FTW Project Cargo

MAY 2010 FREIGHT & TRADING WEEKLY

PROJECT CARGO feature

Dan Hope on the

Gautrain’s extraordinary journey The six key factors for project success The devil’s in the detail –

Murray & Roberts’ Les Dodds on the big issues

Infrastructure in peril –

‘We are not alone’

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When it comes to project cargo, the devil’s in the detail – and for operators with the right skills and mindset, there are opportunities for the taking.

FTW gets the lowdown from some of the key players.

Editor Joy Orlek Consulting Editor Alan Peat Assistant Editor Liesl Venter Advertising Carmel Levinrad (Manager) Yolande Langenhoven Gwen Spangenberg Jodi Haigh Divisional head Anton Marsh Managing Editor David Marsh

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Page 2 Gautrain’s extraordinary journey ends with a universal thumbs-up Page 4 The six essential factors that ensured Gautrain’s success

Page 5 Global sourcing demands effective global network

Page 10 Methodical planning is critical Page 11 Volumes to Zambia and Congo back on track

Page 12 Infrastructure investment boosts Manica’s project book

Page 6 ‘Being prepared for the unknown is crucial’

Now Media Centre 32 Fricker Road, Illovo Boulevard, Illovo, Johannesburg.

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Page 17 ‘Trade incentives would ramp up interest in West Africa’

Page 18 By road or by rail …

Page 20 Big copper contract moves on DRCJo’burg route

Page 21 Project management must be proactive not reactive Page 8 Growing oil industry will provide major opportunities

Cover photo: Tijana Huysamen.

Page 16 High expectations for business from oil and gas industry

Page 9 Infrastructure shortfalls a global challenge for project specialists

Page 14 Facilitating pro-active management throughout the process

Page 15 Magnetite boosts Swazi rail volumes

Page 22 Infrastructure projects ramp up project opportunities Page 23 Project work is not for text book operators Page 24 Spike in demand hits container suppliers Intensive planning and tight communication are key

2 | MAY 2010

Gautrain’s extraordinary journey ends with a universal thumbs-up Transportation of each 46-t car no small feat

By Liesl Venter

A

s the first ever rapid rail system for Africa and one of the biggest infrastructure projects in South Africa, Gautrain has become a symbol of pride, prosperity and progress for the continent.

The extent of the emotional connection of the South African people with the project was clear when, with the arrival of the first rail car on African soil at the end of 2008, not only did workers at the Port of Durban come to a standstill to look but motorists would stop to move out of the way of the abnormal load on the roads giving it right of passage.

With the system set to be operational between OR Tambo International Airport and Sandton

by June this year, Gautrain is changing the face of transport in the country forever.

But getting the massive rail cars into the country was not easy. The project, which involved 81 cars “flat packed” and crated into the country from Europe and 15 fully assembled railway cars imported, demanded careful planning and execution.

The Gautrain system, which consists of 24 train sets, each consisting of four cars – a total of 96 cars – saw 15 of the railway cars constructed and assembled at the Bombardier Transportation manufacturing facility in Derby in the UK before being transported

Dan Hope … ‘Planning and more planning was crucial to the success of the project.’ Photo: Tijana Huysamen.

to South Africa. The remaining 81 cars were locally assembled at the premises of Union Carriage and Wagon Partnership in Nigel following a skills transfer programme with the UK. Once assembled they were moved by road to the Midrand depot.

According to Dan Hope, service introduction manager for Bombardier Transportation, who has been involved with the project

since 2007, planning and more planning was crucial to the success of the project.

“Bringing the 15 cars home was a job of note, but one which made me realise how emotionally involved people are with the Gautrain. People stopped on the highways to watch the heavy procession going past, giving them right of way, hooting and waving.

It really was spectacular to watch

and be part of it.”

After the 15 cars were constructed in Derby they were loaded onto a trailer and transported in twos by road from the workshop to Immingham harbour on the east coast of the English midlands and then by sea to Antwerp.”

From Antwerp the cars travelled by sea to Durban where they were carefully loaded onto a specially

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designed trolley system and moved by road to Midrand in Gauteng.

“With each car measuring in at 21 metres in length and weighing 46 tonnes, the transportation was not a small feat. Throughout the entire process, communication between the various role-players was extremely important,” says Hope.

“People stopped on the highways to watch the heavy procession going past. It really was spectacular to watch and be part of it.”

A project of such enormity meant that everyone had to be committed to ensuring success.

“From the shipping line to the transportation company there was always a very good working relationship,” says Hope.

“Ultimately the different project managers had to be in constant communication with each other to stay on top of what was happening and also to ensure that everything was running smoothly.”

Shipped by Maritime Carrier Shipping and road-hauled by Vanguard transport, the 15 cars

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have since arrived at the Midrand depot where for the past few months they have been vigorously tested for quality and safety.

“Another reason why this project was so successful is that there were plenty of pre-meetings to ensure everyone knew exactly what was expected of them and that all aspects of the project were always covered,” says Hope.

Despite all the planning it was, however, not always smooth sailing – an inevitable reality of project cargo. “Firstly the rail cars are awkward sizes and that proved difficult in the loading and unloading phases – especially at the port, which is not necessarily set up to receive large trains.

Another pr oblem we ran into was that most of the bridges on the N3 were too low to accommodate the abnormal load, so the trucks had to be re-routed and the trip from Durban to Midrand finally comprised a distance of some 1200km.”

But experience and knowledge proved key, says Hope. “We found after the first run that we had a much better idea of what to expect and also how to cope with any problems and issues. We are extremely proud of this project as it really has been an extraordinary journey.”

An intricate move … because the rail cars are awkward sizes, loading and unloading was not easy, especially at the port which is not set up to receive large trains.

4 | MAY 2010

The six essential factors that ensured Gautrain’s success Skills transfer an enduring spin-off for the continent

By Liesl Venter

S

kills transfer has been one of the major spin-offs during the construction of the Gautrain, says Jan van Tonder, engineering manager of Isithimela Rail Services.

