Freight News Features - Compendium October 2021 by Now Media

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October 2021

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CONTENTS

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Welcome to our latest compendium of Freight News features Freight News Editor Eugene Goddard eugeneg@nowmedia.co.za Features Editor Liesl Venter lieslv@nowmedia.co.za Africa Correspondent Ed Richardson edrich@siyathetha.com Sub-editor

Joy Orlek

Publisher

Anton Marsh

Advertising Yolande Langenhoven Samantha Britz Sandy Rooy fnsales@nowmedia.co.za Advertising Coordinator Layout & design

Tracie Barnett Dirk Voorneveld

Having combined our weekly print publication with our daily online news service to create a single portal – Freight News – we will continue to bring you weekly features providing insight and commentary

by industry leaders on issues of relevance to our readers. Because these features have a long shelf life and are often kept for reference purposes, we have collated them into a monthly print compendium.

Volume 16 October 2021

Covid batters automotive logistics providers

Growing presence in the chemical industry

WAREHOUSING, DEPOTS & DISTRIBUTION

Heavy-duty market embraces hydrogen fuel

Leschaco South Africa opens tank container division

Safety and training remain top priority

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THE AMERICAS No let-up in demand for space

Capacity constraints a challenge in high-growth market

Security standards a concern as robots take over

Civil unrest creates sea change for manufacturers

Screening challenges put further squeeze on timelines

The changing face of warehousing

Delays likely to continue well into 2022

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18 Economy expected to recover in 2022

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Rail project set to unlock potential of coal basin

Maputo port now among the best connected in Africa

Greater focus needed on maritime risks

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WAREHOUSING, DEPOTS & DISTRIBUTION Feature by Liesl Venter

No let-up in demand for space

he sudden Covid-induced change in consumer buying patterns has turned traditional warehousing on its head, with some sectors booming and others screeching to a halt. According to Martin Bailey, chairman of Industrial Logistic Systems (ILS), the past year has not been easy due to the fragmented impact of the pandemic. “In the sectors that were booming, demand for space was at an optimum, but then there were sectors that came to a near halt and suddenly had too much space on their hands.” He said e-commerce had become one of the key drivers of warehousing demand – not only in developing markets but also in Africa. “The biggest change has been the phenomenal growth in the courier industry and e-commerce as consumer behaviour changed around the world. As lockdowns and quarantine policies were instituted, people turned online to shop. We don’t have detailed numbers in South Africa of what the growth

experienced a doubling of revenue in has been in e-commerce, but in the past year. the United States the growth is McKinsey estimates projected estimated at as much as 50%.” annual e-commerce sales for the Bailey said there was no reason continent of around $75 billion to assume that South African e-commerce growth was that much by 2025. lower. “What complicated matters Bailey said despite the tough from a warehousing and distribution economic environment, there point of view is that there was was nothing to indicate that massive growth e-commerce for some products in Africa was and negative likely to slow growth for others. down anytime The cosmetics soon, driving a E-commerce has become industry, for need for overall one of the key drivers of example, which logistics, but warehousing demand − not more especially has traditionally been bullet proof, only in developing markets specialised but also in Africa. was severely warehousing and impacted as distribution. – Martin Bailey demand for goods Tim White dropped. The of property and demand for vitamins, on the other construction company Profica hand, exploded.” agrees, saying e-commerce According to a recent report by fulfilment can require four times global consultants McKinsey, Covid- the warehouse capacity in the 19 has accelerated Africa’s digital destination market compared to transformation, and e-commerce traditional logistics models. “Also, is growing fast. Online retailers through Covid-19 and other supply in Nigeria, for example, have chain shocks, companies want to

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keep more inventory on hand, which means more demand for space. We expect strong demand for logistics space, from large storage hubs down through to small last-mile fulfilment centres in urban centres, to continue to grow in key regions.” Furthermore, said Bailey, space for reverse logistics was just as important. “Some online retailers talk of return rates as high as 22%. Ideally one wants to run the reverse logistics into the same space you are moving volumes out of as it makes sense to run one’s couriers in two directions.” For many traditional warehouses this will mean some kind of conversion will be necessary. Bailey said location of warehouses and distribution centres was also important in the e-commerce sector. “The good old-fashioned warehouse simply does not work for e-commerce,” he said. “There has to be a reasonable amount of decentralisation, and the spaces have to be closer to the customer for quicker delivery – especially if one is looking at same-day delivery.

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Security standards a concern as robots take over

ore robots and fewer people. That’s the future of warehousing. As consumer expectations for speed of delivery, customisation and product availability increase, warehouses will be under pressure to keep up. Anthea van Breemen of Forte Warehousing Solutions says more artificial intelligence (AI) can be expected in the warehousing space in the future. “Robots will make people’s jobs more efficient and ergonomic,” she explains. “For example, why not bring the distribution unit to the picker in the location instead of sending the picker there? I recently visited a warehouse where AI is being tested in the flower industry. Face recognition software is being used on flower bulbs for sorting and counting. This replaces manual sorting and machines count the number of bulbs falling through a funnel.” The increasingly important role of AI is already evident in the larger logistics operators’ warehouse environments where autonomous vehicles and robots have been delivering solutions. Amazon has in the region of 350 000 mobile drive robots

deployed across their fulfilment humans will become more expensive operations worldwide. The company in comparison, therefore it makes has, to date, not calculated the total sense to ensure that the people in population of robots in operation, any operation are skilled to exploit but has said it is growing rapidly the increased flexibility of an and will continue to do so. automated fulfilment operation. As The International Federation logistics is transformed by trends of Robotics estimates an annual towards e-commerce, e-retail and growth of 12-15% of robot use in new manufacturing models, the warehouses and flexibility enabled distribution by robots as a centres from service (RaaS) 2020-2022. will be game According to changing,” reads Robots will make people’s the report. a recent report by Transport One of the jobs more efficient and Intelligence (TI), ergonomic. challenges in this different types fast-changing – Anthea van Breemen of robots are AI environment, being used in the however, logistics sector. is security. These include: “Despite the explosive growth Autonomous Mobile Robots in devices capable of being (AMR) – robots that move materials connected to Internet of Things around the warehouse environment; (IoT) networks, there are very few Automated Guided Vehicles security standards that have been (AGV) – another type of material agreed. This is because different transport robot, but restricted to manufacturers have developed their certain routes using wires, magnetic own technology platforms and some strips or sensors; and of these have their origins back Collaborative robots or cobots – when cyber risk was uncommon,” designed specifically to help human according to the report. “Given workers where repetition is involved the necessity for sensors and other such as wrapping, sealing or boxing. devices in any IoT ecosystem to “As robots become cheaper, communicate, open interfaces and

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ease of connectivity provide an open door for malicious actors. This has now been recognised as a significant risk to operational performance, but the variety and volume of new devices make it very difficult and expensive to retroactively address.” On the upside, the increasing use of cloud-based applications and services continues to make it easier to consistently enforce good cybersecurity practice. Another challenge is resilience and business continuity, according to TI. “As warehousing facilities are increasingly automated, they are reconfigured around the most efficient layouts for operations. The deployment of robots, narrow aisle bays, automated vehicle pathways etc, change the nature of such locations into areas where humans are confined to small sections. This becomes a serious issue in the event of prolonged power failure or system outage. In more traditional layouts, humans can continue to move around the entire facility and have the room to maintain operations at a slower speed. But within facilities where movement and access is restricted to the dimensions of machines, it is impossible to run a manual operation.”

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Case study reveals how to save ‘tens of thousands of dollars’

hanging a distribution network need not involve complex processes and high costs, according to Rob O’Byrne of the Logistics Bureau. “These channels are frequently overlooked as a source of performance enhancement in the supply chain. But if you think outside the box, huge savings can be made by simply evaluating the channel and implementing alternative strategies.” More often than not changes to a distribution network are associated with complexity and are considered costly. Not so, says O’Byrne, who saved one company more than 18% annually by simply making a few changes to its distribution network. “One of the most important factors to consider when evaluating any distribution channel is the cost to serve. Once you have a clear indication of that cost it becomes far easier to come up with alternative

analysis of the distribution network distribution strategies.” it was clear that the company had a Sharing a recent case study of a very heavy cost-to-serve component. company operating in the building “Many of their customers were product space, O’Byrne highlighted situated in rural areas and were how a change in strategy saved the company tens of thousands of dollars. ordering small volumes of product less frequently. “This particular The cost to company was serve them was moving millions incredibly high. of tons of cargo through its One of the most important Hardly any profit was being made, distribution factors to consider when while in many network, utilising evaluating any distribution instances they 12 warehouses were actually and 1500 vehicles. channel is the cost to serve. operating at a The challenge, loss distributing however, was – Rob O’Byrne to these regional that they had a customers.” very low-margin In a traditional cost-to-serve product and were operating in a very approach, the goal would have been competitive industry. Needless to to improve the economy of scale by say, they were struggling and wanted getting the customers to not only to save money in distribution, but increase volumes, but also do so more were convinced it would cost a lot of frequently. “This would have been an money to change their system.” extremely costly exercise and maybe According to O’Byrne, after an

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even not possible. The solution that was finally found was far simpler.” The company closed ten of its regional warehouses and opted to keep only two main warehouses in two metro centres. “It then outsourced all the distribution in the regional rural areas to smaller service providers that were already distributing a range of products to these areas.” He said whilst the decision to outsource was not immediately embraced by the company, the benefit in terms of savings was soon realised. “Our first meeting with the sales director did not go down well when we proposed selling in bulk to small distributors in the regional areas at discounted rates. “It took some convincing as it would mean smaller margins, but the savings in distribution made up for it and within six months they have seen profits skyrocket.”

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Transnet’s port plans offer opportunities for the warehousing sector S outh Africa’s warehouses rank right up there with the rest of the world in terms of certification, health and safety standards, and digitisation and automation. That’s the view of Hans Modipane, executive logistics, sales and marketing at SA Cargo Services, who believes there are several positive

developments that augur well for the warehousing and distribution sector – among them the Cato Ridge logistics hub in KZN, and Jet Park on the East Rand in Gauteng. He admits, however, that the unrest experienced in South Africa in July hurt the sector. “In the short to medium term there will undoubtedly be a need to rebuild

some of the capacity that was lost – particularly in KZN,” he told Freight News. “In the long term, in view of the recent announcement by Transnet that they want to quadruple volumes handled through the Port of Durban by 2030, there will clearly be a lot of growth for the sector as these volumes will require additional

warehousing and depot capacity.” In line with this, said Modipane, Transnet had also advised they would be looking for private sector partnerships to develop the port and depots to handle the increased volumes. “This move is creating a massive opportunity for the sector and is very encouraging in the long run.”

Civil unrest creates sea change for manufacturers Demand for warehousing has spiked since the outbreak of the Covid-19 pandemic, according to Databuild CEO Morag Evans. “The rapid surge in e-commerce has accelerated the need among the fast moving consumer goods (FMCG) sector for last-mile logistic facilities that expedite the movement of merchandise in the supply chain and minimise delivery time to the final destination,” says Evans. “This is evidenced in Databuild’s dynamic database of active contacts, projects and tender opportunities, Databuild Online.” The company, which is a knowledge hub for the construction and allied industries, has begun tracking several warehouse construction projects for online

retailers. “For example, Takealot is headquarters in Africa and the building new warehouses in Cape R4.5-billion project, involving Town and Kempton Park, while 15 hectares of land, was recently Cotton On has awarded to commenced developer construction WBHO.” on a new Evans says warehouse in the recent Instead of storing products in one civil unrest Midrand.” gigantically sized warehouse, we and looting Along with expanding expect to see role-players making experienced warehouse and use of a diverse array of smaller in KwaZuludistribution Natal and centres, online warehouses, strategically located Gauteng, closer to large urban centres. retailers are which severely also extending – Morag Evans jeopardised their physical South Africa’s footprint, supply chain, according to Evans. will further catalyse a shift in “Amazon has chosen Cape how FMCG manufacturers and Town as the location of its new retailers set up and manage their

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warehousing infrastructure. “Rather than putting all their proverbial eggs in one basket and storing their products in one gigantically sized warehouse, we expect to see these role-players making use of a diverse array of smaller warehouses, strategically located closer to large urban centres. This will not only improve the delivery experience for their customers but also mitigate operational risk when it comes to stock security and availability.” According to Martin Bailey, chairman of Industrial Logistic Systems (ILS), another outcome of the unrest has been the decision by several companies to pull out of KwaZulu-Natal completely in fear of further unrest.

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The changing face of warehousing In the face of a global pandemic, the rise of e-commerce, technological advancements, and the growing complexities of customer demands, the face of warehousing is changing dramatically. Freight News features editor Liesl Venter spoke to Anthea van Breemen of Forte Warehousing Solutions about the current trends, challenges and developments in the industry. How has Covid affected the warehousing/depot/ distribution industry?

What are the biggest challenges facing the warehousing sector at present?

In a number of different ways. In the beginning the staff complement was doubled in case one team member got Covid and had to be swopped out. A year on and the picture is slightly different. Now it is only the individual who is affected who needs to be replaced. Management and supervisors have also had to take on dual responsibilities. What has become clear is that to perform they have to have the correct tools to assist with these roles and responsibilities. Digitisation was always going to happen, Covid19, however, has speeded up the process significantly.

