Freight & Trading Weekly Feature Cross Border

FEBRUARY 2010 FREIGHT & TRADING WEEKLY

Cross Border SPECIAL feature

Who is next in one-stop race?

The next BIG thing – The Cross Border single transit bond

How to save a year in man-hours every day Brighter future for road freight – Barney Curtis

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FEBRUARY 2010 | 1

Editor Joy Orlek Consulting Editor Alan Peat Assistant Editor Liesl Venter Advertising Carmel Levinrad (Manager) Yolande Langenhoven

Gwen Spangenberg

Jodi Haigh Division Head Anton Marsh Managing Editor David Marsh

Correspondents

Durban Terry Hutson Tel: (031) 466 1683 Cape Town Ray Smuts Tel: (021) 434 1636

Carrie Curzon

Tel: (021) 674 6935 Port Elizabeth Ed Richardson Tel: (041) 582 3750 Swaziland James Hall jhall@realnet.co.sz

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Co-ordinators Layout & design Circulation Printed by

As the one-stop Chirundu border post heralds a new era in efficiency, it provides a blueprint for the rest of the continent.

FTW takes a closer look.

Page 2 One-stop Chirundu border will provide a blueprint for the future

Page 11 ‘Sars to be commended for proactive stance’

Page 16 Beitbridge action plan proposes onestop border post

Page 4 Portuguese-speaking staff mitigate delays

Page 12 Strong moves to address non-tariff barriers

Escalating power costs a major challenge to mining industry

Page 5 Electronic clearance system designed for BLNS countries

Page 13 Strong rand cuts overborder profits

Page 19 Move to single transit bond gains momentum

Tracie Barnett, Paula Snell Dirk Voorneveld ftwsubs@nowmedia.co.za JUKA Printing (Pty) Ltd

Page 20 An audience with Zuma for logistics newcomer

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Page 18 Researchers raise questions over benefits of single African currency

Page 6 Feasibility studies ensure constant improvement on Walvis corridors Page 7 ‘Too many cooks spoiling the border efficiency broth’ Page 8 ‘Africa offers significant growth potential’ Page 9 SAA focuses on partnerships to expand reach

Page 21 Swazi operators continue to lobby for 24-hour border opening

Page 14 Lack of consistency among customs officials remains a problem

Page 22 Vicious cycle of corruption continues Swazi Rail looks at creating demand to grow the business Page 23 Abnormal load specialist plans fleet expansion

Cover photo: Barney Curtis, executive director of Fesarta. Photo: Tijana Huysamen.

Page 10 Awakening economies keep airfreight buoyant

Packaging specialist sets expansion sights on Africa

Page 24 Regional corridor concept falls short of expectation

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2 | FEBRUARY 2010

One-stop

Chirundu border will provide a blueprint for the future ‘Saving a year in man-hours every day’

By Liesl Venter

ZAMBIA

A

t Africa’s first-ever one stop border post it is not business as usual – in fact, business is better than it has ever been before.

The long-awaited opening of the Chirundu one-stop border post between Zambia and Zimbabwe was finally achieved on December 5, heralding a new era for African border posts.

The first of its kind, it has been a long time in the making.

Identified and earmarked as the pilot phase of the one-stop border post initiative in southern Africa several years ago, Chirundu is the ideal border post to lead the way.

“It has not all been smooth running,” says Barney Curtis, executive director of the Federation of East and Southern African Road Transport Associations (Fesarta). “Its opening was postponed several times, but it was an important process to work through because role-players now know exactly what is needed to make a one-stop border post a reality.”

And while most people are expecting teething problems in the beginning, Chirundu – with its strategic location as a node of trade between southern and eastern Africa – will act as a prime example for other countries

ZIMBABWE

wanting to implement one-stop borders.

“It is an ideal choice as a pilot site for the one-stop border control programme,” says Curtis.

Speaking at the opening, Zambian president Rupiah Banda said it would certainly enhance trade between Zambia and Zimbabwe.

“Reducing the time one spends at the border will reduce the cost of doing business," said Banda.

“The development of the structure we are seeing today is a milestone in facilitating trade in the Comesa region and beyond.”

By reducing the crossing time for trucks from three days to three hours, the Chirundu border post will save about a year in manhours every day at what is the busiest transit post in the region.

It deals with 270 trucks every 24 hours.

Barney Curtis … ‘It is an ideal choice as a pilot site.’

We’ll smooth the way regardless of the challenges

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FEBRUARY 2010 | 3

‘SADC must be involved in implementation’

Swaziland breakbulk road freight operator

Three steps to a one-stop facility

T

he one-stop concept is clearly the answer for some of Africa’s congested and tired border posts – but unless the correct procedures are followed they will be doomed to fail.

Barney Curtis, executive director of the Federation of East and Southern African Road Transport Associations (Fesarta), says while one-stop border posts are for the most part the answer, it is important that SADC be involved in the implementation.

“Several years ago SADC decided to draw up a strategy for one-stop border posts and earmarked Chirundu as the pilot project for the first such facility.

This strategy ensured there was no duplication and that everyone knew who was doing what.”

With Chirundu having achieved one-stop status in December, the next one on the list will be

Since 1974

earmarked by SADC. “Several countries have tried to go it alone and have failed.

There are just too many processes involved, while funding is crucial.

If the right organisations are on board, the funding comes along.”

Curtis says it is much more fruitful to join the SADC initiative than to try to go it alone.

“There are three processes involved of which the first is legal.

This means that you need to have a Memorandum of Understanding signed by the two countries involved and parliamentary laws that allow for a one-stop facility.”

The second process is procedural and just as important.

“This is all about the decisionmaking – who is going to do what and when, while the third infrastructural process is about ensuring that the right systems and infrastructure are in place that can allow a one-stop border post to function.”

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Portuguese-speaking staff mitigate delays Integrated border posts will improve efficiency

By Liesl Venter

I

ntegrated border posts will go a long way to improving the efficiency of the supply chain while also addressing some of the biggest challenges freight forwarders and transporters face on a daily basis.

