Transport World Africa Jan/Feb 2015 by 3S Media

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Intraregional supply chain soluƟons from producer to consumer

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COVER STORY ORY Y Scania ia – Growing ing market share are

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Andrew r Layman, CEO, Dur Commerce ban Chamb – KZN: SA’ er of s burgeoning industrial ISSN 1684-79

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46 January /Februar ISSN 1684-79 y 201546 Vol.Mar/Apr 13 No. 2013 1 / R50.00 Vol. 11 incl. VAT No. 2 / R40.00

REGULARS

SUPPLY CHAIN LOGISTICS 2 5 6 8

Editor’s Comment Staying safe is in your belt FESARTA In memorium Cover Story Scania – Growing market share Regional News

COMMERCIAL VEHICLES 10 12 14

HCV trucks 2015 Expanding into the FMCG market The road to vehicle load management

TRAILERS 16

Meeting specific needs

TYRES 17

Putting tyre safety first

Understanding supply chain capabilities

Enhancing the bottom line

FLEET MANAGEMENT

Fat and lazy supply chains

CORRIDORS KZN – SA’s burgeoning industrial hub

Advice when insuring Mature risk retention strategies

PORTS 34 37

Port of Durban The reefer peak season

TRAINING 38

ALCOHOL 39

Behavioural implications

20 21 22

Empowering independence

WAREHOUSING

The human investment

LUBRICANTS

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AIR CARGO 40

Air freight still flying high

17 27

TWA | Jan/Feb 2015

EDITOR'S COMMENT

Staying safe is in your belt!

Head of design Hayley Mendelow

Apparently not!

Production coordinator Jacqueline Modise

I recently saw a video shot by Volvo in Sweden, which shows two dummies in an articulated truck; the driver dummy was wearing a seat belt while the passenger dummy was not. The truck with the two dummies was then rolled down an embankment similar to the ones we have on our highways. Inside, a camera filmed the two dummies. If every truck driver and his assistant saw this video, the first thing they would do, as soon as getting into the truck, is fasten their seat belts. The video shows the dummy without the seat belt hitting the roof of the truck, before bouncing around the cab, hitting the windscreen, the steering column and then being propelled into the dummy driver (still wearing its seat belt). Needless to say, neither dummy would have been pulled out unscathed and, in all likelihood, the dummy being tossed around the cab would have killed or, at the very least, seriously injured the dummy driver. It turns out that most drivers not wearing seat belts in this situation are flung out of their vehicle and are killed by the impact of their own truck rolling on top of them. Hopefully neither you nor your drivers are like the unfastened dummy described above. There is no time like now to drive home the importance of wearing a seat belt in a truck. Just because the driver sits above the traffic does not make them less susceptible to the real dangers of being thrown out of their truck in the event of an accident. In this issue, we take a look at what some of the industry’s biggest names are bringing to the heavy commercial vehicle sector in 2015, and how some others are expanding into the FMCG market with ever-growing light commercial vehicle ranges. We also get some solid advice on fleet insurance and risk management – key operational factors that all owners and operators need to be aware of. We are offered some interesting insight into the capabilities and ideal operation of supply chains, and uncover how KwaZulu-Natal is becoming a national industrial hub, along with how things are currently looking at the Port of Durban. As always, a varied read. Enjoy!

Simon Foulds 2

Editor Simon Foulds • simon@3smedia.co.za

Curtis, Rhys Evans and Mario Landman

t never ceases to amaze me how many truck drivers on our roads do not wear seat belts. You would think, in a country where over 12 000 people are killed on our roads yearly that safety should be top of mind and that it starts with your seat belt.

Editor in action

Publisher Elizabeth Shorten

TWA | Jan/Feb 2015

Designer Kirsty Galloway Contributors Raymond Abraham, Martin Bailey, Barney Chief sub-editor Tristan Snijders Sub-editor Beatrix Knopjes Client services & production manager Antois-Leigh Botma Marketing and digital manager Esther Le Roux Marketing specialist Philip Rosenberg 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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FESARTA COMMENT

UPON HEARING OF this tragic loss, numerous industry professionals offered their condolences:

by Barney Curtis, CEO, FESARTA

In memorium It is with great sadness that I write this column following the passing of a true transport legend. Mike Scott passed away near the end of 2014 at the age of 75.