The company was responsible for the laying of some 160km of track. Subcontracted by Bombardier Transportation UK, it has been the first to lay 1435mm of “standard gauge” track in sub Saharan Africa.

This track type, typically used for high-speed rail tracks, offers greater balance and safety. To date the company has completed some 50% of the track with the stretch between OR Tambo International Airport and the Sandton station

Jan van Tonder ... ‘Price is not always everything.’

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fully functional.

“There have been major skills and knowledge transfers on this project which will benefit South Africa for many years to come,” Van Tonder told FTW during an interview at the Gautrain Midrand depot. “Make no mistake, South Africa has always had skilled people capable of doing this kind of project, but we have been exposed to the world’s leaders when it comes to railway construction and that is extremely important.”

An important lesson learnt during the project was that of not working labour intensively as is the norm in South Africa, but rather mechanically intensively.

With most of the equipment, machinery and track having to be imported, the project has also been larger than usual for South Africa and planning around having construction workers on site at the right times has been crucial.

Van Tonder says the success of the project so far has been around choosing reputable companies.

“On a project of this scale there are several important aspects of which the first is reputation and reliability. The companies involved have to be reliable and dedicated to ensure success – one cannot have workers waiting for track or track

waiting to be laid and the workers are not there, meaning if a company has committed to a deadline, it must happen.”

The other important aspect is communication, says Van Tonder.

“Throughout it is important that everyone talks to each other and is informed of each aspect of the project.”

And the experts agree with him – ensuring the communication lines are open is part and parcel of a large project running smoothly.

“If there is a hold-up at sea and the construction site is timeously notified one is already one step ahead,” says Van Tonder.

Another lesson, he says, is that price is not always everything.

“No company is going to pay more than they have to but reliability sometimes goes further than the quoted rate. And finally the entire supply chain must work together to bring the project together.”

For Van Tonder and many of his colleagues the opportunity to be part of the Gautrain construction has been a once-in-a-lifetime chance. “This was no doubt a use it or lose it project. As a team we have learnt from the world’s best and we have developed skills that we can now transfer across this continent.”

Global sourcing demands effective global network

By Liesl Venter As project cargo markets continue to grow all over the world, successful project logistics in the future will require definite global players who can take responsibility for a project on a door-to-site basis.

So says Herbert Müller, general manager of a hartrodt South Africa, which has been forwarding cargo into South Africa on behalf of German manufacturers since early last century.

“Our company gets more involved with opportunities in Africa and Central and East Asia, which require logistics from many places in the world for a specific project,” says Müller. “The group of companies provides professional expertise in all areas of international project management. Global sourcing of equipment requires the worldwide presence of a competent and experienced project forwarder.”

This is an extremely important element when doing project work on a global scale, he says. “We have a network available that provides all

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sorts of specific solutions for projects including general cargo shipments, urgent airfreight delivery and handling of over-sized and heavy lift cargo. From the initial planning stage to the final delivery on site, the a hartrodt network ensures efficient and cost-effective completion of any project under permanent supervision.”

According to Müller customisation of every individual contract is key.

“That means doing an extensive project analysis and professional consultancy, working out strategic cargo routes based on own surveys, transport budgets, operations analysis and supply chain design while allowing for “turn-key” project management from worldwide sources to the job site.”

He says there is no denying the importance of accurate planning.

“This all needs to be driven by dedicated personnel as single key points of contact with co-ordination for the entire shipment process, performing within fixed time frames and undertaking permanent monitoring.”

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6 | MAY 2010

‘Being prepared

for the unknown is crucial’ Never underestimate the role of the truck driver

By Liesl Venter

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Les Dodds ... ‘No amount of planning and preparation can ever measure up to the reality of working in the field.’

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hen it comes to project work the devil is truly in the detail, says Les Dodds, discipline manager: logistics for engineering, contracting and construction services company Murray & Roberts.

“Many people think they are experts at project cargo but it’s one of those areas where you have to have a huge amount of logistics knowledge along with experience,” says Dodds.

And having been involved in major projects across the globe, he is a firm believer in preparing well in advance and ensuring that all the bases are covered.

“It is important to take all the aspects into consideration from the cargo’s point of origin to the final destination – at no point can you wash your hands and say

it’s a done deal. When it comes to project cargo you have to be hands-on all the way and prepare far in advance of the start of the project.”

But no amount of planning and preparation can ever measure up to the reality of working in the field.

“Anything can happen during the transportation phase – from the ship coming in late to the truck breaking down. Being prepared for the unknown is just as important.”

And be it the Dubai International Airport in the United Arab Emirates or the Medupi Power Station in the remote northern regions of South Africa, it’s all in a day’s work for Murray & Roberts.

A large part of the company’s success comes down to insistence on following strict policy and procedures, regardless of what it is working on. Not only does this ensure the safety of the people

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involved, but it also ensures that risk is managed throughout a project – be it financial, environmental or just protecting the integrity of the brand.

According to Dodds another important link in the success of project cargo is good, reliable and well-trained drivers – something on which South African transport companies too often don’t place enough emphasis.

'South Africa does have to invest more time and money in the training of drivers.'

“You can never underestimate the role the truck driver plays.

I am in essence just hiring your big taxi and your driver must be able to respond to any foreseeable situation around my cargo. Not only are you looking at a person being responsible for an expensive truck, but also for cargo that can cost millions.”

And with more projects taking off in Africa, more opportunities are arising in the sector.

“It means being committed though. In some ways project cargo can be seen as very simple –

a set of wheels moving cargo from one point to another,” says Dodds.

“But when one takes all the factors into account one realises how very complex it is and how critical industry knowledge is and how necessary it is to always be on top of regulations to ensure compliance.”

