Category / Inland Ports

by Mike Poverello

Jamaica plans global logistics hub

The Port of Kingston – ripe for development

The Port of Kingston – ripe for development

The Government of Jamaica has revealed ambitious plans to turn the Caribbean island in to a global logistics hub – and high level talks have already begun with the aim of increasing volumes of sea cargo.

Projects under discussion include developing the Port of Kingston ahead of the expansion of the Panama Canal and the development of a new commodity port to be built in eastern Jamaica which will specifically handle petroleum products, coal, minerals and grain.

At the same time, there is talk of constructing an air cargo airport to help with increased volume of boxes and the construction of large scale ship repair docks to service the increasing volume of post-panamax vessels.

Dr Eric Deans, chairman of the Logistics Task Force, said a market of 800 million people, including the USA and Brazil, can be accessed readily from Jamaica. He said trade opportunities are due to “burst wide open with the expansion of the Panama Canal scheduled to be completed in 2015; the multi-billion stimulus package by Brazil for World Cup 2014 and Olympics 2016; and the growing middle class in Latin America.”

He added that a critical aspect of the global logistics hub initiative is the broadening of bilateral collaborations with Jamaica’s global partners, and encouraging private sector investment and financing through private-public partnerships (PPPs).

Talks regarding the set-up of special economic zones are already underway with local and foreign investors.

The Jamaica Ministry of Industry, Investment and Commerce, which is spearheading the initiative, says that it will help give the country a global logistics supply chain that is able to compete with the likes of Singapore, Dubai and Rotterdam.

Perhaps this initiative could spur on our local authorities to actually move on ‘logistics hubs’ here in South Africa. While the huge expansion plans for our existing harbours, railroads are pursued, it is high time that the likes of Tamboekiesfontein, for instance, and other privately initiated transit hubs are taken seriously, and in an integrated manner to benefit commerce and trade in the Southern African region.

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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

Revisiting the national transit procedure – Part 1

FTW Online last week ran an interesting article in response to a proposed change in Customs’ policy concerning the national transit movement of containers from coastal ports to inland container terminals and depots. In February 2011, I ran an article Customs Bill – Poser for Cargo Carriers, Handlers and Reporters alluding to some of the challenges posed by this approach. The following article goes a step further, providing a trade reaction which prompts a valid question concerning the practicality and viability of the proposed change given logistical concerns. I believe that there is sufficient merit in the issues being raised which must prompt closer collaboration between the South African Revenue Service and trade entities. For now it is sufficient to present the context of the argument – for which purpose the full text of the FTW article is presented below. In Part 2, I will follow-up with SARS’ response (published in this week’s edition of the FTW) and elaborate on both view points; as well as consider the matter  on ‘raw’ analysis of the ‘cargo’ and ‘goods declaration’ elements which influence this matter. Furthermore, one needs to consider in more detail what the Revised Kyoto Convention has to say on the matter, as well as how other global agencies are dealing and treating the matter of ‘security versus facilitation’.

Customs’ determination to have all goods cleared at the coast does not bode well for the South African trade environment, Pat Corbin, past president of the Johannesburg Chamber of Commerce and Industry (JCCI), said. Speaking at the Transport forum in Johannesburg Corbin said the Customs Bills have been on the cards for several years now and while consensus had been reached on most issues in the Nedlac process, the determination of Customs to not allow for any clearing to take place at inland ports will only add more pressure to the already overburdened ports in the country. “Customs maintains that despite the changes they propose it will be business as usual. We disagree. We have severe reservations about their intention to terminate vessel manifests at the coastal ports in all cases and have called for further research to be undertaken in this regard,” said Corbin. “By terminating the manifest at the coast it has severe ramifications for moving goods from road to rail. International experience has shown when you have an inland port and you have an adequate rail service where the vessel manifest only terminates at the inland port, up to 80% of the boxes for inland regions are put on rail while only 12% land on rail if the manifest terminates at the coastal port.” Corbin said the congestion at both the port and on the road would continue and have an adverse impact on quick trade flows. “It also raises issues around the levels of custom security and control at inland ports and then the general implications on the modernisation project.” According to Corbin, government’s continued response has been that no provision exists for inland ports and that goods must be cleared at the first port of entry. “They maintain that it is about controlling goods moving across our borders and thus the requirement that all goods must be cleared at the first port of entry. The security of the supply chain plays an important role to avoid diversion or smuggling of goods,” said Corbin. “Government says that the policy change will not clog up the ports or prohibit the seamless movement of trade. Labour organizations and unions seem to agree with them.” But, Corbin said, the Johannesburg Chamber of Commerce differs and is worried about the ramifications of this dramatic change to the 35-year-old option of clearing goods at an inland port or terminal. “With this policy change all containers will have to be reconsigned after not only Customs clearance on copy documents but also critically, completion of shipping lines’ requirements ie, payment of freight, original bill of lading presentation and receiving delivery instructions prior to their issuing a delivery order.” Corbin said the issue had been addressed directly with Transnet CEO Brian Molefe on two occasions, but that he had said he accepted Customs’ assurance that nothing would change and the boxes would still be able to move seamlessly once cleared. “It is not understood that the manifest will terminate at the coast where all boxes will dwell until they can be reconsigned,” said Corbin. Source: FTW Online – “New Customs Bill ruling will put pressure on port efficiency.”
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by Mike Poverello