HIS MILESTONE cannot be allowed to pass without FESARTA paying tribute to one of its most ardent supporters, since it was formed in 1993. That he chaired FESARTA for more than eight years, gives testimony to his support for the regional association. It was not just his occupying the chairmanship that we remember him for. He openly and publicly voiced his support whenever the opportunity arose. Whether at a regional conference, or at a high-level meeting with overseas dignitaries, his message was always the same, regardless of who was listening – give support to FESARTA. He always wanted action. He was tired of hearing the same old problems over and over again. Of course, he knew all the problems, right down to the last detail. Nobody was better equipped for this, because he wasn’t just a very senior person in Cargo Carriers, one of the largest and mostrespected transport companies, but he was also a ‘hands-on’ man. He travelled extensively and picked up details from drivers, customs agencies, s, transporters, financiers and anyone else who was as prepared to give information. His knowledge of African countries is well known and unlikely to be surpassed. He could speak nine African languages with exceptional fluency and socialised with many leaders of these countries, and was always up-to-date with the latest political happenings. Of course, he read avidly about African affairs rs and international finances. He knew why a country was going through difficult times and could link the economy with its financial position. Even potential investors would seek out his input on where and how to invest. Mike never baulked at what he needed to do to achieve FESARTA’s objectives and always responded to email requests with valuable input.

He was prepared to travel to any meeting anywhere on the continent, if it could help FESARTA. There was at least one occasion where he used the Cargo Carriers plane to take us stakeholders to a meeting in Beitbridge! Even though Mike spent many of his earlier years crawling through the bush on some exercise or other, he never let the side down when it came to being dressed for the occasion. Jacket and tie, or suit, was the order of the day. I don’t think I ever saw him in a pair of shorts and, when it came to a regional conference, or the FESARTA AGM, it was only ever a neatly pressed suit. We will all miss Mike very much. For his outspoken approach, his knowledge, his desire to help and his seemingly endless energy. You are now at peace, Mike, though I’m sure the trucking industry is still somehow with you!

Barney Curtis

Jean Kizito Kabanguka, manager: Transport and Infrastructure, AfB, Ivory Coast I am deeply saddened by the death of Mr Scott. I met with him in 2009 in Mombasa and was impressed by his dedication in serving the federation, as well as his great sense of humour. My deepest condolences to his family and FESARTA – his second family. May his soul rest in peace. Lovemore Bingandadi, transport specialist, SADC, Botswana We at SADC share Mike’s family’s loss of a loved one and FESARTA’S loss of a true champion and advocate of the trucking industry. I personally remember Mike fondly for his many jokes in Shona, my home language, and his untiring lobbying for the industry. His memory will spur us to urgently complete the unfinished business of harmonising transport regulations in our region. Famba zvakanaka shamwari… Go well, my friend! Dave Watts, SAAFF, Durban I am so sorry to hear of Mike’s passing. He was a real stalwart in our region and our businesses. He will be sorely missed. Paul Maiyo, chairman, Kenya Transport Association, Kenya We are deeply saddened by the untimely death of Mr Mike Scott. Mike’s death is not only a big blow to his family but also to the entire membership of FESARTA and indeed the larger transport fraternity, which he served with deep conviction, diligence and dedication. We remember him as a solid voice of truckers during his tenure as chairman of FESARTA. Mike stood out as a champion of truth and justice, and was always pragmatic in his approach to matters of concern to members of the federation and the industry. Mike will be dearly missed by all of us. On behalf of the board of directors and members of Kenya Transporters Association, I wish to convey our deepest condolences to the family, friends and the entire membership of FESARTA for this tragic loss. May you find peace, courage and strength in this time of grief. May God rest his soul in everlasting peace.

TWA | Jan/Feb 2015

COVER STORY

SCANIA

GROWING market

Scania Southern Africa had a good 2014 and believes 2015 will also see growth, albeit not in similar numbers. Steve Wager, MD at Scania SA, tells Simon Foulds how the company has grown and where it expects growth in 2015.

E ARE certainly very pleased with the results we achieved during 2014, where we closed the year with 12% market share. We had 8% market share in 2012 and 10% in 2013. We were somewhat surprised with the growth of the extra-heavy truck market, considering the underlying economic situation. “However, the market was fairly robust with reasonable customer confidence; although the market took a bit of a dive in the middle of 2014. We are taking tak orders for 2015, so the market seems to be holding up u fairly well, and we are pleased with our market share in South S Africa.