Many of the challenges are around Covid-19. On a middle-management level, every responsibility has to be shared with at least one other individual who can fill in should there be a Covid-19 case. Every one of these people already has a responsibility of their own, which leads to thinning of responsibilities when anyone is off. The only way to remain on top of your game is access to timeous information. Another challenge is continuity – especially in the initial phase of digitalisation. When a person becomes ill due to Covid and is taken out of the loop, they need to be brought back into the project with as little disruption as possible. Also challenging, especially for the medium and smaller sector, is knowing where to begin with digitalisation. Most know they could benefit from this, but where to start is the big question.

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Digitalisation is fundamentally about reviewing and optimising existing business processes, streamlining operations, and utilising technology to do so. Break this down for the layman – what does it mean? The first step is to understand the current processes that are happening in a business. The next step is to take each one of these processes individually and understand if it is being performed at its optimal best. If not, then change or enhance the process to ensure this. Once you have designed a good business process flow, this should be used to find the correct technology partner to take your business into digitalisation. Digitalisation is a process requiring a partner with the right skills to take the company through the process, each step at a time, from implementation, to training, to going live and ongoing support. What are the benefits of a digitalised warehouse/depot? Faster, more accurate data as digitalisation means less human intervention – for example, scanning information as opposed

to manual data capture. Also, the sharing of information. Anyone who has access to the system can check the flow of goods throughout the warehouse, and this allows for informed decision-making. Information shared on dashboards for KPIs to be displayed throughout the business gives everyone a view of the performance and the challenge to meet and improve these. How does an operator embrace digitalisation in their warehouse? An operator’s tasks become easier and more accurate and efficient. For example, moving replenishment from a manual white board and manually looking for stock and writing it down for the operator to replenish, to an automatic instruction on a scanner, leading the operator to the correct location and pallet, with the correct stock and a simple scan to confirm the move from that location – then leading them to the replenishment location for a second scan to confirm they have moved it to the correct pick location, is far more efficient. If digitalisation leads to incentives based on efficiencies that can be measured, operators and businesses benefit.

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Investment and diversification should be top of mind

environment, it is critical to ngoing investment in its warehousing facilities stay ahead of the curve if you has given Independent want to service your clients well,” said Beira Logistics Terminal Stals. and Services (IBLTS) the competitive He told Freight News that now, edge, according to general manager more than ever, an innovative Neil Stals. approach was The company necessary – has invested in a particularly 30 000-squareconsidering that metre property, Being able to handle multiple space was at a extending premium. commodities at the same its premises “Costs continue time, while utilising the same to increase as significantly to increase cargo assets, has been key for us. ports around the flow. A second world remain – Neil Stals warehouse of congested, 13 000sqm has while increased added further flexibility to its service regulation and legislation have also offering. added to costs. As logistics operators, According to Stals, the global it is imperative that we continuously container shortage has put severe look at ways to protect margins and pressure on warehouses, making the keep ourselves competitive.” investment even more important. Just as important as ongoing “In the current economic investment in infrastructure and

equipment was the need to diversify across sectors. “As a company, we have looked for partnerships that will allow us to do just that. One example is our decision to partner with Imperial Logistics. It has enhanced our presence on the Beira Corridor, and given us entry points into new sectors of the market such as healthcare and consumer packaged goods.” Stals emphasised the importance of being flexible and adaptable in the current market. “Specialised equipment helps in some areas, but being able to handle multiple commodities at the same time while utilising the same assets has been key for us.”

He said ongoing investment in facilities, and the purchase of additional capital equipment to service these warehouses well, had positioned IBLTS well. “It is a move that we believe will stand us in good stead as volumes are set to grow on the Beira Corridor. Whilst the container shortage has slowed exports, we have not seen any downturn of cargo through our facility – and when the empty repositioning is resolved, we expect a large increase in exports through Beira. Our ongoing investments in our warehousing will place us in a position to take advantage of that increase.”

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Demand for space expected to spike

ovid-19, the associated lockdowns, and the hit to both supply and demand, have challenged supply chains and distribution networks in ways never imagined. Steve Purvis, operations director at Bis Henderson Space, says businesses will need to look carefully at how they adapt their supply chains for a new reality post pandemic, and importantly, how they flex their warehouse space requirements to build in resilience. “Challenges have extended across all supply chain activities, from sourcing, through transport and distribution, to the adoption of safe working practices,” he writes in a white paper on the topic. “A common factor for many supply chains has been radical change in retailers’, manufacturers’ and shippers’ requirements for warehousing and warehouse-related activities. In some cases, sales activity has slowed to a standstill and firms need somewhere, anywhere, to de-stuff containers

property consultants JLL who and store goods still coming from believe reshoring or near sourcing suppliers. In other sectors, demand will further impact regional has soared. However, the need demand for industrial facilities. to maintain safe distances while “Businesses will not go back increasing throughput raises the to the way we knew before the floor-space requirement even pandemic, but will use this crisis further.” to reinvent themselves to be more Further impacting the resilient, adapting warehousing their operational sector has been models to the the e-commerce new normal,” boom. Along with reads a report this has been the E-commerce is notoriously by the group on increase in home hungry for warehousing/ the pandemic’s deliveries as more distribution centre space, impact on real people around and demand is sure to spike estate. the world work According to from home as in years to come. the JLL report, part of ongoing – Steve Purvis the pandemic quarantine accelerated policies. trends already in According to evidence across the logistics sector – Purvis, e-commerce in particular such as increased online penetration is notoriously hungry for rates, expansion of online grocery warehousing/distribution centre space, and demand for warehousing shopping, omni-channel retailing, and the integration of technology space is sure to spike in years to into warehousing. come. “Industrial and logistics This outlook is supported by

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fundamentals were very strong prior to the Covid-19 crisis. Occupier demand had been exceptionally robust, and vacancy rates were at near record lows. The pandemic has highlighted the critical importance of supply chains and logistics real estate, and the sector is well placed to respond to the post-Covid recovery.” The report also points out that a rethink of lean supply chains could be on the cards in a post-Covid environment. The risks associated with the lean-inventory approach were evident across the world when the pandemic broke out in early 2020, and around the world businesses are toying with the idea of boosting inventory levels again – which will increase demand for warehousing space. According to Purvis, businesses will need to look carefully at how they adapt their supply chains in a post-Covid world, and more importantly, how they rethink their warehouse space requirements to build in resilience.

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New C&F division makes end-to-end service a reality

roviding end-to-end customer service has been the driving force for the team at SA Cargo Services. This was clearly demonstrated with the company’s recent launch of a full clearing and forwarding division with an international network. “It has significantly boosted our offering and we are now able to offer order fulfilment, indent management, as well as international freight and transport management. This meshes with our already established local warehousing, transport and distribution services,” said Hans Modipane, executive logistics, sales and marketing. “These are important developments considering that customers are increasingly relying on us to handle their end-to-end supply chain. For certain specialised products we are now seeing goods being unitised, ready from warehouse to retailers. Bespoke onsite unpacking from container and repacking for retailer is another aspect of distribution that seems to be improving the market.” Mndeni Ngcobo, sales and

environment in terms of reducing marketing manager, said most fast carbon emissions and the number of moving consumer goods (FMCG) trucks on our national roads.” customers required specialised pick The biggest challenges in the and pack and unitisation that was warehousing space remain very high tailored for their different customers. leasing and overhead costs which “Our proximity to the Durban means you need a constant flow of port enables us to receive, unpack, cargo to maximise revenues whilst consolidate and distribute to the rest on the other hand of the country.” customers need Ngcobo and additional storage Modipane days but are not said there always willing to were multiple Most FMCG customers pay for them. advantages that require specialised pick “The recent could be derived unrest in from consolidating and pack and unitisation close to the port. tailored for their different Durban, as well as the ensuing “Firstly, we customers. cyberattack on are able to help Transnet, have our customers to – Mnedi Ngcobo also created reduce the volume a capacity of vehicle traffic bottleneck,” said Modipane. “This moving from the port directly to has resulted in too much inbound their premises – and this is because cargo and slow outbound movement consolidation allows for bigger of cargo. In order to maintain profits, breakbulk loads instead of individual warehouses and depots do not container loads. This comes with necessarily want to store for lengthy some cost savings. Additionally, periods of time as this creates an reducing the number of vehicle imbalanced flow of cargo.” trips has a positive impact on the

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From a distribution point of view, the cost of trucking cargo remains a challenge. “Whilst the more cost-effective and environmentally friendly mode of transport would be rail, it is still unreliable due to locomotive shortages and copper theft. This is why the logistics sector still favours trucking which, of course, comes with its own set of challenges.” Commenting on future trends, Ngcobo said digital planning and optimisation would certainly dominate over the next few years. “In a world where siloed processes and services were previously profitable and effective, today’s standards and trends require a far leaner and more integrated approach which includes digitisation, optimal planning, visibility of operational data, and instant communication. Due to the presence of international and local blue-chip retail and FMCG companies within the market, South Africa has found the digitisation transition somewhat easier in comparison to its continental counterparts.”

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trucks and abnormal trailers, ncreased investment in as well as sideloaders. We have technology will take centre recently become involved with the stage in the warehousing sector over the next few years. transport of 19-metre-long water pipes to a pipeline in Botswana According to Billy Meysel, GM and similar projects in the region.” of Jacobs Transport, the lesson He said the company had also that the pandemic has taught invested heavily in its side tipper us is that the Fourth Industrial business. “We can transport Revolution (4IR) is very much chrome, upon us. manganese, “The more magnetite, visibility that iron ore, and can be offered pig iron. Our on what is Jacobs Transport is developing tipper fleet stored, the consists of side better,” he told routes for freight movement tipper links, Freight News. to its northern neighbours as featuring The company well as to Komatipoort on the state-of-therecently Maputo Corridor. art lightweight introduced design, capable a locally – Billy Meysel of super developed payloads up to Warehouse 40 tons.” Management System (WMS) According to Meysel, a developed by INControl. warehousing provider must “We can now offer high activity become part of the customer’s and low activity storage areas. supply chain. “This means that We can also help with staging to you must be able to trust in your keep control of the whereabouts of service provider’s capabilities stock in the warehouse and pick stock based on customer orders for as a crucial link, one that won’t break. This is a huge just-in-time deliveries,” explained responsibility. Relying on cuttingMeysel. “Our WMS integrates edge technology to manage seamlessly with our transport the complexities in the various planning booking system. This processes helps to minimise loss means better control of incoming or value destruction,” he said. and outgoing stock.” “Warehousing is not only space He said Jacobs Transport rented and stock control, but also was also developing routes completing the customer order for freight movement to its perfectly, every time.” northern neighbours as well as Meysel said South Africa was to Komatipoort on the Maputo very much on par with best Corridor. “Our company is practices in the industry globally. known for its huge fleet of crane

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“As an ISO 9001:2015-compliant company, Jacobs Transport has also introduced tested process flows into the warehouse. Maybe there is a higher focus placed on the security of the facility here in South Africa than in other parts of the world.” Commenting on the area of distribution, he said the impact of the recent riots on the routes to the Durban port was worrying. “It would not be surprising if the Maputo Corridor, and specifically Komatipoort, gains ascendancy.” For Jacobs Transport, which specialises in the machine moving and rigging arena, Meysel explained that distribution was not usually to the end customer but rather maintenance or repair of the plant. “Often we will need to move a very heavy piece of machinery, like a huge 150-ton transformer, into place, or assist

with the assembly of a plastic injection moulding machine on site. The heavy tonnages or abnormal loads often demand a highly specialised team to transport, store and move.” Overall Meysel is optimistic about the future, but emphasises the importance of ongoing investment in technology. “One has to continue to try to redefine the transport industry in the sectors one serves. Forecasting about mining ore for the side tipper division is not always easy as there is a lot of fluctuation due to commodity price cycles. Within the machine moving/project logistics side of the business, we forecast good growth with our northern neighbours. There has been good infrastructure development recently, like the opening of the Kazungula Bridge, and that bodes well for growth going forward.”

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October 2021 Warehousing, Depots & Distribution 9

VEHICLES Feature by Liesl Venter

Private/public sector effort targets ro-ro terminal efficiency

study to benchmark operations at South African ro-ro terminals is currently under way at the Port of Durban as part of a larger strategy to improve efficiency in the automotive supply chain. According to Mervin Pillay, general manager at "K" Line Shipping South Africa, the private sector and Transnet Port Terminals are putting in a lot of effort to improve overall efficiency. “There is a lot of brainstorming taking place at several stakeholder forums that have been established as we all work towards improved operations at the car terminals,” he said at a recent Transport Forum. “A time and motion study is currently under way aimed at the ro-ro segment in particular. The goal of this study is to benchmark one of the berths to establish the standard criteria of operations and then move towards improvements.” He said a lack of resources and skills continued to impact the

automotive supply chain, especially view, more visibility would result in at the ports. “It can be felt quite a bit, improved coordination and efficiency but at the same time, it is important overall. to note that there is improved Loganathan said TPT had collaboration through the various introduced a skills and development forums and meetings. A lot of work programme to address some of is being done in the critical the background requirements in to alleviate the operations at the problems and to car terminals. deliver solutions “The operating that will improve A study will benchmark one environment the import and has changed of the berths to establish export of vehicles.” the standard criteria of drastically. Critical Speaking during and operations and then move thinking the same event, complex problem towards improvements. Vis Loganathan, solving have to TPT head of be infused in the – Mervin Pillay planning, said one way we respond as of the challenges logistics planners.” in the automotive sector was the Both Loganathan and Pillay lack of visibility. “We have it on the emphasised the importance of container side, but not so much collaboration between stakeholders, on the automotive. It is therefore saying the smooth import or important that we collaborate more export of vehicles was not just the with the lines to improve our ro-ro responsibility of the port. operations.” “Volatility, uncertainty, complexity He said from a planning point of and ambiguity remain the order of

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the day,” said Loganathan. “It is the currency that we all currently have to deal with, and it often means that the toolbox that we used two years ago, even a year ago, is today outdated. If we are to stand any chance of success, stakeholders across the supply chain must collaborate more.” He said it was important that car terminal planners understood exactly what was on a ro-ro vessel. “So the question is how we collaborate more with the lines, particularly on the automotive side, when it comes to vessel stowage planning. We don’t have to be stowage experts, but we can learn and improve our operations through closer collaboration with each other.” Pillay said it was important the shipping lines, clearing and forwarding agents, TPT and transporters were all part of the collaboration. Providing a detailed explanation of the process each of the entities followed when moving vehicles, he said the days of working in silos were long gone.

