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Tambo Springs Rendering

Tambo Springs Rendering – Transnet

The following abridged article was authored by Suren Naidoo, published in MoneyWeb on 6 June 2019.

Ports and logistics parastatal Transnet is moving ahead with plans to develop a new ‘inland port’ [terminal] in Gauteng and on Wednesday announced the winning bidder that will develop and operate the R2.5 billion Tambo Springs Intermodal Terminal in Ekurhuleni.

Transnet’s says the deal represents a major public-private partnership (PPP) that will see Southern Palace Joint Venture Consortium holding a 20-year concession for the new inland terminal, which will complement the container facilities at City Deep.

A wholly black-owned and managed diversified industrial holding company, Southern Palace is the lead concessionaire in the consortium. Its partners in the project include Italian state rail and infrastructure company Ferrovie dello Stato Italiane as technical partner and supply chain and advisory group Makoya as logistics and marketing partner.

The new terminal in Springs will have an initial capacity to handle around 225 000 TEU [20-foot-equivalent unit] containers in its first phase and ultimately grow to handle some 550 000 TEUs. City Deep, located near the Johannesburg CBD, has a capacity of 400 000 TEUs and has already reached almost 80%.

The new Springs terminal will boost efficiencies as a fully-fledged modern intermodal facility, directly connected to the Natal Corridor (Natcor) rail link between Durban and Johannesburg.

The PPP project will improve the rail freight system in the country and boost economic growth. Transnet has experienced challenges on the general freight rail side, which has been in systemic decline over the years.

The decline of general freight rail has contributed to the growth in the number of trucks on national roads, especially the N3 between Durban and Johannesburg. There is therefore some urgency to get general freight working again on rail. With time-sensitive cargo, rail can play a critical role as part of the intermodal mix.

The Springs terminal is expected to break ground by November and is anticipated to open in 2022.

It will be located on a 67-hectare (ha) site within the broader Tambo Springs Logistics Gateway development, which is being master-planned by the Tambo Springs Development Company on 607ha of land near the N3. Transnet has already purchased 35ha of land within the new development node, with another 32ha being negotiated.

The City of Ekurhuleni will provide major bulk services for the development. The terminal will be developed as part of a next-generation logistics gateway combining direct terminal handling facilities as well as back-of-terminal property development and related value-add logistics services and activities.

The existing Natcor dual directional freight rail line runs directly to the site of the [new terminal]. Transnet will therefore not incur significant additional costs for new rail infrastructure to connect to the new terminal, but rather, leverage off the existing infrastructure.

Once the terminal is developed, it is expected to spur surrounding industrial and commercial property development to the tune of around R20 billion from the private sector.

Southern Palace, told Moneyweb that Southern Palace has brought in international rail and container terminal specialist Italferr, which is part of the Ferrovie dello Stato Italiane group. The joint-venture consortium is also supported by Concor and engineering firm AECOM.

Southern Palace has raised around R7 billion to date through its various businesses, so the terminal will be largely “self-funded”.

See the unabridged article here!

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containersThe following was penned by a long-time customs acquaintance Aires Nunes da Costa, who has kindly permitted me to post his article titled “Why unpack containers in Durban if you can have containers at your door step in Gauteng within 24 hours?” which first appeared on LinkedIN.

The Tambo Springs initiative involves creating a significantly improved intermodal capability for the movement of freight to and from Gauteng. This is to be achieved by the operational twinning of the inland port with other seaport, inland and cross border locations. The connectivity i.r.o. these twinned locations is achieved via sea, rail, road and air linkages, ideally involving seamless movement of freight between modes.

The Tambo Springs development incorporates a next generation inland port with a state of the art rail terminal facility designed to be developed in phases, with an ultimate capacity of 1 m TEU’S p.a., as well as, a sprinter freight land bridge.