Neighbouring countries “If we look at surrounding marke markets, Namibia will see another record set in terms of truck volumes, making us clear local market mar leaders, and in Botswana, 2013’s record sales sa will be exceeded as well. “Tanzania has been a tough to market for the company due to a com combination of heavy rains destroying the road roads and an influx of competition from the Fa Far East, which has been challenging. “These three countries countrie are our captive markets that fall under unde Scania Southern Africa. We have also performed reasonably well in these three thre regions where we work with independent importers – Zambia, Zimbabwe and Malawi – and we are fairly pleased with our growth here. “There has been good growth g in the export market and we are starting an a operation in Beira, Mozambique. To date, we hav have sold a handful of commercial vehicles there and signif significant further growth is expected as we establish a new dealership d in the port town, during the first quarter of 2015. 2015 From a low base, we foresee GDP growth in the country of between 7% and 8% and we also foresee an increase in demand for transport in the region. It is important for us to be at Beira to support our South African customers transporting goods into Zimbabwe and, because of its strategic position, we are also able to accommodate transport operating in Tete. Mozambique is quite an exciting market for us in the future.

TWA | Jan/Feb 2015

COVER STORY Services “We have also seen good growth in both our after-sales and services businesses. A new service we offer customers is maintenance of clients’ trailers. So we are creating a one-stop-shop solution. Trailer maintenance is offered in Europe but is fairly new in South Africa. “We will not be able to offer this service across South Africa just yet due to the footprint of our dealerships and we are looking at expanding this in the future,” explains Wagner. Scania SA currently has 17 dealerships in South Africa, two in Botswana, four in Tanzania and three in Namibia. There are two dealerships each in Malawi, Zambia and Zimbabwe.

2015 “We are expanding the Fleet Management offering introduced in 2014. The ‘Control package and Monitoring package’ was already introduced in 2014. In 2015, we will introduce further services such as ‘Driver Coaching’, in which a driver trainer will monitor the performance of a driver through the FM system and give continuous coaching over the phone. “In terms of product, the biggest event for us this year is us refocusing on our construction vehicle range. We have a proven product from Europe and will be relaunching our products into the South African marketplace. “On the pre-owned side of our business, we will continue expanding our coverage. And regarding our rental business, we have grown this sector to 400 vehicles and it has become its own business unit within the company,” says Wagner.

Driver training “Every vehicle sold includes two days of free driver training and this year we are introducing Driver Coaching as part of our Fleet Management solution. “We know drivers can influence up to 60% of the total cost of a long haul operation, so wise customers know how important it is to continually train them. “With fuel and tyres being a big part of operating costs, it is important that drivers know how to save on the operator’s fuel bill as well as wear and tear on tyres.

Regions

Operators

Since taking over the helm of the company in South Africa, Wagner restructured Scania SA into five regions, each with its own regional director. “The idea behind this was to shorten the decision-making process, empowering the directors to operate the business locally, dealing directly with customer issues. It has paid dividends and keeps us closer to our customers. We can adapt fairly quickly to a customer’s situation and be more flexible in running the overall business from Johannesburg. “The country is far too big to handle everything from one central location and customers appreciate the difference it now makes for their operations.

“I think the pressure on operating margins for operators will continue, forcing them to look even harder at total cost of operations. “How Scania can assist customers is through our Total Operating Economy, which includes total cost of operation plus uptime. Through this, we are able to present a good offering to operators and, in speaking to customers to find out what variables they look at before purchasing a truck, we find, almost without fail, that the top three variables are uptime, fuel economy and price. Price is usually third because customers realise it is worth paying a premium for a fuel-efficient, robust vehicle. Our whole philosophy and approach is to work closely with the customer to find the right total solution for them, which also includes finance and insurance,” Wagner concludes.

Parts centre “We have worked hard at ensuring parts availability is delivered in the shortest possible time, ensuring customers experience minimal downtime. “As a consequence of this, a new central parts warehouse was opened in 2011. It is located in Johannesburg, which has helped to cut lead times of parts into Southern Africa dramatically. “Over the past year, we spent time improving our system and, from 2015, service will improve even further.

