TWA Jan/Feb 2014 by 3S Media

ENDORSED BY

Intraregional supply chain soluƟons from producer to consumer

Commercial Vehicles

The truck market in 2014

Legislation New customs laws

Logistics Operating

in sub-Saharan Africa

Volvo Trucks’ brake specialist, Mats Sabelström

““We We had a plan and we worked our plan.” Craig C r a Uren, Isuzu Trucks SA

P20

ISSN 1684-7946 January/February 2014 Vol.Mar/Apr 12 No. 12013 / R40.00 incl.No. VAT2 / R40.00 incl. VAT ISSN 1684-7946 Vol. 11

ENDORSED BY

Intraregional

Commercial

The truck

Vehicles

mar ket in

2014

Legislation

customs laws New

supply chain

soluƟons from

producer to

consumer

Logistics

in sub-Sah Operating aran Africa

Intraregional supply chain solutions from producer to consumer onsumee r

COVER STORY TOR RY Volvo Trucks rucks boosts safety ty on slippery roads oads

INSIDE

Volvo Trucks brake specia ’ Mats Sabels list, tröm

P4 P 4 ““W We e ha d a pla n an d we Cra ig Ure n, Isu zu Tru wo rke d ou r pla n.” cks SA

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ISSN 1684-7

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946 January /Februa ISSN 1684-7 ry 2014 946 Vol.Mar/Ap 12 No.r 12013 / R40.00 Vol. 11 incl.No. VAT2 / R40.00

REGULARS

Izuzu – Cost savings for the customer

Editor’s comment Exciting road ahead

Trailers – Operating advice

FESARTA Growing credibility and stature Cover story Volvo Trucks boosts safety on slippery roads Regional news

2 3 4 6

Trailers – Increased output, improved times New codes in BEE

Logistics in sub-Saharan Africa

Scania’s Driver of the Year

No cash! No problems!

Ensuring swifter delivery to customers Investing R4.8 million to train staff and community Company values need to be a drivers values as well Pinpoint your cargo through Africa Ctrack – First rank ratings UD – 2013 defied expectations

8 10 12 13 14 16 17 18

20 22 23 24

SUPPLY CHAIN LOGISTICS

COMMERCIAL VEHICLES New vehicles – Outlook for the 2014 truck market

incl. VAT

SAAFF offers international diploma New legislation facilitates trade Proposed changes to the SA international shipping tax The Port of Durban Multibillion rand fuel deal Developing the copper railway IATA – Global Standards for Africa

26 29 31 32 33 34 38 39 40

TWA | Jan/Feb 2014

EDITOR’S COMMENT

Exciting road ahead

Editor in action

UE TO DEMAND from the market place, Transport World Africa is increasing its circulation both in South Africa and in sub-Saharan and East Africa. Our online stats have grown phenomenally over the past year, Transport World Africa has seen a 203% increase in unique visits to its website; pages viewed grew by 164%. The transport and logistic industry is reading and finding value in our relevant and original content! As a result of this demand, we are increasing our distribution by 35%. The combined circulation will now be 13 600, including 5 500 printed and 8 100 digital magazines. Distribution into Africa will also increase by 83%, with 700 copies going to nine African countries. Can you afford not to be part of this significant growth? • Your target market is reading our unique content as proven by the online statistics. • Widely increased distribution offers you more exposure and value for your money. • The increased reach into Africa gives your brand the necessary presence in these markets. Grow with us, share in our success and increase your company’s brand exposure! I am optimistic that 2014 is going to be an exciting year in Africa as business continues expanding operations on the continent. In this issue, Scania expands its driver competition to include all truck drivers irrespective of the vehicle they drive. Isuzu tells us how its plans are paying dividends, MAN opens its world class distribution centre and we also look at transportation into sub-Saharan Africa. UD Trucks explains how 2013 defied expectations and what their outlook is for 2014, we look at the new BEE codes as well as what 2014 has in store in both the trucking and trailer markets. Looking at supply chain logistics we find out how Customs is changing business, the international shipping tax regime, the Port of Durban and Transnets’ multibillion rand fuel deal. As always, a varied read – enjoy!

TWA | Jan/Feb 2014

Publisher Elizabeth Shorten Editor Simon Foulds • simon@3smedia.co.za Head of design Frédérick Danton Senior designer Hayley Mendelow Designer Kirsty Galloway Contributors Barney Curtis, Sue-Marie Winshaw, Hester Hopkins, Eric Stuttaford, James Milne, Sarah O’Carrol, Craig Parker Chief sub-editor Claire Nozaïc Sub-editor Beatrix Knopjes Client services & production manager Antois-Leigh Botma Production coordinator Jacqueline Modise Marketing manager Hestelle Robinson Digital manager Esther Louw Distribution manager Nomsa Masina Distribution coordinator Asha Pursotham Financial manager Andrew Lobban Administrator Tonya Hebenton Printers United Litho JHB • t +27 (0)11 402 0571 Advertising sales Hanlie Fintelman • h.fintelman@lantic.net t +27 (0)12 543 2564

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www.3smedia.co.za Annual subscription: R290 (incl VAT) subs@3smedia.co.za ISSN 1684-7946 © Copyright. All rights reserved. All articles herein Transport World Africa are copyrightprotected and may not be reproduced either in whole or in part without the prior written permission of the publisher. The views of contributors do not necessarily reflect those of the publishers.

FESARTA COMMENT

By Barney Curtis, chief executive officer, FESARTA

Growing credibility and stature FESARTA’s credibility and stature in the East and Southern African region are growing steadily.

T HAS ALWAYS had a good working relationship with SSATP (Africa Transport Policy Programme), funded by the World Bank. This is because SSATP was one of the first international organisations to recognise the importance of the private sector in the process of improving the efficiency of transport in Africa. SSATP used to be the acronym for Sub-Saharan Africa Transport Policy Programme, but the closer working relationship between SSATP and the AU resulted in the AU calling on SSATP to develop transport policy for the whole of Africa and not just sub-Saharan Africa. The full acronym was retained, since the board felt that it was well known and should not be changed. FESARTA participates in most of the SSATP meetings. FESARTA has carried out three projects for SSATP: Monitoring Beitbridge border, monitoring Chirundu border and assessing the HIV/AIDS interventions in our region. Recently, FESARTA was invited to submit its application for a position on the SSATP Board. At the time of writing, we are likely to hear the outcome of this application at the SSATP Annual Meeting, held in Dakar on the 12 December.

IRU The International Road Transport Union (IRU) has also shown its interest in closer cooperation with FESARTA. FESARTA has in the past tried to become a member of IRU, but financial constraints have prevented this. Now there is an opportunity to achieve this goal, through the IRU Regional Committee for Africa (CRIPA). A cooperation agreement has been drawn up and signed in Abidjan on the 13 December; after the SSATP Annual Meeting in Dakar. Whilst FESARTA may not receive direct benefits from this cooperation with the IRU, it is sure to have long-term indirect benefits such as the two-way flow of useful information and the opportunity to introduce IRU systems and schemes into Africa. As there are virtually no costs to FESARTA in entering into such an agreement, it makes sense to at least try it.

Infrastructure consortium FESARTA was a panellist at the recent AfDB’s Infrastructure Consortium for Africa (ICA) annual meeting, held in Arusha early in December 2013. While the same tired issue were discussed, some progress has been made. In addition, there was good networking with some of the international cooperating partners. FESARTA will be circulating a report on this meeting.

NTBs Four Non-Tariff Barriers (NTBs) affecting the road transport industry have been recently added to the Tripartite system. They are: • NTB605 – Unrest on the DRC side of the Kasumbalesa border. The unrest has been temporarily halted, but the underlying causes still remain. • NTB606 – Security problems for transporters as they enter the port of Beira. The Mozambique police have intervened and we will watch this closely. • NTB608 – Zambia is to toll all vehicles using its roads. This is in addition to the tolls that foreign transporters pay at the borders. There is work to be done to resolve this problem. • NTB609 – Transporters being harassed for overall length in Botswana. The limit is 22 m, plus a bullbar, but this is not being accepted by the authorities.

Beit bridge border post on the Zimbabwean side

TWA | Jan/Feb 2014

COVER STORY

VOLVO TRUCKS

Boosting safety on As one of the world’s leaders in safety technology, Volvo Trucks has introduced Stretch Brake, which is a new innovation that will minimise the risk for trucks travelling on slippery roads.

OR TRUCKS with trailers, slippery roads and downhill gradients represent a tough challenge for even the most skilled drivers. There is always the risk of the rig becoming unstable and – in the worst-case scenario – starting to jack-knife. Volvo Trucks’ new system, called Stretch Brake, automatically retards the trailer and straightens up the rig on slippery downhill stretches.

TWA | Jan/Feb 2014

Mats Sabelström, brake specialist for Volvo Trucks, says: “Even if the truck driver ultimately manages to control the situation, it can be extremely unpleasant for both oncoming road users and the truck driver if a rig suddenly veers off its intended course on a downhill gradient.” Even though South Africa is currently in the midst of summer, countries in the northern hemisphere are experiencing some extremely challenging winter conditions. Carl Johan Almqvist, the director of Traffic and Product Safety at Volvo Trucks, adds: “Every year, approximately 15 % of the 30 000 serious road accidents in Europe

TWA offers advertisers an ideal platform to ensure maximum exposure of their brand. Companies are afforded the opportunity of publishing a two-page cover story and a cover picture to promote their products to an appropriate audience. Please call Hanlie Fintelman on +27(0)12 463 2564 or e-mail her at h.fintelman@lantic.net to secure your booking.

COVER STORY

slippery roads involve trucks. Although this is a declining trend, however, with more effective brakes, stability systems and collision warning systems already helping drivers avoid risky situations in difficult conditions. Stretch Brake is yet another important part of our long-term drive to increase traffic safety and minimise the number of accidents involving trucks.” Stretch Brake is a complement to the rig’s electronic stability programme – yet another system that Volvo Trucks was the first truck maker in the world to introduce. While ESP is at its most effective at higher speeds, Stretch Brake is only operational at speeds below 40 km/h. Both systems contribute to better stability and easier steering. Sabelström states: “One might call Stretch Brake a kind of low-speed electronic stability programme. As the rig approaches a downhill slope, the driver manually activates the system. When the driver then releases the accelerator, the brakes on the trailer are automatically applied in a pulsated mode all the way down the hill until the gradient levels out and speed can once again be increased.”

In Europe, Stretch Brake was introduced in 2012 on Volvo FH trucks pulling drawbar trailers and in 2013 on Volvo FM trucks pulling drawbar trailers. In 2014, it will also become available for Volvo FH and FM semi-trailer rigs there. Concludes Almqvist: “Drivers who have tested Stretch Brake came away very impressed with the system. As we now also introduce the system on tractor-semitrailer rigs, even more drivers will be able to negotiate difficult downhill gradients both more simply and safely.”

O Opposite Jackknifing occurs k when the trailer w sslides forward and swings out a L Left The driver c can activate tthe Stretch B Brake system Below Mats B Sabelstrom, S brake specialist b ffor Volvo Trucks

TWA | Jan/Feb 2014

REGIONAL NEWS

Read more on www.transportworldafrica.co.za

SOUTH AFRICA

10 ppm diesel launched SASOL HAS LAUNCHED its new fuel, the TurbodieselTM ULS 10 ppm, which is the lowest sulphur content diesel available in South Africa. According to Sasol, the fuel has advanced detergency and lubricity properties to keep the engine and fuel injection system clean and well protected, plus it is ideally suited to complement modern day fuel to enable these engines to run efficiently, while producing less harmful exhaust emissions. This development is a step forward in moving South Africa closer to cleaner fuel specifications in line with international standards and this new fuel already complies with the sulphur and cetane requirements. Mohamed Carrim, retail manager at Sasol Oil, says: “We are continuously looking for ways to enhance our products to enable the latest technology vehicles to be introduced in South Africa and ultimately benefit the general consumer. It is indeed a huge milestone for Sasol and South Africa. “The Sasol TurbodieselTM ULS 10 ppm is suitable for all diesel vehicles, from the latest technology to older generation models, with or without turbocharging.“ He adds: “A key part of the Sasol TurbodieselTM ULS 10 ppm is its advanced detergency. This prevents or removes deposit build-up in the engine and fuel system, allowing the engine to operate at optimum efficiency and sustain optimum fuel consumption over time. Continued use will maintain new fuel systems as well as clean up dirty fuel systems.” It will initially be available at 78 forecourts in Gauteng and Mpumalanga and then will be selectively rolled-out to other areas in 2014 and 2015. Mohamed Carrim, retail manager at Sasol Oil

LIMPOPO

Delivering 6 million school books THE TASK OF distributing six million school books to 5 000 schools in Limpopo and the Northern Cape has been awarded to Imperial Logistics group company, Imperial Truck Rental, by the South African Post Office (SAPO). Johnny Wright, MD at Imperial Truck Rental, says: “We believe our job is not just about providing trucks – it’s about giving our customers the solutions and support they need, to help them drive their business’s competitiveness and success.” Imperial Truck Rental is providing a total of 70 vans to undertake these deliveries. The 35 eight-tonne and 35 four-tonne vehicles are all driven by professional drivers.