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10 Vehicles October 2021

Covid batters automotive logistics providers

nprecedented rates and an unprecedented demand for shipping has seen some industries flourish – but the vehicle sector remains under extreme pressure. According to the Association of European Vehicle Logistics (ECG), the sector is under extreme pressure.

In a statement, ECG president Wolfgang Göbel said inventories were close to zero and volumes had fallen dramatically, while factories continued to close without notice. “The result is empty yards, empty workshops, idle and underutilised car transporters, trains and ships.” With manufacturers under

pressure, logistics service providers in the sector are not thriving. A recent report by Transport Intelligence states that major contract logistics companies providing inbound services to assembly plants and major component suppliers have generally had businesses in other sectors

to which they can shift resources. The hardest hit have been those service providers that tend to be wholly dependent on the automotive industry. According to Göbel, it is not just the lack of volume that is a concern, but also the unpredictability of the current marketplace.

August vehicle exports down The South African new vehicle market has recovered from the economic disruptions caused by the unrest in July 2021, but the knockon effects of the disruptions, as well as the cyberattack on Transnet operations, were still visible on vehicle exports during August. This is according to the latest report by the Automotive Business Council (Naamsa) which recorded a decline of 15.6% in exports this year compared to the same period last year. The automobile industry is the country’s fifth-largest exporting sector. However, for the year-to-

date, vehicle exports were still 37.7% ahead of the same period last year. According to Naamsa, Covid -19 has turned out to be the biggest obstacle to growth for the global automotive industry in recent times, with supply chain bottlenecks and dwindling new vehicle sales resulting in losses worth billions. “The most visible effect of Covid-19 is the fact that original equipment manufacturers (OEMs) globally produced fewer vehicles in 2020 than in 2019. In 2019 a marked decline of 5.2% in global vehicle production was evident,

ending 10 years of growth in the industry. Since then global vehicle production has declined by a massive 15.8% to reach 77.62 million vehicles, down from the 92.18 million units produced in 2019,” reads a statement. South Africa’s share of global motor vehicle production also decreased in 2020 to 0.58%, from the 0.69% in 2019. The country is still the dominant market on the African continent, accounting for 447 218 vehicles, or 62.1% of total African vehicle production of 720 156 vehicles.

Despite these declines, Naamsa remains bullish about the export market, predicting a sharp rise in exports over the next two years. It attributes the strong upward momentum in vehicle exports to the robust recovery in demand in Europe, which accounts for 77.2% of the total export volume, or nearly four out of every five vehicles exported during the first half of 2021. However, although exports are 66% ahead of the corresponding period in 2020, for the first half of 2021 they remain 0.9% below the level of the first half 2019.

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October 2021 Vehicles 11

Daimler Trucks is focusing on hydrogen-powered fuel cells for the electrification of its vehicles. Photo: Daimler Truck AG

Heavy-duty market embraces hydrogen fuel

ydrogen fuel may only be in its infancy, but it’s fast gaining traction in the heavy-duty transport and logistics industry. Possibly the most abundant element on earth, hydrogen has several advantages other than not being a carbon-based fuel. Present in the air and an element in numerous other materials, notably water, it can also be produced from renewable sources. Ongoing research and development has shown hydrogen to deliver a clean fuel with no harmful exhaust emissions, delivering the same performance and torque as electric cars. It has a greater range than electric cars and shorter refuelling times. While the fuel has not taken off as yet in the general automotive industry thanks to the growing uptake of electric vehicles, it holds

potential in the heavy-duty transport in the future. In combination with pure battery-electric drives, it industry, delivering greener vehicles. enables us to offer our customers According to a recent white paper the best genuinely local CO2-neutral on hydrogen-powered vehicles in vehicle options, logistics, hydrogen depending on fuel cells are more the application,” economically said Martin viable than Daum, chairman electric vehicles in the heavy-duty Hydrogen-powered fuel-cell of the board of electric trucks will be key management of sector due to the Daimler Truck time it takes to for enabling CO2-neutral charge batteries. transportation in the future. AG, whose brands include Freightliner Around the – Martin Daum and Mercedes-Benz. world, truck The company manufacturers are foresees up to 60% investing heavily of truck sales as battery or hydrogen in hydrogen technology. Earlier this vehicles by no later than 2030. year Daimler Truck AG and Volvo According to Daimler Truck AG, Group launched a joint venture the biggest obstacle to the increased committing both companies to delivery of hydrogen fuel-cell cars is hydrogen-based fuel cells. the infrastructure for fuelling. The “Hydrogen-powered fuel-cell same applies in the electric vehicle electric trucks will be key for enabling CO2-neutral transportation market, with charging facilities still

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limited. This is further hampered by the fact that the necessary infrastructure is developing at different speeds around the world, and at a much slower pace in the developing world. With this in mind, truck manufacturers are focusing on delivering vehicles that can achieve ranges of up to 1000km before having to stop for refuelling. Just as important, he said, was that the new generation trucks were able to compete with conventional trucks currently in operation around the world – and that they could cope with extreme conditions in real-life operation situations. Hyundai is in the process of delivering 1000 heavy-duty fuel cell electric trucks that will come off the production line in 2023, and Toyota is also powering the next generation heavy-duty truck with fuel cell technology.

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12 Vehicles October 2021

THE AMERICAS Feature by Liesl Venter

Capacity constraints a challenge in high-growth market

igh cargo demand in North America is paving the way for CFR Freight to expand its LCL import service with the addition of a second direct service offering out of the Midwest. According to trade manager Michelle Horner, positive growth in cargo volumes for both imports and exports is set to continue in the Americas where the neutral consolidator holds solid partnerships and networks. “In North America our partners, Shipco Transport, have an extensive intermodal and CFS network, complementing their diverse presence of offices, enabling us to provide full coverage of the country,” said Horner. “On the South American side our network allows for flexibility of cargo routings, which is essential in these unprecedented times. Flexibility of services, cargo routings and loadings sees us working closely with our customers, enabling extensive opportunities for

transport constraints, it has been a the movement of LCL cargo out of challenging year,” said Horner. “The South America into South Africa, excessively high cargo volumes in as well as transhipment and overNorth America, along with severe border movement into Africa.” capacity constraints within both According to Nicholas von the shipping lines and intermodal Flemming, national sales manager, providers, have resulted in heavy it is not just on the LCL side that growth is evident. “We see growth in delays of cargo and congestion in terminals and some other noncontainer freight traditional LCL stations. As markets in the capacity becomes Americas. This tighter, we see will form a key We see growth volatility in the part of the 2022 freight rates strategic outlook in some non-traditional and ancillary for the group to LCL markets in the Americas. charges. This strengthen its from a previously hold on the LCL – Nicholas von Flemming very stable market in the region.” area,” he told In South America, manpower Freight News. restrictions, carrier scheduling Both Horner and Von Flemming and service changes, blank sailings say they have seen increasing and high cargo demand have also challenges in the Americas region. resulted in delays and extended “From reduced manpower in transit times. terminals due to Covid-19, and “For South African exports into critical truck driver shortages, to the Americas, high volumes, port port congestion and equipment and

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congestion and carrier scheduling changes have also seen extended transit times for cargo movement. Recently, we have also seen severe weather and storms impacting North America, negatively affecting already constrained operations.” Von Flemming said the methodology for dealing with the challenges facing the logistics industry was the optimisation of information flow by means of weekly market updates. Said Horner, “As the use of technology increases, there is a surge of online purchasing, leading to an increase in goods and cargo movement. Customers are looking for fast, efficient and reliable endto-end solutions.” An ongoing trend in the Americas is an increased focus on accessibility of information – an essential part of any logistics operator’s service offering. “Constant developments in online platforms are necessary to progress towards keeping clients informed at all times.”

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October 2021 The Americas 13

The Americas

Screening challenges put further squeeze on timelines

xport capacity remains a challenge in the airfreight sector, along with rates being upsold when it comes to the American services, says Chilton Corrigall, CFR Freight airfreight route developer. This has increased the need for innovative solutions from logistics operators serving the region. According to Megan Ekermans, airfreight rates manager, the cancellation of passenger air travel over the past year has resulted in congestion at air cargo terminals. "The reduction in commercial air capacity dramatically reduced the available capacity to move freight, which is now primarily being moved via freighter or charter service.

Terminals are receiving an increase are not partnering with freight of freight, pushing demand to an forwarders who are able to facilitate all-time high and, combined with the screening of cargo. labour shortages, we are seeing a “The increased screening has two-week delay negatively in the recovery of impacted cargo at airport the terminal terminals such as timelines. Where Chicago.” previously they Ocean congestion and In addition, had a 48-hour changes to take-off window lack of equipment are export screening pushing larger shipments for freight, this standards have has now been to airfreight. created backlogs reduced to a mere and congestion at – Chilton Corrigall 12 hours – and terminals, which if any problems is exacerbated by are encountered lack of warehouse capabilities. The during the screening or result is that carriers have to screen transportation to the terminal, shipments because some shippers congestion will follow.”

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Despite the challenges the outlook for the region from an airfreight perspective is extremely positive. “With a weekly consolidation on offer, we are able to provide a solution to the market, and with our negotiated rates we are able to remain competitive in the constantly changing market,” explained Ekermans. Commenting on trends, Corrigall said the ongoing ocean congestion and lack of equipment were pushing larger shipments to airfreight which was already under pressure and backlogged. “Air capacity remains our biggest challenge. Passenger and widebody aircraft out of the United States is still only at 50% of what it was pre-Covid-19.”

Delays likely to continue well into 2022 In North America, the container shipping system has maxed out its capacity, and there are growing signs that it will only get messier in the near and midterm as monthly cargo volumes have increased by double digits since August 2020 and show no signs of letting up. According to Turloch Mooney, associate director product management, maritime and trade at IHS Markit, there is no indication of any improvement in the congestion situation. “It has, in fact, worsened in several key locations,” he said

during an online conference. The US West Coast, in particular, was under pressure where vessel berth waiting time had seriously deteriorated in recent weeks. “Improving capability to move more containers faster is part of the solution, but at the large North American ports one is dealing with much bigger call sizes and cargo volumes are high,” explained Mooney. “The high proportion of imports going into consumer supply chains makes distribution more complex than the more export-

orientated set up of the Asian ports for example.” He said failing a heavy drop in demand, delays at American ports were expected to continue until the end of 2021 and even well into 2022. “This will have long-term effects on the structure of supply chains as shippers invest more in limiting risk. We have seen big shippers and the large logistics operators are increasingly concerned about port performance, and they are looking at the situation closely. There will

also be an increased appetite and capability to diversify sourcing for product categories with simpler supply chains over the long run.” Mooney said congestion at American ports, as well as in Europe, would continue to place intense pressure on maritime transport prices, and on the availability of space and equipment. In the long term, cargo bottlenecks will slow economic growth, producing higher costs for importers and exporters and putting pressure on employment.

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14 The Americas October 2021

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DANGEROUS GOODS Feature by Liesl Venter

Regulations under review to address safety deficiencies

he movement of dangerous goods is becoming more complex than ever before. According to David Alexander, CEO of Professional Aviation Services, this is driven by the ever-increasing e-commerce uptake and the continual demand in the market for smartphones and numerous other devices that use lithium ion batteries. “Lithium ion batteries represent (probably) the greatest risk in the transport of dangerous goods,” he said. So much so that Iata recently launched an industry certification programme to improve the safe handling and transport of lithium batteries across the supply chain. Alexander says companies need to invest in the training of everyone involved in the handling of dangerous goods – particularly those who deal with lithium ion batteries. Special courses are available on the safe transport of these batteries. “Regulations are undergoing review with the aim of improving safety and making mandatory

compliance applicable to a wider losing the opportunity to learn from range of industry participants. what happens on the ground in the The changes will include the industry,” he explained. “All these requirement for a Dangerous Goods changes are currently being finalised Operations Manual that will address and all in the business of dangerous the warehousing and handling of goods need to make sure that they dangerous goods, are fully aware of and the training how these changes requirements for will impact their organisations and operations.” their personnel. A According to key change is the Alexander, there The failure to report requirement for appears to be incidents and accidents every organisation some “reluctant is widespread, with to have a person compliance” within companies reluctant to nominated as the industry, including Responsible Person report their clients to the the approach in for Dangerous SACAA as this could impact some quarters Goods.” that the dangerous business relationships. Another goods regulations – David Alexander important change, don’t apply to he said, was that certain sectors every single industry because they are not participant would have a legal mentioned in the applicability section obligation to report all dangerous of the regulations. goods incidents and accidents to “The failure to report incidents the South African Civil Aviation and accidents is widespread, with Authority (SACAA). companies reluctant to report their “At present, only an operator is clients to the SACAA as this could compelled to report and we are impact business relationships. This

“

must change so we can learn from what is happening in the interests of safety,” he told Freight News. “We have no standards for dangerous goods operations in companies other than operators at present, so the task of the SACAA to ensure compliance and therefore safety is impossible. The changes to the regulations address this.” Commenting on the impact of Covid on the sector, Alexander said new commodities like hand sanitiser were being carried in greater than normal volumes and e-commerce and the transport of electronics had increased. “At the same time Covid caused personnel reductions, while volumes increased in some instances, so the systems and procedures were strained. We also lost very experienced people and experience is hard to do without.” While people were reemployed after the initial recovery, a number of them struggled to regain peak operational efficiency. “Dangerous goods handling is a skill that must be practised,” he said.