Dodds says while South Africa has proved it is just as capable as anyone else in the world to do project cargo well, the country does have to invest more time and money in the training of drivers.

“The market is growing not just in South Africa but in Africa as a whole. We need to continuously work on improving our skills and knowledge base, while getting to really understand the environment we work in.”

Equally crucial is industry support for initiatives like the RTMS, an industry-led, voluntary self-regulation scheme that encourages consignees, consignors and transport operators engaged in the road logistics value chain to implement a vehicle management system that preserves road infrastructure, improves road safety and increases the productivity of the logistics value chain.

Be it the Dubai International Airport in the United Arab Emirates (above) or the Medupi Power Station in the remote northern regions of South Africa, it’s all in a day’s work for Murray & Roberts.

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8 | MAY 2010

Growing oil industry will provide major opportunities

By Liesl Venter

G

etting mothballed projects back on their feet seems to be the focus of many companies following the 2009 global economic meltdown, which saw project cargo across the globe slowing down substantially.

‘Good signs of future growth, especially since African minerals and resources are in high demand globally.’

Ross Barry, supply chain developer for RB Freight Management, says many businesses are also looking at introducing new projects now, particularly as the country seems to moving out of the recession.

“Organisations are however still wary and are not as willing as before to allocate the large sums of money required to make projects work. As a freight provider this

can lead to delays and adjustments which can raise the overall cost of the project. “ But, he says, the project cargo industry, like most others, is already looking forward to a slightly rosier future. “Things are definitely picking up after the recession, but not nearly as fast as they dropped off pre-recession. However, there are good signs of future growth, especially since African minerals and resources are in high demand globally. The growing oil industry off the coast of West Africa will provide many opportunities in the future for project work as infrastructure needs to be built as do the rigs themselves.”

He believes these opportunities are further increased in Africa as the dash for resources continues and it’s seemingly picking up momentum.

“New mines, infrastructure and building projects abound, all of them offering significant reward to a well placed and knowledgeable organisation.”

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currently working on several projects in both South Africa and the rest of the continent, there is much on the horizon for the company in the project sector, especially in the mineral resources, infrastructure and housing markets.

“We believe doing project cargo well means first and foremost satisfying the customer,” says Barry. “During a project you are dealing with a wide variety of different cargo from different sources, so making sure that the person who is ultimately in charge (and paying the bills) is satisfied is paramount. This means having the ability to deal with all the cargo types, transportation methods and pitfalls.”

Add to that having a good relationship with the customer.

“Being able to reconcile the reality of the transport environment with the customer’s expectations is vital – it often happens that a customer has unrealistic expectations of the freight system as a whole. This must be managed.”

MAY 2010 | 9

Infrastructure shortfalls a global challenge for project specialists

By Joy Orlek It’s a comforting thought that the challenges faced by South Africa’s project cargo specialists are no different from those facing the rest of the world – chief among them the inability of infrastructure to keep pace with growth.

In order to provide a global perspective, FTW interviewed Brisbane-based Kevin Stephens who heads up the Project Professionals Group, a global association of 120 project specialists in 100 countries.

According to Stephens it’s been business as usual in Australia, where most of the big projects have gone ahead, despite the recent recession.

“We haven’t seen a large downturn in the past 18 months to two years but we do expect things to slacken off over the next 18 months – although not in Australia because we’ve been pretty well serviced by our government.”

His membership is involved in the full spectrum of projects – from mining, construction and infrastructure to power generation and wind turbines.

“There’s a lot of work going on everywhere,” says Stephens, “ but with a lot of new projects coming on stream, particularly in Australia, South East Asia and South America, governments are not maintaining pace with infrastructure needs.

“I can’t see any more roads, ports and shore-based gear emerging to support these new projects and that will place a lot of pressure on companies setting them up,” he said.

The result will be inevitable delays.

“On the east coast of north Australia we deal with all the coal and gas shipments going out and there are often dozens of ships waiting for weeks for a berth.”

In terms of road infrastructure, Australia has been fairly well served until now, says Stephens.

“But we’ve got several multibillion dollar projects coming on stream in the next few years and no advancement in road, rail or coastal shipping. Port infrastructure will also be a major problem in the next couple of years.”

Too little too late appears to be the complaint in Australia – as it is locally.

Kevin Stephens ... ‘Reliable network crucial.’

“Many of the major ports in South East Asia are well covered – Thailand and Vietnam for example – because they started investing 20 years ago.

“But North America, South America, Australia and South Africa will suffer the most as a result of bad government decision-making over the past 10 years.”

Stephens established the first project cargo grouping 12 years ago, with what he describes as ‘an Australian inferiority complex’.

“But when we organised our first conference I was stunned by the fact that my knowledge was as good as anyone’s and that all our members were equally clued up. We all think globally although most of the projects are happening in our own countries.”

For the most part, project cargo specialists find themselves in a dozen different countries in a year so they all have a good understanding of the requirements in other countries.

Which is why one of the crucial elements of a successful project cargo operator is a reliable network of partners who know what they’re doing and whom they can trust.

And that’s the premise on which PPG was established.

For the future, Stephens remains upbeat. “Unlike general freight forwarding, projects will continue to move, particularly as worst hit economies begin to emerge from last year’s crippling recession.”

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10 | MAY 2010

Methodical planning is critical

SA well positioned to handle logistics throughout Africa

By Liesl Venter

C

areful and methodical planning are crucial for successful project work, says Colin Atkins, director projects for World Groupage Services.

“Not only does this ensure smooth running of the project, but it also ensures that costs are kept down.”

It is important to remember that it is not as easy as just a case of moving cargo from A to B, he says.

“When planning it is important to consider all the available options, analyse each one on its merits, consider the shortcomings of each option (what can go wrong), then consider the logistical requirements, discuss with all role players, and then only consider the costs.”

And with World Groupage Services having been involved in project work for several years,

Atkins should know.