“Borders where staff from neighbouring countries can use common facilities and common control methods in line with global standards will no doubt lead to more efficient operations,” says Hannes Rust, managing director of Johannesburg-based Chavda Freight.

The company often uses border crossings such as Skilpadshek/ Pioneer Gate between South Africa and Botswana, Oshikango/Santa Clara between Namibia and Angola as well as the Buitepos border post between Botswana and Namibia.

“The biggest challenges we deal with besides the border delays

– which are often due to import duties and taxes not being paid on time as well as the poor state of the roads and the ever-increasing traffic congestion – are around capacity and communication.”

In an effort to address the language barriers the company has employed several people fluent in Portuguese.

“We are also sending a great deal of cargo to Maputo and so are frequenting the Komatipoort/ Lebombo border post between South Africa and Mozambique.

Having skilled people at the border post who can speak Portuguese, especially when working in Angola and Mozambique, has helped a great deal in rising above the challenges.”

Rust says the new one-stop border post recently opened at Chirundu is setting a good example for Africa. It is proof that delays can be minimised and transit times improved.

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FEBRUARY 2010 | 5

Electronic clearance system designed for BLNS countries Direct EDI link with customs

By Alan Peat

I

n the past few years an extensive involvement with road freight into neighbouring member countries of the Southern African Customs Union (Sacu) has led Compu-Clearing to develop a special system for the job, according to account manager Gavriel Rootshtain.

“This targets the BLNS countries (Botswana, Lesotho, Namibia, Swaziland) and, in particular, the Asycuda system that they use,” he told FTW. “Based on our experience we have developed a system specifically designed for the capturing of customs documentation for these countries.”

The current BLNS system, he added, is extremely quick, accurate and powerful.

He also pointed to various features which he felt underlined its versatility.

“These include creating road manifests; details of all the different

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tariff headings which are linked to our online tariff book that is updated daily; and a dynamic national credit limit check, which instantly suspends the entry if the credit limit is exceeded.

“The system also creates a unique UCR number as per the SA Reserve Bank (SARB) requirements.”

Another of the more recent developments to the system is a direct electronic data interchange (EDI) link with customs - making the entire process paperless, and ensuring a quicker, more effective and accurate practice all round.

Another of the features highlighted by Rootshtain was the enquiry screen. “This,” he said, “shows exactly what is happening with the user’s shipment, updating them on how far along the process is, or why it was rejected. The user will no longer have to wait for documentation at the border or have shipments delayed.”

Amongst Compu-Clearing’s latest enhancements is a working interface

Gavriel Rootshtain ... ‘National credit limit check instantly suspends the entry if the credit limit is exceeded.’

with the Asycuda system – allowing the user to directly interface local

data into the Asycuda system.

“This means that, with one click, the entire entry is now copied into Asycuda and can be sent to both sides of the border,” said Rootshtain.

“This interchange of data disposes of any need for double-capturing or having to struggle on the Asycuda system because of slow lines and down time.”

He saw the entire system as “a seamless solution” – helping companies to generate better communication and manage their business procedures more efficiently.

And the system development is an on-going evolutionary process, Rootshtain added.

“It is only through constant innovation and development that we can find ways to make these processes simpler and rule out mistakes in the work place.

“This will allow businesses to retain a healthy relationship with our neighbours across the border and continue to build strong economic growth throughout Africa.”

6 | FEBRUARY 2010

Feasibility studies

ensure constant improvement on Walvis corridors

By Liesl Venter

T

he Walvis Bay Corridor Group (WBCG) is changing the mindset of both importers and exporters about the benefits of using the Port of Walvis Bay. Ongoing information sessions as well as the establishment of a branch office in Gauteng are paying off as importers and exporters increasingly become more aware of the advantages – savings in travel distance and time translating ultimately into savings across the whole supply chain.

Agnetha Mouton, WBCG business development officer, says it remains a challenge to change perceptions.

The WBCG, a public private partnership, aims to increase the utilisation not only of the three corridors it serves through the port of Walvis Bay – the TransKalahari, the TransCaprivi and the TransCunene.

“We have seen some major

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developments in recent months,” says Mouton. “This includes several feasibility studies that have been conducted and concluded as well as a major port expansion project that will see us increasing the port capacity from the current 200 000 TEUs per year to 500 000 per annum.”

The conclusions of a feasibility study around a one-stop border post between Trans Kalahari and Mamuno border posts were presented to the governments of Namibia and Botswana recently, as was a proposal for a corridor performance management system.

“A feasibility study is also in progress regarding the extension of the railway lines along the TransKalahari Corridor. A separate study has been completed on the upgrade of the Okavango River/ Divundu Bridge which proposes increasing the carrying capacity of the bridge from its present 60 tons and widening it from a single to a double lane bridge.”

Mouton says all of this

continues to show importers and exporters the commitment of the WBCG to the corridors and the port. “We have more direct shipping lines calling from Europe, North and South America, the Middle East, the Far East and Africa, which also

results in increased opportunity for importers and exporters.

There is no doubt that the Walvis Bay Corridors provide an ideal opportunity to add economic value to countries like Angola, Botswana, the DRC, Zambia, Zimbabwe and South Africa.”

FEBRUARY 2010 | 7

‘Too many cooks spoiling the border efficiency broth’ One-stop Chirundu post a model to be emulated

By Alan Peat

A

ttempts to alleviate the major problem of border post delays in Africa may just be a case of “too many cooks spoiling the broth”, according to Lawrie Bateman, director of MSC Logistics.

“The volume of cargo, both international and local, moving overborder has increased considerably over the past decade,” he told FTW. “But, unfortunately, so have the delays and costs.

“While there are concerned organisations involved in efforts to alleviate the problems, the question is: Are there too many?”

Among others, there are the Southern Africa Development Community (SADC); the East African Community (EAC); the Common Market for East and Southern Africa

(Comesa); the Federation of East and Southern African Road Transport Associations (Fesarta); and the New Partnership for Africa’s Development (Nepad) – all involved in attempting to solve the border delays hassle.