TWA | Jan/Feb 2014

SOUTH AFRICA

Inclusion of new data in trade statistics SOUTH AFRICA’S TRADE statistics will now include trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS countries). BLNS trade statistics have previously not been included in the trade statistics, due to the free flow of trade from a customs-duty point of view within the Southern African Customs Union (SACU). BLNS merchandise trade does have a material impact on South Africa’s trade balance. South Africa exported R103.8 billion to and imported R21.5 billion from BLNS countries. In 2012, this resulted in a positive trade balance of R82.3 billion for trade with BLNS countries. South Africa’s total trade deficit for 2012 was R116.9 billion. Had the BLNS trade data been included, the deficit would have been R34.6 billion, therefore showing a more accurate trade statistic. SARS’s customs modernisation programme has resulted in its systems moving to new technologically enhanced platforms that enable better electronic capturing of trade data that was previously done manually. The modernised system greatly improves the accuracy of trade data and allows the reporting and analysis of trade data to be done in real time. Although SARS is confident of the accuracy of the BLNS trade numbers, it intends to approach the United Nations to review the treatment of South Africa’s trade data that will now include BLNS trade numbers. In addition to the inclusion of the BLNS trade figures, SARS is also contemplating certain other revisions to improve the reporting of trade statistics in the future. Some of these include the following: • publishing of imports on both a Free On Board and a Cost Insurance Freight basis to align it with UN principles • compiling statistics on the dates when the goods are actually released into or from South Africa’s economy, rather than using the dates on which the goods entered the customs’ system for ultimate release from or into the South African economy • publishing gold exports as recorded on the SARS system reflecting the physical export movement of gold as opposed to the current practice of reporting the SARB gold export data on the IMF change of ownership basis. These changes will, however, only be finalised and implemented after consultation with international experts and other relevant stakeholders.

REGIONAL NEWS

TANZANIA

Strategic intent goes beyond SA borders

A STRATEGIC PARTNERSHIP with the intent of venturing into operations north of South Africa’s borders is being undertaken between Transnet Port Terminals (TPT) and construction and engineering group Aveng. The two companies recently signed a memorandum of understanding that seeks to explore new and existing opportunities

BOTSWANA

of expansion and operating terminals in Tanzania, in East Africa, considered a global growth point. TPT Head of Strategy, Moshe Motlohi, says: “Part of TPT’s intentions include venturing into Africa and expanding our global operations to increase our footprint as a port operator.“ Both TPT and Aveng have submitted an expression of interest to jointly operate seven berths in Mtwara, Tanzania – a city bordering Mozambique. Karl Socikwa, chief executive at TPT, adds: “Transnet’s market demand strategy has enabled us to thoroughly consider and act upon Africa’s regeneration. Seven of ten growth points in the world are in Africa, skills exist and it is up to Africa to convert itself into one of the fastest growing and strongest economies in the world.” It is TPT’s intention to venture into global operations, enhance and grow its skills base and better integrate into the supply chain. The expression of interest precedes the process of requests for proposals. Tanzania is one of seven existing opportunities that will see TPT further its mission to handle commercial import and export of cargo globally.

ANGOLA

Training the driver

Infrastructure growth in Angola

DRIVER TRAINING IS critical for every transport operator and recently, Scania South Africa’s Dirk Koekemoer joined his colleague in Botswana to train six drivers from the Petrologistics Botswana and Choppies companies. Koekemoer has been working with Scania for the past four years and says training is about making sure drivers achieve optimal use of the vehicle. “Basically we need to make sure the drivers get the best fuel consumption and maximum uptime from the vehicle.” During the five-day training the drivers are given a pre-assessment test to determine their level of expertise. Koekemoer adds: “We first test their driving styles and capabilities and once we have determined what their problems or weak areas are, they do ‘corrective training’. In this case we show them what their weakness are and how to rectify them. The training includes both theory and practical sessions. Usually by day three of the training, the driver trainees are able to reduce consumption when driving the vehicle and also to improve their driving scores. Generally, their driving improves.” Koekemoer adds: “Driver training is not just about reducing fuel consumption and improving driver techniques, it is also about preserving the environment. How we drive affects the environment through pollution, so ultimately we need to make sure we save the environment for today and for tomorrow.”

THE ANGOLAN GOVERNMENT, during 2013, opened over 100 railway stations as part of a project to rebuild the country’s rail network, according to a statement issued in Luanda. Angolan news agency, Angop also reported that in Lobito municipality two docks in the port’s city were refurbished and that container and ore terminals were built from scratch. The building project also included a dry dock and buildings to house administrative and technical services, alternative power systems and equipment to process cargo. The statement noted that construction of a channel on the Kuando River to link Angola to neighbouring Zambia as well as port support facilities for cross-border river transport in Kuando Kubango province was under way. Studies have also been carried out for construction of the ports of Dande, Porto Amboim and the deep water port of Cabinda, as well as sea passenger terminals along the Angolan coast. Finally, the Angolan Transport Ministry noted that the Angola Maritime and Port Institute and Secil Marítima in Geneva, Switzerland, signed an agreement to prepare the relaunch of an Angolan flagship sea shipping service. (Source: macauhub)

TWA | Jan/Feb 2014

COMMERCIAL VEHICLES

TRAINING

Driving competition open to all Driving heavy vehicles, particularly over long distances, requires concentration, dedication and ﬁtness. It is a demanding occupation involving far more than just driving.

Ryno Niewoudt, a previous winner

FTEN THE DRIVER is the company’s main face-to-face contact with customers, and he needs to project a positive image and attitude. Not only must he see that his vehicle is roadworthy and safe at all times, he must also ensure that his load is safe, legal, protected, delivered on time and in good condition. While on the road, he is accountable for his actions and must use his own judgement to cope with any situation or emergency that may arise. Apart from the required driving skills, drivers of commercial vehicles have always been expected to be conversant with the various rules and regulations concerning road transport. The driver is the key person to deliver the freight and be responsible for his rig. Driving is job that requires many hours of concentration, dedication and stamina, while remaining within all parameters of safety: driving, vehicle and road.

safety rules on and off the circuit and should a driver ignore one these rules he is severely penalised. Non-compliance to a safety rule could mean coming third or fourth in the competition.

The purpose of the competition

Regional

Scania’s Driver of the Year competition takes place every alternate year to stimulate a professional driving culture within the transport industry. Drivers compete for the prestigious status of being the best driver in the country. Achieving a top-ten rank is a great moment for any driver, as it makes a statement about one’s ability to be professional in all aspects of heavy vehicle driving.

The competition is being held in South Africa, Namibia, Tanzania and Botswana between March and October, all under the guidance of Scania South Africa. At the finals in October, all the regional finalists will compete for the title of Driver of the Year. Gideon de Swardt, project manager, says: “This is the first time we are opening up this event to drivers other than those that drive Scania commercial vehicles. We believe in the merits of this event and believe it will benefit all drivers irrespective of the type of truck they drive. “The main objective of the competition is to recognise the best driver in the region based on competence along with safe and economical driving skills. We believe the driver is the single most important factor when it comes to regarding road safety and ensuring operators achieve efficient and economical fuel figures while being a brand ambassador for the company he works for.”

Stretching the limits During the competition, drivers are expected to achieve the best fuel economy and trip time over a predetermined undulating circuit, that takes into consideration various road hazards and obstacles. Drivers are expected to complete an obstacle course that involves precision vehicle manoeuvres while reversing and in forward motion. The competition is governed by

TWA | Jan/Feb 2014

To enter The event is run under the guidance of Scania South Africa and, for the first time in its history, the competition is open to all truck drivers irrespective of the type or make of truck they drive. Entry forms will be available from the beginning of March. Drivers must answer a number of questions and submit their answers to Scania, which then chooses the drivers who proceed through the next round of the competition. In the second round, drivers complete a theoretical test before heading onto the practical aspect of the competition.

Worldwide This internationally run competition was started by Scania in 2003 and up until 2012 (the last time this event was held) 200 000 drivers have participated, making it the largest driver competition of its kind in the world. The event is run in South America, Sub Saharan Africa, Europe, Asia and Australia.

Get your costs in perspective. Over time, you spend more on fuel than the initial price tag of the vehicle. So isn’t a truck’s fuel efﬁciency more important than its purchase price? There is a better way.

COMMERCIAL VEHICLES

MARKET PLACE

Outlook for the 2014 truck market What does 2014 have in store for the commercial vehicle sector? Simon Foulds speaks to UD trucks and FAW to ﬁnd out their views. What new vehicles will be available for the SA market in 2014?

quality through to the new scope of support offered by our regional dealer network.”

surprised with growth of 11.3%; we think the growth rate will slow down in 2014 with only about 4.93% growth on 2013.”

EVDB “With the large capital Jacques Carelse, UD Trucks Jacques Carelse, managing director of UD Trucks Southern Africa: “UD Trucks will launch additional EHCV products into the Southern African market in the last quarter of 2014. Most importantly, we believe our local customers are set to profit from our upcoming product ranges’ positioning in the market, including its level of techJacques Carelse, managing director, UD Trucks nology and

“We have always introduced product to cope with conditions in our markets.” 10

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Eugene van der Berg, FAW Eugene van der Berg, FAW national fleet sales manager: “We are in the developing stages for a new light duty truck and expect it to arrive in South Africa in 2014. This vehicle will come in as a prototype initially and be rigorously tested before being officially launched into our range.”

Are you optimistic about the road ahead for 2014 within your sector? Why? JC “In 2013, the market

injection and the support from our mother company in China as well as with the Coega development reaching completion, we anticipate an incredibly positive future for our company and we are extremely optimistic about 2014. We will be making inroads in the freight carrier market with our successful four and eight tonne vehicles. In the EXHCV sector we will have the majority market share with some of our construction vehicles. We will be able to supply unrivalled financial packages and offer deals that nobody else can do.”

What new elements or technology is being

COMMERCIAL VEHICLES introduced to your trucks to keep them efficient? JC “The future plans of UD Trucks are all about enhancing our customers’ transport and service experience with us. We are committed to supporting our customers in a smart and modern way, and going the extra mile in everything we do. As has always been the case, UD Trucks will provide customers with transport solutions that offer the right balance between features, cost and efficiency. Although UD Trucks are made for Africa – tough, hard-working and dependable – they are also fitted with modern equipment and technology to ensure the best possible lifecycle costs for customers. The future plans of the company also include the introduction of new ranges that are set to change the way Southern African fleet owners think about trucks.”

efficient and easy to maintain. Minor items such as tare weight reduction and better weight distribution can have an enormous impact on fuel consumption. We have also had great success with driver training, which is the largest contributor to efficiency and longevity on any vehicle.”