The company recently showed its project competence when it completed the import of stackers and reclaimers from China for Sishen South iron ore mine. With around 150 police escorts required for the abnormal loads it proved to be quite challenging, but careful planning saw them meeting the deadline.

Atkins says there is much opportunity for project cargo at present.

“While there are a number of large projects either under way or on final feasibility in South Africa, all offering work for competent price competitive BBBEE logistics companies, the real opportunities probably lie beyond our borders.

“South Africa is well positioned to handle logistics throughout Africa and logistics players generally have a strategic advantage over their counterparts

abroad, provided they have strong strategic alliances with companies in the countries they wish to work in.”

Atkins says all indications are that the project industry will see steady growth in the coming months after a few years of consolidation due to projects being put on hold.

‘The real opportunities lie beyond our borders.’

But there are still challenges that companies must overcome.

“Tenders often involve substantial work and time and may only be for projects still to be tendered on. The lead time to banking can be years,” he says.

“Another challenge is that many supply chains are controlled politically and quality BBBEE suppliers are often excluded

from even quoting. This lack of competition can lead to bad service delivery. In addition, coming off a low activity base, there are many logistics players tendering on jobs, often with very low margins or even at cost to pay their overheads.

While these tenders are initially competitive and attract attention at tender adjudication, the lack of basic strategy and methodology of operation often results in poor performance and excess variable costs, pushing up final project logistics costs and resulting in an unhappy client.”

Atkins says the message clearly is to be careful when assessing a logistics provider in order to ensure they understand the full implications of the project and agree on how variable costs will be contained.

“If there is no strategy, there is no solution,” he says.

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MAY 2010 | 11

Volumes to Zambia and Congo back on track

By Liesl Venter

A

fter a tough 2009, which saw the global economic downturn negatively affecting volumes across southern Africa, abnormal and project cargo to Zambia and Congo are back on track.

Adrian Friend of Zambia-based Celtic Freight says there has been a dramatic increase in the number of abnormal loads on Zambian roads in recent months – good news for the project cargo industry.

“Most of the traffic we are seeing is heading for the Copperbelt and transit to Congo,” he says.

With Celtic only operating to Zambia, the return of abnormal and project cargo work is a welcome relief after the quiet period in 2009.

“Hopefully the quiet down time our abnormal trailers and our Zambian-based rigging equipment experienced in 2009 is now over.

Bookings are steady and certainly Celtic is getting a lot more enquiries for the specialist container handling equipment and crane trucks based in Lusaka,” says Friend. “We also have two container handling side-shifters and two crane trucks that are on hire or used for project work in the country.”

Adrian Friend ... bookings steady.

With its customer base mostly comprising the forwarding industry in South Africa, the company has done some exciting projects for events and the demonstrations industry.

“For these projects we bring containers of display and samples to a site where our trucks wait for the duration of the show or expo

and then move the equipment back to South Africa,” says Friend. “We are currently running an operation where some 20 containers from South Africa are being staged in our Lusaka depot. The builders on a project in Mfuwe, Luangwa Valley, call for the containers as and when they need them and we deliver according to

that schedule.”

For Friend it is about being able to meet the customer’s specific requirements around project work.

“We can move the cargo direct out of Durban or Johannesburg to placement on site, or move it to storage – depending on the customer’s requirements,” he says.

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12 | MAY 2010

Infrastructure investment boosts Manica’s project book

By Liesl Venter

P

roject work in Namibia is on the increase with much development in the energy and mining sectors, says Patrick Kohlstaedt, general manager logistic services of the Manica Group Namibia.

“With the world economy and investor confidence picking up, we expect the situation to further improve,” he says. “Future developments especially in the energy and mining sector are foreseen in Namibia and the region at large.”

More activities in infrastructure investment in Namibia and its neighbouring countries and corridor partners is also expected to bring much opportunity for companies wanting to get involved in project work.

“We believe infrastructure investments are driven by resource exploration, energy needs and partnerships between developing countries, specifically China and Africa. Therefore we foresee further

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growth in this area, should world economies continue to grow,” says Kohlstaedt.

And with the Manica Group Namibia already heavily involved in two major projects, it is clear that the downturn of 2009 is finally something of the past and the predicted brighter future is on the way.

“We have been involved in the development of the CapriviLink Interconnector, a new power line connecting the Zambian and Namibian grid. The total investment in this project is estimated to be more than R2bn,” says Kohlstaedt.

“Part of the line is the construction of two substations. Both substations, Katima Mulilo and Gerus near Otjiwarongo, received four 111 MT transformers and the various ancillary equipment required for the construction of a substation. The line is set to be commissioned later this year.”

The other project on which the company has been working is the construction of a cement plant

in Otavi. With the total value estimated at R2.5bn, it is the biggest single foreign direct investment in Namibia since independence.

“We are responsible for delivering components from CFR Walvis Bay to the site,” says Kohlstaedt.

“Various charter and liner services delivered more than 30 000 freight tonnes to the port of Walvis Bay.” While there are still challenges to address such as having sufficient and suitable equipment and transport available at the time and place required to ensure a project is completed successfully, the opportunities far outweigh the challenges.

“The Port of Walvis Bay and Manica are well positioned to support projects along the Walvis Bay corridors into Angola, Zambia, DRC and Botswana. In addition the Port of Walvis Bay itself is planning a major upgrade in the next 36 months, worth in total about R2bn,” says Kohlstaedt. “This will further strengthen the performance of this port and hinterland connection.”

A ball mill for the Ohorongo Cement Plant … one of

MAY 2010 | 13

Latest logistics study attracts muted response

By Alan Peat The proposed R17.2-million logistics study of the operational efficiency of selected key transport corridors has met with considerable stakeholder interest – but some of the enthusiasm has been somewhat blunted by the suspicion that it might go the same way as many other bright ideas, into oblivion.

It is part of the efforts by the combined departments of public enterprises (DPE), transport (DoT) and trade and industry (dti) to improve the corridors’ logistics performance, and help guide infrastructure planning and future investment programmes.