OPPOSITE The Scania G-Series is a versatile and formidable range of heavy trucks ABOVE Steve Wager, managing director at Scania SA

“We have worked hard at ensuring parts availability is delivered in the shortest possible time, ensuring customers experience minimal downtime.” Steve Wager, managing director, Scania SA

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TWA | Jan/Feb 2015

REGIONAL NEWS

Read more on www.transportworldafrica.co.za

SADC

Focusing on growing economic ties

SOUTH AFRICA

Danes view South Africa a ass springboard into Africa DENMARK IS AIMING to improve trade with South

IT IS ESSENTIAL for South Africa and Botswana to grow economic ties and investments as this will form a firm foundation for mutual benefits. This is according to Minister of International Relations and Cooperation, Maite Nkoana-Mashabane. Addressing the second Bi-National Commission between South Africa and Botswana, in Gaborone, Nkoana-Mashabane said the existence of 34 signed agreements and memoranda of understanding between the two countries demonstrated the depth and extent of bilateral cooperation. States Nkoana-Mashabane: “Our task today is to review progress made in the implementation of the bilateral agreements/memoranda. It is only by working together that we can succeed and move our cooperation forward. “We have made good progress, but more remains to be done.” Strong cooperation exists between South Africa and Botswana. The two countries continue to cooperate in various fields such as energy, water, justice, immigration, culture, transport, science and technology, defence and security, agriculture, tourism, minerals, education, sports and recreation, health, trade and industry, and issues related to regional integration. South African companies also remain some of Botswana’s major trading partners.

TWA | Jan/Feb 2015

Africa, utilising the country as a springboard into the rest of the continent. This is according to Mogens Jensen, Danish Minister of Trade and Development Cooperation, following a meeting ing in Cape Town with Rob Davies, Minister of Trade and Industry. Total trade between South Africa and Denmark has steadily been on the increase, with total trade at R2.9 billion in 2009 having increased to R3.4 billion in 2011. In 2013, total trade increased to R4.8 billion. South Africa and Denmark’s bilateral trade and investment relations are governed by the European Union and South Africa‘s Trade, Development and Cooperation Agreement. Davies says, “The total exports to Denmark from South Africa increased from R1 billion in 2009 to R1.4 billion in 2011, with the exception of 2010 (R917 million), 2012 (R1 billion) and 2013 (R890 million). The decrease in total exports from South Africa to Denmark in 2012 and 2013 can be attributed to a decline in external demand, due to slow recovery in the EU.” During their meeting, the ministers also discussed bilateral investment treaties and the Tripartite Free Trade Area.

SOUTH AFRICA

A legend for a legendary cause CELEBRATING THE END of an era, UD Trucks donated the last of its U41 range, a UD40, to the Legends Rhino Orphanage in Limpopo. As the last vehicle rolled off the assembly line in Rosslyn, staff gathered to see the end of an era in the MCV range, as the company embarks on its new range, to be introduced from 2015. The company sold more than 13 000 units of the range since its introduction in 1996. Rory Schultz, acting MD at UD Trucks Southern Africa, says, “Although this might be the end of our current MCV range, UD Trucks has an exciting future ahead of it. From 2015, we will be introducing various new models over the following years, which is set to not just renew our product offering to our customers, but also challenge the way one thinks about the local transport industry.” In the company’s tradition of celebrating the last unit coming off the assembly line, management and staff wanted to mark the occasion in a significant way. Schultz adds, “Seeing that the legendary U41 range is now extinct, so to speak, we wanted to help the Rhino Orphanage prevent a living legend, the rhino, from going extinct as well.” Aubrey Rambau, general manager of manufacturing at the assembly plant, says, “It is a privilege to get involved in an issue that affects the local community. Many of our staff members who work on the assembly line have been part of the U41’s journey since its introduction 18 years ago. We are all proud to play a role in the production of this legendary range, and even prouder that one of our vehicles will be used for such a good cause.”

REGIONAL NEWS

EAST AFRICA

Self-regulation among Northern Corridor truckers IN A MOVE that promises to rid Kenyan roads of overweight trucks, transport companies operating along the Northern Corridor have embarked on self-regulation to curb overloading of trucks. Despite the presence of tough law enforcement, trucks in the region – especially those leaving the Mombasa port – have been accused of overloading as transporters seek to squeeze more profits from each trip made along the corridor. The development of the Axle Load Control Charter was spearheaded by the

Northern Corridor Transit Transport Coordination Authority and the Kenya Transporters Association, whose members control more than 70% of the total heavy commercial vehicle fleet operating along the Northern Corridor. Government agencies that are part of the effort include the Kenyan Ministry of Transport and Infrastructure, the National Transport Safety Authority, Kenya Maritime Authority, Kenya Ports Authority, Kenya Police Service, Kenya Revenue Authority and Kenya Pipeline Company.