Multimodal inland hubs to add to Gauteng’s container capacity

Engineering News reports that Gauteng will require additional container terminal capacity by 2016, when City Deep, in Johannesburg, will reach its full capacity. Container movements to the province was projected to grow to over three-million twenty-foot equivalent units (TEUs) a year by 2020, she said in her Budget Vote address at the Gauteng Provincial Legislature. Gauteng’s intermodal capacity currently stood at 650 000 TEUs a year and comprised the Pretcon, Vaalcon, Kascon and City Deep hubs.

Gauteng MEC for Economic Development, Qedani Mahlangu said the next generation of inland hubs would create an integrated multimodal logistics capability connecting air, road, rail and sea. Tambo Springs and Sentrarand, in Ekurhuleni, were identified to be developed into the new improved hubs.

By 2018, Tambo Springs would handle 500 000 TEUs and will focus on economic development and job creation, among others. “Tambo Springs will serve as an incubator to stimulate the establishment and growth of new ventures, create opportunities for small, medium-sized and micro enterprises and create 150 000 new jobs,” Mahlangu said.

She added that the department was working towards reaching an agreement with State-owned Transnet in September so that funding could be committed to start implementation by June 2013, for the first phase, which would comprise the railway arrival and departure terminal, to be completed by March 2014.

As per the Gauteng Employment, Growth and Development Strategy, freight and logistics were key drivers in stimulating sustainable growth in the province and the country. “Logistics efficiency will have positive spin-offs to the country‘s ability to export and import goods. In terms of freight, the intention is to move to rail… thereby reducing congestion on roads, air pollution and the impact on the surface of roads. The overall objective is to optimise Gauteng as the gateway to the emerging African market,” Mahlangu said. Source: Engineeringnews.co.za

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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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by Mike Poverello

Moving goods efficiently to inland cities – a case for inland container depots

Port of Agapa, NigeriaNearly one in three African countries is landlocked, accounting for 26% of the continent’s landmass, and 25% of the population, or more than 200 million people, indicating that current population growth trends, including the development of population megacities distant from coastal locations will become powerful drivers of inland markets.

At the 3rd Annual Africa Ports, Logistics & Supply Chain Conference, APM Terminals’ Director of Business Development and Infrastructure Investments for the Africa-Middle East Region, Reik Mueller stated that “Ports will compete to become preferred gateways to move goods efficiently to inland cities and landlocked countries” Mr. Meuller added that “The future prosperity of these nations depends on access to the global economy and new markets; high-growth markets need inland infrastructure and logistics capabilities along development corridors. The ports that can provide the best and most efficient connectivity to those Inland markets will be the winners”.

Citing the recent success in reducing port congestion through Inland Container Depots (ICDs) now in operation outside of the APM Terminals operated port of Luanda, Angola, the Meridian Port Services joint venture in Tema, Ghana, and the ICD which was opened four km from APM Terminals Apapa, the busiest container terminal in Nigeria and all of West Africa, Mr. Mueller made the case for integrated transportation solutions, “Importers are not going to wait for improved infrastructure; the cargo will simply move to other ports” said Mr. Mueller.

Mueller described a new model for transportation planning and development in West Africa in which port and terminal operations shift focus from “container lifts” toward “integrated container transport solutions. Dry ports and inland markets are the untapped, overlooked opportunity markets of the future in Africa”. Now ain’t this a contrast to views on the southern tip of the continent – the continent’s biggest port without efficient inland corridors and networks must jeopardize investor confidence not to mention export profitability.   Sources: DredgingToday.com, PortStrategy.com and Greenport.com.

by Mike Poverello

China leads shake-up in distribution methods

Out of respect for copyright, I would encourage all logistics followers to visit this link to learn more about a significant shift occurring in the distribution of containerized goods. Some food for thought considering local conditions in South Africa which currently appear to marginalize (if not discourage) inland localisation and multi-modal distribution of goods between the hinterland and major air and sea ports in Southern Africa. Source: FT.com

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