It has been titled the national corridor performance measurement (NCPM) programme, and the DPE is taking the lead role, according to Andrew Shaw, deputy directorgeneral for transport.

He has revealed that a team from the University of Stellenbosch’s department of logistics – led by Dr Jan Havenga and Paul Aucamp – has

been contracted for the threeyear study.

It is designed to gather relevant performance data from stakeholders – like the logistics and transport sectors and their industrial users – on the six corridors: Gauteng-Durban; GautengCape Town; Gauteng-Port Elizabeth, Ngqura and East London; GautengMaputo; Sishen-Saldanha; and Mpumalanga-Richards Bay. It will also study the four industrial sectors of automotive; metals and mining; containers; and agro-processing.

The project manager is Neelesh Amaidas of the DPE, who said the initial step was to decide which corridor to study first.

He hinted that either the bulk ironore line from Sishen to Saldanha, or the coal line from Mpumalanga to Richards Bay, was likely to be the first choice – with only a few stakeholders (like the railways and the harbour authorities) having all the necessary performance measurements.

The idea of the study, Amaidas added, is to build both visibility and corridor-level intelligence.

the major projects undertaken by the Manica Group Namibia.

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14 | MAY 2010

Facilitating pro-active management throughout the process

Sydney Ramoorthy … ‘Operations support system must assist the operator to comprehensively manage the status of each individual file.’

T

he complexity of project cargo logistics demands a comprehensive systems control, according to Sydney Ramoorthy, head of new business development at Core Freight Systems, a specialist software house servicing SA freight forwarding and customs clearing clients.

“The nature of project cargo is characterised by the co-ordination of multiple time-sensitive shipments of generally varied cargo,” he told FTW.

“This emphasises the need for an operations support system that assists the operator to comprehensively manage the status of each individual file – which is integral to the total project delivery.”

Ramoorthy headlined ‘the imports indent management’ facility.

“This supplies a mechanism to start managing shipments from the initial planning stage, with data flowing seamlessly through the subsequent forwarding and clearing steps.

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“Where required, the integrated ‘CoreWarehousing’ functionality provides for recording of cargo held by the agent pending further movement.”

Ramoorthy stressed that this type of comprehensive reporting allowed for pro-active management throughout the process.

“And,” he said, “when combined with ‘CoreQuery’, it allows the client to track the status of his shipment processing over the internet.”

Add to this the use of the ‘CoreDocs’ module, and the operator can easily store electronically, and extract where necessary, any documentation pertinent to the shipment.

This includes any scanned document or file received electronically. “For example,” said Ramoorthy, “email correspondence or even a picture of the cargo which may be required as a record of damages or commissioning on site.”

If you want to add detailed accounting at the file level, he spotlights the ‘CoreFreight’ application.

“This,” he said, “provides advanced disbursement and revenue controls, realtime credit control, flexible client-rates set-up and proven interfaces into general ledger accounting packages. It ensures that management has the financial control essential to operating a business, in addition to the traditional operational processing controls.”

Core Freight Systems believes that its software will contribute equally to the efficiency of an import and export operator in the SA environment.

“This,” Ramoorthy said, “irrespective of whether it is a project or general cargo application.”

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Magnetite boosts Swazi rail volumes

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agnetite is a recovered byproduct from copper mining used in iron production, but for Swaziland Railway it is an ore key to this year’s profitability. 26% more of the product will be shipped to Richard’s Bay from Phalaborwa through the landlocked country whose rail system earns most of its revenue from transhipment of SA goods.

“The 2010 financial year starts in April for us, and it is going to be a good year because of the growth of magnetite traffic. The volumes for other commodities we move will probably remain the same, but because of magnetite we will have real growth in freight traffic this year,” Gideon Mahlalela, CEO of Swaziland Railway, told FTW. Swaziland Railway does mount occasional tourist excursions with special trains, partnering with Rovos Rail and others, but its core business remains as it has been since the first trains rolled in the 1960s – freight, specifically mined ores.

And the output of mining firms would further boost company business if the Swazi government would grant licences

for new operations. There is a backlog of applications seeking to excavate iron ore, diamonds, coal and other minerals in the country. Until these are approved, the rail system looks to other local commodities and transhipment opportunities.

“I just met with our counterparts in Mozambique in anticipation of the sugar export season. We inspected all 226 kilometres of line in Swaziland, and they are inspecting on their side of the border,” said Mahlalela, who noted that the old citrus clients they once served to bring fruit to Maputo have shifted to sugar production, though the output is still shipped to Maputo.

All coal mined in Swaziland is used in SA, whether shipped by road to Mpumalanga or via Swaziland Railway to Richards Bay. As for the textile industry, which uses rail to import inputs to Swazi garment firms and export finished products to Durban port, the sector’s declining fortunes in recent years has meant less business for the railway.

So it is in the transport of minerals that the rail system sees potential for new business, until orders again pick up for the Swazi manufacturing sector.

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16 | MAY 2010

High expectations for business from oil and gas industry

‘Project cargo does not diminish in a recession’

By Liesl Venter

S

ecuring project cargo work at a price that allows one to still be competitive and deliver a professional service is probably the biggest challenge facing the industry currently, says Owen Bottomley of Cape Crating.

A major crating company providing logistic services to the freight forwarding and clearing industry, Cape Crating has always been heavily involved with project cargo and the company believes there are many opportunities in this sector.

“Project cargo opportunities do not diminish in a recession,” says Bottomley, commenting on the market conditions of 2009.

The upgrading of a berth in Cape Town targeted at the offshore industry is creating much expectation around project cargo work in the oil and gas industry in Cape Town.

“The expectations are that oil and gas work will increase and that the government will create a tax/customs-

Owen Bottomley ... ‘Effective planning is key.’

friendly environment to help attract major oil and gas work to Cape Town.”

