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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: www.railjournal.com (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: Ports.co.za

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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English: Spoornet Class 18E Series 1 18-503

Transnet Class 18E Series 1 18-503 (Photo credit: Wikipedia)

One of Transnet’s many faults (it has many good points too) is that it keeps changing its branding. For about 60 years just about everyone was familiar with the South African Railways & Harbours or SAR&H or its Afrikaans equivalent – well, okay, maybe not so happy with the absolute monopoly but we all knew the name and what it represented. Then for some reason the SAR&H was evolved into SATS – South African Transport Services but soon that wasn’t good enough and the group became Transnet, with its various offshoots and divisions.

One of these that we all remember was Portnet – which actually wasn’t a bad choice for the old Harbours Service. But still not satisfied with things, someone decided that Portnet must be absorbed back into Transnet with the divisions taking on separate identities – Transnet National Ports Authority (TNPA) and Transnet Ports Terminals (TPT). Lest we forget however, in between we had South African Ports Operators (SAPO) whose acronym clashed with that of the South African Post Office.

Nor was the railways spared this confusion in the haste to rebrand. It became Spoornet, a name which surprisingly stuck in the early days of post-1994. But eventually that had to change, becoming Transnet Freight Rail as the division went about attempting to convince itself that it could survive as a main line carrier of freight only – no more parcel trains and definitely no more branch lines.

Another of the older divisions to suffer this loss of identity was the old workshop division, well established at places like Germiston, Salt River, Durban, Pretoria, Bloemfontein, Uitenhage and so on. Those that weren’t shut down or emasculated became Transwerk –again a name that surprisingly hung around for longer than expected. But change comes to all and Transwerk evolved into Transnet Rail Engineering, or TRE by its acronym – another of those habits we seem fascinated with.

And now, once more the passion for name-changing has taken hold. The engineering business is now called Transnet Engineering (TE), which we are forced to admit is actually quite a good choice for a change. In fact, we wonder, why on earth wasn’t it called that in the first place? (Source: Ports.co.za)

All of the above pales into insignificance when compared to the embarrassing realisation of the acronym for the South African Border Police’s division – Port Of Entry Security!

Artistic impression – Durban Dig-out Port

Freight and Trade Weekly (FTW) reports that a team has been assembled to sort out the funding for the new dig-out port on the old Durban International Airport site (FTW November 9, 2012) – a project that represents a potential major shot in the arm for the economy of the region and the country. The consortium is composed of the well-known Dutch port consultants, MTBS; the highly respected international engineering firm, Arup; and Durban-based lawyers,Van Velden Pike Incorporated, in association with Nichols Attorneys.

This consortium is to act as transaction advisers to Transnet, on what is, according to government, likely to be SA’s flagship public/private sector partnership initiative.That will be part of the team’s studies, according to Andrew Pike, partner in Van Velden Pike. However, the study, although started, is still very much in pre-feasibility stage, and there is obviously still no firm comment to be made on what direction the public/private element will take, he told FTW.

Further abroad, AECOM has announced (Oct 2012) that Transnet has awarded the company a US$3.4-million contract to initiate the design of the Durban Dig Out Port in South Africa. AECOM’s has experience delivering creative design services for major ports around the world, such as the New Port Project in Doha, Qatar. As part of the contract, AECOM will provide concept and pre-feasibility design services for the new port and container terminals, including all associated infrastructure relating to its operation. A critical aspect of the design will be ensuring the sustainability of the port throughout the construction phase as well as all of the operational phases of its development.

The Mercury reports that work on the multi-billion rand project is expected to commence in July 2016, with the first phase of the project completed by 2019. Development of the project is to be over a 30-year period. The construction phase will provide an estimated 64,000 jobs, while 25,000 permanent jobs are envisaged in the functioning port.

The scale and details of the project are staggering. The port will involve liquid fuel, automotive and container cargoes. The siting of the entrance to the port will require the relocation of the Shell and BO Refinery’s (Sapref) single buoy mooring. The construction of the southern breakwater alone will absorb 16% of the total cost and will require special sources of quarry stone. Environmental concerns are being taken very seriously. For example R85-million has been budgeted to relocate some 2,000 chameleons which inhabit a part of the northern section of the airport site.

Of particular significance is that without the dig-out port, Durban will stagnate as a port of call and experience decline. Already Cape Town does not have the capacity or berths deep enough to handle the new generation of 18,000 TEU ships that are due soon. Durban’s proximity to the Witwatersrand makes it the logical and preferred destination for container shipping. Studies have shown that the old airport site is ideal for the construction of a new harbour designed specifically to manage the size and volume of container shipping. Durban’s geographical location in the southern hemisphere is particularly advantageous as regards intercontinental shipments from the east to South America and beyond to the north Atlantic. Sources: FTW, AECOM, and The Mercury.

 

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?

Transnet Port Terminals has successfully completed testing of two Liebherr Super Post Panamax cranes at Ngqura Container Terminal, just north of Port Elizabeth. The Ship-to-Shore cranes (STS), which were delivered in January bringing the terminal’s fleet of STS cranes to eight, represent an investment of R150 million by the port operator.

The cranes will improve productivity by increasing Ship Working Hour (SWH) – the number of containers moved by the number of cranes working a vessel in one hour. A total of 78 additional operators have been trained and are ready to operate the equipment. Transnet’s newly formulated Market Demand Strategy will see Transnet SOC Limited invest R300 billion on freight infrastructure over the next seven years. Of this, TPT will invest R33 billion to boost port operations.

The portion allocated for the 600,000 m2 Ngqura Container Terminal includes just under R1.1 billion for its Phase 2 A expansion, which will increase container handling capacity from the current 800,000 TEU to 1.5 million TEU by 2013/14. A further R 808 million will be spent between 2015 and 2019 on the terminal’s Phase 2 B expansion to increase the terminal’s capacity to two million TEU. Source: Porttechnology.org

Ports.co.za reports that the US-based General Electric (GE) Transportation has announced that another locomotive, which forms part of a deal sealed with state-owned Transnet, was delivered with local content that exceeds the commitment from GE’s initial Transnet order of 100 locomotives.

The locomotive is the 42nd and is the most advanced diesel-electric locomotive ever built-in South Africa. Its official unveiling took place at an event held at Transnet Rail Engineering’s facilities in Koedoespoort, Pretoria, on Wednesday.

With this order, GE overshot its self-imposed target of 30% local content. The locomotives assembled in South Africa now have 37% local content.Transnet concluded an agreement with GE for a further 33 diesel-electric locomotives, over and above the 100 already being purchased under a deal concluded in 2009. In terms of the contract, 10 of the locomotives were manufactured in Erie and Grove City, Pennsylvania, USA and 133 are being assembled locally at Transnet Rail Engineering’s site in South Africa.

A total of 53 will be deployed in the Phalaborwa-Richards Bay corridor, 30 on the Sishen-Saldanha iron-ore corridor, 32 on the Witbank-Nelspruit-Komatipoort line and the remaining 28 will be used to transport coal to Eskom power stations. Source: ports.co.za