AFRICA

SOUTH AFRICA

The Grand Free Trade Area ONCE ESTABLISHED, it is envisaged that the Grand Free Trade Area (GFTA) will be the largest bloc on the African continent serving as a launching pad for the establishment of the Continental Free Trade Area in 2017. Being launched in mid-December 2014, the GFTA, also known as the Tripartite Free Trade Area of COMESA-EACSADC, links 26 African countries. With a combined population of 625 million people and a GDP of $1.2 trillion, these states account for half of the membership of the African Union and 58% of the continent’s GDP. During a ministerial meeting of the Tripartite Sectoral Committee of the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and the Southern African Development Community (SADC) in Bujumbura, Burundi, in October, it was agreed that the GFTA would be launched at the Tripartite Summit of Heads of State and Government to be held in Egypt in mid-December 2014. Sindiso Ngwenya, secretary general of COMESA and chairperson of the COMESA-EAC-SADC Tripartite Task Force, says, “The GFTA offers significant opportunities for business and investment within the bloc and will act as a magnet for attracting foreign direct investment into the region. The business community, in particular, will benefit from an improved and harmonised trade regime, which reduces the cost of doing business as a result of the elimination of overlapping trade regimes. “The launching of the GFTA is the first phase of implementing a developmental regional integration strategy that places high priority on infrastructure development, industrialisation and free movement of business persons.”

Supporting fleet owners in educating driver wellness A SECOND COMPANY, City Couriers, has joined hands with the MercedesBenz South Africa (MBSA) and Corridor Empowerment Project’s Fleet Owner Workplace Programme. The aim of the programme is to assist fleet owners in taking a holistic approach to employee health and wellness, based on a proven model. City Couriers is a logistics solutions provider with a nationwide and crossborder footprint that operates more than 250 vehicles. The Fleet Owner Workplace Programme is an extension of the MBSA workplace wellness strategy that has entrenched the health of the company’s employees for over a decade, adding to the company’s ability to achieve profitable growth and contribute to the socio-economic success of the country. Dr Clifford Panter, manager: Health, Safety, Compensation and Benefits, MBSA, states, “Our drive for excellence translates into benchmark achievements in the field of occupational health and safety. However, pockets of excellence can never be sustainable, so, for more than two decades now, we have made it a mission to share the lessons we have learned around employee health management with businesses and communities around us. This is based on our first-hand experience of the benefits of a healthy workforce to the sustainability of our business.” The concept for the Fleet Owner Workplace Programme came about as a result of MBSA’s involvement in the Trucking Wellness project, an initiative of the National Bargaining Council of the Road Freight and Logistics Industry, which provides an education and basic health-care service to truck drivers along the major freight routes in Southern Africa. This includes dissemination of information, and testing and treatment of HIV/Aids and other lifestyle illnesses.

TWA | Jan/Feb 2015

COMMERCIAL VEHICLES

HCV trucks 2015 Simon Foulds speaks to some of the big names about what the heavy commercial vehicle sector can expect in 2015.

PERATING COSTS are the most important factor to take into consideration before purchasing a heavy commercial vehicle, especially when you consider that fuel and tyres constitute 60% of a truck’s operating costs. What can the market expect this

year within the heavy commercial vehicle sector?

Are you feeling optimistic about business in 2015? RS We at UDTSA are very optimistic about the road ahead. During 2014, we have seen the commercial vehicle industry perform better than expected

Rory Schultz, acting MD, UD Trucks

Alexander Taftman, marketing director, Scania

against all the difficult economic conditions and factors. The last two months have showed a great improvement in the purchasing managers’ index, which is a result of expanding manufacturing activities after recent weakness. Overall, it looks like South Africa’s economy is on its way to recovery and we are optimistic to see this trend continue into 2015. AT Yes, we are surely positive. We expect modest growth in South Africa next year and even greater growth in the Southern African region. With the financial recovery in Europe and North America, the demand for African commodities will increase. Scania South Africa will have an even broader product range in 2015 and it will continue to expand, in order to meet more customer needs from different industries and types of transports. EvdB FAW has a strong range of competitively priced models across the segments, and we are sure that we will be in a position to fill the requirements of a big part of the market – especially those looking for vehicles that are tough, reliable and affordable. Our vehicles are known for their good fuel efficiency and this in itself will play a big part for decision-makers. Quon Green EHCV UD Range