But, he asked, even with all their regular meetings and conferences, are they actually solving the major problems that exist for importers and exporters?

He believes the required solutions include: reducing the cost of crossborder trade; overcoming the administrative hurdles; somehow simplifying the complex customs procedures, clearance and cargo inspections; cutting down on border post delays; improving security and reducing corruption; and standardising the currently different requirements at each border.

What is needed to unlock the

growth potential of trade through the Southern African transport arteries (especially the north/south corridor), Bateman told FTW, “is high-level political commitment, together with private sector involvement from major transport and logistical companies.

“At the same time, we must not forget development banks and world aid organisations – as funding will be required to develop and refurbish the presently ailing infrastructure of the road and rail networks throughout the region.”

To see the required principles in action, and the benefits of mutual co-operation and overseas funding, one just has to look at the new “onestop” Chirundu Border Post between Zimbabwe and Zambia, he added.

“Although truck delays have not been completely eradicated,”

Lawrie Bateman ... ‘What we need is highlevel political commitment, together with private sector involvement.’

said Bateman, “there is certainly an improvement on the previous delays of up to a month – or more on occasion.

“Let’s hope that we will soon enjoy similar innovation throughout all of southern Africa.”

Fesarta and trucking bodies join forces to fight crime

By Liesl Venter Crime remains an ongoing concern for transporters moving goods across Africa.

In Chirundu operators have warned against night driving as bandits jump on slow moving trucks and cut tarpaulins to get hold of cargo, while syndicates operating at the border post are alleged to target truck drivers directly, offering them money for the loads.

“It is not anything new,” says Barney Curtis, executive director of the Federation of East and Southern African Road Transport Association (Fesarta).

“Traditionally loads have come under attack by people who jump on the back of trucks in the Chirundu escarpment where the trucks have to slow down. We are seeing a trend where trucks are being targeted in the Lusaka area itself. When they slow down at traffic lights, loads are grabbed.”

With copper and cobalt along with other mineral commodities often being transported under strict surveillance, crime is a major concern.

“There are certain guidelines that drivers can follow to minimise the risk - like not driving at times when these incidents happen. In some cases armed escorts are a way of stopping the disappearance of an entire truck and its load.”

Curtis said various initiatives were under way to address crime

– such as working together to find solutions. “For a long time people have not talked about it because theft, corruption and smuggling have been difficult to deal with.

But more organisations are coming forward and taking a stand.”

He said Fesarta and several trucking associations were now working together to find solutions to crime. “As national organisations we can possibly address the matter and find ways to ensure the safer transportation of cargo.”

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8 | FEBRUARY 2010

‘Africa offers

significant growth potential’ Qatar upbeat about the year ahead

L

ast year was a challenging one for the airline industry, but growth potential exists in numerous locations, including Africa, according to Dileepa Wijesundera, senior vice-president of Qatar Airways Cargo.

While many carriers have been reducing capacity and offering low rates to generate cash flow, he told FTW in an exclusive interview that his cargo operation had managed to perform well.

“This,” he said, “through having a diverse network and numerous trade lanes feeding the overall business.

“Although growing at a rapid pace, we continue to operate in a flexible manner. This allows us to react to shifting market dynamics quickly, either with pricing initiatives or moving capacity allocations from one trade lane to another.”

He also pointed out that the cargo carrier’s home base at Doha was at the crossroads of East and West.

“This allows us to connect the

Diverse network and numerous trade lanes feeding the overall business.

markets of Europe to the Middle East, the Far East, Indian subcontinent, Africa and Australia,” he added.

“With dedicated staff, the Doha hub and its facilities ensure all transhipments are processed in an efficient, seamless manner.”

And, despite the generally tough time for airfreight cargo volumes,

Qatar Airways Cargo has noted some distinct points of good growth.

Said Wijesundera: “We are continuing to see growth in Asia, particularly South Asia, as well as USA and Europe where frequencies and destinations have been increased.

“Potential for growth exists in numerous locations, particularly

in Africa.”

Looking ahead, Wijesundera is relatively confident about the prospects.

“The upcoming year,” he said, “will determine whether recent improvements in demand are temporary or whether there is solid growth across the industry.”

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FEBRUARY 2010 | 9

SAA focuses on partnerships to expand reach Ready for the upswing

By Joy Orlek

A

s the world emerges from recession, developing economies will be the primary drivers of recovery. And Africa, as a developing continent that has serious limitations in terms of road transportation, has become a key area of focus for SAA Cargo.

“We need to try to expand our reach beyond the current points of operation,” says SAA Cargo acting divisional head Justice Luthuli.

“And to achieve this we must try to find partners in Africa to help us fly to points currently not served in our network.”

Luthuli concedes that the current state of the aviation industry in Africa remains a challenge. “But we believe that by co-operating and sharing skills and resources we can help to resuscitate some of the requisite routes by helping to re-establish airlines.

“SAA is a leading airline in Africa. By sharing our capacity and expertise we would not only be helping ourselves but helping Africa to reconnect – and this is where we believe our focus should be.”

Luthuli is hopeful that the turmoil is over and that an upswing is on the way.

“For us it’s important to move quickly. As much as there has been

By co-operating and sharing skills and resources SAA believes it can help to resuscitate some of the requisite routes.

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too much capacity we may find that the capacity available has been misappropriated so we have to choose the routes we believe are going to be the leading routes in Africa.”

Over the past year Lusaka has been one of the airline’s key growth markets. With perishables moving out of the country and essentials from South Africa and the rest of the world flying in, it’s a bi-directional trade.

Luanda, another top performer, on the other hand is one-directional.

“It’s a developing country which is importing most of its goods – and with all the construction taking place, spares for the mining industry as well as ICT like cell phones are big export business.”

SAA launched its freighter service to Luanda in August this year, an initiative linked to the revision of the aero-political regime between the two countries. “It’s allowed us to operate a cargo aircraft on a full-time basis – and we see significant growth potential.”

The challenge however lies in Africa’s infrastructural limitations.