The key elements are as follows:-

Direct Traditional Rail Link to Durban Harbour

The Tambo Springs Terminal will be linked to the Durban Container Terminal which currently handles the bulk of all container freight moving in and out of Gauteng, via an efficient rail service. The fixed rail infrastructure for this link already exists to the Tambo Springs site. This state of the art Terminal facility is designed to significantly increase the rail capacity for container freight to/from Gauteng, while simultaneously reducing real costs and significantly improving levels of service via:

  • a new technology “greenfields” terminal being more efficient;
  • a reduction of congestion issues in and out of the new inland port due to its location;
    improved efficiency of port operations;
  • having the facility serviced by improved rolling stock commissioned by Transnet;
    Sprinter Freight Rail Link to Ngqura Harbour In the Coega IDZ (Port Elizabeth)

In addition to the direct rail link with Durban harbour, the initial phase of this programme involves the twinning of the Coega IDZ and its adjoining Deep Water Container Terminal at the Port of Ngqura with Tambo Springs. This is to be undertaken by means of a Public Private Partnership type structure which utilizes the Transnet capability between the two locations as well as the participation of SARS.

The service level to be achieved for the movement of the freight via this land bridge has a goal of “24 hours” as opposed to the current 3 to 5 days service level achieved at City Deep. This is to be achieved by capitalizing on the creation of high efficiency intermodal activities integrated with the port functions and feeder network.

Truck Freight Movement

The Tambo Springs Inland Port will function as a multimodal logistics gateway serving the Gauteng Catchment area. It therefore provides ease of movement between individual transportation modes in addition to facilitating manufacturing, warehousing and distribution activities.

The operational plan is therefore designed to accommodate long distance (FTL) truck traffic in addition to regional (LTL) freight movement.

The principle truck markets the inland port will attract include:

  • FTL long distance movement of time sensitive freight from other ports or metropolitan areas. This includes both cross docking and stuffing/de-stuffing facilities within the inland port;
  • Rail/truck (intermodal) movement where product utilizing the rail links is transferred to truck in order to each its final destination;
  • LTL truck and Van short distance movement of freight, including a regional metropolitan distribution function.

The next generation inland port therefore capitalizes both on rail and road transportation modes with a focus on increased movement of long distance freight by sprinter rail.

Intermodal Movement

In order to achieve seamless intermodal movement of freight between sea, rail, road and air transport, it is essential to link Tambo Springs with other inland port and hub locations. The creation of such a twinned Inland Port Network provides a means to effectively participate in the Global Supply Chain in a manner which optimizes both existing and new facilities to enhance capacity. Hence, for example, Tambo Springs would be linked to City Deep via rail and road linkages and to other hub locations in Gauteng and elsewhere.

A principle element of this approach is to create an efficient transportation service between all the individual entry/exit ports providing an improved level of service over and above that provided by a traditional network. The key to this is to rethink existing processes with a focus on efficiency savings in terms of the inbound and outbound process flow at Tambo Springs. This has been incorporated into the operational concept and addresses both operational and customs and regulatory efficiency issues as part of the supply chain. Source: Aires Nunes da Costa (Customs & Excise Specialist)

Tambo SpringsSouth Africa’s freight and logistics company Transnet this week launched its massive drive to bring private sector operators into the country’s freight system.

The company has issued a request for proposals inviting suitably qualified global logistics service providers to design, build, operate, maintain and eventually hand over its proposed inland container terminal in Tambo Springs, East of Johannesburg – a 630ha site located on land originally known as Tamboekiesfontein farm.

The concession will be over a 20-year period and will be Transnet’s biggest private sector participation project to date.

The proposed terminal is in line with Transnet’s drive to migrate rail friendly cargo off the country’s road network.

The terminal is expected to be in operation by 2019 and will have an initial capacity of 144 000 TEUs per annum, with an option to ramp it up to 560 000 TEUs, depending on demand.

The project entails the following:

  • Arrival and departure yard for handling cargo trains
  • Terminal infrastructure;
  • Terminal equipment;
  • Stacking area;
  • Warehousing space
  • Distribution centre
  • Inland Reefer facilities

Transnet Freight Rail will be responsible for the operation of the arrival and departure yard required to service the terminal.

The operator will be responsible for loading and offloading of containers and marketing of the facility. The winning bidder is expected to introduce new entrants – particularly black players – must have demonstrated technical expertise, a minimum of level 4 BBBEE status with a commitment to reach level 2 by the third year of operation.