TWA | Jan/Feb 2015

Eugene van der Berg, national sales manager, FAW

Do you have any new heavy vehicles in the offing? RS UD Trucks Southern Africa is particularly excited to be launching a new extra-heavy commercial truck into the Southern African market in the first quarter of 2015. The Quester will be a complementary product to our current product line-up, and the Quon and Quester will be targeted at different applications and industries in the EHCV segment. AT It is of particular importance to Scania to expand its range of vehicles, both trucks and buses, driven by alternative fuels. This will be an important contribution to our aim of optimising transport solutions and minimising carbon footprint. We will also introduce a wider range of products for the construction sector, backed up by tailored service, finance and warranty packages. This will bring added value to the operators doing tipping and mixing operations. EvdB We are not currently planning on launching any new heavy commercial vehicles in 2015. We have a very exciting new medium commercial vehicle that we will be bringing into the market.

Are there any new technologies you have recently introduced or will be introducing to market in the near future?

COMMERCIAL VEHICLES

Scania R-Series range RS The Quester will be introduced with factory-fitted telematics, as well as a unique fuel couch system that will help improve drivers’ economical driving abilities. Our cabs are designed in a way that everything is in sight, in reach and easy to control. The Quester’s cab is a well-planned driver’s environment that results in safer and more efficient driving. The cab boast features like an ergonomic dashboard design, driver’s information display, in-vehicle diagnostics, plenty of storage space, a

safety-tested cabin (passed the ECE R29/AIS029 crash test), and ergonomic driver and auxiliary passenger seats. AT In Q3 2014, we introduced the Scania fleet management system. The entry level monitoring package comes free of charge with every new Scania truck or bus and will help all operators get a better view on the basic cost drivers of their transport operation. We have also upgraded our vehicle range for fuel and chemical transports to be in line with the latest safety levels applied in Europe. This includes adaptive cruise control, lane departure warning and an

“Look beyond the price tag of the vehicle. Take all cost and income factors into consideration before you make a decision.” Alexander Taftman, Scania

advanced emergency brake system. Combined, these features not only drastically improve safety, they also creates a more comfortable driving environment. EvdB FAW trucks are built to last and are strong and rugged enough to run in the sometimes-harsh African environment. This also means that the vehicles are solid and safe enough to protect the driver. In the current economic situation, simplicity is the key to keeping vehicles efficient.

Finally, what advice do you have to offer owners and operators? RS Buy the correct truck for the application – buy a dependable truck that’s easy to maintain and not too complicated, but which offers you all the bells and whistles you need but none you don’t. Ensure there is enough support

from accredited dealers along the routes. AT Look beyond the price tag of the vehicle. Take all cost and income factors into consideration before you make a decision. Do not just buy a truck or a bus, buy a total transport solution and, with that, build a partnership with a supplier that you can truly rely on. EvdB A fleet owner should look for a company that – while being a major player in the industry, with a national aftersales support footprint, including an AA assist facility – is still small enough to care about each and every fleet owner and vehicle. The simplicity of our vehicles plays a big role when going cross-border, as we all know the tough conditions and poor roads can put a lot of pressure on the performance of your vehicle.

TWA | Jan/Feb 2015

COMMERCIAL VEHICLES

Expanding into the

Manufacturers are expanding their ranges, targeting the FMCG market where smaller loads can be transported with ease during inner-city travel. Simon Foulds looks at the models on offer to the FMCG market, asking manufacturers why their vehicles are ideal for South African cities and operating conditions. Why should FMCG companies utilise your light commercial vehicle? LN Our light commercial vehicles such as the Chevrolet Spark Pronto and Utility and the Isuzu KB have low running costs backed by a fiveyear/100 000 km warranty, with strong after-sales support from our parts distribution centre located in Port Elizabeth. JS Volkswagen Commercial Vehicles offers the largest range of panel vans and pick-ups in South Africa. The panel van offering ranges from the Caddy (>700 kg payload/3.2 m3 load space for the Caddy Panel Van