“We have not been able to activate the outbound service but are in discussions to establish how we can collaborate

Justice Luthuli ... sharing skills and resources.

to bring the security measures up to standard so that we can make sure that they benefit from inter-border trade.”

While the airline lists Kinshasa, Maputo, Accra, Lagos and Dakar as additional key performing routes on the continent, connecting with intercontinental destinations through Johannesburg, it remains intent on extending its reach.

And this will be achieved through a strong focus on hubs – with a central African, West African and East African hub all part of the mix.

10 | FEBRUARY 2010

Awakening economies keep airfreight buoyant

By Joy Orlek

V

olumes on Airlink Cargo’s strengthening African network are on an upward trajectory, says managing director Alwyn Rautenbach.

“Things are looking up in Zimbabwe at the moment, with particularly good volumes to Bulawayo and Harare.

“And with the mining industry in Zambia and Zimbabwe also beginning to reopen, mining spares into those countries are showing a steady increase.”

The same is true of Beira in Mozambique. “There’s so much activity in the mining industry which – along with the movement of textiles and clothing as well as cell phone

accessories, all sorts of goods from China and the courier industry – is keeping the airline buoyant.”

Because of the significant growth in courier business, Airlink has streamlined operational procedures. “In May this year we introduced an electronic waybill for regular customers so they can complete the waybill online. In addition, cut-off procedures for early morning flights before the aircraft departure are extremely attractive.”

In a further upgrade the airline has set up a new export warehouse at OR Tambo International Airport. “We introduced a screening process upstream rather than downstream where it used to be, and the entire operation has been

streamlined for faster handling.”

In a further move to improve processes for the benefit of its customers, the company’s electronic data interchange system interfaces in standard Iata-type freight messages with its customers so that there is no need to fill in two waybills.

“The system also offers a pre-alerting facility so that the customer is aware of what cargo to expect – cutting down on human error.”

For the year ahead, Rautenbach remains bullish, with more destinations in Mozambique on the planning boards for 2010.

This will complement its current service network covering Zambia,

Alwyn Rautenbach … streamlined operational procedures.

Zimbabwe, Mozambique, Lesotho, Swaziland and Antananarivo.

Transporters can expect massive food volumes to Swaziland

By James Hall MBABANE – At least 70 000 metric tonnes of maize will be transported from South Africa to food-insecure Swaziland this year, agriculture

officials tell FTW. “The national requirement is about 140 000 metric tones annually. Last year’s harvest was 71 000 metric tonnes. We don’t foresee a production increase this year, so the shortfall will come from

South Africa, either maize produced there or through South Africa as a transhipment route for food aid originating overseas,” said Sipho Simelane, chief agricultural officer for the Ministry of Agriculture.

The problem isn’t a lack of

rainfall – in fact too much rain in November swamped many fields – but impoverished farmers’ inability to purchase inputs like seeds and fertiliser. Government’s scheme to provide inputs has been sidelined by a budgetary crisis.

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FEBRUARY 2010 | 11

‘Sars to be commended for proactive stance’

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By Liesl Venter

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ustoms clearing is not always the bane of transporters’ lives.

In fact much is being done by customs in various African countries to ensure speedy processes that are user-friendly, effective and efficient.

Kitty Hewitt, owner of Botswana Consolidators, which consolidates cargo in its warehouse in Johannesburg for various destinations in Africa including Botswana, Swaziland, Lesotho and Zambia, says one such system that is making a difference is the South African Customs’ EDI system.

“It has been in place for several years now and I have to admit that being able to clear online has made a difference. EDI is speeding up the clearing process, which means quicker delivery and ultimately a better service.”

There is no doubt about the importance of efficient systems not just for private companies, but also for governments.

“Sars has been very proactive in

Kitty Hewitt ... efficient and user-friendly Customs processes are key.

finding solutions and implementing means that ensure a quicker, more efficient service around clearing and that is commendable,” says Hewitt.

And as cross-border opportunities continue to grow and more goods are moved by road, it is now more important than ever to have Customs processes in place that are efficient and user-friendly.

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12 | FEBRUARY 2010

Strong moves

to address non-tariff barriers ‘Income tax’ costs transporters dearly in Katanga province

By Liesl Venter

N

on-tariff barriers in several countries continue to pose major challenges to transporters who have to work their way through a bevy of restrictive and punitive legislation, levies and taxes.

Most recently the Democratic Republic of the Congo implemented an income tax for transporters regardless of whether they are registered in the country or not.

“The freight forwarder or the agent is the registered company in the DRC and should be paying the income tax, but in the Katanga province legislation requires the trucking company also to pay income tax. This has been gazetted and if transporters do not want to have their trucks impounded, they must pay,” says Barney Curtis, executive director of the Federation of East and Southern African Road Transport Associations (Fesarta).

And pay they do – in some cases tax of up to $100 000 is charged to the transporters.

“The matter has been taken up with the DRC central government

Transporters liable for income tax, regardless of whether they are registered in the country or not.

as it is becoming increasingly problematic,” says Curtis.

But rumours have it that the central government has no way of stopping Katanga province charging this income tax unless they move the entire border post to another region.

“We have in the past just not placed enough emphasis on the non-tariff barriers,” says Curtis.

“Comesa, SADC and the East African Community (EAC) have

set up a non-tariff barrier system to address these barriers. At the moment though the system has no teeth and countries can get away with the charges they are levying.”

Curtis says the challenge lies in getting the system functioning to its maximum level. “The system must have the authority to address countries that are not following procedures and that are offenders.

It must also have a means of

ensuring that action is taken against a country that introduces a punitive regulation.”

He says that would bring about much more clout when dealing with transgressing countries instead of dealing with issues one at a time in a shotgun approach.

“Much work is currently going into the development of this system so that it has the ability to bring countries into line,” he says.

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FEBRUARY 2010 | 13

Shoprite in Luanda, Angola ... one of countries in which the supermarket operates.