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October 2021 Dangerous Goods 15

Dangerous Goods

Growing presence in the chemical industry

the helm along with, Juan Enslin, eschaco South Africa has managing director South Africa. identified two key priorities “A clear focus for Leschaco in its growth strategy – South Africa is to embrace the expanding its footprint opportunities in Africa’s emerging in Africa’s emerging markets and markets. The chemical industry is growing its presence in the chemical a mainstay of industry. the Leschaco The Leschaco Group’s business, Group, with and we aspire representation in 22 global A clear focus for Leschaco to increase our expert knowledge markets, has South Africa is to embrace in specialist reorganised itself the opportunities in Africa’s operations, like into three key transporting regions – Europe, emerging markets. hazardous cargo the Americas and – Peter Schmidt-Löffler and managing APAC. “This has a global tank helped us to not container fleet,” Schmidt-Löffler told only be closer to our customers but also to transfer values and know-how Freight News. One of the company’s flagship with more precision at a local level,” products is its consolidation service said Peter Schmidt-Löffler, CEO from Bremen, servicing the Northern Sub-Saharan Africa, who has taken

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Leschaco is expanding its footprint in Africa and the chemical industry.

European market. “Our state-ofthe-art facilities in Bremen allow us to handle hazardous cargo which makes us one of the only freight forwarders offering dedicated hazardous cargo consolidations into South Africa on a weekly direct schedule. Controlling and managing our own consolidations gives us a competitive edge and the flexibility to offer our clients customised solutions.”

Enslin said that during the challenges of the past 18 months, having a global set up had made all the difference. “In normal times everything flows nicely, but now you need to do something else to add value, and really take care of every single container and shipment. Making sure cargo is delivered and received on time requires a lot of fine tuning and trusting relationships among all stakeholders,” he said.

Leschaco South Africa opens tank container division An early convert to the tank container idea, Leschaco has opened a tank container division in South Africa. According to Peter SchmidtLöffler, CEO Sub-Saharan Africa, this will provide their South African chemical clients with the full range of services, including LCL, FCL and airfreight. The company has a long history in tank container logistics, having shipped its first 20’ tank container 45 years ago. “At that time Leschaco was already an established international freight forwarding company. It was prepared to meet the challenges presented by the shipping of hazardous chemicals and, indeed, represented (and still represents) itself as the freight forwarder of choice in this demanding sector,” said Schmidt-Löffler.

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16 Dangerous Goods October 2021

The development of tank container movements in the late 1970s is what motivated Leschaco to set up offices globally, which marked the beginnings of the globalisation of the group, presently employing more than 2 500 people in over 22 countries around the world. Leschaco controls more than 5 000 tank containers, which are employed exclusively in the deepsea business. Through this fleet, Leschaco offers its customers door-to-door transport services combined with value-added logistical solutions. The company has developed its state-of-the-art tank container fleet management system where Leschaco can offer its customers transparency in their supply chain by showing all fleet movements in real time. It can also be a value

Leschaco is well equipped to deal with the challenges of shipping hazardous chemicals.

driver used by its customers for their own fleet management, with the transport order processing being carried out by Leschaco. “In addition to centralised tank container management at group headquarters in Bremen, Leschaco has regional Tank Container

Competence Centres in Houston, Tokyo and Bremen. These are responsible for ensuring the efficient operational employment of the fleet. Safety, quality and sustainability are given top priority in all Leschaco’s business operations.”

Safety and training remain top priority

do they need to be up to date with hen it comes to the MSDS, but more importantly, the movement of how to read it accurately and handle hazardous cargo, these types of inquiries and work safety and efficiency are at the forefront of M&S Logistics’ safely with the chemical product alongside the company’s Dangerous priorities. The pursuit of optimised Goods Safety Adviser, especially safety is never ending, and keeping in our company where we move up to date with new legislation and products in bulk form.” developments is crucial, a point She said the company had highlighted by Melanie de Valence, established itself as experts in general manager – Africa. dangerous cargo, making sure “It is imperative that global they were up to speed with local logistics companies, such as ours, regulations and ensure that they international are up to date laws, adding that with new safety company-wide legislation at compliance and all times. All Shipping lines are getting very certifications were our staff are robustly audited. certified to the strict regarding hazardous Commenting International cargo, despite dangerous on how South Maritime goods still accounting for a Africa compared Dangerous Goods large volume of exports and to the rest of the (IMDG) Code world in terms and complete an imports. of logistics, annual IMDG – Melanie de Valence De Valence course, which recognised that is hosted by there were still areas that needed the International Tank Container improvement but, despite the Organisation (ITCO),” said De levelling up required, South African Valence. This underscores the logistics companies were on a par wider importance of greater safety with international logistics. What in the dangerous cargo sector was concerning, she said, was the and the potential impact on lives, way dangerous goods were moved in communities and the environment. South Africa as a high volume was According to De Valence, all moved by road. “A drive towards M&S Logistics staff are trained in transporting more dangerous goods the understanding and complexity via the rail networks would be of the Material Safety Data Sheet advantageous.” (MSDS), a technical document that Another potentially hazardous provides details and comprehensive information on the potential hazards area is the fact that local drivers, despite being hazchem approved, and controlled products. “Not only

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are only responsible for a part of the supply chain. “This lack of ‘cradle-to-grave’ control is probably the biggest challenge the industry faces,” explained De Valence. “Accidents can happen at any time and anywhere with these goods. It is essential to ensure sufficient and effective training takes place for all people in the global logistics chain who work with dangerous goods, and for them to fully understand the risks associated with the movement of these types of products.” Another challenge is the availability of storage facilities and the number of service providers who are simply no longer prepared to carry or handle certain hazardous products. “Vessel space has become a major hurdle as other cargo is always accepted before hazardous cargo,” said De Valence. “There is also a shortage of depots and storage

solutions, especially bulk liquid in ISOtanks. Some port terminals are only accepting hazardous products on the last day of the stack, putting pressure on transporters who have to contend with port congestion.” According to De Valence, across the board there is a move towards more stringent policies. “Shipping lines are getting very strict regarding hazardous cargo, despite dangerous goods still accounting for a large volume of exports and imports.” She said the company was extremely positive in its outlook for the sector, which has seen growth during the past year’s disruption. “All sectors of the logistics chain however need to be vigilant and, crucially, invest heavily in their safety standards and have the correct procedures in place at all times.”

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October 2021 Dangerous Goods 17

MOZAMBIQUE Feature by Liesl Venter and Ed Richardson

Economy expected to recover in 2022

fter experiencing its first economic contraction in nearly three decades during 2020, the Mozambican economy is expected to rebound by 2022, according to the World Bank. In its latest economic update for Mozambique, the World Bank predicts that the economy will have recovered during 2021, and that it will grow by around 4% in 2022. A combination of the 2019 floods, Covid-19, and insurgency in the north saw nearly 3% of companies in the south of the country closing, and 39% in the violence-hit areas. “The capacity of firms to respond to such massive shocks is very limited in Mozambique. Firm survival time in the absence of revenues is short, estimated at between six and 10 weeks in Mozambique. “While the impact is significant across the board, small firms are worst affected,” state the authors. The transport sector was among

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18 Mozambique October 2021

the worst hit, along with tourism and mining. “The road to a resilient and inclusive recovery will be long. In the short-term, measures to support viable firms need to be strengthened.” The World Bank expects the broader economy to gradually pick up over the coming years as the global demand for commodities and domestic demand for services recover, and LNG investments gain momentum. The risks include more waves of Covid-19 due to the failure to vaccinate sufficient people and the continued stoppage of the liquid natural gas (LNG) operations in the north. Mozambique also needs to

invest more in skills, infrastructure development and conditions to support the development of a local transformative industry. This will increase the resilience of the economy in the face of external global supply chain shocks, and help develop integrated local value chains. Mozambique ranked 84 (out of 160) economies in the 2016 Logistics Performance Index, performing poorly for its trade and transport infrastructure quality and for the competence and quality of its logistics services. Mozambique also has poor levels of electricity infrastructure, and problems with transmission and distribution losses, the report states.

Mozambique’s predicted growth in 2022.

Progress is being made. In May 2021 Mozambique began construction of gas-to-power plant and transmission line projects worth $1bn in the southern province of Inhambane. Funding is coming from the World Bank, the US, Norway, African Development Bank (AfDB), Islamic Bank, and The Opec Fund for International Development, according to statements from the World Bank and the US embassy. “Our governance aspires that more than 10 million Mozambicans will have access to electricity for the first time in their homes by 2024,” Mozambique President Filipe Nyusi said at the launch of the project. Upon completion, the gas-to-power Temane Thermal Power Plant will have a capacity of 450MW. Another positive sign is a report by Radio Mozambique that 52 companies in Tete province have resumed their activities after shutting down due to Covid-19.

Several positive projects unaffected by insurgency

ozambique took a major knock when violence erupted earlier this year in Cabo Delgado, but the country is not allowing this to prevent it from attracting investment and developing new projects. “There is no doubt the insurgency in Cabo Delgado had an impact on the reputation of the country and one cannot get away from that, but there are also a lot of other things happening in Mozambique that bode well for the country’s future,” said African analyst Duncan Bonnett. While much of the development is happening in the south of the country, this does not mean that there is no focus on the north. “The ENI offshore project in the north was largely unaffected by the insurgency and has continued without much impact,” said Bonnett. “The floating LNG vessel is being built in Korea and the project itself is situated 100km offshore. The first gas is expected to start flowing next year, and this will be a major boost to Mozambique as the government will be able to

start generating revenue from the and Inhassoro project, representing project.” Mozambique’s government strategy The Exxon Mobil Corp project in to monetise its natural gas resources the north of the country was also through value-added projects. not impacted significantly, even This project sets the stage for the though the project owners delayed country to become a small light some work. oil and LPG “It is important producer by 2024 to note that – but the likely the project had construction not yet reached of a gas-fired final investment Mozambique is power plant in decision (FID) the same time not the first − when Covid frame provides and nor will it broke out or significant be the last country to develop upside risk to the insurgency happened. It was a major industry in an unstable Mozambique’s still in its very gas consumption area or to be affected by early stages, and forecast, serious risk factors. while there was according to – Duncan Bonnett some impact it Fitch Solutions. was not as great Civil work as one would and early think. There is still a fair amount construction work is already under of work that has to happen on that way on the Sasol project. project before it moves forward.” Another project to keep an eye Bonnett said there were several on is the Gigajoule LNG project, other projects taking off in according to Bonnett. Mozambique that were cause for This floating LNG import optimism. Sasol earlier this year terminal near the Port of Matola is reached FID on its Pande, Temane close enough to South Africa to offer

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real opportunity to local players. “These projects are all drivable from South Africa, and they are all going ahead and not being impacted in any way by what is happening up north. This is good news for South African operators,” said Bonnett. Ongoing investment in the various ports in Mozambique is also a sign of the increase in volumes. “Beira has consistently been upping its exports of copper from Zambia and the DRC and is now also doing breakbulk shipments. Investments at the Port of Maputo continue and a new port at Macuse is under construction – all positive developments,” said Bonnett. “If one looks at what has happened in Mozambique then it is important to note it is not the first, and nor will it be the last country to develop a major industry in an unstable area or to be affected by serious risk factors. Companies involved in major project development are well aware of the risks and are able to navigate around these incidents – be it a war in Iraq or an insurgency in an African country.”