How are you ensuring that the next generation of trucks keeps moving through the continent? JC “The roads are improving in some instances but in other are deteriorating. At UD Trucks we have always introduced product with the technology and design ruggedness to cope with conditions in our markets. We have recently ‘remapped’ African road conditions as an input into the design of our next generation product.” EVDB “Our development into

EVDB “With each model we are aiming for the most fuel-efficient design and features possible while keeping the vehicle cost

the Coega Zone has been widely publicised for its job creation and infrastructure influence. However, the largest benefit will be to each

“We are in the developing stages for a new light duty truck.”

of our customers who will receive products built Eugene van der Berg, national to the highest fleets sales manager, FAW standards, incredible parts and after-sales to purchase trucks to support from a professional and move goods from Cape prepared dealer network. With Town to Johannesburg this level of product and support, and then up to Harare we will definitely expand rapidly and Lusaka, in order for into the rest of the continent.” them to make a good

How important is the carbon footprint emanating from the next generation of trucks and is this a key factor when fleet operators purchase new vehicles? JC “The carbon footprint is often confused with emission standards. In reality, it relates directly to fuel consumption. For every litre of diesel used, 2 664 kg of carbon is produced. Thus the key remains in lowering fuel consumption and looking towards alternative technology or hybrids to improve the situation.”

EVDB “FAW still believes in simplicity but as demand is increasing the testing of Euro 5 and LPS gas vehicles are in development.”

What advice would you give to a fleet operator who wants

choice when deciding on purchasing a truck? JC “It’s quite simple, for each job or application one needs to understand the circumstances and conditions, the legal issues etc. We at UD Trucks have just such products, knowledge and simulation packages to assist customers to select the correct vehicle for the job in hand. Our dealers are trained and also we cover the major routes so support is never far away.”

EVDB “FAW has entered into a joint venture with the AA, which was developed with the longhaul operator in mind. Across the lengths and breadths of South Africa as well as into the neighbouring countries, the fleet owner can be rest assured that they have the support of not only us, but also of a prestigious company such as the AA behind them.”

TWA | Jan/Feb 2014

COMMERCIAL VEHICLES

PARTS DISTRIBUTION

Ensuring swifter delivery to customers MAN Truck & Bus South Africa’s new Parts Distribution Centre (PDC) in Germiston, Gauteng, is located just over four kilometres from the company’s Isando headquarters and OR Tambo International Airport. Simon Foulds attended the opening.

Top Anders Nielsen and Geoff du Plessis cut the ribbon Above Warehouse staff

HE PDC HAS been designed to house greater inventories of MAN and Volkswagen truck and bus spare parts and to expedite swifter speed-ofdelivery to MAN Truck & Bus South Africa’s subSaharan customer base. This new flagship MAN PDC is equipped with state-of-the-art technologies to meet growing market demand in the subequatorial African region. Anders Nielsen, CEO of MAN Truck & Bus AG, says: “The introduction of new systems for procurement and parts supply-chain management, along with the expansion of our global spare-parts logistics network, is enabling us to progressively meet the needs of our growing African customer base.” At a total investment of R180 million, the new PDC is custom-built to MAN specifications and comprises 17 000 m2

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of warehouse space with 1 000 m2 of office space. The warehouse will operate on MAN‘s advanced parts platform system and features a new racking system, as well as a 1 600 m2, three-level mezzanine area for smaller parts. Networked with other MAN logistics locations, the new PDC improves the supply of spare parts to a growing base of operational centres in sub-equatorial Africa. Geoff du Plessis, executive chairman, MAN Truck & Bus South Africa, adds: “The new facility has been designed to comfortably allow for future expansion of MAN Truck & Bus South Africa into the sub-Saharan region, particularly as MAN’s global strategy gains momentum with the introduction of new models. The new facility will also be geared to comprehensively support existing and forthcoming truck and bus derivatives from MAN and Volkswagen.” “This PDC is fully integrated in MAN’s organisation IT systems, allowing stocks to be centrally scheduled, with MAN’s dealer network given full support in ensuring optimum parts availability for their customers.” To limit its carbon footprint, the new building incorporates a specially designed roof to allow as much natural light as possible into the warehouse. It is also fitted with special lighting and thermal insulation to reduce the building’s overall energy requirements. Du Plessis concludes: “With its close proximity to OR Tambo International Airport and state-of-the-art warehousing technologies, the new facility will enable our Central Parts Division to improve on its already impressive customer service delivery record by being able to fly in urgently needed parts from MAN‘s international production centres and courier them to our customers with greater efficiency and speed, providing our Support Division with an enviable competitive advantage.”

COMMERCIAL VEHICLES

TRAINING

R4.8 million staff investment Over the past two years, UD Trucks Southern Africa has invested more than R4.8 million in training both staff and members of the community in various programmes. Simon Foulds ﬁnds out more about the company’s training initiatives.

ACQUES CARELSE, managing director of UD Trucks Southern Africa, says: “We passionately believe in the vital importance of training and investing in the future of our employees and surrounding community. Our objective is to provide ongoing developmental opportunities that not only allow us as a company to achieve our business objectives, but also to empower and contribute to the overall development of the participating learners.” Through the company’s MERSETA-accredited programmes, UD Trucks continuously aims to address the skills shortage in the transport industry, the surrounding communities and the country as a whole. The company also presents various learnership programmes every year, which provides tertiary students with the opportunity to intern in a variety of departments, including marketing, HR, finance and engineering. UD Trucks recently held a graduation ceremony at its assembly facilities in Rosslyn, Pretoria, for the students who have successfully completed their studies. These included 13 students who gained a National Certificate in Automotive Sale and Support Service, an 18-month course which also saw many existing UD Trucks staff members enhance their skills portfolio. Fourteen students also completed a year-long qualification in Wholesale and Distribution, which provided vital developmental opportunities for some of the company’s existing warehouse employees, as well as for unemployed learners from the community who could potentially fill a vacancy at the company if the business need arises. Telishia Middleton, training manager at the company, adds: “One of the most vital skills at UD Trucks’ region-wide dealer network is that of diesel technician. Ten students successfully completed their diesel technician trade with the assistance of the company and its dealers and are now able to assist UD Trucks customers in a knowledgeable and efficient manner.” The company also trained 33 unemployed learners from the community in Automotive Component and Manufacturing; these learners could also potentially be employed at its assembly plant should production increase.

In addition, 13 disabled learners were given the opportunity to gain qualifications that address the specific needs and requirements of the manufacturing industry, as well as the government’s initiatives in this regard. Middleton says: “The unemployed disabled learners completed 12 months of training, which included modules ranging from numeracy and literacy to production concepts, employer/employee relationships, as well as hand and measuring tools.” Carelse concludes: “Trucking forms such an integral part of the South African economy and it is of great importance to ensure that the wheels of industry continue to turn effectively and productively. One of the sure ways to ensure the vitality of the industry is to empower people through learning and skills training opportunities. As a company, it is a privilege to be able to provide these opportunities to our staff and our community.”

“We passionately believe in the vital importance of training and investing in the future of our employees .” Telishia Middleton, training manager, UD Trucks

TWA | Jan/Feb 2014

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TRAINING

The need for driver values Driver training is an important aspect of operating a successful transport D operation. Eric Stuttaford, a transport consultant, says there is another equally important aspect companies need to focus on: driver values.

T IS VERY rewarding to see progressive companies making investments in driver training with the objective of reducing operating costs by reducing fuel consumption and so forth. It is even better if the companies can find a way of getting the drivers to apply what they have learned voluntarily and not go back to old driving habits.”

Company objectives “After many years in the transport industry, specifically in fuel distribution, it has become clear to me that even more important than training drivers on vehicle technical driving skills (e.g. green-band driving, use of retarders and engine brakes) is educating the drivers in what the company’s overall objectives are and persuading them to employ or refute behaviours the company’s value system allows and disallows.” Below Good drivers need to know what the company’s values and objectives are

Values A list of company values or a mission statement is an essential tool to facilitate this. Good drivers need to know what the company’s values and objectives are, so they can align their own values and behaviours with those of the company.

Thorough discussion of the company’s values and objectives, and how they affect the different stakeholders, must be part of induction and ongoing training and education. Good drivers need to be people of good character, in order to internalise and accept the company’s values and work willingly within the company’s value system. Those inclined to rebellious or reckless behaviour do not generally make good drivers. When joining a new company (effectively a new community) the driver has to learn what the new rules and regulations are to be able to apply them, and it is critical that everyone in the company helps him to do so. He needs a clear understanding of what the company’s values are and what they allow and disallow. Companies need to publicise this information widely and consistently, and of great importance is the need for all employees from CEO to cleaners to set good examples by ‘walking the talk’. They must all exert good influences on new drivers to do the same – because they believe it is right and because they want to. The last four words are the most important!

Successful Only when you have drivers following legislation, company regulations and applying the technical aspects of driver training because they want to, can you say that your driver recruitment, induction, training and education system is successful. To assess this transparently, it is also a very good idea to provide drivers and front line supervisors with a tool to measure all aspects of driver performance. By plotting various degrees of driving competency against various levels of voluntary commitment to desired behaviours on a simple “Self-Assessment Matrix”, you can enable drivers and supervisors to rate performance transparently and link the results to incentives or reward schemes.

TWA | Jan/Feb 2014

Get your costs in perspective. Over time, driver capability has a bigger impact on your costs than the price tag of the vehicle. So doesnâ&#x20AC;&#x2122;t partnering with a company that helps develop your drivers make sense? There is a better way.

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TRACKING

Pinpoint your cargo through Africa Did you KNOW? VEHICLE tracking has been accomplished by installing a box into the vehicle, either selfpowered with a battery or wired into the vehicle's power system.

RACKING SOLUTIONS for both trucks and trailers are an integral part of every fleet operator’s armoury in ensuring freight arrives at its destination, not only in South Africa but also for cross-border operations.

What are the latest trends in this sector?

Rudi Martin from Intermec Rudi Martin RFID is used extensively at weigh bridges, identifying truck with weight – specifically for trucks carry coal or other mining produce. Transnet is also using RFID with fixed reading station tracking carriages.

Simon Foulds speaks to Rudi Martin from Intermec and Charles Young from Trovano Technologies to ﬁnd out more about their technology in assisting ﬂeet operators’ ability to pin point exactly where their cargo is in South Africa. aspect of their fleet, not only trucks but all trailers carrying valuable cargo. The challenge has always been the intermittent power supply on trailers. This has an impact on the monitoring options available to the fleet owner. Trovano Technologies uses the latest low-power technology and our products can last for months on the small internal backup battery, giving you realtime information on your assets when you need it. We are also seeing that clients don’t want to be tied into long-term contracts, typically 36 months. We have listened to our customers and we now offer flexible short-term contracts and also pay-as-you-go contracts.

What type of products do you offer to the market place? RM Intermec offers a range of fixed RFID readers, portable RFID readers, tags and antennae. We also do portable devices with 3G communication capabilities and RFID enabled.

CY Our product range includes Charles Young from Trovano Technologies Charles Young Fleet owners are starting to monitor every

TWA | Jan/Feb 2014

asset tracking, container tracking, fleet management, personal tracking and even animal tracking solutions.

What are the advantages of a fleet owner/manager

installing your products? RM Real-time visibility and management of their assets and resources.

CY The management of your fleet can have a huge impact on the profitability of your company. Our solutions will improve the efficiency and visibility of your vehicles allowing for timely decisions on where you would like your vehicles and when. The customer gets real-world benefits which are visible from the first day of use. We are using the latest technology in our products giving maximum visibility to the fleet manager. Trovano Technologies has the experience to cater for the specialised requirements of the fleet owner. We have tried to make the fleet management solutions as transparent as possible, ensuring you, the fleet owner, do not get confused with the array of options on the tracking market.

Do your products monitor trucks and trailers just inside in South Africa or also outside the country’s borders? RM Depending on the solution, cross-boarder is also monitored. CY Our clients have the option to enable roaming on any of our

products. Many fleets are operating across our local borders into Africa and require roaming.

How often does the software get upgraded? RM Software is supplied by our specialised partners and this could be custom written for specific applications. CY “We bring out new software features as the needs of our customers change, typically every quarter, we will release new features.

In your opinion why should fleet owners/ managers install your product? RM It is because we can offer real-time management and decision making, reliability and versatility of product.

CY Trovano Technologies puts you in full control of your fleet. Our system can be used to track, trace, evaluate and create greater efficiencies within your fleet. Our solution is built on a solid reputation and total service commitment, allowing for transparent pricing and clear service benefits. We pride ourselves on providing an exceptional value for money proposition in the industry.