TWA | Jan/Feb 2015

and 800 kg/4.2 m3 for the Caddy Maxi Panel Van) through to the Transporter (1 000 kg/6.7 m3) and the Crafter (1 500 kg/9 m3 for the Crafter 35 and 2 400 kg/15.5 m3 for the Crafter 50). The pick-up range includes the Transporter and the Amarok (both in single and double cab). Over and above exceptionally fuel-efficient 2.0 TDI engines across the range, the Caddy Panel Van also offers a 1.6 ℓ petrol engine. The range delivers class-leading fuel economy, which benefits cost of ownership. DvdM We have noticed a general shift in business requirements to reduce

inventory levels to the lowest levels possible. Simply put, inventory is cash tied up and thus restricts one very important business survival element – cash flow. One of the options for a company to reduce inventory levels requires delivery of goods in smaller batches and more frequently, as and when required. Recognising this shift in business requirements, it is recommended that suppliers of goods explore more cost-effective transport solutions that will enable them to deliver smaller batch orders, faster and more efficiently. Given today’s challenges of traffic congestion and high fuel cost,

VW Caddy transporting goods in large, underutilised delivery trucks is not the most cost-effective way of delivering goods. Utilising LCVs, and to some extent MCVs, in lieu of HCVs could offer some significant cost savings for a company. DS The H100 has proven itself not only to be very reliable, but also very versatile, and capable of fulfilling many different applications. The totally flat load deck means no space is wasted on protruding wheel wells, which means more cargo can be loaded. Fitting a canopy

COMMERCIAL VEHICLES

FMCG market TWA speaks to • Lunga Ntsendwana (manager: Product Communications, General Motors SA)

• Jaco Steenkamp (general manager: Sales and Marketing, Volkswagen Commercial Vehicles)

• Dawid van der Merwe (manager: National Fleet, Ford South Africa)

• Deon Sonnekus (general manager: Corporate Communications, Hyundai Automotive South Africa)

• Nicola Kirkbride (regional sales manager, Foton) can further increase the volume that can be carried. Backed by an excellent warranty and roadside assistance, downtime is minimised and, with the standard service plan that is included, customers can budget better for maintenance costs. Loading and offloading usually gets done by hand, therefore a low deck height is ideal. NK The latest addition to the growing range of Foton Tunland one-tonne pick-ups, the singlecab workhorse, does what its name suggests by being an excellent all-round vehicle for a multitude of applications. This new workhorse is far from being a stripped-down, budget bakkie. Instead, it has a car-like interior.

fuel usage. Our Utility 1.4 is the lightest vehicle in terms of fuel consumption in its class, using only 9.2 ℓ/100 km in the urban environment (7.2 ℓ combined). The Isuzu KB 2.5 LEED lowpressure turbo engine model delivers fuel economy of just 7.9 ℓ/100 km. The vehicle is also fitted with low-rolling-resistance highway tyres for maximum fuel efficiency. JS Our 2.0 ℓ TDI engines deliver best-in-class fuel consumption, and high torque availability offers ease of driveability. The entire range also offers class-leading safety features, including driver airbag, ABS and ESP. DvdM Ford Motor Company elected to focus on four key brand pillars – quality, green, safe and smart – when designing vehicles to provide fleet customers with the best transport solution for most business applications. By designing and building quality transport solutions that meets customer expectations and incorporating sophisticated system technology systems to ensure maximum safety for the occupants and other road users, Ford products feature smart, intuitive technologies such as sync with Bluetooth and voice control (on certain models) designed to connect with the world in an easy and safe way. Considering Ford’s

focus on sustainability, we are focusing on creating vehicles with improved fuel economy, reduced CO2 emissions and, very important for the fleet owner, a lower overall cost of ownership. The Ford Transit 2.2 offers a combined fuel consumption as low as 7 ℓ/100 km and CO2 as low as 186 g/km. Additional features such as a shift indicator, provides further opportunities for achieving additional fuel savings. DS The H100’s 2 600 cc naturally aspirated engine delivers very good fuel consumption, and the engine power matches the gross vehicle mass of the vehicle perfectly. NK The Foton Tunland singlecab workhorse not only offers a load capacity of 1 105 kg but its under-stressed, 2.8 ℓ Cummins turbo-diesel engine, which produces 96 kW, is also very fuel efficient in urban conditions, while having the performance to handle inter-city deliveries as well.