He says if the correct business climate is created then growth can be expected and Cape Town could become an offshore supply hub servicing the oil and gas industries in both East and West Africa.

According to Bottomley, much opportunity also exists in the power generation industry that is expected to

provide project work.

It is, however, necessary to do the job well and that includes correctly assessing a client’s needs before the work starts, effective planning, excellent communication to all parties and having competent staff on board.

“It is also important to have the right equipment and be able to effectively manage subcontractors, and then to continuously plan throughout the project.”

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World Cup’s many beneficiaries The project cargo industry has been one of the beneficiaries of the World Cup, with stadia expenditure, the airports, the road upgrades, the Gautrain, and the new hotels being built spread over a number of years between 2005 and 2010 and easily approaching R100bn overall.

It is estimated that during 2010, World Cup related expenditure could add as much as 0.2% to 0.4% (R5bn to R10bn) to the country’s GDP (both as production and as income), says FNB chief economist Cees Bruggemans.

Throughout the build-up period, thousands of construction jobs were created, while the new facilities need to be manned, creating different job opportunities, many permanent, he said.

Clearly the World Cup will put South Africa, and Africa, on the map, with many benefiting from having presented, hosted or participated in this huge world class event.

‘Trade incentives would ramp up interest in West Africa’

S

A needs to introduce trade incentives and increase awareness of the investment opportunities in Africa, according to Jason Stramrood, trade manager for Safmarine’s SA-West Africa multipurpose vessel (MPV) services.

It will go a long way to growing our trade with the rest of the continent, he said, adding that he doesn’t understand why Africa does not feature as prominently as the likes of India and Pakistan in the investment plans of SA entrepreneurs.

“SA companies applying for investment capital appear more likely to cite India, Pakistan and Europe as their prospective markets than countries in Africa,” Stramrood told FTW. “We have also noted that companies in Europe, the Far East, the Middle East and the Americas are far more active in Africa, particularly West Africa, than are SA companies.”

Commenting on the project cargo market, he said SA companies appeared, in general, disinterested in West Africa, even though the local industry has the technology, the infrastructure and the connections it

Jason Stamrood … ‘SA companies appear generally disinterested in West Africa.’

needs to maximise the opportunities available.

“Even though this country enjoys the shortest transit times into West Africa, the majority of project cargo is currently sourced from other countries.”

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18 | May 2010

By road or by rail...

Gavin Kelly, technical and operations manager – Road Freight Association.

Abrie de Swardt, marketing director – Imperial Logistics.

John Thompson, CEO RailRoad Association of South Africa.

As the road versus rail debate continues to rage in South Africa, more and more surveys and research studies are pointing towards the need for an effective rail system working hand-in-hand with the existing road network.

Liesl Venter spoke to three industry leaders to determine if there is light at the end of this particular tunnel.

T

ransport Minister Sibusiso Ndebele is a big fan of the railways.

Since stepping into office he has spent much time researching the country’s inadequate rail system.

In his recent budget speech in Parliament the minister did not beat around the bush – he made it clear that the exorbitant cost of transport in the country was no longer viable and more cargo needed to move from road to rail, quickly. And the industry agrees – rail must come to the party if South Africa wants to remain globally competitive.

There is no doubt that the country requires more cost-effective transport to keep its economy going compared to the rest of the world, considering the main economic hub is some 600km from its nearest ports, says Dr Jan Havenga of the University of Stellenbosch.

With the cost of logistics now in the region of around R339 billion per annum, experts agree the debate is over and it is no longer a question of road or rail, but rather how soon the country can harness both to ensure global competitiveness and success.

‘Rail will not get its fair share of cargo until it addresses issues around its unreliability and inability to deliver to the customer.’

– Gavin Kelly But, says Gavin Kelly, rail must get its act together if there is to be any move forward. “Rail will not get its fair share of cargo until it addresses issues around its unreliability and

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19 | May 2010

inability to deliver to the customer.”

He says there is no denying the need for rail in the country, but reliance on trucks will continue for years to come unless major steps are taken to address the infrastructure backlog of the rail network as well as its inability to function professionally. “The reality is without trucks South Africa stops.

That does not mean though that we don’t need an efficient rail network.”

Abrie de Swardt agrees saying an efficient rail network is a critical enabler of a country’s competitiveness.

“In a global economy led by marketrun supply and demand, rail today needs to be orientated towards supply chains to meet the changing needs of its customer base. No economy in the world can remain globally competitive and sustain growth without a credible and sound rail transport system.”

As transport remains a dominant factor in the day-to-day activities of the majority of South African companies with regard to mobility, it is essential to have access to an effective rail system.

According to John Thompson one just cannot accept that rail is a dysfunctional investment. “Rail makes sense not only from a cost perspective but an ecological perspective.”

Why not just build a freight highway since rail is struggling to find its feet?

An improved railway infrastructure and system is vital to meet the growing demand for efficient transport links to ports and between neighbouring countries in southern Africa. Kelly says admitting the rail system is dysfunctional is the first step in addressing the problem.

“Why build a freight highway – we already have one. It is called the N3.

There is no doubt in my mind that we need both road and rail in South Africa. Therefore we need to fix the rail infrastructure, not accept its

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dysfunctionality as a fait accompli,” he says. “In the same way we should be maintaining our secondary road network.”

According to De Swardt the main challenge facing South Africa is the modernising of its railway system in a manner that promotes growth and development given that South

‘For South Africa to become globally competitive rail has to be seen as relevant and excellent.’ – Abrie de Swardt Africa’s ability to efficiently move freight is vital to a modern, thriving economy. “Our transport services and infrastructure are however expected to be focused, planned and budgeted for and it’s therefore imperative that the plan on paper come to fruition quickly and effectively.”

But if the annual 6th State of Logistics Survey is to be taken into account then Transnet’s multibillionrand investment plan is already inadequate in creating rail capacity, making private investment crucial.