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TRACKING

First rank ratings Ctrack, a vehicle monitoring and a ﬂeet management technology provider, was rated the ’best telematics technology provider’ and ‘telematics service provider’ in Asia, Latin America and other continents including Africa and Australasia.

HE RESULTS RELEASED in the 2013 Insurance Telematics Supplier Ranking Study by Ptolemeus Consulting Group, highlight leaders in the technology and telematics industry to help insurers in selecting their partners. As part of the UBI (Usage Based Insurance) Global Study, suppliers are ranked based on 14 criteria, including their footprint, product range and track record. Nick Vlok, CEO of DigiCore, says: “Ctrack is an innovative technology solutions company that continues to identify new telematics solutions that will suit the changing motor insurance sector. With new trends that have accelerated exponentially, we look forward to maintaining our offering that meets and delivers to global standards.” The UBI Global Study paints a truly comprehensive picture of the UBI market being the foremost leading market forecast of telematics solutions within the motor insurance sector. Strategic research, market analysis and complete recommendations of insurers, regulators, OEMs and operators can be found in the UBI 2013 Edition. Ptolemus is known for assisting insurance companies in their procurement strategies through identification, qualification and selection of telematics solutions.

Ctrack adds On-the-Road technology

task management, which is integrated with navigation functions to assist fleet managers with route planning and assignment of tasks for the day. By optimising their drivers’ routes, OTR helps lessen distance travelled and cuts fuel and maintenance costs. With real-time traffic information, drivers are routed around roads with congested traffic, and a built-in front-view video camera for recording or taking snapshots of an accident helps determine what might have gone wrong. For heavy or special sized commercial vehicles, the onboard route navigation can be set to include the truck’s weight and size constraints for its route planning and navigation. The OTR communication system integrates seamlessly into a fleet and is easily configured into vans, trucks and heavyduty vehicles, providing an all-in-one vehicle tracking and fleet communications solutions. The terminal includes voice communication and allows voice calls to predefined numbers or instant messaging, which can only be accessed by the driver if the van or truck is stationary, promoting safety, better driving and efficiency. Vlok says: “We are continuously identifying and redefining innovative applications and future telematics trends. The concept of a total fleet management is gathering momentum, offering deeper fleet analysis and a productive measure to improve operational efficiencies.”

Ctrack Onthe-Road

Designed with road safety in mind, Ctrack On-the-Road (OTR) – supplied by Ctrack – is based on Android and uses a full colour touch screen to enhance driver experience. This complete on-board messaging and navigation system assists fleet operators in saving time and money through advanced navigation, optimal routing, voice functionality, task management, messaging and driver behaviour attributes, ensuring improved productivity and operational efficiency. The product offers

TWA | Jan/Feb 2014

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GROWING MARKET

2013 defied expectations Sales of commercial vehicles increased by 11.12% on 2012’s full-year results, reaching a noteworthy 30 936 units despite a number of key challenges posted by the local political and economic environment.

CCORDING TO THE combined results released by the National Association of Automobile Manufacturers of South Africa (Naamsa), Associated Motor Holdings and Amalgamated Automobile Distributors, all segments in commercial vehicle market, except for buses, showed growth when compared to 2012’s results. Sales in the Medium Commercial Vehicle (MCV) segment increased by 14.66% to 11 585 units, while the Heavy Commercial Vehicle (HCV) segment showed a 9.94% growth to conclude the year on 5 477 units. The Extra Heavy Commercial Vehicle (EHCV) segment experienced significant growth of 10.39%, selling 12 828 units during 2013. Jacques Carelse, managing director of UD Segment Growth (%) Forecast 2014 Trucks Southern Africa, MCV 4.96 12 200 says: “There were a numHCV 5.57 5 800 ber of growth factors drivEHCV 4.98 13 500 ing truck sales upwards Bus 0.38 1 050 last year. Total 4.93 32 550* “Fast Moving Consumer *Includes Naamsa, AMH and AAD Goods and daily

commodities were the main drivers of sales, especially in the high-volume MCV and HCV segments, contributing 55.01% to the growth of the truck market during 2013. Construction, even though it is traditionally a low-volume contributor to truck sales, experienced a very high growth rate on the back of a number of strategic infrastructure projects and made up 39.05% of the industry’s growth last year.” Another transport segment that made a significant contribution was demanding long-haul (29.82%), which is usually a high-volume segment but faced some growth challenges due to the improvement of the country’s rail infrastructure and capacity, as well as a slowdown in mining production. Improvements in waste collection and recycling spurred sales in the waste and public utilities segment and contributed 14.78% to the truck market’s growth. Carelse adds: “Despite facing a number of macroeconomic challenges that included a downgrade of the country’s GDP, the depreciation and volatility of the rand and a slow economic recovery in Europe, the South African truck market still managed to perform exceptionally well.” During 2013, a total of 1 202 trucks were exported by South African manufacturers, an increase of 11.71% when compared to 2012’s figures. “The weaker rand should raise demand for exports in the year to come as a weak global demand is not allowing the currency to gain more value at this stage. The weaker rand will also, of course, have a negative impact on truck prices and a number of manufacturers are expected to announce price increases over the next few months,” explains Carelse. During 2013, UD Trucks comfortably retained its fourth position in the market and was once again the top selling

“The weaker rand will also, of course, have a negative impact on truck prices.” Jacques Carelse, managing director, UD Trucks

TWA | Jan/Feb 2014

COMMERCIAL VEHICLES HCV brand with a 24.16% share of the market. The company also made significant inroads in the EHCV segment, growing sales of its Quon range by 18.57% to capture an 8.76% market share.

Outlook 2014 Rory Schulz, general manager of corporate planning and marketing at UD Trucks Southern Africa, says: “The country’s failure to generate faster growth is problematic and could cause some significant challenges for the local truck market in 2014. “Gross Fixed Capital Formation, or GFCF, the new value that is added to the economy, is set to increase slightly during 2014 with the main gains coming from several construction and infrastructural projects. Government’s New Development Plan, although met with mixed reactions, has also now for the first time been included in the state budget and bodes well for the development of a number of the Strategic Infrastructure Projects or SIPs identified by government.” The SIPs include 18 projects ranging from geographicallyfocused developments to social infrastructure, knowledge, water and sanitation. Most of these projects require heavy involvement by the transport industry, which could once again have a positive impact on the potential growth of the market. Schultz explains: “While we expect interest rates to remain basically unchanged during 2014, one also has to consider the impact of the national elections and labour on the performance of the country’s economy.” UD Trucks expects the total truck sales to increase by 4.93% during 2014 to reach an expected 32 550 units. This forecast includes an increase in sales across all the segments (see table).

UD Trucks in 2014 & Beyond UD Trucks Southern Africa is set for a groundbreaking era during the next five years and is planning the introduction of game-changing new products and services to customers. Carelse says: “The future plans of UD Trucks are all about enhancing our customers’ transport and service experience with us. We are committed to supporting our customers in a smart and modern way, and going the extra mile in everything we do.” As has always been the case, UD Trucks will provide customers with transport solutions that offer the right balance between features, cost and efficiency. UD Trucks is also constantly developing, strengthening and training its already comprehensive regional dealer network. The 64 UD Trucks dealers across Southern and Eastern Africa are always ready to support customers with manufacturer-endorsed sales, service and parts, as well as financial and fleet solutions.

“The country's failure to generate faster growth is problematic.” Rory Schulz, general manager of corporate planning and marketing, UD Trucks Represented all along the major routes and trade corridors across the region, UD Trucks Southern Africa is able to provide a speedy response, knowledgeable technical advice and service, as well as ultimately dependable trucks that get the job done. UD Trucks Southern Africa has also invested more than R4.8 million over the past two years in the training of its staff and members of the community in various developmental and training programmes. Carelse concludes: “We passionately believe in the vital importance of training and investing in the future of our employees and surrounding community. The objective of the programme is to provide ongoing developmental opportunities that not only allow us as a company to achieve our business objectives, but also to empower and contribute to the overall development of the participating learners.”

TWA | Jan/Feb 2014

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COMPANY MILESTONE

Cost savings for the customer Isuzu Trucks SA has reacted to the demand for an improved return on investment and is offering clients a well-priced truck. Simon Foulds reports.

SUZU TRUCKS SA reached a milestone in 2013, selling over 4 019 trucks and in the process rewriting its own history book. The last time the company achieved a similar feat was in 1981 when it sold 3 890 trucks. Another achievement reached last year was that two of the company’s top three selling months occurred in June (401 vehicles sold) and in December (522 trucks sold). The last time Isuzu sold over 400 vehicles in one month was in October 1981 when 512 were sold. No surprise then that Craig Uren, chief operating officer at Isuzu Truck SA, was in a buoyant mood whilst addressing the media in January.

Working the plan “We have had amazing responses from both our dealers and suppliers with the advent of 2014. Everyone is proud of what was achieved last year through hard work and ensuring the

TWA | Jan/Feb 2014

plan we had in place for the growth of the company came to fruition. Everyone involved with Isuzu Trucks SA is looking into the future with a revitalised and invigorated momentum because in our books we are ahead of growth plan. “Will we continue to grow the company this year? Absolutely! Because this year will be a continuation on the growth of last year as the company progresses in further developing our footprint in the marketplace,” said Uren.

Costs “Demand for trucks is being driven by costs because businesses are under pressure regarding margins, rates and so forth. Old trucks cost money and the big question everyone asks is: how do you reduce costs? “We are under lots of pressure to solve these problems for our customers. We do not sell cheap trucks; we are selling well-priced trucks to do a job. However, the return

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on investment is that it gives the customer better returns over its lifespan and enables them to achieve cost savings during this time. This is the success of our brand in the marketplace.”

Market factors “My advice to those whose negative attitude due to the lacklustre economy affects their drive, is stop talking the economy down, you will not generate and grow the GDP that way. Rather, focus on your business decisions moving forward, be positive and you will be successful at what you plan.”

Growth Uren said: “Factors ensuring our continued growth include a great product line-up and specifications. We provide clients with solutions, and some might view this as a cliché but it is a fact, we are providing cost-saving solutions for our customers. This is resulting in us growing our customer base significantly because we are providing clients with improved bottom lines.” He added that the growth of Isuzu Trucks and the brand in South Africa might have surprised the industry, “but we were not at all surprised, because we had a plan and we worked our plan.”

Africa “Part of our plan is to get more involved within the rest of Africa. Watch this space as we look at developing synergies within the continent. We are testing our products in Kenya and from there we will look at bringing these trucks into subSaharan Africa.”

100% of fleet “Another feather in our cap last year was the fact that we sold 100% of our vehicles into eight companies’ purchase fleets. We sold these operators a solution and I believe they all made a good business decision for themselves. “We are with you for the long run and I believe integrity in doing business is crucial for us.”

2014 Elaborating on factors which will have an impact on the overall truck market in South Africa, Uren states that 2014 will be the year of many promises, because it is an election year, which can ultimately affect how businesses can and will operate. He believes the rand will exceed the R11 to the dollar and the fuel price will continue rising. Regarding the dire situation on our roads, Uren believes it will be combatted not through politicians wanting to ban trucks from roads and decreasing speed limits, but rather through more disciplined driving on the roads, effective policing and putting the basic fundamentals back into place on the roads.

Top left The complete range: N-series medium truck model varients, F-series heavy trucks and extra-heavy models in the F-range Middle left left to right, Hirosh Nishizaka, CEO and managing director; Craig Uren, COO; and Masaji Shimizu, chief financial director Left The new N-series

TWA | Jan/Feb 2014

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TRAILERS

Operating advice The choice of trailer is just as important as the type of truck purchased for your specific industry. Simon Foulds speaks to Paulo Ribeiro, financial director at Paramount Trailers, to find out what advice he would give fleet operators.

What advice would you give freight operators transporting fully loaded trailers on roads that at times leave a lot to be desired, ensuring the operators get the best optimisations of the relevant trailers during its defined lifespan?

Paulo Ribeiro, financial director, Paramount Trailers Paulo Ribeiro Try not to load in excess of the trailer’s carrying capacity. There may be a short-term benefit, but this will impact the structure of the trailer over the long term; operators should enhance their knowledge of the route and road infrastructure conditions. They should also ensure the trailer is regularly checked, serviced and maintained. Most importantly, purchase a trailer which is suitable for the operating conditions of the cargo that will be carried and the road infrastructure. Paramount

specifically manufactures trailers for cross-border travelling which is more robust so as to allow for road conditions.