Strong rand cuts overborder profits for food retailer SADC agreement benefits Shoprite

By Liesl Venter

S

hoprite Holdings makes no secret of it – the company makes hay while the sun shines. Growing from a small chain of supermarkets in the Cape area in apartheid South Africa in the sixties, the group has grown to an African phenomenon with the Shoprite group of companies now Africa’s largest food retailer.

Operating more than 800 outlets in 17 countries across the continent, the Indian Ocean islands and southern Asia, there is no stopping its cross-border activities.

With stores in Angola, Botswana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Swaziland, Zambia and Zimbabwe in southern Africa, Tanzania and Uganda in East Africa, Egypt in North Africa and Ghana in West Africa, its strategy of supplying customers in the broad middle to lower end of the market with basic foods and household requirements in a no-frills fashion has paid off.

Africa is an important market to the retailer.

“Due to the weakening of most non-South African currencies against the rand the turnover of the Group’s non-South African supermarkets in

rand terms declined by 4.3% in the last six months of 2009,” said group chief executive Whitey Basson.

“And, on a like-for-like basis, by 9.3%. At constant currencies an acceptable rand turnover growth of 16.3% was however achieved.”

According to a spokesman for Shoprite, a major development during 2009 was the implementation of the Southern Africa Development Community agreement, allowing member countries to export goods at reduced rates of import duty within the SADC. “In the short term the agreement has positively impacted the Group’s trade with Mozambique, Malawi and Zambia in particular. It has also levelled the playing fields in that contraband no longer enjoys a price advantage. To improve service levels outside South Africa, the Group has created a special distribution centre in Centurion outside Pretoria where products for export are licensed by the customs authorities before leaving the country,” said the spokesman.

As the effects of lower commodity prices hit Africa during the latter part of 2009, there is no doubt that supermarkets across the continent, like many other businesses, felt the pinch.

FTW1402

14 | FEBRUARY 2010

Lack of consistency

among customs officials remains a problem

By Liesl Venter

T

Anthony Lee ... ‘Punitive penalties among greatest challenges.’

here’s been significant improvement in cross-border relations over the past year, says Anthony Lee, managing director of Transport Holdings Limited.

“Working more closely with customs officials has helped a great deal in improving the set-up,” he told FTW. “But we still have some issues to overcome – for example every time the staff changes due to their rotational system, the whole process begins again. In addition to that new officials also have their own interpretations of customs codes.”

Representatives of Imperial Logistics in Botswana servicing the bulk fuel, general consolidation and mining industries in the country, THL frequently uses the Martins Drift, Gaborone and Lobatse border posts.

“Punitive penalties, inconsistencies in tariff code classifications as well as delays associated with repair and return items remain our greatest challenges,” says Lee. “The elimination of the ‘discretion of the customs office’ would also

contribute significantly to more efficient operations. Along with that all DTI/ EDI entries should be paperless and have no delays,” he says. “A simplified, streamlined process for handling repair and returns as well as longer border hours would be a great feat to accomplish.”

He says another boon would be if combined customs and immigration procedures could be put in place for both countries as well as standardised road and vehicle legislation between SADC countries.

“We have been informed that paperless border processes are being implemented in the near future,” says Lee who believes the implementation of new fines and procedures for cross-border operators by the new Administrative Adjudication of Road Traffic Offences (Aarto) in South Africa is set to have major implications for foreign operators.

“Another aspect we are keeping a close eye on is the South African authorities’ intention to limit axle masses and possibly ban the transportation of certain commodities from certain roads.”

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FEBRUARY 2010 | 15

Packaging specialist sets expansion sights on Africa Infrastructure challenges add extra demands

South Africa Tel: +27 11 824 1033 Fax: +27 86 633 8896 Botswana Tel: +267 392 4845 Fax: +267 392 4743

Services offered: Warehousing & Consolidation Customs Clearing Securing cargo into crates, then into containers, and then onto trucks, is the most important part of the packing process.

By Alan Peat

T

he cross-border market is one of growing potential, but has tricks all of its own to play on unwary cargo transporters, according to Ryan James, MD of the cargo packing specialists, Cratelogic.

You have to recognise that it is a market that raises many problems for those who are unfamiliar with it.

“In my experience,” said James, “cross-border cargo needs extra attention if it is going to travel and arrive safely.

“For example, most destinations have limited equipment to handle the cargo. This means that thought has to be applied as to how the client is going to offload containers and unpack, and how he will handle breakbulk loads and so on.”

Traversing cross-border nations also highlights the fact that much of the transport infrastructure network is still underdeveloped, poorly maintained if at all, and often inadequate to handle modernday freight vehicles.

Freight Forwarding Said James: “These bad road conditions travelling cross border also affect the cargo en-route.

This means that securing cargo into crates, then into containers, and then onto trucks, is the most important part of the packing process.

“Case markings and shipping information is also critical – because, should any cargo go astray, it can at least be identified.”

With its extensive experience in this often awkward marketplace, Cratelogic has built ways of satisfying clients’ needs into its cross-border product package.

“As an added service to clients sending cross-border,” said James, “we have the facility to receive and consolidate cargo then pack and load, either onto trucks or into containers. All this under-roof at our Boksburg facility.”

And Cratelogic has its sights set on an on-going development of this promising market.

“We do target all export areas, including cross border,” James said, “and will be focusing more on it in 2010.”

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16 | FEBRUARY 2010

Beitbridge

action plan proposes one-stop border post … but achieving it is a long way off

By Liesl Venter

W

hile several plans to address the numerous issues at the Beitbridge border post between South Africa and Zimbabwe are in the pipeline, talk that it will become a one-stop border post within the next year is premature and not realistic.

So says Barney Curtis, executive director of the Federation of East and Southern African Road Transport Associations (Fesarta), who has drawn up a six-page document on the problems and the potential solutions for the Beitbridge border post.

“This document was presented at a workshop in May 2009 where SADC endorsed and adopted the project.”

Several workshops have since followed resulting in an action plan being drawn up and circulated to stakeholders. “Part of this action plan includes a one-stop border post, but there is still a long way to go before this becomes a reality.”

