and estimates the potential economic benefits that will be created by improved cross-border operations. It then proposes a combined GPS/RFID system that can provide the required level of visibility to support improved operational management, resulting in a simultaneous increase in the security and efficiency of cross-border freight operations. A brief cost-benefits analysis is performed to show that the expected benefits from such a system will by far exceed the costs of implementation. Source: Tenacent & iPico

Old Durban airport - site for new Dig Out Port (Picture credit: ACSA)

Old Durban airport – site for new Dig Out Port (Picture credit: ACSA)

Transnet has concluded the first in a series of early stakeholder engagement sessions with local organisations on the proposed Durban dig-out port project. If built, the new port will be to the south of Durban on the site of the former Durban International Airport and 15 minutes by car from the existing port. It has been proposed that it will consist of 16 container berths, three Ro-Ro berths for the automotive business, and several oil and product tanker berths.

The engagement sessions just concluded form an integral part of the project’s concept phase which includes the development of a Sustainable Port Development Framework (SPDF) that will inform all future designs as well as operations. Transnet commenced with high-level technical and environmental studies in 2012 as part of the proposed Durban dig-out port project process. The current concept phase is scheduled to conclude in July this year, and comprises the generation of a number of technical design options.

The engagement sessions involved key representatives from local business, property, environmental and civic associations who met in order to comment on a discussion document which was distributed to them in mid-February 2013. The discussion document included important information on the background to, and process involved in, validating the viability of constructing a major container port on the site of the old Durban International Airport.

The sessions were held at various public venues and were facilitated by an independent sustainability consultancy. All feedback obtained during the engagement sessions was captured and will be factored into the development of the SPDF which will ensure the effective implementation of sustainability objectives throughout the life cycle of the proposed port project.

Along with promoting the long-term sustainability and operational excellence of the port, the framework also seeks to integrate environmental and social principles into the planning process. The series of engagement sessions, which will continue throughout the project’s lifespan, will also form part of the Department of Transport’s requirement for engagement during the strategic level environmental assessment as part of the legislative requirement for the promulgation of the port.

The process of moving from the current concept phase through the pre-feasibility and feasibility phases, and finally to actual implementation is anticipated to take approximately four years. The next phase, which is the pre-feasibility phase, is expected to proceed in July this year when the viability of the preferred design option will be thoroughly investigated.

The proposed port forms a key pillar of Government’s Strategic Integrated Projects (SIPs) to upgrade the Durban-Free State-Gauteng Freight Corridor (otherwise known as SIP2 in the National Infrastructure Plan). Source:

Trucks at Transnet Freight Rail's City Deep Terminal (Engineering News)

Trucks at Transnet Freight Rail’s City Deep Terminal (Engineering News)

Following up on last year’s meeting (click here!) of the minds, convened by the JCCI, a recent meeting in Johannesburg placed fresh emphasis on the dilemma which impending changes contemplated in Customs Draft Control Bill will have for the import and logistics industry in particular. The following report carried by Engineering News highlights trade’s concerns which are by no means light weight and should be addressed with some consideration before the Bills come into effect. Gauging from the content below, there is a clear disconnect between business and policy makers.

The closure of Johannesburg’s inland port seemed to be a “done deal” as Parliament deliberated the recently tabled Customs Control Bill that would leave the City Deep container depot invalid, Chamber of Commerce and Industry Johannesburg (JCCI) former president Patrick Corbin said on Friday.

The promulgation of the South African Revenue Services’ (Sars’) newly drafted Customs Control Bill, which, in conjunction with the Customs Duty Bill, would replace the current legislation governing customs operations, would have a far-reaching impact on the cost and efficiencies of doing business in South Africa and other fellow Southern African Customs Union (Sacu) countries, he added.

The Bill, which was the product of a three-year development process within the National Economic Development and Labour Council, declared that all imported goods be cleared and released at first port of entry. This was part of efforts by customs officials and government to root out any diversion and smuggling of goods, ensure greater control of goods moving across borders and eliminate risks to national security.

Speaking at the City Deep Forum, held at the JCCI’s offices in Johannesburg, Corbin noted, however, that City Deep had operated as an inland port for the past 35 years, easing the load on the country’s coastal ports, which were already strained to capacity. Despite customs officials assuring the chamber that the operations and facilities in City Deep/Kaserne would retain its licence as a container depot, he believed customs had failed to recognise the critical role City Deep had played in lowering the cost of business, easing the burden on South Africa’s ports and ensuring ease of movement of goods to neighbouring countries. As customs moved full responsibility of container clearances to the ports, port congestion, inefficiencies, shipping delays and costs would rise, and jobs would be lost and import rail volumes decreased, he noted.

Economist Mike Schussler added that the closure of the City Deep inland port operations would add costs, increase unreliability and induce “hassles”, as the Durban port did not have the capacity to handle the extra volumes and its productivity and efficiencies were “questionable” compared with other ports.

“The volume of containers going to overstay or being stopped for examination in City Deep [will] need to be handled by [the coastal] ports. If they can’t cope with the volume at the moment, how are they going to handle increased volumes,” Iprop director Dennis Trotter questioned. He noted that only the containers cleared 72 hours prior to arrival would be allocated to rail transport. Those not cleared three days before arrival would be pushed onto road transport to prevent blocking and delaying rail operations.