Would this advice differ to those operating north of South Africa’s borders compared to freight owners only operating in South Africa? Ensuring that your trailer is constantly checked, serviced and maintained is good working practice. Operating with cross border issues is more expensive and difficult to resolve.

What should operators be doing to ensure the trailer delivers the goods efficiently? Understand the route being travelled and be prepared in advance for the various borders and the manner in which they operate. Also ensure you have the right trailer for the job required.

“Ensuring that your trailer is constantly checked, serviced and maintained is good working practice.” Paulo Ribeiro, financial director, Paramount Trailers

TWA | Jan/Feb 2014

Does this differ between trailer

types or is it similar for all types of trailers? Yes, this differs between trailer types. Having the right trailer for the job is the most important decision an operator will make.

What are the latest trends within the trailer market? How have these made the trailers more efficient to operate? The latest trends are to develop and build trailers that are more sustainable and efficient while operating, i.e. building less windresistant trailers, especially on upper body structures such as tautliners. Early indications are that small efficiencies are being observed but this is an area where further development and enhancement is required.

How often should maintenance be undertaken on a trailer? What are the best maintenance practices transport operators should implement to ensure they get optimum usage from respective trailers? There

are specific pre- and post- trip inspections which should be carried out by the driver to ensure safe travelling. There are not many electronic devices on the trailer so an inspection by the drivers on the quality of the tyres and the general wear-andtear of the trailer to identify any significant concerns. In addition, the following should be checked regularly: • tyre pressures to be checked when tyres are cold, in alignment with the tyre manufacturer guidelines • wheel alignment to be performed every three months or after every 10 000 km • regularly checking and tightening of the bolts and nuts on the wheels and the suspension parts. Many of the larger transport companies have a maintenance crew to inspect and maintain their trailers regularly. But the best advice is to check, service and maintain the trailer regularly so as to identify any potential concerns in advance and to enhance the longevity of the trailer.”

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TRAILERS

Increased output, improved times Positive about its growth prospects in 2014, South African trailer and truck body manufacturer Serco is moving into new premises in Johannesburg early in the new year while simultaneously starting an expansion to its Durban factory.

ANAGING DIRECTOR Clinton Holcroft says the company has outgrown its existing premises in Johannesburg and the new facility will increase yard space to more than 50 000 m2, allowing it to take on more work and improve repair turnaround times. “Construction at the new factory situated in Boksburg near Carnival City will be completed in December [2013] and we plan to start the move during January” says Holcroft. Holcroft goes on to say that the extension and upgrade of its Durban operation in Phoenix Industrial Park will start around March and is expected to be completed by the later part of 2014. The underroof area will increase by more than 3 000 m2 and result in improvements to operating efficiencies. “The expansions to our Durban factory will accommodate a new leading edge technology panel press and cater for an increase in manufacturing capacity.” Turning to last year’s performance, he said there had been steady growth overall in volumes over last year. “The first half of the year’s orders were up 23% on the corresponding period last year. The second half, however, has been more subdued and is slightly lower than previous years. This is largely due to retailers cutting back on replacement trailers due to tight consumer spending. Increasing diesel costs and the weakening rand

have also caused some transporters to taper off on new vehicle replacements. “We have, however, seen a significant increase in the refurbishing and rebuilding of refrigerated trailer bodies in an effort to replace ageing vehicles with a limited budget.” Holcroft anticipates that 2014 will see steady growth on this year’s figures. With the average age of fleets increasing as well as rising diesel costs, there is a need to replace older truck bodies and trailers with new lighter models which will reduce fuel and maintenance costs. “I am optimistic that there are opportunities for real growth this year. “We believe that aerodynamics has an important role to play in saving long distance transporters on fuel THE COMPANY started from costs and reducing carbon emishumble beginnings in 1981 as sions. With this in mind we have intro“Vital Services”. The name was subsequently shortened to Serco to duced the option of a new roof difreflect the focus on service to the fuser and side skirts for our trailers.” transport industry. Recent road tests done in cooperation with Spar and Mix Telematics have shown impressive fuel savings of at least 2.5% in normal operational conditions. This is significant considering the high impact of fuel costs for transporters. “These developments and our new equipment and factory extensions planned for 2014 will introduce exciting growth opportunities for Serco and are an indication of our confidence in the South African market.” Clinton Holcroft

1981

TWA | Jan/Feb 2014

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COMPLIANCE

New codes in BEE There are methods to a raise a business’s BEE rating and Keith Levenstein, CEO of the BEE advisory ﬁrm EconoBEE, speaks to Simon Foulds about how this can be achieved with the new BEE codes.

HE NEW CODES, which come into effect in October 2014, enable any 100% black-owned business with an annual turnover of less than R50 million to automatically receive a Level 1 rating. If a business is more than 51% black owned, it will receive a Level 2 rating. Levenstein explains what each section entails, outlining what companies should be doing in order to be BEE compliant.

1. Ownership This has not changed significantly for businesses with a turnover between R10 million and R50 million. The target remains at 25% and the weighting is 25 points. We are encouraged that there is better clarification around how to score points.

2. Management Control The codes previously included two elements: Management Control and Employment Equity. Both elements have been consolidated into a single element but with the same indicators. Previously Management Control and Employment Equity were worth 29 points combined. The new combined element is only worth 19 points. In recent years, Employment Equity has improved dramatically. Points are the incentive for businesses to become compliant. By dropping dro the available points and making the weightings more onerous, companies may make less effort in this important importa activity.

3. Skills D Development The Skills Development D rating has increased from 15 points to 25 points, showing the importance of skills development in the economy. Some targets have developmen increased: Target spend is now 6% of payroll, incre instead of 3%, but more points can be in earned. We see this as a positive move.

“The Skills Development rating has increased from 15 points to 25 points.” Keith Levenstein, CEO, EconoBEE

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4. Enterprise and Supplier Development The current codes from 2007 speak of two elements: Preferential Procurement and Enterprise Development. The new element, Enterprise and Supplier Development, is a simple combination of both elements. The two were previously worth 35 points and has now been increased to 44 points. A slight concern is that it is now more difficult to reach targets on procurement as the minister has defined ‘empowering suppliers’, which is a more complex definition than having a simple recognition level. It implies that even if a company does reach a compliant level, it may not be sufficient to help its customers earn BEE points. The drive behind BEE compliance is for companies to ask their suppliers for BEE certificates in order to earn points and, in turn, companies obtain certificates to satisfy their customers’ BEE scoring requirements. If a company cannot meet the requirement of being an “empowering supplier”, even if it can reach a BEE level, it may discourage that company from continuing its transformation journey. One of the terms of the new element Enterprise and Supplier Development is for companies to spend 40% of their procurement from suppliers that are at least 51% black owned. We know that there is a distinct lack of black industrialists and this target is going to be very difficult to achieve. Clever businesses will start the process of identifying black businesses that can supply substantial values of goods and services. Since the new codes give a one-year transitional period, there is not much time. From a black industrialist’s viewpoint, this is an excellent opportunity to grow their business. If procurement works, BEE will have succeeded.

5. Socio-economic development: The last of the five elements is unchanged at five points. The points on all elements add up to 118 (previously 107 for all seven elements, see the element table). As a result of the increased points available, the minister has changed the points to levels (See the level table). We see this as an unnecessary complication to the codes. Everything could have been calculated out of 100%. Psychologically, businesses may feel disappointed when they see their current Level 3 become a 4 or 5. In addition, the minister has exempted all businesses with an annual turnover of less than R10 million (previously R5 million) from all forms of BEE. Any organisation falling

COMMERCIAL VEHICLES in the category, no matter its ownership, is automatically given Level 4 status. But any business that is 100% black owned and has an annual turnover of less than R50 million automatically has a level 1 status. If that business is more than 51% black-owned but less than 100% owned it has a Level 2 status. A QSE (qualifying small enterprise), which is currently any organisation/business with a turnover of between R5 million and R35 million, and following a far more lenient scorecard, has been adjusted to between R10 million and R50 million. However, other than for black-owned businesses, it still has to follow the entire scorecard with very few allowances.

6. Priority Elements The minister has also defined three of the five elements as priority elements with additional targets. • 40% on Ownership’s net value • 40% of the Skills Development score • 40% of the Enterprise and Supplier Development score • If a generic business does not achieve all three targets (two targets for QSEs), it drops one level. In conclusion, Keith says: “There is a general improvement in the targets, which should result in better transformation. Some of the weightings and targets may be a disincentive. At first glance, the new points-to-levels table may be more onerous but we feel that most companies will be able to easily reach the same number of points as before. There will, however,

be more work and planning required. It will be important to understand how the new codes work and therefore a change in strategy is required. This will result in increased and more effective transformation of the economy, The element table Element

Points (incl. bonus)

Ownership

Management Control

Skills Development

Enterprise and Supplier Development

Socio-economic Development

Total

118

The level table Level

Amended Codes

Current codes

≥100

≥95 but <100

≥85 but <100

≥90 but <95

≥75 but <85

≥80 but <90

≥65 but <75

≥75 but <80

≥55 but <65

≥70 but <75

≥45 but <55

≥55 but <70

≥40 but <45

≥40 but <55

≥30 but <40

Non-compliant

<40

<30

TWA | Jan/Feb 2014

SUPPLY CHAIN LOGISTICS

FREIGHT

Logistics in subSaharan Africa Sub-Saharan Africa is becoming an increasingly attractive investment frontier. James Milne, Sarah O’Carroll and Craig Parker, senior consulting analysts at Frost & Sullivan Africa, offer advice to those striving to move freight through the region.

ITH SEVERAL OF the fastest-growing economies located in sub-Saharan Africa, companies from around the world are looking to enter the region in order to escape aggressive competition in their home markets and improve sales. For these companies, gaining an understanding of the state of infrastructure at a country level will be critical in order to mitigate potential risks. In conjunction with energy and communications infrastructure, Africa to Average 4.8% efficient transport and logistics GDP Growth in 2013 Ethiopia infrastructure is fundamental to operational success. Nigeria On a macroeconomic level, Ghana DRC Gabon transport and logistics infrastructure provides access to consumer markets, connects Zambia raw materials to beneficiation markets, promotes regional inteCOUNTRIES with gration and ultimately, improves high growth South Africa connectivity to the global economy. and investment potential in On a microeconomic level, transport and Africa, 2013logistics infrastructure has a direct impact on a 2015. Countries country’s handling capacity for imports and exports, disbased on the score determined tribution route development, the frequency of shipments from the and the cost for freight handling, storage, distribution and weighted average related services. All these factors affect how competitive a of per capita GDP and potential company can be within a market – particularly with regards growth, GDP & to companies that are highly reliant upon efficient supply GDP potential chain management or strategic sourcing. growth, FDI stock and growth, political stability, Regional transportation network overview export and Sub-Saharan Africa is plagued by poor and under-develimport growth potential, and oped transportation infrastructure, limiting accessibility population size to consumers, hampering intra-regional trade and driving and population up import and export costs. Southern Africa is the most growth potential.

2013

TWA | Jan/Feb 2014

developed region, from an infrastructure and intra-regional connectivity perspective. Perhaps most notable is the widespread use of rail as a key mode of transport for freight transportation in Southern Africa – an option that is currently heavily under-utilised in the rest of sub-Saharan Africa. East and West Africa are regional growth ‘hot spots’ from an economic perspective, but also due to the numerous multinational companies targeting these regions for expansion. Compared to Southern Africa, transport and logistics infrastructure in these regions is very poor. The infrastructure has been poorly maintained, resulting in dilapidated and over-congested roads, poorly functioning railway systems and inadequate airports. Regional connectivity is better in East Africa when compared to West Africa – a factor which can possibly be attributed to the fact that East Africa is not currently a resource-based region (major resource discoveries of a commercially viable nature have only been made in the past 10 to 15 years). This has historically resulted in the promotion of intra-regional trade links (and infrastructure) in order to drive growth for companies operating in the region, by offering access to alternate markets. The East African Community (EAC) has also introduced regulations which seek to promote intra-regional trade. Unlike East Africa, the mineral wealth of West Africa has been known for decades – and has to a large extent driven an individual-country focus to infrastructure development, as countries have less need to trade with each other and prefer to focus on moving resources to ports internally. As a result, intra-regional trade volumes remain low and the regional infrastructure network is poor. There is a significant lack of infrastructure in Central Africa, due to political instability for almost three decades. Although rich in resources, Central Africa remains one of the most difficult and costly regions for companies to successfully penetrate. The void of development in Central Africa is a key barrier to connectivity between North, East,

SUPPLY CHAIN LOGISTICS West and Southern Africa. Major progress towards improving transport and logistics infrastructure in Central Africa is unlikely over the next decade; a real improvement can only be expected by 2040.