According to Thompson many of the issues around rail’s inability to function relate to its marginalisation since the mid 1980s.

“In the same vein the lack of investment in road maintenance is now coming home to roost. Road freight when compared with rail is much more environmentally unfriendly. We are entering the age of taxing emissions and the country is going to have to meet its targets.”

But does rail still have a role to play?

Imagine moving 100 million tonnes of export ore and coal onto road for transport to the ports, says Thompson.

“There is no doubt that rail has a role

to play, but the real question is rather what role should rail be expected to play in the various transport segments.”

In Kelly’s opinion rail is a musthave in the country when used in the markets for which it is best suited. “For any long distance single commodity point to point transportation rail makes sense.

Stopping and starting has always been a problem for rail, but if you take this facet out of the equation and build the lines properly to service specific commodities, then rail has a big role to play.”

But rail traffic has stayed the same over the past 15 years, while road transport has more than doubled in the same period.

“It is not sustainable,” says De Swardt. “As companies we need to have a common objective to alleviate the pressure on the road system and to bring back to rail the commodities and containers that are suitable for rail transport – rail centric products such as coal, iron ore and manganese to name but three.”

‘Rail makes sense from a cost and an ecological perspective.’

– John Thompson As large parts of the rail network system remain in serious decline, while the backlog in road maintenance causes much concern, South Africa – be it government or the private sector – is going to have to find solutions that ensure the continued movement of freight, optimising the country’s endto-end supply chain.

“It is about integrating the way that South Africa’s rail, road, inland terminals and ports work in an effort to complement each other so as to compete as a whole against other global supply chains,” says De Swardt.

20 | MAY 2010

Big copper contract moves on DRC-Jo’burg route

By Joy Orlek

A

contract for the movement of large volumes of copper from the DRC to Johannesburg, with lime on the return route, is keeping Zambia-based clearing and forwarding agent Cee Cee Freight on the move.

‘Currently negotiating a major fertiliser contract for the government.’

And there are several good reasons why the company is keen to expand its share of this type of cargo, says managing director Chris Chiinda.

“With a contract of this magnitude you are able to project how much profit you will make because the cargo is already there and you can utilise your trucks to maximum capacity.”

Cee Cee was established more than six years ago. It signed up the copper deal last year and it will run for two years.

The company is currently negotiating a major fertiliser contract

for the government which would add considerable volumes to its transport base.

“In the rainy season the government provides farmers with subsidised fertiliser which is not sourced locally.

It moves from China to Durban and is trucked to Lusaka.

“It could involve up to 50 000 tons which would significantly boost our business base.”

And while speed is of the essence for cargo of this nature, border delays, roadblocks and poor infrastructure continue to stymie smooth movement of cargo, says Chiinda.

“We don’t object to roadblocks which are essential to ensure that trucks are roadworthy, but staff inefficiency leads to unnecessary delays.

“Transit time at the border should be no longer than 24 hours, but trucks are sometimes delayed for three to four days if there’s a problem.”

Transit time from the DRC to Johannesburg, with 48 hours at each border, translates into two weeks.

“This could be cut in half if there were no border delays,” says Chiinda.

Chris Chiinda ... 'Border delays, roadblocks and poor infrastructure continue to stymie smooth movement of cargo.'

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MAY 2010 | 21

Project management must be proactive not reactive ‘We regard all projects as partnerships with our clients’

By Liesl Venter

C

ompanies with proven track records and sound experience will not find themselves marginalised when looking for project work even in the current tough economic times.

According to Carl Webb, director of Project Logistics Management, the project logistics environment is becoming more specialised and the management of risks is becoming more demanding.

While experienced and knowledgeable staff is becoming scarcer, it has meant developing in-house training programmes to ensure continuity.

“Project management is proactive, not reactive. But even in these economic times there are projects under way or in the planning. Companies with proven track records and project management experience will have the opportunity to secure project work.”

Specialising in project and abnormal cargo, Webb says

abnormal load routes, abnormal permit requirements and abnormal travel limitations remain challenges when doing project work.

“Port restrictions and ever changing requirements in the harbours also present difficulties at times.”

He believes creating a team environment within the project group is one way of ensuring success. “We regard all projects as partnerships with our clients, with the sole aim being the timeous completion of the project, within budget and with minimal risk,” says Webb. “Communication is also a key element. The earlier we can get involved in the logistics planning for a project, the more successful we will be in achieving our objectives. Risk assessment and management also contribute to a successful project.”

While Webb believes the industry will not grow too much in the near future due to the shortage of personnel, securing work will be based on proven track records. “ There will always be companies

A recent project undertaken by PLM … ‘Even in these economic times there are projects under way or in the planning.’

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22 | MAY 2010

Infrastructure development ramps up project opportunities

By Liesl Venter

W

ith more and more infrastructural development in Africa, opportunities in the project cargo sector are plentiful, says Concargo’s Greg Tighe, director: global projects worldwide operations.

“And we are currently experiencing a dramatic increase in international enquiries from our strategic partners abroad for project work in Africa.”

With the primary focus at present in South Africa around the energy sector there is also much opportunity for

companies to find and do project work locally.

Says Tighe: “The opportunities in the energy sector are in both the traditional coal-fired sectors but also alternate energy generation like wind farms.”

But challenges do remain for the project industry especially after the global economic meltdown. “Due to the slow recovery period from the worldwide recession there is still a fair amount of caution in the funding of large projects, but we are getting more enquiries and that is good.”

Tighe believes companies that do

project work well will find themselves growing with the industry in the years to come.

“It is important to have reliable equipment available and have an experienced and dedicated project team at hand who can ensure reliability at all times,” he says. “It is also necessary to have a good relationship with the various government departments such as Transport and Public Works as well as with traffic authorities.”

And, says Tighe, never underestimate the importance of planning when doing project work.

Greg Tighe … ‘Never underestimate the importance of planning.’