This, Schussler said, would also contribute – along with port tariffs and the cost of delays – to higher costs, as road transport was more expensive than rail.

He pointed out that South Africa was deemed third-highest globally in terms of transport pricing. It would also result in less rail capacity returning for export from Johannesburg, further leading to increased volumes moving by road from City Deep to Durban.

Sacu countries, such as Botswana, would also be burdened with higher costs as they relied on City Deep as an inland port. Trotter noted that the region would experience loss of revenue and resultant job losses. Over 50% of South Africa’s economy was located closer to Gauteng than the coastal ports. Johannesburg alone accounted for 34% of the economy, said Schussler, questioning the viability of removing the option of City Deep as a dry port.

However, unfazed by the impending regulations, Transnet continued to inject over R1-billion into expansion and development opportunities at City Deep/Kaserne. Corbin commented that Transnet had accepted the assurances from customs that “nothing would change and the boxes would still be able to move seamlessly once cleared.” The City of Johannesburg’s manager of transport planning Daisy Dwango said the State-owned freight group was ramping up to meet forecast demand of the City Deep/Kaserne depot.

The terminal’s capacity would be increased from the current 280 000 twenty-foot equivalent units (TEUs) a year, to 400 000 TEUs a year by 2016, increasing to 700 000 TEUs a year by 2019. Transnet aimed to eventually move to “overcapacity” of up to 1.2-million TEUs a year. Dwango said projections have indicated that by 2021, the City Deep/Kaserne terminals would handle between 900 000 and one-million TEUs a year. Source: Engineering News

Debate or Mitigate?

March 13, 2013 — Leave a comment

City Deep1_SnapseedBrowsing my various sources of news I came across this article featured in the FTW Online a few weeks ago. It prompted me to post it as an item for some detailed discussion in a follow-up post. Many followers have enquired what happened to my discussion on Inland Ports and the National Transit procedure. I guess it’s now time to respond, but not just yet – perhaps after what materializes at the event below.

What will be the impact of the new Customs Bill on City Deep’s inland port status?
This is the issue to be debated at a JCCI event scheduled for March 15. “The Johannesburg Chamber has been closely involved with City Deep, our international gateway for containerised cargo, for the past 36 years,” says the JCCI’s Pat Corbin. “We have actively promoted the benefits for traders of a combined transport (multi-modal) bill of lading allowing seamless movement through the coastal ports.

“But diametrically opposed developments are taking place which could have far-reaching impact on not just the future of the dry port, the supporting logistical suppliers and local employment, but also the coastal ports and the transport mode for inland movement.”

The event will examine Transnet’s major investments in City Deep and the Durban corridor, SACD’s expanded facilities and services, and the Customs Bill – with its intended removal of inland port status. Source: FTW Online

cargo-container-shippingThe Ports Regulator of South Africa will soon announce anew port tariffs structure that will include a cut of about 40% in the tariff on exported containers. This step is part of the Transnet National Ports Authority‘s strategy to reduce South African port charges, which are seen as among the highest in the world, because it erodes the competitiveness of South Africa’s exports.

This announcement was made during a colloquium on the impact of administered prices on the manufacturing sector. The purpose of the colloquium was to get all the stakeholders together to try and find a solution to the challenges. It had become clear that the stakeholders did not have a regular opportunity to engage on the issue of administered prices.

In addition to the new tariffs, the authority is proposing a reworking of its tariff structure, which if accepted by the regulator, will see higher charges for bulk commodities, up to 68%. South African port tariffs were at least 8.7 times more than the global average for containers and 7.4 times the global average for automotive cargo.

Transnet’s CEO said the shift in the tariff burden was aligned with the government’s manufacturing growth strategy. The mining sector had been hugely subsidised by a tariff structure weighted in favour of raw exports, at the expense of the manufacturing and agricultural sectors. Department of Trade and Industry has also welcomed the expected tariff reduction, saying it would be a major boost for exporters. 

One would therfore like to believe that these tariff reductions will be extended to agriculture and agro-processing. Hopefully ocean carriers will not see this as an opportunity to increase their tariffs!

Durban_Harbour_Photo Hi-ResA tad of nostalgia? No, this is relevant and historic. Look what Africa’s busiest seaport looked like 60 (or more) years ago. I am very grateful to Lois Crawley and Cecil Gaze (fellow customs colleagues in Durban) for sharing these historic gems. For purposes of contrast see the modern-day harbour (above). Real estate in the harbour area is in short-supply and significant operational expansion over the last 10 years has placed huge strain on the road and rail networks and the surrounding industrial areas. In recent times the expansion of containerised handling facilities has radically affected the traffic flows, even in nearby residential areas such as the Bluff. With increasing demand for premium containerised port handling facilities, the old Durban airport has been sited for development of a new port, perhaps the biggest and most ambitious construction project yet in South Africa. While one can marvel at the development over what is a relatively short period of time (a generation), spare a moment and view the seemingly archaic slideshow of Durban harbour purportedly between 1940 and 1960 – which some amongst us can even remember. Enjoy!

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