Improving infrastructure and its impact African governments across all regions have re-prioritised the rehabilitation, upgrading and expansion of transportation infrastructure in order to rapidly improve trade, both international and intra-regional. Frost & Sullivanâ&#x20AC;&#x2122;s analysis of infrastructure development in sub-Saharan Africa reveals that US$174 billion (R1 800 billion) is being invested in transport and logistics infrastructure in the region. US$28 billion dollars is being invested in the development of major transAfrican road and rail corridors and deep-sea ports in order to rapidly improve trade volumes in sub-Saharan Africa. Current estimates indicate that trade volumes in subSaharan Africa will more than triple from 102.6 million tonnes in 2009 to 384.0 million tonnes in 2030, if the trade corridors are completed. In 2009, Southern Africa was driving trade volumes in the region, accounting for approximately 64% of total trade. By 2030, Southern Africaâ&#x20AC;&#x2122;s contribution to total trade volumes is estimated to be reduced to 53% as trade in other regions improves. Trade in East and West Africa is expected to grow to 181 million tonnes and 300 million tonnes respectively, with growth in West Africa slightly faster than that of East Africa.

The development of rail corridors will have a substantial impact on intra-regional trade, with trade between African countries expected to increase from 34.9 million tonnes in 2009 to 120.4 million tonnes in 2030. Resource-rich landlocked countries in particular will see significant benefits. Trade in oil-rich Uganda is projected to increase at a rate of 8.2% year on year to 2030, while trade in Zambia is projected to grow by 9.7% year-on-year between 2009 and 2030.

How will transportation corridor development evolve? Trade will not increase at the same rate across sub-Saharan Africa, as trade corridor development is projected to occur in three distinct phases. The first phase of development will be the strengthening of trade routes between Southern African countries. Transport and logistics infrastructure is already relatively well established and investment is focused towards improving rail links between countries in the area. Significant portions of trade corridor development are expected to approach completion by 2020. The second projected phase of trade corridor development

Port of Durban

TWA | Jan/Feb 2014

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SUPPLY CHAIN LOGISTICS will be driven by strengthening Southern and East African trade links. Although both road and rail links already connect the two regions, significant rehabilitation and improvement is required to manage increasing trade volumes. Based on ongoing projects, Frost & Sullivan estimates that these links should be greatly improved by 2030. Significant greenfield construction is required to improve regional connectivity because West Africa has historically undertaken transport and logistics infrastructure development on a country-by-country basis. Once complete, several mega-projects in the region will greatly improve the ability of large multinationals to transport resources and deliver products and services to multiple markets in West Africa. Because of the poor state of infrastructure in the region, improvements to trade links in West Africa can only be expected by 2040 or beyond.

What does this mean for business?

Because of the poor state of infrastructure in the region, improvements to trade links in West Africa can only be expected by 2040 or beyond

TWA | Jan/Feb 2014

Understanding the evolution of trade corridor development is extremely important when considering access to consumer populations and the challenges associated with logistical networks. Markets in sub-Saharan Africa are often over-estimated, as the current state of transport and logistics infrastructure is not regularly taken into account when calculating the size of a potential market.

As consumer markets in the developed world mature, a great deal of emphasis has been placed on Africa’s burgeoning middle class and its vast growth potential – creating expectations of a large, untapped, yet accessible consumer population that is eager for new products and services. The size of Africa’s middle class is highly dependent on the factors used when making such projections and is, thus, highly variable. As a result, projections in the public domain range between 32 million and 350 million people. Because projections are heavily weighted towards demographic and socio-economic factors and consumer purchasing trends, the projected size of Africa’s middle class is usually over-estimated. This gives companies looking at Africa for geographic expansion, unrealistic views of their growth potential. Rather than estimate the size of the African middle class, companies are usually just trying to estimate the spending potential of middle class consumers within a country. Often, spending potential will be estimated using earnings – if earnings fall within a certain range, then the person is considered to be ‘middle class’. This, however, does not predict how consumers spend money. A more comprehensive approach would be to use indicators such as living in a formal dwelling, access to running water, electricity and internet, and owning a fridge, television, stove and mobile phone. Using average spending potential in Africa does not give particularly accurate estimations as there is too much income inequality. In countries with extractive industries, there are many more poor people compared to rich people and only the rich get richer, driving up the average spending potential. Using average spending potential will usually provide an overestimate and false growth potential. Using a combination of earnings and socio-economic indicators, Frost & Sullivan estimates that Africa’s middle class is between 50 million and 60 million people. This middle class would however be poorer than its counterparts in Europe and North America with earnings between US$1 000 (R10 349) and US$2 000 (R20 692) per month, live in a formal dwelling, have running water, a flushing toilet, electricity, a stove, fridge, television and access to the internet. The small size of Africa’s middle class does not mean that sub-Saharan Africa has no potential for companies undergoing geographic expansions, but it does require companies to take considerable care when determining what the addressable market is for their products or services. Not only should a more suitable definition be used for estimating the size of an addressable market, but the actual accessibility of markets should also be taken into account. Poor transport and logistics infrastructure in many sub-Saharan African countries, results in some areas being largely cut-off from traditional consumer markets. As a direct result of this oversight, a number of companies that have expanded into sub-Saharan Africa have suffered severe setbacks based on unrealistic expectations of the actual accessible market. For companies looking to expand geographically into subSaharan Africa, it is crucial to develop a strong understanding of the consumer markets and infrastructure present in the markets they wish to enter. This will allow companies to make better estimations of the size of their addressable market as well as develop mitigation strategies associated with supply chain management and sourcing.

SUPPLY CHAIN LOGISTICS

FINANCE

No cash! No problems! Drivers no longer have to carry wads of cash when undertaking crossborder deliveries.

RANSPORT FOREX, created by Inter Africa Bureau de Change, a registered bureau de change with the South African Reserve Bank, has created an unique online banking system for the transport industry. With branches at all of South African border posts, the company has expanded operations into Namibia, Botswana, Zimbabwe, Mozambique, Zambia, the DRC and Tanzania, with offices on all the major border posts between these countries. Transport Forex is an online ordering system where the transport manager can deposit money in South Africa into the relevant account, therefore ensuring when drivers arrive at the relevant border posts there is enough money for them to pay the relevant duties. At the same time, this ensures enough cash is in the account for drivers to purchase fuel at key petrol stations or even pay for a service on-route in one of the partner countries. Once the monies have been deposited into the account, an order number is sent via SMS to the driver who then presents it at the relevant Transport Forex office to draw the necessary funds required. In the same way, you can book and pay for diesel for your truck on any of the major transport routes in Namibia, Botswana, Zimbabwe, Mozambique, Zambia, the DRC and Tanzania. Transport Forex has negotiated with partner fuel suppliers for better prices and passes this discount directly to the transport company. A new payment service was introduced in 2013 for clients. Should additional unforeseen

funds be required for an emergency while the driver is on the road then monies can be made available for drivers almost immediately. This prevents valuable time from being lost. Transport Forex is also in negotiations with several government institutions so relevant duties and taxes for operators’ trucks can also be paid through the system in advance. To join Transport Forex simply log onto www.transportforex. co.za and click on “Create Account”. Registration is free, and there are no monthly charges.

You can book and pay for diesel for your truck on any of the major transport routes in Namibia, Botswana, Zimbabwe, Mozambique, Zambia, the DRC and Tanzania

TWA | Jan/Feb 2014

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SUPPLY CHAIN LOGISTICS

FREIGHT FORWARDING

SAAFF offers international diploma The South African Association of Freight Forwarders (SAAFF) has been accredited to present and award the prestigious FIATA Higher Diploma in Supply Chain Management.

ONY D’ALMEIDA, director at SAAFF, responsible for education, training and development, says: “This qualification is very relevant to the freight forwarding industry, which is undergoing change and becoming increasingly central to the articulation of global supply chains. SAAFF has therefore made the strategic decision to apply for accreditation of the FIATA Higher Diploma in Supply Chain Management to help alleviate the current critical shortage of people who not only know the process of supply chain, but can also apply their expertise in innovative ways that add value to the entire process.” SAAFF was accredited following presentations to the FIATA Advisory Board on Vocational Training at the FIATA Congress in Singapore at the end of October. SAAFF is effectively one of only 14 professional bodies around the world accredited to offer this industry-leading qualification. SAAFF will be the custodian of the Higher Diploma, which is pitched at NQF level 7, two levels higher than the FIATA Diploma in Freight Forwarding that SAAFF is also entitled to award in South Africa and which has already produced 22 graduates. The minimum requirement for consideration for entry into this Higher Diploma is a relevant university degree, a national diploma or the FIATA Diploma in Freight Forwarding. All SAAFF accredited training providers may offer this programme to suitably qualified students. D’Almeida adds: “This higher diploma is globally recognised and as such, will provide supply chain professionals with the training that will give them a far deeper understanding of the global and local supply chain landscape and make them globally relevant and competent. Aspects relating to global supply chains are constantly evolving, making it vital for every player to be at the forefront and fully aware of these trends in order to provide clients with relevant and current advice and guidance. Added to this, we are having to come to grips with rapidly evolving technology in our everyday business practices that, while bringing tremendous value to our operations, is coming

at frightening speed and voracity. Keeping ng ahead of the curve has never been this tough. h. Being able to ratify skills against global standards rds and benchmarks brings enormous value to the e business, the client and the individual.” The launch of the course follows four years of intense planning of the local curriculum, which hich culminated in SAAFF being ratified at the annual FIATA world congress held in Singapore earlier this year. FIATA is the global association to which most national associations like SAAFF belong and functions as an overarching advisory body which assists with various aspects of the supply chain including vocational training. For further information contact the SAAFF office at +27 (0)11 455 1726 or email: saaff@saaff.org.za.

“This qualification is very relevant to the freight forwarding industry”

ABOUT

SAAFF

SAAFF is a national association with members throughout the Republic of South Africa.

TWA | Jan/Feb 2014

SUPPLY CHAIN LOGISTICS

CUSTOMS

New legislation facilitates trade New customs legislation will change how we go about business, says Deloitte’s senior manager of Customs and Excise, Hester Hopkins, and customs consultant Sue-Marie Winshaw.