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October 2021 Mozambique 19

18/06/2021 18:10:05

Cold chain opportunities in Mozambique

here is growing demand for cold storage facilities in Mozambique, according to the United States government’s International Trade Administration (ITA). It says that improving food availability in Sub-Saharan Africa (SSA) is directly related to reducing food losses and waste, in addition to improving supply chains. Post-harvest losses in SSA are the highest in the world, in part due to a lack of reliable logistics cold chains. This is confirmed in an article published by Fresh Plaza, which states “the true problem for the country is the lack of chilled logistics and of infrastructures between production and consumption”. Fresh Plaza was reporting on the participation by seven Mozambican agro enterprises in the annual MACFRUT Fair held in Italy during September. Potential growth markets for Mozambican produce are both internal and external. Up to 2019 there was a steady increase in food imports. Demand

cold chain infrastructure to smallcould be met by local growers if scale farmers who lack capital and they had the right logistics in place, electricity supply, the ITA states. according to various studies. Support for logistics solutions Mozambique’s agriculture sector comes from the government of contributed 24% of GDP to the Mozambique, which has allocated economy and provided means of 10% of its budget to transforming income to more than 70% of the smallholder population in farmers into 2018. sustainable However, postentrepreneurs. harvest losses In February exceeded 30% of Post-harvest losses exceed 2020, output and are 30% of output and are Mozambique pinpointed as pinpointed as the main President Filipe the main cause of alarming cause of alarming levels of Nyusi launched the SUSTENTA levels of food food insecurity Initiative, a insecurity, – US International programme according to the ITA. supported by Trade Administration Contributors the World Bank, to post-harvest which aims to loss in Mozambique include integrate rural households into long distances between harvest sustainable agriculture and forestand distribution points, the lack based value chains. of cold storage, as well as poor The initial grant amount is valued transportation. at $60 million, which will support Cooling and storage of crops farmers with training and financing, require an intensive supply of and improve supporting services. energy, which cripples adequate Cold storage technologies in

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Insurgency and Covid restrictions a toxic mix The arrival of troops from Rwanda and SADC has provided hope that the tide will turn in Cabo Delgado. This is according to Oxford Economics Africa, which has been monitoring developments in the country over the past few months. Specialising in providing forecasts and insights for major African countries, the company has also kept watch over the impact of the ongoing pandemic on Mozambique which, it says, has had an adverse effect on the 20 Mozambique October 2021

country, mostly due to the ongoing restrictions. “These restrictions and the large-scale displacements due to the armed conflict will hamper economic output this year,” reads a report. “On the bright side, the outlook for commodity exports has improved in the second half of 2021 thanks to robust Chinese demand. We forecast real GDP growth to recover slowly to 1.7% this year from -1.2% in 2020, before speeding up to 2.9% in 2022.”

demand for small-scale production include passive/evaporative coolers, absorption refrigerators, solar grid refrigerators, precooling and cold rooms, and packhouses and automated ripening chambers. An example of the difference made by cold room technology is Ausmoz Farm holdings, a large commercial farm located in Manica Province of Mozambique, about 40km from the Zimbabwean border. Its main products are litchis and avocados for export. The company was suffering significant losses when it relied on cooling inside refrigerated containers. Since installing a 60-squaremetre cold room, which can handle 32 pallets at a time and bring the fruit down to 1-2 degrees Celsius before packing into reefers for air and sea transport, the company has suffered no losses, according to the cold room supplier InspiraFarms. In 2020 Ausmoz exported over 90 tons of litchis and avocados, mainly to the United Kingdom and Europe.

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New fertiliser warehouse serves growing market

eira Logistics Terminals (BLT) has just completed a 4 200-square-metre warehouse dedicated to bulk fertiliser handling. According to general manager Kevin Hutton, this is in addition to the company’s existing operating warehouses of 28 314sqm at BLT and 6 552sqm at BLT’s external Manga warehouse. “We have also increased the cargo handling fleet by 50% to ensure cargo is moved in and out of the warehouses without delays.” He said the Beira corridor continued to offer opportunity to the market. “Clients are still looking for the shortest route to market, and Beira fits this bill very well.” According to Hutton, one of the biggest challenges, however, has been container issues and vessels not calling at the port – which negatively affected the advantages Beira offered.

“Vessels and container shortage the port and the container shortage. issues continue to plague the “It did affect the balance of cargo market, and customers need some moving on the Beira Corridor, but kind of certainty that cargo will things have started to improve and move. These pressures are usually the issue around containers and transferred to the cargo agents and vessel availability is starting to warehouses. Warehouse operators stabilise.” therefore need to find innovative He said most warehousing solutions and in Beira was reduce costs operating at while still capacity. “There is offering a high new warehousing level of service to going up to Most warehousing customers.” accommodate He said until the volumes. in Beira is June this year 2020 was a operating at BLT had seen great year for capacity. stable container the corridor, and – Kevin Hutton movements these warehouses for export are being built on cargo from the the back of those hinterland, but the last four months volumes. This being said, volumes of had seen a drop of at least 30% and cargo from the hinterland need to be customers had been diverting cargo sustained, otherwise warehousing in to other corridors. This was mostly Beira will have excess capacity and attributed to vessels not calling at rates will come under pressure.”

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Hutton said BLT was continuing to invest in new systems, equipment and warehouses. “A new CCTV system with facial and number plate recognition, and new cargo handling equipment has been on the cards. Just recently we received a new Kalmar for container handling. As a company we have to stay ahead of the local market, offering levels of service and security that are equivalent to, if not better than, what warehouses in South Africa and along other corridors offer.” Commenting on new developments, Hutton said e-seals were a relatively new process in Beira and had not kicked off without complications. “This has increased costs in an already strained market and reduced the truck efficiencies on the corridor. Greater care therefore needs to be taken when new systems are implemented, and increased consultation with the stakeholders on the corridor is important.”

Investing in equipment to support projects

Offshore gas finds offer real promise to the Mozambique project sector.

ozambique continues with new technology. to offer plenty of “Companies servicing Mozambique opportunity to have to ensure they have good logistics operators operational and managerial staff in thanks to its massive gas finds and place, as well as the right equipment. bulk mineral pools. As a company, in According to addition to transport Aly Lalgy, general equipment, we manager of have also invested Transportes Lalgy, in equipment such ongoing investment Gas extraction is expanding as earthmoving in Mozambique by across the country and is machines and cranes some of the world’s standing out as one of the to support various largest companies most reliable and durable projects.” bodes well for the He said the projects. future. biggest challenges “Mozambique is a – Aly Lalgy faced by road developing country operators were road with enormous conditions and potential in several areas of activity. access to various locations, especially The country's open market has led those rural and remote areas where to several international companies new projects were emerging. investing.” “Another challenge is updating of He said road transport continued data in map systems, which is not to play a critical role and operators always up to scratch. This can create were under pressure to stay ahead difficulties in tracking vehicles due

to its accuracy and the availability of the network. Therefore, the real costs seem to be high for the services we offer, and in most cases the profits generated are low and development is restricted.” Lalgy told Freight News that gas extraction was continuing to expand across the country and was standing out as one of the most reliable and durable projects. “At the same time, more projects in the mineral and agricultural sectors are taking off. These are still, however, in the implementation phase and will need some development – especially in terms of access. Reliable road infrastructure that allows easy access to various points is critical. This reduces the time factor, vehicle breakdowns, accidents, and other issues.” Lalgy said he was expecting to see economic growth in several areas, mainly in the northern part of Mozambique.

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“The new and recent projects arising in the north of the country are very promising. Yes, some political change is still required, especially to bring about substantial changes to the Mozambican infrastructure and to recover structures lost from the colonial era. This must be done as quickly as possible. Not only will it attract more foreign investment into the country, but also improve the per capita income of Mozambicans.” He said the logistics market continued to grow as Mozambican companies were mostly transporters. “They are gradually beginning to expand their services in accordance with customer requests.” According to Lalgy, the consolidation of cargo and transport across the country through the three Mozambican ports continues to be an opportunity for various entities to set up complete logistics solution companies.

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Mozambique

EU to start military training in Mozambique

he European Council has approved the establishment of a European Union Military Training Mission in Mozambique (EUTM Mozambique). According to a statement by the council, the mission will provide training and capacity building to “support a more efficient and effective response by the Mozambican armed forces to the crisis in the Cabo Delgado province”. The decision was the EU response to the Mozambican authorities' request for increased EU engagement in the areas of peace and security. President Filipe Nyusi has welcomed the deployment of an EU military training nonexecutive Common Security and Defence Policy (CSDP) mission in the country, according to the statement. EUTM MOZ will take over from a Portuguese armed forces

training project, and is expected to reach its full operational capability by mid-December 2021. It will consist of around 140 military personnel divided between two training centres – one for commando training and the other for marines. The costs for EUTM Mozambique, to be covered via the European Peace Facility, are estimated at €15.16 million (R258m) for a period of two years. A further €4 m (R68m) has been approved to complement the training of military units, with the provision of nonlethal individual and collective equipment. Over the budgeted two years of training, the strategic objective is to support the capacity building of the units of the Mozambican armed forces that will be part of a future Quick Reaction Force. In particular, the mission will provide military training,

The European Council's military training unit in Mozambique will assist the country in dealing with the armed struggle in Cabo Delgado.

including operational preparation, specialised training on counterterrorism, and training and education on the protection of civilians – especially women and girls in conflict – and provide compliance with international humanitarian law and human rights law, according to the statement. The European instructors will

not engage in military operations. “EUTM MOZ will contribute to the EU's integrated approach to Cabo Delgado, together with peacebuilding, conflict prevention and dialogue support, humanitarian assistance and development cooperation, as well as the promotion of the women, peace and security agenda,” according to the statement.

Financier goes bananas Perishable exports through Maputo are due to increase, with a $3-million investment in the Quinta da Bela Vista Limitada (QBV) irrigated banana estate in the southern Boane area in the Maputo province. Mozambique is one of the biggest banana exporters in Africa. Production has been affected by Panama disease (Foc TR4) and the Banana Bunchy Top Virus (BBTV). Plantations are being replaced with more resistant variants. Production has shifted south after the collapse of the Matanuska plantation in northern Mozambique, which at its peak exported 50 000 tons of bananas a year and employed 2 500 people. It went bankrupt in 2018, in part due to Panama disease destroying the plants. Despite this failure, production in 2019 was 724 966 tons, according to World Data Atlas. 24 Mozambique October 2021

Maputo province has 22 private companies growing bananas, in Namaacha, Moamba, Boane, Manhiça and Marracuene districts, 80% of which are exported to South Africa, Botswana and the Kingdom of Eswatini. In 2018 South Africa accounted for 99% of Mozambican banana exports. Other export destinations for

Mozambican bananas are Saudi Arabia, Liberia, Singapore, Greece, Italy, and Antigua and Barbuda. UK-based “social investor” AgDevCo is providing debt capital for the expansion of QBV, which was established in 2016 as a joint venture between Silverstreet Capital's Silverlands I Fund and Crookes Brothers.

Bananas are a lucrative export commodity in Mozambique, one of the world's biggest banana exporters.

Crookes Brothers provides QBV with a marketing channel into South Africa. Exports of fresh or dried bananas and plantains from Mozambique to South Africa were worth $32.62 million during 2019, according to the United Nations COMTRADE database on international trade. SilverStreet is one of Africa's largest dedicated investors in the agricultural sector, with investments in eight countries on the continent. The QBV plantation currently comprises 128ha of irrigated bananas, with plans to expand to 260ha over the next two years. It is not the only recent investment. In April 2021, Bananalândia opened a new banana production and processing unit in Moamba district, Maputo province. It has started exporting its produce and has a potential of around 3.5m boxes a year, according to the company.

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Rail project set to unlock potential of coal basin

railway line linking the predominantly used for the hinterland coalfields transport of bulk minerals from the to the proposed new mines to the ports.” Macuse Port, which is Savad said moving coal to rail currently under construction, is fast also ensured a more competitive gaining traction in Mozambique. logistics cost. He said the project was already According to Greg Savad, CEO at an advanced stage, with all of TransRailnet International, an the necessary environmental and infrastructure construction and feasibility studies completed and all operating company looking to approvals already awarded – as well finance, build, operate and transfer as the concession. various rail construction projects Plans are also under way to throughout Africa, the project is of extend the rail link across the rest vital importance for the logistics of of Mozambique up to the Zambian the mining sector in Mozambique border. “Our goal and to unlock the is to have a second potential of the coal phase development basin in the country. where we connect the The company Zambian Copperbelt is working with This rail solution will to the Mozambican Thai Mozambique take the pressure off line. This can even Logistics (TML) the existing highway be further extended which has been system that is currently to connect the granted the Democratic Republic concession to build predominantly used of Congo as well as a high-performance for the transport of connecting to the railway to transport bulk minerals from the natural resource coal and cargo areas of Zimbabwe.” between the Moatize/ mines to the ports. Savad said the Chitima region and – Greg Savad Peebco Energy Group the new port to be was also on board built on the Macuse and would utilise its patented, wind River. turbine, green energy technology The Macuse Port is a proposed to create an auxiliary/hybrid new export port for Mozambican source of green electrical energy for coal, to be located on the coast of both the operating trains and the Zambezia province in Macuse near Mozambique deepsea port. the city of Quelimane. “Thus far, $100 million has “We are very excited about this already been injected into this development and are working closely with TML to deliver this rail endeavour for feasibility studies, environmental impact studies, solution. It will take the pressure consultant fees, and such.” off the existing highway system Andrew Clothier, the engineer in the country, which is currently

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NACALA

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MAPUTO A planned railway line between Macuse and Tete will take the pressure off the road network in Mozambique.

working on the project, said construction would take anything from three to four years for the 637km length of railway line. “We are very positive about the outlook for this project, especially considering the comeback that rail is making and the growing focus on development in Africa.” He said with most of the high-level studies on the project completed, the more complex and detailed engineering designs would be the next phase, taking the team one step closer to construction. Asked about the cost and financing of the project, Savad said it was all privately financed. “This is for several reasons, including that it is a more flexible option. The cost of the project is significantly less than what was expected. We also have time to

start with the basics and develop the project as we go along.” Plans are also under way to develop a mentorship and skills transfer programme to impact local communities in Mozambique. “Our ultimate goal is to make rail construction and rail operation a safe, long-term job prospect for Mozambicans,” said Savad. He said discussions with other governments of other countries were under way, but at present, the focus was entirely on Mozambique. “It is important to keep to bitesize chunks that are deliverable rather than trying to do too much too quickly. As TransRailnet we want to be involved in the holistic development of Africa. We want to start with a project on the ground and phase in other projects as we progress.”