Project market can expect another volatile year The global recession has had a variable impact on project cargo, according to Greg Ulicki, Safmarine's director of multipurpose services (MPV).

Problems with financing were evident in the postponement and delay of projects, but a number of projects still came on stream.

This, according to Ulicki, meant that business conditions were, on the

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whole, “volatile”.

He also suggested that, with the situation changing daily, there was no fixed pattern or trend in terms of growth or contraction of demand.

The same pattern can be expected for the year of 2010 – as the market demand varies between ups and downs.

“Although the prospects for 2010

are difficult to predict,” Ulicki added, “we do not expect business conditions to significantly worsen in 2010. We also expect demand for breakbulk services to fluctuate, as they did in 2009.”

Much of this is linked to the fortunes in the container market.

Breakbulk services will continue to be influenced by container freight

rates, according to Ulicki.

“When freight rates for container services are low,” he said, “there is often a tendency for certain shippers to temporarily shift their business away from MPV to container services.

“However, in most cases, these shippers return to MPV because of the distinct advantages of the MPVtype services.”

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Contact: Thys Pienaar or Rob Lovemore Tel: 031 705 1404 Fax: 031 705 2049 Cell: 082 771 5135 Email: thys@lovemore.co.za or rob@lovemore.co.za www.lovemore.co.za

MAY 2010 | 23

‘Project work is not for text book operators’

Business confidence rising

By Liesl Venter

S

kill, expertise and a flawless track record has seen Shipping & General Transport walk away with a major project cargo contract to distribute 800KVA circuit breakers to various Eskom substations.

“We were initially given the project of unpacking, staging and transporting 70 container loads of circuit breakers at our premises in Germiston, where our standards and methodologies were measured and compared to those of our European counterparts,” says managing director Regan Moodley. “Needless to say the flawless execution and the well-documented photo finish of the initial phase led to us being awarded the contract to final delivery to substations across the country.”

Moodley says skill and expertise go a long way in ensuring success when doing project work.

“Diligence and very meticulous planning are key along with a welltrained team who all understand the specific requirements of a project and who are committed to seeing it

Part of the shipment of circuit breakers distributed to Eskom substations countrywide.

through from concept to fruition.”

He believes that project work is not a platform for trial and error. “It is not an industry for ‘text book’ operators and those who sell their services based on impressive presentations without the fundamentally important experience

and know-how.”

It’s a market that has grown significantly in recent years, says Moodley.

“For me it is a quick measure of where we are heading as a country, and so far in South Africa we are moving in leaps and bounds.”

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The Business Confidence Index (BCI) has continued its upward trend registering 84.2 points in April – up from the 83.2 points in March, the South African Chamber of Commerce and Industry (Sacci) revealed recently. The April 2010 figure is 2.8 points higher than in April 2009 and represents the second year-on-year increase in 30 months, BuaNews reports.

According to Sacci, between April and March this year, nine BCI sub-indices had a positive effect on the BCI as it did between March and February.

The index has been on an upward trajectory since the beginning of 2010.

“Domestically, there is growing support for the view that most economic indicators have advanced beyond their lower turning points. The key economic constraint remains low levels of real household consumption expenditure which restrains stronger business activity,” said Sacci.

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T +27 11 873-4786 F +27 11 873-6066 reganm@shippingandgeneral.co.za www.shippingandgeneral.co.za BEE ACCREDITED

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24 | MAY 2010

Spike in demand

hits container suppliers

By Alan Peat

A

lthough the supply element in used containers went through the roof last year, the demand element had also slumped – and it was difficult to find a good home for the cheap containers that had become available, according to Darren Singh, GM of the major suppliers and converters, Container World.

“The slump in the market caused by the global recession hit the shipping industry hard,” he told FTW, “with many shipping lines cutting back on staff and selling off containers to keep themselves liquid.”

But this boost to the supply of containers was matched by a similar slump in a major market – the mining industry. It had become a thriving market for used containers as it stepped up exploration in Africa, with new mining and drilling sites springing up all over the continent.

“With the containers usually also destined to remain permanently on site – for storage or workshop purposes, for example – shipper-owned units were a most cost-efficient answer,” said Singh.

But the worldwide recessive slump also caused the mining sector having to trim its financial wings, and cut

back on costs. “This,” Singh added, “had a restraining effect on our supply of specialised equipment to them.”

So, by the beginning of November last year, container prices had dropped drastically, and there was abundant supply. But, according to Singh’s market report, this has changed in the past few weeks.

“Demand has suddenly hit an alltime high after the slump,” he added, “and supply has become scarce. There was also the threat of prices being pushed up with an imminent steel price increase on May 1 “Also, investigations by the SA Revenue Service (Sars) into containers

which had not been customs cleared, resulted in many shipping lines putting a stop on the sale of any of their equipment in the SA market.”

This, along with prices in Europe and the Far East having spiralled out of control, also had an adverse impact on the supply/cost equation.

“With the World Cup looming,” Said Singh, “we can only hope to satisfy the needs of our clients as well as the events companies who require containers during this competition.

“We will all have to scrape the bottom of the barrel to get our hands on whatever equipment we can, in order to keep afloat.”

Intensive planning and tight communication are key A major move has just been successfully completed by Röhlig Grindrod in Cape Town – where it was awarded the contract to transport a massive polyetheleneteraphthalate (PET) plant from Bellville in the Western Cape to the Middle East.

The scope of the complex project work involved the purchasing and forwarding of 49 x 40-foot shipperowned containers, and a part charter consisting of 1 722-cubic metres (cbm) of breakbulk cargo, with the largest piece being over 30-m in length.

“Movement of these kinds of abnormal loads takes intensive planning, foresight and tight communication with all parties and service providers,” said Candice du Randt, Röhlig-Grindrod’s Cape Town-based sales manager.

Moving the converter alongside the vessel for its journey to the Middle East.

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