O Below SueMarie Winshaw, Deloitte customs consultant Bottom Hester Hopkins, Deloitte customs expert

VER THE PAST month, the process to replace the outdated South African Customs and Excise Act of 1964 has finally picked up momentum. It is high time. We need innovative, real-world customs legislation that strikes a balance between promoting flourishing trade and combatting illegal activity. In October, the Minister of Finance, Pravin Gordhan, introduced the Customs Control Bill (CCB) to the National Assembly and then opened it to public comment. Given only six days to comment on many proposed changes, interested and affected parties requested more time. The issue of the removal of inland ports – and its impact on international trade, the roads system and coastal ports – was of particular concern. During the hearing, which was postponed for one week, the South African Revenue Authority (SARS) guaranteed the continuation of inland ports, including Johannesburg’s City Deep. SARS proposed that, in order to overcome the deficiencies of a manifest, a mandatory advance clearance of goods be enforced three days before the arrival at the first port of entry. Goods consigned to inland ports will be released conditionally. This advance clearance requirement will only be enforceable in 2015 in order to provide businesses with an opportunity to bring the necessary amendments to business. An alternative proposal provided is that goods undergo a lesser form of clearance at the first port of entry. These developments now bring us to the current state of play: the Standing Committee of Finance has postponed finalising the CCB to allow more time for written and oral submissions. At the time of writing, submissions were due no later than 12:00 on 13 December 2013, followed by a public hearing on 28 January 2014. Whatever the outcome of this process, the new legislation will change the game for everyone operating in the logistics business. Here’s why:

TWA | Jan/Feb 2014

The draft legislation sets out a generic supply-chain process from the time a vessel arrives at the customs port to the unloading and transporting of goods to a depot, the clearing of goods for home use, inward processing or in transit, and exportation of goods. The CCB incorporates new concepts, such as advance rulings, electronic notifications and tax free/ due status. Everyone in this business will need to make sure they know how to achieve compliance and to seize all the benefits of the new system. The new bills are user-friendly, but the greatest benefit will be the new technology it introduces. Traders will be able to communicate electronically and directly with Customs, which will expedite the release of goods and cargo inspections. It also allows for a simplified and prompt electronic declaration process and will set out clearer benefits for accredited traders. Customs officials will be able to do smarter, more targeted spot checks of containers and tax compliance checks on traders. The system is designed to save honest traders time and hassle going through Customs and to penalise dishonest traders. The CCB gives customs officials more fire power when it comes to illegal trade, especially in terms of their authority to gather information, access premises, arrest, inspect, sample, investigate and confiscate goods. This of course means that if your house is not in order, you’d better get it sorted out. Luckily, SARS has proposed softening the penalty provisions for errors, resulting in no prejudice to customs. The new draft legislation provides enhanced frameworks for advance clearance of goods. To make it work will require planning and early paperwork; preparation is key for your business. News of interest to importers is that the period for clearance of goods has been brought down to three days, while storage of goods in bond is limited to 12 months. Certain of the legislative changes may seem daunting, but companies that invest in their customs staff and their drivers’ knowledge of required documents to avoid problems at congested ports and border posts, and who invest in modernised processes and systems, could achieve significant competitive advantages over competitors who fail to do so. This legislation eases doing business in the fast-paced international trade environment – and that is good news.

SUPPLY CHAIN LOGISTICS

SEA FREIGHT

Changes to international shipping taxes An internationally competitive international shipping tax regime is being proposed in terms of the draft Taxation Laws Amendment Bill, 2013.

URRENTLY, INTERNATIONAL shipping transport conducted by South African companies is subject to a corporate income tax rate of 28%, with limited incentives such as a depreciation allowance for capital investments. Internationally, the trend is towards reduced taxation for shipping companies through a tonnage tax or a total exemption for shipping activities. In light of these trends, a new shipping tax regime is proposed by the Bill to provide tax relief for qualifying South African shipping companies. The proposed relief will apply to an “international shipping company”, being a South African resident company that holds share(s) in one or more ships that are registered in South Africa in terms of the Ship Registration Act, No 58 of 1998, and utilised in the international transportation of passengers or goods for reward (South African ship). The receipts and accruals derived by the international shipping company from the operation of a South African ship will be exempt from income tax. Capital or revenue gains or losses realised from the sale of a South African ship engaged in international shipping will be disregarded. However, as a result of the income and capital gains tax exemptions, South African ships will no longer be depreciable. Other ships will remain depreciable over a five-year period at a rate of 20% per year. Any dividend paid by the international shipping company will be exempt from dividends tax, provided that the dividend is derived from income generated from the operation of a South African ship. Similarly, any interest paid to a foreign person by the international shipping company in respect of a debt used to fund the construction or improvement of a South African ship will be exempt from the withholding tax on interest (the 15% interest withholding tax will become effective on 1 January 2015). The officers and crew of a South African ship will further be exempt from tax on their salaries, irrespective of the number of days spent abroad. In respect of a foreign company that constitutes a controlled foreign company (CFC) – by virtue of the extent of its South African resident shareholders – it is proposed that a South African ship engaged in international traffic will specifically constitute a “foreign business establishment” for purposes of that exemption in the CFC rules. Income attributable to such

a ship will therefore effectively not be taxable in the hands of the South African resident shareholders. In summary, these amendments will effectively provide international shipping companies operating South African ships with exemptions from income tax, capital gains tax, dividends tax and the cross-border withholding tax on interest. In terms of the Bill, the proposed amendments will come into operation on 1 January 2014 and will be effective for years of assessment beginning on or after that date.

Below A new shipping tax regime is proposed by the Bill to provide tax relief for qualifying South African shipping companies

TWA | Jan/Feb 2014

SUPPLY CHAIN LOGISTICS

SEA FREIGHT

The Port of The infrastructure at the Port of Durban has recently been developed, with future upgrades also planned. This will ensure it remains the leading multi-cargo port in the SADC region and the premiere trade gateway between South-South trade, Far East trade, Europe and the US, and East and West Africa regional trade.

TWA | Jan/Feb 2014

S THE BUSIEST port in Southern Africa, the Port of Durban generates more than 60% of the combined revenue of South Africa’s eight ports. As much as 60% of all South African imports and exports pass through this port. Approximately 4 500 vessels call on the port annually and the port is able to accommodate vessels ranging between 120 m to 350 m in length. Very large container ships – 400 m in length – are able to enter the port under special conditions and half laden. In terms of containers 2.69 million TEUS are handled annually by the port with one billion tonnage of cargo carried annually in containers through the port. It is the second largest container port in Africa, after Port Said in Egypt, and is the fourth largest container port in the southern hemisphere after the Port of Jakarta in Indonesia, followed by Port Surabaya also in Indonesia and Port Santos in Brazil.

SUPPLY CHAIN LOGISTICS cranes. It also has an undercover area for weather sensitive cargo.

Maydon Wharf Breakbulk It handles a complex mix including project cargo, neobulk, timber, steel coils and other steel profiles, the current capacity handled is 1.2 Mtpa and there is also undercover storage of 11 000 m2 and open storage of 110 000 m2. With access to 15 berths, it is also aligned to another four berths if needed.

Maydon Wharf Agri-Bulk Three berths with a capacity of 1.47 Mtpa handle wheat, maize, soya bean meal and animal feed, along with woodchips. It feaOperating hours tures a bi-directional conveyor for The Port of Durban operations simultaneous handling of imports including the container terminal is a continuous 24-hour, 365-days a year and exports, has a dedicated berth operation. The administration of the at MW8 with a ship loader and ship port, however, opens at 08:00 and closes at 16:00. un-loader, plus a state-of-the-art soya handling facility and specialised facilities for woodchips via a joint venture in fruit handling.

Durban Container Terminal (DCT)

Durban Port facilities Durban Ro-Ro Automotive Terminal This is South Africa’s largest and the most well-equipped car terminal in the southern hemisphere. Comprising three berths, it features include facilities, vehicle tracking, fitment centres and car wash facilities. The terminal has achieved NOSACAR status for seven years and has an electronic data interchange with all the vehicle manufacturers facilitating supply chain integration.

Durban Ro-Ro Break-bulk Comprising four berths, it handles a niche market of container business as well as break-bulk including abnormal cargo steel commodities and project cargo. Its current capacity is 0.4 Mtpa or 95 000 TEUs. It also features 28 reefer points for perishable cargo and has the capacity for rail handling such as overhead gantry cranes and mobile

With a combined capacity of 3.6 million TEUs, the DCT is the busiest container terminal in Africa. Investments of R2 billion and R1.7 billion in Pier 1 and Pier 2 respectively have positioned the terminals as global competitors, thanks to increased capacity, upgraded equipment and improved efficiency. DCT Pier 1 has an annual capacity of 700 000 TEUs. Its three berths with a draft of 11.9 m have a combination of six quayside ship-to-shore gantry cranes, two rail-mounted gantry cranes, 22 rubber tyre gantry (RTG) cranes, 40 haulers and 40 trailers. DCT Pier 2 has an annual capacity of 2.9 million TEUs. Comprising six berths with a draft of 12.5 m (which will be deepened to 16 m in the future), it features 17 quayside ship-to-shore gantry cranes, three rail-mounted gantry cranes, 53 haulers, 88 trailers, 112 straddle carriers and a staging area for 300 trucks.

Latest infrastructure developments Durban Container Terminal – Pier 2 The R1.7 billion re-engineering programme at the Durban Container Terminal’s Pier 2 to optimise capacity is nearing completion. It includes an autogate, rail terminal and relocation of workshops to create 2 884 additional ground slots. Transnet National Ports Authority (TNPA) is providing the required infrastructure to support the seven tandem lift, ship-to-shore cranes at Durban Container Terminal berths 203 and 204. Phase 1 crane rails beam construction at berth 203, was completed in October 2012 and will ensure that the quay wall is able to withstand the high wheel loading of the ZPMC Tandem Lift STS Cranes. 

Above The busiest port in Southern Africa Inset Durban Central Terminal

TWA | Jan/Feb 2014

SUPPLY CHAIN LOGISTICS

The project consists of the construction of a new 30 m gauge crane rail and landside crane beam to receive the landside crane rails, and installing ‘stitching’ piles in the water five metres in front of the toe of the quay wall.

Maydon Wharf The largest break-bulk handling terminal in the Port of Durban that handles seven million tonnes of cargo a year, is undergoing a R1.5 billion revamp of seven of its 15 berths. This project is due for completion in December 2016 and entails the reconstruction of the sheet-steel pile quay walls and deepening berths for a 13 m draft vessel. Once complete, it will provide modern berths with high load carrying capacity and reduce the existing operations constraints with regards to use of mobile cranes in the precinct. The first phase saw the successful completion of berth 12 in November 2012, thus making it a berthing facility with the highest load carrying capacity in Maydon Wharf. This will, in turn, allow port users to be able to mobilise and utilise the efficient cargo handling equipment on this berth.

Liquid bulk cargo is expected to grow by 23% over the next five to six years

Bayhead Road The road was upgraded to a four lane dual carriageway from Langeberg Road to the Pier 1 entrance, two additional truck staging areas capable of holding 136 trucks and a new tanker washout access road were built in a R274 million project. The project was handed over to TNPA by Aurecon in October 2012. The Bayhead initiative set out to address the recurring problem of trucks being delayed in congested traffic on Bayhead, Iran and Trinidad Roads and to streamline activities to Pier 1, Pier 2 and Island View.

completed in 2012. The project followed the decision to phase out the obsolete practice of delivering bunker fuel to ships by pipeline in favour of barge delivery. About 60% of the fuel volumes within the Port of Durban are transferred via pipeline and 40% by barge. Island View Berth 10 is the only dedicated bunker berth facility and the phasing out of the pipeline will increase the demand on barge operators and the associated facilities. Using barges to transfer bunker fuel is safer and aligned with international best practice. It also improves vessel turnaround time, service levels and is expected to attract new business in the bunker supply industry.

Island View Berth 5 Island View Berth 5 is primarily used by the chemical, petroleum and liquefied natural gas (LNG) industries. The outdated berth infrastructure was no longer able to meet the needs of modern shipping and growing cargo throughputs. The R267 million reconstruction of this berth, which was completed in the first quarter of 2013, will reduce congestion and provide capacity to meet long-term growth requirements. Liquid bulk cargo is expected to grow by 23% over the next five to six years. The berth is now able to accommodate 45 000 tonne ships with a beam of 29 m and a length of 230 m. The water depth in the berth increases from 10.9 m to 13 m.

Island View Berth 2 Island View berth 2 is currently being used as a bulk liquid transfer berth. Its configuration is non-standard and makes the product transfer arrangements cumbersome and dangerous at times. The R263 million reconstruction of the berth has enabled it to accommodate 60 000 tonne ships with a beam of 32 m and length of 245 m, and was completed in the first quarter of 2013. The water depth on the berth increased from 10.9 m to 14.5 m.