Transnet currently operates 5 inland terminals in Gauteng, including the City Deep Container Terminal in Johannesburg, Africa’s largest inland port.

The proposed terminal is an integral part of the Presidential Infrastructure Co-ordinating Committee’s SIP 2, aimed at unlocking the country’s industrial development while boosting export capability. It is designed to complement Transnet’s container-handling capacity in the province.

This is the culmination of years of hard work and a demonstration of cooperative governance between Transnet, representing the national competence, and both the Gauteng Provincial Government and the Ekurhuleni Municipality.

The Tambo Springs terminal is one of three mega terminals that Transnet is planning to build in Gauteng over the next 20 years. It will be located in Ekurhuleni along the N3, just off the Natal Corridor.

The project is expected to create 50 000 jobs, and has stringent requirements for supplier development and skills transfer. Source: Transnet

City Deep Container Terminal (Transport World Africa)

City Deep Container Terminal (Transport World Africa)

The controversial Customs Control Bill adopted by Parliament’s finance committee on Wednesday includes a “fallback” provision allowing for a return to the current customs control system should the new one fail.

A similar clause was included in the law that introduced value-added tax in 1991, allowing for a legal alternative to be implemented quickly if things do not work out as planned.

The committee also adopted the Customs Duty Bill and the Customs and Excise Amendment Bill as part of a total revamp by the South African Revenue Service (SARS) of the customs system. Visit this link for access to the Bills and submissions to the parliamentary committee.

The Customs Control Bill has been highly contentious as it will fundamentally change the way imported goods are cleared and released. The Democratic Alliance and Business Unity SA (Busa) opposed the original proposals on the grounds that doing away with manifests in the operations of City Deep would threaten the inland terminal in Johannesburg. SARS disputed this but nevertheless amended the bill.

Busa’s Laurraine Lotter yesterday welcomed the inclusion of the fallback clause but said she would have to see the details of the amendments introduced by SARS before commenting.

The fallback provision — which will automatically lapse five years after the effective date of the legislation — was included to be on the safe side, although SARS does not expect the proposed system to fail. It consulted widely on the bill, sought legal opinions about the legality of its amended proposals and ultimately secured the support of ship operators and agents, freight forwarders and Transnet for the amendments.

Implementation could be delayed by 12 months to allow the trade sufficient time to prepare.

SARS chief legal and policy officer Kosie Louw assured the committee this week the existence of City Deep would not be jeopardised. He urged adoption of the new system of customs control, saying the authorities needed more detailed information about incoming cargo to clamp down on fraud and illegal imports.

In terms of the bill, the submission by shipping lines of a manifest that provides only a general description of cargo will be replaced by a clearance declaration. This must contain information on the tariff, value and origin of the goods, and be submitted by the importer (which can be held accountable for its veracity) three calendar days before arrival at the first place of entry into South Africa.

Penalties will be levied only if the clearance is not submitted within three working days after the arrival of the goods. Containers will be provisionally released before arrival of the goods at the first place of entry and finally released at the first point of entry. To allow for seamless movement of goods, shipping lines will still issue multimodal contracts and through bills of lading.

“The revised proposal provides certainty and predictability to role players in the supply chain regarding the movement of goods,” Mr Louw said.

He said the new system would allow customs officials to undertake documentary inspections earlier, mitigating delays. High-risk containers would be identified before arrival, detained on arrival and held at the inland terminal for inspection. Containers with no risk would be able to move “seamlessly” to the inland terminals.

Mr Louw submitted that the objections to the proposal — that it would require traders to change their sale contracts; that sellers would be reluctant to sell under the new terms; that importers would be affected; that carriers would no longer issue a bill of lading to internal terminals; and that it would give rise to delays and congestion at ports — were found to lack foundation by international trade law expert Prof Sieg Eiselen and two advocates.

He said the proposed system would lay a solid and predictable framework for a modernised system of customs control that balanced the need for trade facilitation with the need to prevent imports of illicit goods. The current system was governed by an outdated, 1960s law. Source: Business Day

Related articles

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?