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Gearing up to meet standards of international industrial clients

ngoing interest in the Asked about challenges, Krueger movement of bulk cargo said the interconnectivity with global through the Port of supply chains was still problematic. Maputo is good news for “A lot of this relates to the global the Mozambican logistics sector. supply chain disruptions from the According to Mark Krueger, Covid-19 pandemic. This includes business manager for LBH bottlenecks and capacity restrictions Mozambique, pandemic-related at ports, reliable access to the right change and unpredictability has shipping vessels, and even availability forced companies to find new ways to of shipping containers.” support bulk exporters. Logistics companies, he said, “We see growing interest in moving needed to actively help clients bulk material through Maputo, and manage all these challenges and in developing corridors to move bottlenecks, and look at workable exports and imports from inland alternatives. “We can see that many countries to ports such as Beira service providers are embracing new and Nacala,” he told Freight News. technologies, world best practices and “As a company our focus has been training to deliver a new standard of on creating innovative solutions for quality, safety and performance.” clients. In Africa, In this regard, just as important LBH Mozambique as solutions, is was continuing having the right to gear up, said people on hand Krueger, to meet The change in the global to make those the standards geopolitical landscape and and global solutions a longlasting reality.” supply chains has resulted expectations He said the of the many in a surge in interest in company was international Mozambican coal. at present industrial clients – Mark Krueger reinvigorating from the oil its consumables and gas as well delivery services as mining and to meet the changing needs of communication sectors. Mozambique’s economy and the According to Krueger, new global supply chain. opportunities were continuing to “We are also maintaining our focus open up in the country as corridors on projects, delivering tailor-made were developing. logistics solutions that are cost“Despite the delays on the Afungieffective and efficient. The upcoming based developments for LNG, we expansion in Temane, along with have continued to see confidence in growth in infrastructure and developing hydrocarbon resources communications in Mozambique, as in Area 4 under the Eni-operated well as the growth of mining in the Coral South project, and also the country are exciting developments in expansion of the Temane field and the project sector.” gas plant construction under Sasol.

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Roadfreight experts into

MOZAMBIQUE NAMIBIA ANGOLA BOTSWANA

There is growing interest in the movement of bulk cargoes through Mozambican ports. Photo: LBH Group

The change in the global geopolitical landscape and supply chains has also resulted in a recent surge in interest in Mozambican coal,” he told Freight News. Mozambique is rich in resources and minerals that are required to support the 5th industrial revolution, including lithium, cobalt, solar and wind energy. “This continues to attract investment and interest in Mozambique, and often in remote or challenging locations that require an innovative and adaptable logistics partner.” Another development, said Krueger, was the increased competitiveness in rates for local services, something to which everyone needed to pay attention. “What we feel will distinguish those who are successful long-term, though, will be the delivery of innovation and quality of service. That includes efficiency through the use of technology, partnering with those best positioned to manage risk, and continuing to strive for operational excellence in all that is delivered.” He said the soon-to-open ring road, linking the N4 at outer Matola

with Marracuene, was a positive development and would allow an efficient and safe bypass for freight coming in from South Africa, but heading onto regional destinations. “This will reduce congestion on the existing routes through the city and port areas, as well as improve speed and safety for freight travelling north in Mozambique. We are also excited about the ongoing port expansion and development projects at Nacala and Beira. These are integral to executing the vision of leveraging Mozambique’s geographic location to support southern African imports and exports. “For the resource-rich northern region of Cabo Delgado, we also see a need to secure and rebuild road transport corridors, as well as expand the capacity of the Pemba port area beyond the ageing and congested existing port located in the city area. The progress of investments in alternative project-orientated ports and shorebases, such as Renco’s Pemba Bulk Terminal and the ENHILS shorebase in Pemba, remain important for the future vision of major development in northern Mozambique.”

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Maputo port now among the best connected in Africa

nvestment in information technology has connected the Port of Maputo live with its mine customers in South Africa, according to Osório Lucas, chief executive officer of the Maputo Port Development Company (MPDC). “We have spent a lot of time investing in technology in order to improve the digitisation of the port,” he told Freight News. The IT system informs the port when a truck has been loaded at the mine, along with the details of the vehicle and the truck driver. It informs the port when the truck has gone through the KM7 border post on the South African side, and the KM4 on the Mozambican side. “This means we can plan the resources needed for when the truck arrives at the port,” he says. Remote weighbridges have been installed at the entrance and exit to all the storage areas, which enables the mines to monitor stocks within the port live.

All port operations are now paperless. Security staff use tablets to capture information of visitors. Road and rail infrastructure in the port itself has been upgraded to allow it to move from two million tons to 4.2 million tons of chrome a year by rail, with a further 5.8 million tons on road. The port now has a storage capacity of 10 million tons of ore. Work on the strengthening of the quay walls and slabs on berths 6, 7, 8 and 9 is progressing well. Berths 6 and

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7 will be at 16-metre draught and berth 9 at 15 metres when completed early next year. The port has been able to load vessels of up to 140 000 tons before the completion of the dredging. This will be increased as the berths are dredged to minus 16 from minus 12.5 in early 2022. The next step in the digitisation of the port operations is to manage the loading of vessels. An online planning system has obviated the need for physical meetings with agents.

Skills are being upgraded to facilitate the modernisation of the port operations and planning. MPDC has its own training centre equipped with simulators for gantries and ground handling equipment. Measurable benefits include the reduction of truck turnaround times from three hours to one, as well as faster loading of vessels. Safety has also improved due to better management of risks.

The IT system informs the port when a truck has been loaded at the mine, along with the details of the vehicle and the truck driver.

– Osório Lucas

Osório Lucas

Paving the way for one-stop border crossing Digitisation of the operations of the port of Maputo, which includes direct connections to the mines, has paved the way for speeding up border crossings at the South Africa/ Mozambique border. Osório Lucas, chief executive officer of the Maputo Port Development Company (MPDC), says the bulk of the information needed for clearance is captured by the port system at the mine. This information can be made available to customs in order to preclear cargo, trucks and drivers. Improvements to productivity in the port have now put the focus on the border post, which is unable at present to process trucks fast enough to match the productivity of the port – particularly with the 30 Mozambique October 2021

Mozambican side between the introduction of Covid-19 present operating hours. protocols. This means that there is no “The port works 24 hours a back-up when the border post day, which means that trucks opens at six. should move 24 hours a day. The port has also established “We believe it is possible to an interim truck stop which move to a 24-hour border and a single border,” he told can accommodate 100 trucks Freight News. during the Progress is hours that the being made borders are through steps closed. towards a They would We believe it is possible to “soft” single be able to be move to a 24-hour border border. released from and a single border. “We are four in the – Osório Lucas engaging morning for directly the return with the leg if a “soft” Mozambican and South border is in place. African governments,” he says. There is pressure from all Mozambican customs sides on customs officials has a team which clears the to speed up border crossing trucks caught between the times. South African border and According to Lucas, it takes KM4 border post on the around 30 hours for a truck

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to drive from a mine to the port and back. At present the turnaround time is 2.5 to three days per truck due to border delays. This represents significant lost revenue to the Mozambican fiscus. It is estimated that “collateral loss” to Mozambique alone in 2021 will be around $30 million due to inefficiencies. “No matter what we do, the port will be inefficient if the trucking system is not efficient,” he says. MPDC is also concentrating on improving rail links to the port. “We have removed the constraints inside the port and the challenge now is a lack of rolling stock, in addition to cable theft and sabotage in South Africa,” he says.

New warehouse facilities add muscle

ELOAD-Aquarius Shipping that was continuously investing in its International Mozambique facilities and equipment, but that this has invested in new was a trend throughout Beira. warehouse facilities in Beira “There is a lot of investing going as part of an ongoing strategy to into warehouses and container yards strengthen its foothold in the country. – and with the steady improvement According to Victor Ferreira, that Beira has made year-on-year, it Mozambique GM, the 11 500-squareis attracting a lot of attention from metre facility has both importers allowed the company and exporters, to increase its capacity as well as local in Mozambique. opportunities.” “We now have Ferreira said the 11 500 square metres Constant upgrading of constant upgrading of AAA grade of the port had the port has played undercover working also played an an important role in space with 10 000 important role keeping the momentum in keeping the square metres of going in Beira. hardened yard area momentum going for container stacking – Victor Ferreira in Beira. “Along and bulk handling,” with this, there he told Freight News. has also been “We have also moved into brand new constant upgrading of essential road offices on the premises and have structures and bridges, all of which acquired new assets in the form of continue to improve the landscape. reach stackers, forklifts, weighbridge More businesses are investing into scales, and other necessary equipment the logistics sector in Beira which is for specific purposes.” making it a more attractive option He said it was not only his company for the landlocked countries of

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Investment into warehousing in Mozambique is on the rise. Photo: Reload Logistics

Zambia, Zimbabwe and Malawi.” He said it was essential for companies to keep an eye on the political situation in the country, especially in the north where insurgents had caused disruption. “Also important in Mozambique is to keep a close eye on the weather patterns. Weather can cause severe devastation, as we have seen over the past few years in the country.” Ferreira said other challenges being dealt with included vessel space and congestion outside the port. “Shipping line equipment availability can be problematic at

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times as is truck availability, but for the most part these are challenges being faced on a global level due to the ongoing pandemic.” He said expectations were high that there would be more investment in warehousing in the near future. “Even with the upgrades we are seeing, warehousing remains a big challenge as the volumes coming in and out are growing rapidly. Transport opportunities are available both locally and cross border. We are very positive about the future of Mozambique and will continue to invest in the region.”

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October 2021 Mozambique 31

Mozambique

Greater focus needed on maritime risks

uccesses against occupying forces on the ground in northern Mozambique need to be supported by a greater emphasis on securing the country’s 2 500-kilometre coastline, according to Francois Vreÿ, research coordinator, Security Institute for Governance and Leadership in Africa, Stellenbosch University. In an article published in The Conversation, Vreÿ writes, “the fixation on landward efforts ignores the fact that the insurgency also poses a maritime threat. “The combined military response against the insurgents is primarily on land, with very limited maritime response capabilities. “But the insurgent threat is not limited to the interior. Insurgents stormed and held the port of Mocimboa da Praia in August 2020 and attacked communities on nearby islands off Palma, halting its tourism flows. “Mozambique’s future economy relies heavily on maintaining a safe offshore domain. To this end the government must make use of every opportunity to build the required capacity and partnerships to maintain the rule of law at sea.” Vreÿ argues that security on shore is interrelated with maritime security. “This is the reality in the waters off Somalia, Nigeria, Libya and Yemen. Weak security governance on land affects the maritime economy, with shipping and resource extraction particularly vulnerable. “This land and sea interplay is a potential risk facing Mozambique’s decision-makers.” Perceptions of dangers in the

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insufficiently policed waters waters off Mozambique, similar to those off Somalia and Nigeria, will offer the potential for criminal syndicates and insurgents to have multiple knock-on effects, he prosper side by side. warns. Transnational criminal “Higher insurance costs are syndicates already operate into incurred; shipping must follow Cabo Delgado, he says. longer routes, increasing the cost “Insecurity at sea off Cabo of doing business; private security Delgado carries personnel are the risk of often taken on; compounding and the safety the problem and livelihoods posed by drug of crews are at Weak security governance smuggling higher risk. on land affects the networks “All this is maritime economy, with operating in the evident in the area. No effort demarcated shipping and resource should be spared danger zone now extraction particularly to prevent the operational off vulnerable. insurgents and Nigeria.” – Francois Vreÿ the smugglers Land-based cooperating.” criminals and South Africa, insurgents can Mozambique and Tanzania need attack vessels at sea using drones. to continue with their joint efforts “The recent drone attack on to prevent piracy from gaining a a commercial vessel passing foothold in Mozambique. through the Gulf of Oman, with “Cooperation with a wide Yemen and Iranian connections, array of partners to promote must also serve as a warning. maritime security governance over There have been allegations of the longer term must remain a the presence of drones in Cabo priority.” Delgado.” The South African Navy and Another major risk is that

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UN Office on Drugs and Crime are the first naval and capacitybuilding respondents to arrive. “But the SADC should seriously consider using its Standing Maritime Committee to assist Mozambique. The aim would be to bring about a formal regional arrangement for cooperation to secure regional economic and security interests in the southwestern Indian Ocean over the longer term. “Mozambique is in no position to contribute significantly to the broader array of maritime security endeavours. That’s why international partners need to play a role. “The SADC must now pass the acid test of stemming the insurgent threats from spilling over and threatening the region’s wider landward and maritime interests. “The intervention forces currently fighting the insurgents should extend their role offshore to prevent a collapse of security at sea off Mozambique – or at the minimum, any such perception among the international maritime community,” he writes.