Island View Berth 10 Aerial view of the Port of Durban

A R57.7 million project at Island View to extend the existing bunker barge berth (Berth 10) by 45 m to 176 m was

Future expansion plans The South Quay will be decommissioned in February 2014 for scour protection, quay repair and stack repair. An EIA process is currently in progress for the planned deepening, widening and lengthening of the Durban Container Terminal berth 203 to 205, which is due to take place in October 2015. At the Maydon Wharf, the reconstruction of sheet piles is planned for execution in April 2014. Preparations for execution of the second phase of this project are at an advanced stage, Type and amount of cargo moving through the port • Containerised including refrigerated containers: 2.5 million TEUS • Dry Bulk: 9 292 million tonnes • Liquid Bulk: 28 576 million tonnes • Break Bulk: 3 015 million tonnes • Vehicles: 462 640 units

TWA | Jan/Feb 2014

SUPPLY CHAIN LOGISTICS

Port facts with construction of Berths 13 and 14, and Berths 1 and 2 starting in April 2014. Thereafter Berths 3 and 4 will be constructed immediately after completion of Berths 1 and 2. Currently in the pre-feasibility planning stage is the proposed Durban Dig Out Port (DDOP). The DDOP is a fundamental component of the Durban/Free State/Gauteng Freight Corridor that will unlock South Africa’s trade opportunities in order to boost the country’s long-term economic prospects. The Durban/Free State/Gauteng Freight Corridor (or Strategic Integrated Project 2 (SIP2)) is one of the geographically focused SIPs identified in the 2012 National Infrastructure Plan. The objective of this strategic programme is to improve logistics and economic integration between Durban and Gauteng, and raise the efficiency of import and export operations. It is intended to play a major role in transforming South Africa’s economy from a predominantly raw materials export-based economy to one focused on local manufacturing and beneficiated exports, with a commensurate creation of jobs, in line with the New Growth Plan’s target of creating five million new jobs by 2020. The need for the DDOP is driven by two dynamics, namely: the expected growth in demand for cargo capacity and the changing needs of the shipping industry. Despite the global economic downturn since 2008, the long-term demand for cargo is set to increase dramatically. In South Africa, Durban will be the most impacted by changes in international trading as it is expected to continue to handle the bulk of the country’s increasing container volumes. Also making an impact on international maritime trade is the advent of a new generation of shipping vessel that is longer, wider and deeper. The latest of these purpose-built

• Size: The distance around the Port of Durban is 21 km. • Rail: The port’s rail tracks total 302 km. • Anchorage: One anchorage area is located within the port’s limits. • Entrance channel a. Approach channel – 19 m. b. Entrance channel – 18 m. • Channels and basins: a. Inner port channel – 16 m up to T-jetty. b. Maydon Wharf – 12 m. c. Maximum permissible draft per berth ranges from 9.1 m to 12.6 m. Overall length of 350 m.

container ships will carry 18 000 TEUs or containers and have a draft ranging from about 14.5 m to 15.5 m. These ships will require a deep-water port and the other facilities which the new port will offer, transcending the present port’s draft limitations. The DDOP will be located at the site of the former Durban International Airport, which Transnet, South Africa’s stateowned freight, transport and logistics company, bought from the Airports Company South Africa (ACSA) for R1.85 billion. When completed, the DDOP will consist of container terminal facilities with an estimated combined capacity of 9.5 million TEUs per annum, automotive terminals, liquid bulk handling facilities, and supporting road, rail and other basic port infrastructure. This will help unlock volume growth in the region, with direct and indirect benefits to the economy and surrounding communities. The Port of Durban is also busy with a feasibility study of the proposed Bayhead/ Edwin Swales VC Drive Link Road. This is to improve the traffic flow in and out of the port. A feasibility study for a Maydon Wharf Truck Stage to allow road trucks to be staged before being called into the port as per shipping schedule is also under way.

ZPMC cranes at the Durban Container Terminal

Despite the global economic downturn since 2008, the long-term demand for cargo is set to increase dramatically

TWA | Jan/Feb 2014

SUPPLY CHAIN LOGISTICS

RAIL FREIGHT

Multibillion rand fuel deal A ﬁve-year R15.5 billion contract to supply fuel to Transnet has been awarded to nine companies. Following the announcement of this historic deal, Simon Foulds speaks to Public Enterprises Minister Malusi Gigaba and Transnet Group chief executive, Brian Molefe.

Public Enterprises Minister Malusi Gigaba and Transnet Group Chief Executive, Brian Molefe with the nine suppliers

HIS IS THE biggest contract to date awardEight of the nine suppliers are 100% black owned. Five ed by Transnet, following a rigorous tender of them are more than 80% women owned. Encouragingly, process. Between them, the nine companies three new entrants have been introduced into the industry. will be responsible for supplying Transnet with The successful bidders were assessed on price, which home-based fuel that will be stored at Transnet sites accounted for half of the scoring, supplier development, around the country, supplying diesel lubrication for all BBBEE and technical ability, among others. In addiof Transnet’s locomotives as well as supplying Transnet tion, Transnet conducted a thorough assessment of the with marine diesel for port equipment like dredgers and short-listed bidders to ensure that all of them had the tug boats. required capability and capacity to service Transnet’s Gigaba says: “Transnet’s economic expansion must not operational requirements. stop once the contract has been awarded, we must also Gigaba says: “When the president announced Transnet’s ensure we can also grow the companies supplying the Market Demand Strategy in his state of the nation address tenders to the state-owned enterprise. We are engaging in 2012, he said it was intended to revitalise South Africa’s with small businesses because we realise the importance transport and logistics infrastructure, which Transnet has of this vital segment to the economic growth of the country. custody of. Further, he challenged us to use programmes It is also the shortest route to develop skills required by like these to create employment, develop skills and piostate-owned enterprises like Transnet.” neer the creation of a new class of industrialists – espeFollowing a rigorous open and public bidding cially among black people. Transnet has process overseen by a committee of the Board successfully met the challenge.” of Directors, Transnet appointed nine compaMolefe says: “Given the size and the quannies – Afric Oil, Borutho Gas Supply, Gulfstream tum of the contract, and the central role fuel TRANSNET port Energy, KZN Oils, Mzumbe Oil, NRW Trading plays in Transnet’s operations, this assessterminals was and Logistics, Tlhokaina 21, Women Of Africa ment meant we could comfortably award the established in 2000, when Fuels and Oils, and Yem Yem Petroleum – to contract knowing that security of supply for Transnet’s then cover Transnet’s fuel requirements. the company is assured. single port “The contract contributes significantly to division, Portnet, was divided Transnet’s supplier and enterprise developinto operations ment goals, target and ambitions especially and landlord in relation to skills development, job creabusinesses namely, SAPO tion, technology transfer and rural integra(Transnet port tions. In line with this commitment, Transnet terminals) is further providing support to the new and National Port Authority entrants through mentorship programmes. (TNPA). Since “Over the next six years, Transnet is its inception, spending R307 billion on its infrastrucTransnet port terminals has ture – building ports and expanding them, played a key role buying locomotives, wagon and other rail in supporting the assets, and infrastructure and assets while South African government’s at the same time spending almost a similar export-led amount on its operational expenditure over growth strategy. the same period.”

TWA | Jan/Feb 2014

2000

SUPPLY CHAIN LOGISTICS

RAIL FREIGHT

Developing the copper railway A new 590 km Cape gauge railway, running from Chingola in the heart of the old Zambian Copperbelt to the Angolan border, is to be built and operated by the Northwest Rail Company (NWR) and Grindrod.

HE RAILWAY IS to be built in two phases: Phase 1 extending from Chingola to the Kansanshi, Lumwana and Kalumbila mines (290 km of track), and Phase 2 to connect with the Benguela line on the Zambian-Angola border near Jimbe. Phase 1 is intended to service existing ore and finished copper traffic, and Phase 2 is intended to open up a direct corridor to Lobito, which would allow landlocked Zambia to import oil directly from Angola, as well as to stimulate further mining activity in the Western Copperbelt region. The estimated capital cost of Phase 1 is US$489 million (R5.46 billion), while Phase 2 of the NWR project is estimated to cost US$500 million. Subject to the conclusion of the Phase 1 bankability feasibility study, construction is expected to commence during 2014. Enoch Kavindele, a former vice-president of Zambia and founder/owner of NWR, says: “I have been developing this project for a number of years and the synergies with Grindrod’s rail businesses makes Grindrod an ideal partner in the joint venture and means we will be able to bring this project to being in the shortest possible time.” James Holley, divisional chief executive of Grindrod Rail, adds: “We have spent the last few years developing our rail capabilities and growing our capacity to participate in the growth in the Africa rail sector. It has meant we are perfectly placed to take up opportunities like this on the African continent. “This investment will enable the company to extract synergies from our existing investments in the North-South rail corridor and our port operations in Maputo, Richards Bay and Durban. We also see great potential in creating an Atlantic gateway to Central Africa through Lobito and look forward to playing our part in making this a reality with the development of Phase 2.” The Copperbelt straddles the border of northern Zambia and the southern DRC and is among the richest underdeveloped geological regions in Africa. Current production of copper in this area accounts for around 8% of the world’s

production, and BMI International forecasts sustained growth in the Zambian copper industry at 5% per annum over the next decade. Existing copper mines are located in the Eastern Copperbelt and are serviced by smelters located near to Chingola (Zambia) and Lubumbashi (DRC). New mine developments have started, and more are planned, in the Central and Western Copperbelt area of Zambia, which will need to transport ore up to 300 km for processing. Road infrastructure is poor, and the cost of road transport is becoming prohibitive. An alternative rail transport solution will be both more economic for the North-Western Province of Zambia and much less damaging to the local environment.

Above James Holley, divisional chief executive of Grindrod Rail Below The Northwest Rail route runs for 50 km from Lumwana to Kalumbila

TWA | Jan/Feb 2014

SUPPLY CHAIN LOGISTICS

GLOBAL STANDARDS FOR AFRICA

Improving connectivity The International Air Transport Association (IATA) renewed its call for African governments to focus on adoption and adherence to global standards to ensure a safe, efficient and integrated air transport system.

ONNECTIVITY IS CRITICAL for African growth and development, supporting some 6.7 million jobs and US$68 billion (R733.9 billion) in economic activity. Aviation’s economic and social benefits, however, can be undermined by the unintended consequences of government action that are not aligned with the established framework of global standards. Tony Tyler, IATA’s director general and CEO, addressing the African Airlines Association’s 45th Annual General Assembly in Mombasa, Kenya, said: “Global standards are the foundation upon which a safe, secure and integrated global air transport system are built. The system is so reliable that we don’t often think about the enormous coordination that makes it possible. That is why we need to remind governments of the value of global standards that support aviation and the vibrancy of their economies.”

Dialogue is critical to reach mutually beneficial outcomes

Connectivity and regulation “The overall profitability of the African industry is hovering around break-even, making US$100 million (R1.1 billion) in good years and losing US$100 million when times are more difficult. Africa faces many unique challenges, but as Africa’s economy takes-off, breaking even will not be enough to generate the investments needed for African aviation to seize the emerging opportunities and play the important role of stimulating development across the continent.” To unlock the unique transformative powers a thriving aviation industry can bring to African economies, a better alignment of global standards is needed in the approach of governments to regulation, taxation and the provision of infrastructure. “Today – possibly without realising it – governments are weakening the integrity of the air transport system by introducing different and

sometimes conflicting passenger rights regulations, overly onerous taxes and charges.” Tyler focused on the need for more robust consultation by governments with industry to avoid unintended consequences of regulations, taxes or charges increases. He noted several areas where government policies breech International Civil Aviation Organisation principles: • Fuel: The competitiveness of African aviation is being compromised by the exceptionally high price of aviation fuel on the continent. On average, jet fuel is about 21% more expensive in Africa than the global average. Kenya and Ethiopia are key players in African aviation and both have onerous levies on international fuel which do not comply with ICAO policies and standards. • Security: In several cases, airport security charges recover more from users than is required to keep air transport secure. In Chad passengers pay US$80 roundtrip (R866.69). And similar situations exist in Senegal, Ivory Coast and Equatorial Guinea. Among the causes are private sector security companies who lobby governments to develop national security regimes with funding from air transport. Recently, IATA engaged the Tanzania Civil Aviation Authority over proposed steep increases in air navigation and safety oversight charges. “By engaging in a dialogue we agreed on a much more reasonable increase that provides value for money. Dialogue is critical to reach mutually beneficial outcomes,” said Tyler.

Future opportunity Tyler believes that the future of aviation in Africa has the potential to be very bright. The African population of one billion people is spread across a vast continent with a wealth of untapped resources. The African economy is rapidly developing, its people are growing wealthier and governance is more stable.

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