Other documents that have been drawn up include a Memorandum of Understanding between South Africa and Zimbabwe as well as terms of reference for the task team taking the process of the border post forward.

Probably the busiest border post in Africa in terms of commercial traffic, Beitbridge has been under severe pressure for several years. “It

‘Traffic has increased ten fold in the past twenty years and had nothing been done, it would take weeks to get through.’ is definitely the busiest border post in the region,” says Curtis, who has spent much time investigating it.

“The infrastructure and systems are particularly old and have for some time been struggling to cope with the increased traffic.”

Add to that the congestion issues with the increase in traffic, and most

Congestion getting worse.

people who use the border post on a regular basis say it is getting worse and is nothing more than a ticking time bomb.

“We must remember though that the traffic at this border post has increased ten fold in the past twenty years and had nothing been done, it would take weeks to get through. The problem is that all the interventions and efforts have not gone far enough and we are just not keeping pace. Ultimately it is heading for disaster,” says Curtis.

But with SADC finally on board much is expected in coming months, even if it is not the much-anticipated

and wanted one-stop border post.

With the Regional Trade Facilitation Programme having come to an end in October 2009, its replacement Trade Mark SA is set to kick off soon.

“At the moment SADC is waiting for comment on the three documents, especially the action plan from the stakeholders. They have also requested some much-needed funding that will be used to implement some of the recommendations of the action plan. A one-stop border post is definitely a part of the future of Beitbridge, but it won’t happen soon. Too much work still needs to be done.”

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FEBRUARY 2010 | 17

Escalating power costs a major challenge to mining industry

By Liesl Venter

E

lectricity supply remains one of the major challenges facing the mining industry – not just in South Africa, but also in Africa.

“Most of sub Saharan Africa cannot guarantee adequate electricity supply to the mining industry,” says Frost & Sullivan mining analyst Wonder Nyanjowa.

Electricity remains an important input for all forms of mining. A major energy source for the transport of personnel, material and ore, as well as for production machines and mineral processing. Load shedding and blackouts continue to have a negative effect on the industry across the continent.

According to the South African Chamber of Mines, Eskom and the mining industry in South Africa specifically have developed a thorough understanding of each other’s needs and concerns that resulted in several formal agreements, negotiated through the Chamber. But with electricity increases continuing, the Chamber has in recent months become outspoken in its criticism of the power utility, warning that further electricity increases could

FTW4623

have dire results.

“It is imperative that the South African mining industry has access to an effective and reliable electricity supply,” said Chamber of Mines CEO Zoli Diliza shortly after the Chamber called for a new electricity dispensation for the country in November 2009, preferring to now work directly with the government and bypass the power parastatal.

Experts have agreed that Eskom’s proposed tariff increases of some 35% per year for the next three years, revised from the initial 45% request to the National Electricity Regulator of South Africa (Nersa), remain extremely high.

“The challenge for the mining sector is that we have a basket of goods and services whose costs are rising at double digit figures in an environment of low commodity prices. This means that a number of mining companies are battling for survival and extra costs add to the burden of the pressures they face in the short term,” said the Chamber.

Mining companies are battling for survival and extra costs add to the burden of the pressures they face.

18 | FEBRUARY 2010

Researchers raise questions

over benefits of single African currency Selective approach recommended

W

ith African countries having set a 2021 deadline for the introduction of a single currency, questions are being raised about who is likely to benefit most.

A recent paper by Trade Law Association researchers Johan Fourie and María Santana-Gallego points out that the benefits are likely to be greater for a select few.

The gains in terms of trade will depend on how open the country is and the intensity of trade flows with the other members of the currency union, say Fourie and SantanaGallego.

Creating a currency union may result in large trade gains – an increase in trade by a factor of up to three according to some research – but this is based on the belief that lower transaction costs would lead to large increases in intra-regional trade volumes, augmenting growth.

“The central idea is that a common currency implies more than an elimination of exchange

rate volatility among its members.

It also reduces transaction costs, information asymmetries and uncertainty, increases transparency relevant to international trade and provides a commitment device for macroeconomic policies.”

While many African countries stand to benefit significantly from a shared currency, there appears to be evidence that two of the five FTW1418SD

regional groupings within Africa – Comesa and SADC – would realise substantial gains, and these gains would be greater for a small number of countries within these groups.

“This supports a selective approach to adopting a currency union, rather than the (politically untenable) objectives of the linear approach,” according to Fourie and Santana-Gallego.

Fewer people, more goods Travel through Mpumalanga’s border posts decreased by at least 17% compared to the same period last year, but imports and exports increased.

In a statement released by the Border Control Operations Coordinating Committee for the Lebombo and Ressano Garcia border post, officials said there was no doubt the recession had left its mark and affected the traffic volumes.

“Mpumalanga saw a decrease of 17% of travellers compared to the same period last year. There has, however, been a sharp increase of trade goods exported and imported to the country compared to the same period last year.”

Another reason given for the decline in the number of travellers was the closure of several mines in South Africa during 2009 meaning people left for their country of origin earlier than usual, said a spokesman.

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FEBRUARY 2010 | 19

Move to single transit bond gains momentum Big challenges – but even bigger benefits

By Joy Orlek

O

ne of the most significant cross-border issues of the moment is the move towards a regional transit bond.

Welcomed by all as an essential ingredient in streamlining trade, it’s been several years in the planning and is likely to take some time to reach fruition. But countries in the region are increasingly realising that it’s an economic imperative.

“There are 13 countries involved – and it’s largely related to road bonds,” says Lombard Insurance’s Francis Kingston.

“The idea is to have one road bond issued in the country of origin, allowing the haulier to transit within each of those countries instead of requiring a separate bond for each.

“All countries realise it needs to be done to promote trade in the region and at the moment the biggest beneficiary would be the DRC which sends big volumes into South Africa that have to transit through Zambia and Zimbabwe to reach the port of exit,” said Kingston.

There are several stakeholders involved – from the customs unions

Dean Burscough ...‘The time-saving is huge.’