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Rail links being rehabilitated

ozambique’s ports are becoming more connected to the hinterland through a number of rail rehabilitation projects. Some $260 million will be invested in rehabilitating the Beira-Mutare and the MaputoHarare railway lines, as well as the procurement of four locomotives and 150 wagons to service the routes. In a briefing at the unveiling of the project it was said locomotives would be sourced from India and would be used to pull wheat and chrome between Beira and Harare. The briefing coincided with what is described as the first meeting between the senior management of CFM and the National Railways of Zimbabwe (NRZ).

NRZ is on a drive to attract investments that will see the parastatal being revitalised. These include public private partnerships in which customers repair out-of-service resources such as wagons and locomotives. This equipment is then available to the customers. NRZ’s strategic plan is to transport 4.2 million tons a year on rail by 2023. Work started on the rehabilitation and upgrading of the 317 BeiraMachipanda section of the railway line between the port of Beira and the Machipanda border town in late 2020. It will increase capacity from 1.5 to 3 million tons a year. It is part of the greater Machipanda-Harare railway upgrade. CFM has started replacing

The procurement of four locomotives and 150 wagons will be used to pull wheat and chrome between Beira and Harare.

tracks on the line, as part of a $200m investment. The tracks are being upgraded from 40 to 45 kilogramme capacity, which means they will be able to accommodate 80-ton wagons rather than the previous limit of 60 tons. CFM board chairperson Miguel Matabel is quoted as saying that the work will be completed in 2022. Another project which has started is the $46-million rehabilitation of the Sena line from Beira to the Moatize coal basin in Tete province. It will also connect Malawi to Beira by rail through a spur which goes from Mutarara to Bangula in Malawi.

The 115km spur, which has been unused for a number of years, consists of 44km of rail in Mozambique, and 71km in Malawi. Malawi will then be connected by rail to Nacala in the north and Beira. The private sector is involved in the restoration of the rail services. Unitrans Africa has announced that it has established partnerships with NRZ, CFM and private rail operator Traxtion. According to Unitrans, it will offer dedicated rail links between Maputo Port and three major Zimbabwean trade hubs – Harare, Bulawayo and Gweru.

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Mozambique ‘victim’ of World Bank ‘Doing Business’ scandal

ozambique is among the countries which received poor rankings in the nowdiscredited World Bank “Doing Business” rankings, according to Joseph Hanlon, editor of the newsletter Mozambique News Reports and Clippings. Writing in Club of Mozambique, Hanlon is highly critical of the World Bank, saying that it used its “Doing Business” rankings to “bully” countries like Mozambique to “follow neo-liberal dictates” in order to attract investment by improving their ranking. In 2020 Mozambique was placed 138th out of 190 countries, having dropped three places in the “Doing Business” index. Writing in The Conversation, Fernanda G Nicola, professor of law, American University, says the World Bank is in “the middle of one of its

biggest scandals since being founded in 1944”. The impact of the index on a

country’s fortunes is illustrated by World Bank research which found that a 1 percentage point improvement in a country’s overall Doing Business score correlated with $250 million to $500 million in additional foreign direct investment. “Countries in Latin America and Africa have restructured their entire corporate governance regimes to fit Doing Business’s one-size-fits-all reforms,” she says. Companies looking to do business in Mozambique will be looking at other reports, such as the 2021 Investment Climate Statement by the US Department of State. “Despite the pandemic and terrorism, Mozambique has a decent mid-term outlook. “Following four years of reforms since the hidden debt scandal, Mozambique has made progress in the fight against corruption. “Thanks in part to these efforts,

the IMF and Mozambique entered into discussions to relaunch a new lending programme, potentially the first non-emergency budgetary assistance to the government in five years. “If Mozambique continues on this path of reform, it will be better placed to manage its eventual resource income and attract other foreign investments.” The “hidden debt scandal” refers to €1.76 billion (R29 billion) in loans taken out by three Mozambican state-owned companies, ProIndicus, Ematum and Mam, between 2013 and 2014. A trial of 19 suspects – including the son of Mozambique's ex-president Armando Guebuza – has begun in the town of Machava outside Maputo. Former finance minister Manuel Chang, who is in detention in South Africa, is among the accused.

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October 2021 Mozambique 35

Mozambique

R2.2 billion to help rural agriculture blossom

he World Bank has approved a $150-million (R2.2-billion) grant from the International Development Association (IDA) to support the first phase of Mozambique’s Sustainable Rural Economy Programme. In its first phase, the 10-year programme will tackle some of the pressing challenges facing small agriculture producers and fishers as well as micro, small and medium enterprises (MSMEs), while improving natural resources management practices, according to a bank statement. The agricultural sector – the biggest employer in Mozambique – continues to struggle to recover, according to the Famine Early Warning System Network (FEWS Net). In mid-year, the Ministry of Agriculture and Rural Development predicted that there would be an overall increase in agricultural production of around 8% over 2020. This is largely in line with the Water Requirement Satisfaction Index (WRSI), which estimates near-average to above-average production for maize grain.

However, in eastern Nampula An average to above-average and eastern Cabo Delgado, 2021/22 agricultural season agricultural production is expected is likely to support household to be well below average due food stocks and income from to below-average rainfall and, agricultural labour and crop sales particularly in Cabo Delgado, the across Mozambique for a second impact of conflict. consecutive year, except in eastern Below-average production is Cabo Delgado due to the current also expected in northern Maputo insecurity. However, there is a province and the lower Limpopo moderate to high risk for localised valley in Gaza flooding in a due to dry spells number of areas at the beginning which may affect of the season yields, according and flooding to the FEWS Net There is a moderate to high analysis. in February, according to risk for localised flooding in Commenting FEWS Net. on the grant, a number of areas, which Much of the Idah Z Pswarayimay affect yields. organisation’s Riddihough, – Famine Early Warning World Bank map of Mozambique lists System Network country director it as “stressed”, for Mozambique, with the northern Madagascar, Cabo Delgado area in a state of Comoros, Mauritius, and “crisis”. Seychelles, said “the rural space The prognosis for 2022 is more is the backbone of livelihoods positive: average to above-average for most of the population in rainfall is expected across much Mozambique. It also accounts for of Mozambique between October most of the country’s poor. 2021 and March 2022, driven by “Rapid rural population growth weak La Niña conditions from adds an estimated 450 000 youth August 2021 through March 2022. to the country’s workforce every

“

year, making the focus on rural income growth imperative to promote inclusive growth and prevent conflicts.” The project will provide support to small agriculture producers and fisheries to increase their productivity and access to markets and help MSMEs improve their sales while promoting the adoption of climate-smart agriculture practices. Additionally, the project will invest in extension services and basic “rural climate-proof transport infrastructures”. “It’s evident that economic expansion in agriculture yields the highest impact on poverty reduction in Mozambique,” added Diego Arias Carballo, lead agriculture economist, and the operation’s task team leader. “However, the sector’s potential continues to be challenged by low productivity, mostly due to low technology adoption, and limited provision of agricultural services, coupled with high seasonality in production, as well as increasing climate vulnerability. This project seeks to address some of these challenges.”

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36 Mozambique October 2021

MINING AND MINERALS FEATURE 2022

Providing road-to-rail transport solution

movement of minerals from LG Mozambique, in South Africa through to the Port collaboration with of Maputo. CFM railways, has “There are several benefits completed construction that the terminal offers to the of a minerals transit terminal congested road infrastructure,” at Ressano Garcia Railways she told Freight News. “Drivers exchange yard. do not need to exit their trucks Known as Terminal on arrival at the terminal. Internacional Ferroviario Immigration and customs de Trânsito de Minérios de formalities are Ressano Garcia quick, while (TIFTMRG) , transporters this transit dry can be prebulk facility has registered the capacity to The new terminal has accommodate capacity to load up to four through The Logistics up to 50 000 trains per day or 12 000 tons Company in tons of bulk Centurion South minerals at any of bulk minerals per day. one time and – Florbela Trancoso, TLG Africa. An online booking is only 400 and statusmetres from the tracking system for minerals South African Lebombo border. customers provides further ease According to Florbela of business.” Trancoso, TLG logistics Trancoso said it allowed manager, the partnership transporters to move larger between CFM and TLG volumes of cargo for their Mozambique will provide an customers thanks to the quick alternative logistics road-toentry and exit into the terminal rail transit solution for the

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A new minerals transit terminal at the Ressano Garcia Railways exchange yard has been welcomed by industry. Photo: TLG Mozambique

“Turnaround times are less than 45 minutes, meaning transporters can do more loads per month due to the shorter travelling distances and quicker turnaround times.” Other benefits include a nonintrusive scanning system and CCTV and 24-hour manned security. “This new terminal also enables increased utilisation

of CFM rolling stock,” said Trancoso. “It has capacity to load up to four trains per day or 12 000 tons of bulk minerals per day. It has undoubtedly created job opportunities for the local Ressano community.” According to Trancoso, by designing and delivering a customised solution, maximum value can be extracted from the entire supply chain.

Tackling bulk logistics challenges within the supply chain The Baltic Dry Index benchmark, reflecting the average prices paid for the transport of dry bulk materials, has lately reached its highest level since mid-2010. High freight rates and container shortages are severely battering exporters and importers, resulting in a domino effect down the supply chain and disrupting global trade.

The validity of price quotations to clients has also decreased, which has put short-term pressure on logistics planning. According to World Mining Data, more than two million metric tons of copper is mined in the Copperbelt, located in Zambia and southern DRC, and approximately 330 000 metric tons of chromium ore

is mined in Zimbabwe per annum. These include clinker, vermiculite, and cobalt, amongst many other minerals that are also extracted in Mozambique’s hinterland region. Now, more than ever, capacity is key, and market players are looking for more and better ways to improve their supply chains. To cater for this global demand,

Moçambique Terminal de Minerais, located in the Beira corridor and within the Beira Port perimeter, was developed. “Our bonded bulk storage facility of five hectares connects to the hinterland with both road and rail,” said a spokesman. “Our goal is to facilitate the quickest route to market for bulk minerals.”

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October 2021 Mozambique 37

Mozambique

New contract prompts expansion of Moz footprint

infrastructure in the region. anica Freight “Together with our strategic Services (MFS) partners, we have grown our oil is upscaling its and gas as well as project focus operations in significantly over the past couple Mozambique. This is part of an of years. More ongoing strategy recently, we have to expand its been TRACE footprint in the certified (the country after being world's leading awarded several We have been anti-bribery contracts related TRACE certified standard-setting to LNG projects organisation), and and other business. (the world's leading antibribery standard-setting are fully compliant According to organisation), and are fully and ready to grow Andreas Kusza, our footprint.” MFS senior compliant. He said due to management – Andreas Kusza rapidly increasing adviser, this activities in the upscaling of Pemba region, the company was operations is being undertaken set to put additional infrastructure in conjunction with Manica in place over the course of the next Terminals Mocambique and is a few months. clear indication of the company’s Commenting on the current commitment to investing in

“

Manica Freight Services continues to invest in infrastructure and equipment to service the Mozambican market. Photo: Manica Freight Services

security situation in Cabo Delgado, Kusza said that all activities in and around Afungi had been put on hold until further notice. He said MFS also undertook regular risk assessments. “Not only from the aforementioned security and infrastructural aspects, but natural risk of severe weather patterns also needs to be considered. The rainy season in northern Mozambique can be quite challenging and bring major delays

or disruptions to the supply chain.” He said despite the volatility of the oil and gas market prices, oil and gas projects in Mozambique were set to continue and would be completed. Kusza said while Covid-19 had impacted operations in Mozambique, the business sectors had adapted swiftly to the new operating and communication environment, and supply chain adjustments had been made.

LNG project expected to be back on track next year There are strong indications that the TotalEnergies Mozambique LNG project will be back on track by June next year. This is according to African project specialist and analyst Duncan Bonnett of Africa House who says while the project in the north of Mozambique was significantly impacted after an insurgency, it has remained a top priority for the parties involved. “There is a definite positive feeling and things are picking up following the deployment of troops in Cabo Delgado to help quell the insurgency,” he told Freight News. “Early indications

are that the companies involved are looking at the middle of next year to resume activity on the LNG project. Of course this comes with some very big ifs and buts and is very much contingent on the security in the region being maintained, but it is very positive news indeed.” Total and its partners were forced to declare force majeure on the $20-billion project earlier this year after Islamic State-linked fighters overran the town of Palma, close to where the ongoing LNG project is being developed. This left the French energy group with no choice but to declare force

majeure and withdraw all its staff from the construction site. At the time it was unclear when the project would pick up again or even if it would continue. “I think this has been one of the positives – that even though the companies involved have been offsite, they have not abandoned the project and work has been ongoing in the past few months,” said Bonnett. At least eight export agencies had a stake in the flagship Mozambican project and not a single one had paid out insurance or withdrawn from the project, giving a clear indication that those

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38 Mozambique October 2021

involved were positive about the development, explained Bonnett. “This project fundamentally remains in place and it really is just a question of guaranteeing the security before workers return and construction continues.” Troops from Rwanda and SADC have been deployed to Cabo Delgado in recent months to assist Mozambican forces and stabilise the situation. In a recent statement, the African Development Bank, which is lending $400 million to the project, said it was optimistic that it would take off again by the middle of 2022.