Francis Kingston ...‘It needs to be done to promote trade in the region.’

in the different countries to freight forwarding associations. Lombard is involved on the insurance side as one of the key players in terms of guarantees.

For the single bond to operate, you need a guarantee. “If goods are lost along the way customs wants their VAT and duty and that’s the aspect of the guarantee that we look after,”

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says Lombard’s Dean Burscough.

But while everyone accepts the significant benefits of a single bond, there are huge implications.

“There are different duties and VAT rates for various countries – and the question is how to reduce this to one form to cover duty and VAT in South Africa and everywhere else.

“Another obstacle is language,” says Kingston. “The three languages are English, French and Portuguese which means you would have to have all information in triplicate.”

There are huge obstacles, he says, but a pilot project undertaken recently worked very successfully – although it did involve very small volumes.

The objective is to implement a full test run in the next two years – although all concede that there is still a lot to be done.

In the pilot run, the typical border waiting time of three days was reduced to two hours.

“Clearly the time-saving is huge,” says Burscough.

“The point of the regional bond is to promote trade and by making trade easier we will increase volumes.”

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20 | FEBRUARY 2010

An audience with Zuma

Time-sensitive cargo will kickstart airfreight growth

for logistics newcomer

By Liesl Venter

By Joy Orlek

T

he BBBEE-rated ICM Group is pushing ahead to become a globally recognised brand, with the country’s president sitting up and taking notice of this growing new generation logistics company.

2010 kicked off extremely well for the Bedfordview-based company, which has been operating for just over a year, with a request for a meeting from President Jacob Zuma.

“It was probably one of the most significant moments in my business life to date,” says CEO Kiall Marsh, who along with Kriba Naiken met Zuma at his homestead in Nkandla in the first week of January.

“He was very interested in who we are and what we have been doing in the past year.”

Marsh said they took Zuma through their business backgrounds, their decision to start their own business as well as the progress made in their first

Meeting the president … Kriba Naiken, President Jacob Zuma and Kiall Marsh.

12 months of operation and the global market impact. He said the 45-minute private audience with the president boded well for ICM Group, which is planning to go full tilt in 2010, signing new contracts and expanding.

The company has grown significantly in its first year, having already opened offices in Shanghai,

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Which is why there will always be a place for airfreight.

“If you measure pound for pound, roadfreight is probably five to ten times cheaper than airfreight,” says SAA Cargo acting divisional head Justice Luthuli.

“But if you look at the whole chain – factoring in the buffer to stock the warehouse compared to a Just In Time option – that’s where the benefit lies.”

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ut o b a l l a ’s It e delivery servic

Swazi operators continue to lobby for 24-hour border opening

By James Hall

W

ill Swaziland’s borders with South Africa ever achieve the 24/7 operations once promised for 2010 – a promise likely to be deferred again?

While transport officials in both countries suggested to road cargo hauliers that the key border post at Oshoek would continue with its expanded holiday operating hours come the New Year, shorter hours returned nonetheless.

For road transport firms like Chrisilda Transport in Matsapha, this means ongoing efforts to convince government authorities of the need for landlocked Swaziland to enjoy unfettered road access to South Africa the way the roads are always opened to and from Mozambique.

“When you are in a dark room, you shoot in all directions,” said Chrisilda managing director Sikelela Vilakati, referring to road transport firms’ multi-prolonged approach to lobby for expanded border post hours.

“Concerns have been raised through

Swaziland Truckers’ Association, a government-accredited local trucking group that speaks with the home affairs ministry responsible for borders. We also pressure the transport ministry and individual MPs. The MPs can put forward motions in parliament on border hours,” Vilakati said “With Mhlumeni (the Swazi border post at Mozambique’s Maputo province), you can see how well it works with the 24-hour opening. It would be great if they could extend all hours on the South African side,” he said.

Swazi transport operators believed that once Mozambique signed on to 24/7 border operations with Swaziland, South Africa would quickly follow suit, allowing for road transportation from Gauteng to Maputo via Swaziland on a round-the-clock basis.

“South Africa is taking its time. We acknowledge it’s a costly and involved exercise – security and personnel to operate the border post. But we will still push. We need to look into a regional lobbying group,” said Vilakati, whose firm moves Swazi timber to Gauteng along with a medley of other cargo.

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22 | FEBRUARY 2010

Vicious cycle of corruption continues ‘Operators just pay up and bill it into their charges’

By Liesl Venter

A

fter a difficult 2009, freight forwarders and transporters are cautiously optimistic about the coming year.

Transworld Road Freight says while volumes may have only picked up slightly in recent months, the company remains optimistic that cross-border volumes will grow significantly in the next few months.

“The recession affected our cross-

border projects greatly and turnover was down. In many African countries there were many mining companies that closed and all of this impacted heavily on cross-border operations and on the flow of traffic,” a spokesman said.

Add to this the lack of the usual “silly season” and an increase in volumes is needed for 2010. “We were busy toward the end of the year, but not in comparison with the previous year. We are however

confident that things will pick up and that 2010 will be a better year than the last.”

Mainly transporting between South Africa and Namibia, Transworld Road Freight has seen much improvement in Africa’s infrastructure and border post operations.

“A major concern remains corruption, which is not being addressed at all,” says the spokesman.

“Most operators just pay the money

asked and bill it into their charges so that a vicious cycle just continues and the expectation is that everyone must pay.”

Another problem he said, was the lack of fencing along the Trans Kalahari, especially in Botswana where animals are allowed to migrate freely. “Ironically the problem is not the game, but rather the domesticated animals such as donkeys, horses and goats that are causing very dangerous conditions.”

Swazi Rail looks at creating demand to grow the business

By James Hall Whether countering a challenging economic climate that has seen a decline in cargo shipments or anticipating a more robust business environment, Swaziland Railway operates under a proactive philosophy espoused by CEO Gideon Mahlalela, past president of the Southern Africa Railway Association.

The key is to encourage development

of new industrial sectors that when established can use rail for transport.

Under the previous more passive approach, clients would come with orders to move cargo, and the rail line would work to accommodate the demand, acquiring new equipment or expanding routes as needed.

“I’m doing it differently. I’m trying to create demand. Local or transit, wherever it comes from. I look at opportunities where they may

be, and work to make those happen,” Mahlalela says.

As an example, he mentions Swaziland’s large coal deposits.

The mineral is most economically transported by rail. Indeed, all of Swaziland’s coal is exported, directed to Mpumalanga on Swaziland Railway trains.

“Coal deposits in Swaziland are one and a half billion tonnes. This is a large amount of material that can

be transported.

To make such new business a reality for the rail company, Mahlalela is working with government and private sector players on initiatives to get the mineral out of the ground.

Other countries’ rail systems should adopt a proactive strategy that seeks out new opportunities, in part to correct the region’s over-reliance on road transport, he said.

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Abnormal load specialist plans fleet expansion

BY Joy Orlek

A

bnormal load specialist Frits Kroon is upbeat about the year ahead with business in December and January showing positive signs.

“We’re expecting a very good year,” director Frits Kroon told FTW, and are planning to expand the fleet to cater for the expected increase in volumes.

“We only started feeling the impact of last year’s recession in June/July, but by December volumes were picking up and we’re very positive about the year ahead.”

The company’s specialised fleet of lowbed abnormal trucks caters mainly for the mining industry.

“The yellow metal industry is our major focus – and the recession we felt was mostly related to the fall in the copper price and its impact on the mining industry.

“But by December things were already looking up.”

The company adapts its transport routes to suit the types of cargo and the bridges and ferries that can be used, and for the most part there are few complaints about border efficiency.

“Our biggest gripe is the cost of

The company’s specialised fleet of lowbed abnormal trucks caters mainly for the mining industry.

Zambian permits. They’re not difficult to get – just very expensive and there’s little hope of a change to the status quo.

“If we move goods to the DRC we go through Zambia – to route through Angola is not worth our while.”

And according to Kroon, transiting

borders is generally smooth going. If the paperwork is up to speed, things usually go without a hitch.

It’s largely about experience and knowing the route.

Frits and his wife Tanya frequently travel to Zambia.

“The more often you go there the

better you get to know the problems that lie ahead.

In Botswana and Zambia the roads have been significantly improved, in his view, and a strong police presence during the recent December holiday period provided a welcome boost for law enforcement on the roads.

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Regional corridor

concept falls short of expectation Maputo corridor seen as only successful blueprint

By Alan Peat

F

or two decades one of the buzz phrases in the SA freight and road transport industries has been “regional development corridors (RDCs)” – mentioned with its sister concept “spatial development initiatives (SDIs)”.

The two ideas sprang up alongside each other in the early ‘90s – designed to address SA’s transition from the inward-looking import-substitution economy it had become during the apartheid years. The idea was to focus exportoriented industrial development in areas close to or along the coast, to maximise on transport efficiencies and position the country to compete in global markets.

But it soon gained popularity around the whole Southern African sub-continent, and more than 20 areas of the region were considered as being potential RDCs or SDI. The concepts developed a whole host of grand-sounding words supporting them, all of which promised better times for the economic future of the selected regions.

The concept was first put into practice in the Southern African Development Community (SADC), where – for the purpose of linking transport more closely to general economic development – the member countries initiated a regional SDI programme. The Common Market of East and Southern Africa (Comesa) soon followed suit, fully embracing the strategy.

Finally, the African Union (AU) accepted the strategy for the rest of Africa.

In the meantime, conversations around the freight and road transport industries emphasised the idea that these development initiatives would lead to first-class highway systems being developed across the southern and eastern African regions – making crossborder transport in the region easy, high-speed and cost-efficient.

That, at least, was the optimistic hope of the times.

But, in the 20 years since then, where have all these transport and development corridors gone?

Only in four of them has road development come anywhere near highway levels. These are the Northern and Tazara Corridors in the northern section – where foreign

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A truck awaits removal from a Zambian roadside ... Development initiatives were expected to lead to first-class highway systems being developed across the continent.

aid and expertise has been applied.

For the Northern Corridor, for example, USAID together with the New Partnership for Africa’s Development (Nepad) and Comesa supported a “High Level Workshop on the Northern Corridor Spatial Development Programme” in Kampala in 2008.

‘It’s only in two of the four corridors that there has been any really significant spatial development.’

The corridor transport route starts in the Kenyan port city of Mombasa, going through Nairobi and into Uganda. There it is intended to split into two legs, the first running through Kampala and into Rwanda, Burundi and DRC, the second running to Gulu, and then splitting again going into northeastern DRC and to the southern Sudanese city of Juba.

But it’s done little up to now except develop the road between Mombasa and Uganda.

For the Maputo and TransKalahari Corridors in the southern region, there has been intergovernment co-operation between the SA and Mozambique authorities in the first case, and between SA, Namibia and Botswana in the second.

But it’s only in two of the four corridors that there has been any really significant “spatial development”. And, in the first – the Walvis Bay or Trans-Kalahari

Corridor – this development has been largely confined to the region in and around the Namibian port city of Walvis Bay itself.

But in the second – the Maputo Corridor – there has actually been highway development (in the form of the new N4) and it has proved to be the only area where a true SDI has been implemented at the regional level.

It involved a partnership between Mozambique and SA – and, at the time, this represented an unprecedented level of economic co-operation between the two countries. It was first conceptualised as a transport corridor by the transport departments of the two governments, but the eventual intervention of SA’s Department of Trade and Industry turned it into the first of the regional SDI initiatives.

Overall it has been viewed as a success, and a demonstration of the potential of transport corridors and SDIs in Africa.

The corridor links SA’s most industrialised, but effectively landlocked northern and eastern regions (Gauteng and Mpumalanga provinces) to the Mozambican port of Maputo, and centres on a system of road, rail, border posts, port and terminal facilities.

But, with the exception of the MDC, SDIs in Africa have not been able to translate transport infrastructure development into broad-based growth – and not even too much road development has been activated.

So the Southern African “highway network” still remains only a dream.

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