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Mozambique

Breakbulk copper shipment helps address logistics crisis S coring a significant coup for the Beira Corridor, the first breakbulk copper shipment from Beira in three decades has been moved successfully. According to Cornelder de Moçambique’s commercial director, Miguel de Jenga, 15 000 million tons of copper cathodes were loaded between September 30 and October 5, with the vessel leaving the port in the early hours of October 6. “It was a very successful operation, handled by ourselves along with the cargo agent Access World and the vessel agent Terra Mar Logistics, proving breakbulk shipments are an effective alternative to container shipping of copper out of Beira,” he told Freight News. De Jenga said there had been a continued surge in demand for copper exports out of the hinterland. “In the 2018/19 financial year there was a 42% increase in copper from Zambia and a staggering 700% increase from

the Democratic Republic of the Congo (DRC). This saw the port handle over 270 000 million tons of copper that year. The trend was consistent, and in 2020 exports from the DRC increased by 116%, while Zambia grew by 88%, and total copper handled exceeded 500 000 million tons.” But, said De Jenga, these volumes were all shipped in containers. “Supply chain interruptions experienced globally due to Covidrelated lockdowns have caused delayed container vessel schedules and container shortages, thereby hampering copper supply chains globally. The Beira route was not spared this.” He said this had negatively impacted the throughput of copper from the hinterland by over 50%, at a time when the international commodity price of copper was increasing and stood to benefit the hinterland economies significantly.

The first successful breakbulk shipment in decades bodes well for copper exports out of Mozambique.

“As such, the port and corridor members have taken the important step of reintroducing breakbulk copper shipment from Beira almost two decades after having shifted to containers. The first shipment in October was very successful and is hopefully the first of many.” According to De Jenga, safety was a primary concern and the operation was completed without injuries or compromise to cargo integrity. The

port maintained the same highlevel security protocols for copper handled in containers as it did for the breakbulk cargo. “The Port of Beira and the Beira Corridor cargo logistics service providers are committed to maximising the potential of breakbulk shipping to alleviate the current container shipping crisis, and will continue to offer this solution to valued clients of the corridor.”

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40 Mozambique October 2021

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Perishable exporters take a second look at Maputo

ogistics companies are upbeat about the outlook for Mozambique’s economy. “The growth prospects are more positive for the medium term, and hopefully by next year operations will be back on track – along with investments into the gas projects,” said Captain Jayendra Misra, a director of I. Messina (Moç) LDA, agents for Ignazio Messina & C. The company, which has been operating in Mozambique since 2009, was one of the first shipping companies to start calling Mozambican ports on a regular basis. “The positive economic outlook is important as it is critical for the economy in Mozambique to stabilise,” said Capt Misra, “especially after the damage done by the longrunning “tuna bond” scam.” This scam saw conspirators arranging more than $2 billion in

fraudulent loans from international Other issues are poor investment banks for “front” infrastructure and the high costs projects, including the development involved for shipping lines calling of a tuna fishing boat fleet in Mozambican ports. Mozambique. The insurgency in northern “There are several challenges in Mozambique has also increased the Mozambique and risk factor of the they are varied. country. Over and above “As a company, more economic we continue to stability, the closely monitor volatility of the developments in Over and above more metical has to Cabo Delgado economic stability, the also be addressed. volatility of the metical has that affect the oil Furthermore, and gas sector. to be addressed. we are currently There is no facing an – Captain Jayendra Misra doubt that once onslaught of things stabilise, multiple and development poorly thought out, highly biased will get back on track and it will legislations which, if implemented, be a boost to the Mozambican will threaten the very existence of economy.” logistics companies and shipping Capt Misra said there were agencies that have overseas positive signs of an upward trend shareholding.” in economic activity – especially

“

considering the impact of Covid19. The pandemic was, however, starting to recede and the outlook was far more bullish. “The logistics sector in Mozambique caters largely to the hinterland countries such as Zimbabwe, Zambia and Malawi – hence developments here are closely tied to the situation in adjoining countries. Also, the MaputoJohannesburg corridor is slowly gaining relevance. South African exporters of fresh produce are having a second look at exporting through Maputo, which is very good news.” He said the construction of the railway line between Moatize and the region of Sopinho and the deep water port of Macuse would offer more opportunity for development of ancillary industries and boost Mozambique’s economy even further.

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October 2021 Mozambique 41

Mozambique

Shipping major tunes into ‘one-stop shop’ trend

rowing its Mozambican The country is, however, not footprint has been without challenges. “One of the identified as a key priority main issues for the industry is the for vessel liner CMA CGM. development and improvement According to Ugo Vincent, of Mozambique’s logistics managing director for the CMA infrastructure. This is critical CGM Zambezi Cluster, Indian for the realisation of the many Ocean Island Cluster and Reunion opportunities on offer,” said Island, the increasing number of Vincent. projects in the power, oil and gas He said across Mozambique sectors represents a significant the big players in the logistics opportunity for Mozambique’s sector were increasingly inclined future development. to provide “one-stop shops”, where “Whilst these projects can come they are able to provide services that with challenges, such as the delays cover the entire supply chain of their we have seen on customers. “This the LNG projects, way, not only does there is much customer loyalty opportunity in increase, but there’s Mozambique. One also a bigger focus area of specific on business process The recently launched focus has been the networking services optimisation, increase in mining marketplace is a business providing fewer projects and export operational issues matchmaking service volumes, in which and cost reduction enabling customers to we have a big for the client. footprint,” he told “CMA expand their business Freight News. CGM, with the worldwide. The company acquisition of Ceva – Ugo Vincent says it is also Logistics in 2019, seeing increasing and the launch and growth on both development of the Eswatini and South African its airfreight division, CMA CGM corridors respectively. Air Cargo in 2021, is committed to According to Vincent, the Port providing its customers with more of Nacala expansion, as well as complementary and agile solutions the LNG projects in the northern going forward.” region of Mozambique, are key The company also recently infrastructure development projects. launched its networking “Nacala port, if expanded, could services marketplace, a business accommodate an even higher matchmaking service enabling the volume of cargo for exports and company’s customers to expand imports, thus contributing to an their business worldwide, to create increase in Mozambique’s annual new business opportunities, and volumes,” he explained. to find the suppliers or customers

“

CMA CGM recently joined stakeholders to celebrate the first container rail service between Maputo and Motsapha.

that best fit their needs – all while saving cost and time and reducing the hassle and risks associated with business development. “Considering our expansion plans as well as our environmental sustainability goals, we are currently busy increasing our presence on the Maputo corridor by growing our customer base in Eswatini, South Africa and Zimbabwe. While taking this step, we are conscious of the impact of carbon gas emissions on the planet and are therefore focusing on providing rail transport solutions to the market.” Vincent said a new empty container depot in Nacala that would help cut costs and improve container turnaround times was also on the cards. “We are also planning to grow our footprint in Beira,” he said. “This growing footprint and other initiatives we are undertaking in Mozambique all form part of a

new journey that CMA CGM has embarked on known as Better Ways. It is a global commitment towards building more sustainable, efficient and resilient shipping and logistics solutions. “Our strategic vision is not only to offer more efficient shipping and logistics solutions and digitalisation, but also to develop solutions that are more people- and planet-friendly to make shipping and logistics a more sustainable industry," said Vincent. CMA CGM already has a strong presence in Mozambique where it employs close to 100 people across its three offices in the ports of Maputo, Beira and Nacala. “In Maputo, we operate weekly calls, providing direct connections to Asia, the Middle East, India and Indian Ocean markets for both imports and exports, and to Europe, North and South America through our global connections from Jebel Ali and Singapore,” said Vincent.

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Rehabilitation of BeiraMachipanda rail line

ovid-related supply chain interruptions around the world – and related lockdowns – have caused major delays to container shipping, posing serious challenges to ports such as Beira, says Miguel de Jenga, commercial director, Cornelder de Moçambique. “The biggest challenge for our container terminal is the global container shortage and accompanying increased ocean freight rates,” he told Freight News. “It has not all been negative, however, as it has brought about new opportunities of thinking how to keep the supply chain active and responsive to market demands.” He said out-of-the-box, innovative solutions were increasingly being implemented across the corridor, and logistics operators were working hard to ensure Beira remained competitive.

First country to receive emission reduction payments from FCPF

“A consortium of three national banks has provided $200 million for the rehabilitation of the Machipanda Railway Line, which connects the Port of Beira with Zimbabwe. The African Development Bank provided $700 000 for environmental and social impact assessment for the civil works for maintenance to the Machipanda Railway Line. This is a critical development for the Beira Corridor stakeholders in general, as the rehabilitation of the line promises to lower transit times between Mozambique and Zimbabwe and lower pressure of usage of National Road number 6.” He said another positive was the political stability the country was experiencing. “The instability in Cabo Delgado in the north of Mozambique seems to be under control since the deployment of Rwandan and SADC troops in July. We have seen many companies resuming their activities in the north of Mozambique, which is a win-win situation for the local economy in general, but also for neighbouring countries that are heavily dependent on our ports.” Commenting on trends in Mozambique, De Jenga said there was a growing move by shipping lines to extend their reach through the establishment of their own depots. “This stimulates competition in the market, while simultaneously increasing capacity to accommodate more cargo on the Beira Corridor.” Miguel de Jenga

Mozambique has become the first country to receive payments from a World Bank trust fund for reducing emissions from deforestation and forest degradation— commonly known as REDD+. The Forest Carbon Partnership Facility (FCPF) paid Mozambique $6.4 million for having reduced 1.28 million tons of carbon emissions since 2019. The payment is the first of four under the country’s Emission Reduction Payment Agreement (ERPA) with the FCPF that could unlock up to $50 million for reducing up to 10 million tons of C02 emissions in Mozambique’s Zambézia Province by the end of 2024. “Preventing deforestation and increasing efforts to restore those that have already

been damaged are the twin actions essential to ensuring a safer, climate-resilient and more prosperous future for local communities and the country as a whole,” said Idah Pswarayi-Riddihough, World Bank country director for Mozambique. “These efforts are costly and payment agreements such as these can be a game changer as they provide much-needed finances to improve sustainable forest management and resilience.” With 34 million ha of natural forests, covering 43% of the country, forests are an important contributor to the country’s economy and a source of employment, income, and livelihoods in Mozambique’s rural areas. These forests, however, have been severely degraded over the years.

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Mozambique

Mass vaccination by private sector

he Port of Maputo has vaccinated more than 25 000 members of staff and their families against Covid-19 as part of a campaign by businesses in the country to support the government’s vaccination campaign. This was part of a private sector initiative led by the Maputo Port Development Company (MPDC) and other business partners. According to Statista, Mozambique had administered around 3.68 million doses of (Covid19) vaccine by October 8, 2021. The cumulative number of Covid-19 cases in the country is over 151 000. Mozambique started the immunisation campaign in March, with vaccines received through the COVAX initiative. The “Univax” campaign by Mozambican business began on July 5. The Vero Cell vaccine from Chinese manufacturer Sinopharm arrived in Mozambique on June 30. The 319 companies that joined the initiative purchased around

The Port Maputo has vaccinated more than 25 000 members of staff and their families against Covid-19. Photo: Port of Maputo

500 000 doses of vaccines, of which 139 590 were donated to the government of Mozambique for the immunisation of the marginalised population. The objective of the initiative, which was born in April from a group of private sector entities, was to mitigate the impact of the Covid19 pandemic on the workforce of interested private sector actors and

their families, ensuring the stability of the workforce, contributing to the reduction of pressure on the general budget of the government, as well as accelerating the ongoing vaccination process, according to a statement. In June, the World Bank approved a $100-million grant from the International Development Association (IDA) and a $15-million grant from the Global Financing

Facility (GFF) in support of Mozambique’s efforts to expand its current Covid-19 vaccination campaign. The funds will be utilised to acquire, manage, and deploy Covid-19 vaccines and to strengthen national health systems’ preparedness and capacities, as well as to ensure continuity of essential health services, particularly for women, children, and adolescents. It will also support vaccine logistics, including cold chain inputs, storage, and transportation, as well as training community health workers in rolling out the Covid-19 vaccine campaign. “This operation will enable the purchase of approximately seven million doses of Covid-19 vaccines, the single largest contribution to Mozambique’s vaccination efforts thus far. This will provide coverage for approximately 20% of the eligible population,” said Miguel Angel San Joaquin Polo, senior health economist and the operation’s task team leader.

Adapting to climate change All aspects of life in Mozambique, including the business sector, are vulnerable to climate change. The country has been identified as one of the most vulnerable in Africa to the changes brought about by global warming. It also has huge potential – the World Bank has identified Mozambique as having the most potential in southern Africa to

grow economically over the next decade. For this to happen the country will need to adapt to the realities of climate change. In 2000, Mozambique was hit by four cyclones. It has a coastline of about 2 700 kilometres, with more than 60% of its population of 22 million living in coastal areas.

Foreign exchange earnings from the export of fossil fuels are likely to stagnate as the world moves away from coal. Banks are shying away from investment in new mines, and Brazilian mining giant Vale has put its Moatize coal mine in Mozambique up for sale as the company moves to become “carbon-neutral” by 2050.

Despite this, it increased coal production by 92% over the first quarter of 2021 following the completion of maintenance work. Freight hauled on the MoatizeNacala line increased by 65% to 126 000 tons quarter on quarter, according to the company. It carries both general freight and coal.

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