With the rise of e-commerce and more customers doing their grocery shopping online, why are your vehicles ideal for this growth area? LN The Spark Pronto fits the bill perfectly with a portioned load area capable of carrying

275 kg/876 ℓ, without the need to fit a canopy at extra expense. The Utility takes care of the needs of those looking for a more traditional, yet still compact, bakkie alternative. JS Vehicles like the Caddy, Transporter and Crafter make ideal sense for such deliveries. These vehicles are suitable for varying load sizes, and up to the Transporter, can gain access to any parking area. DvdM A key factor that comes into play is transporting goods in a safe and secure environment. Both Ford van offerings – the Ford Transit and Ford Transit Connect – offer the best of all worlds. Great fuel economy with a variety of active and passive safety features, ease of driving and manoeuvrability, and of course three large access doors for loading and offloading are key critical features for any goods delivery application. DS Space is often a problem with inner-city deliveries, and only vehicles with small turning circles and a low height can truly do the job. While home deliveries for items used daily in households are gaining popularity, the H100 has already found its way into a number of company fleets. Due the big volume capacity and carrying capability of the H100, multiple drops can be done before a vehicle needs to return to a depot to be loaded again. NK The Tunland is compact and easy to drive, with a good turning circle, making it convenient to drive in traffic-laden urban conditions. The controls are light and equipment levels are high to ease the job of the driver. General Motors’ Pronto

Why are your vehicles the best in terms of fuel consumption in inner-city travel? LN The Spark Pronto uses only 7 ℓ/100 km in urban driving (5.4 ℓ combined), making it the lightest LCV in South Africa in terms of

TWA | Jan/Feb 2015

COMMERCIAL VEHICLES

The road to vehicle load management

Harmonising vehicle load management within East and Southern Africa was discussed over two days in Gaborone, Botswana. Organised by SADC and funded by the European Union, it attracted 100 delegates from across the region.

ESARTA’s BARNEY CURTIS was in attendance and explains what important objectives were discussed to develop and adopt a strategy ensuring harmonised vehicle load management that would be acceptable to all member states of the COMESA, EAC and SADC Tripartite regions. “It is extremely important to create one strategy and implementation plan for the Tripartite; at the same time, ensuring the agreed measures are focused, synchronised and coordinated. This will be aimed at supporting member states in implementing the relative legislature in their respective countries,” explains Curtis.

TWA | Jan/Feb 2015

“This will ensure that throughout the region ion the policy regulatory systems and standards at national and corridor level, necessary for harmonised vehicle load management anagement in the ESA region, are implemented within each country’s untry’s legislature.” The objectives of the workshop included setting up the structures to set the standards and limits, and to monitor and evaluate the process. It built on various preceding events, going back to the Nairobi workshop in 2008 and the EAC project in 2011. According to Curtis, at the top of the structure – at Tripartite level – there would be a working group on vehicle load management (VLM), which would be part of the infrastructure and services sector. An MoU to facilitate the implementation of the plan was drawn up and signed by all member states.

COMMERCIAL VEHICLES “There were many challenges to domesticate and implement the Tripartite VLM and MoU strategy and implementation plan. “A schedule was drawn up, showing the different elements of the plan, the time span for implementation, the responsible entity and the key performance indicators.”

The road ahead for the plan is as follows: • ensure senior officials adopt the plan agreed upon on the final day of the meeting • update the plan with further inputs from member states, through circulating a questionnaire • cost the activities, develop a budget and source resources • consolidate all the above and submit the 2015 to 2020 plan to the ministers for approval. This is to be achieved in the first quarter of 2015.

TWA | Jan/Feb 2015

TRAILERS

Meeting specific needs Simon Foulds speaks to Clinton Holcroft, managing director, Serco, about the role trailer manufacturers play in creating tailored, cost-saving solutions for transport operators.

HE TREND NOWADAYS is to design and build trailers tailor-made for the specific needs of a customer. Trailers can have a significant impact on a transporter’s operating costs and operators need to take into consideration their specific needs. Says Holcroft: “Choosing the right trailer is important. As an example, our lighter-weight trailers give the customer extra payload and also reduce fuel costs with lower rolling resistance. We also have solutions for customers looking to carry high volumes at cheaper running costs. Aerodynamic accessories can also curb fuel costs. “We are continuing to improve efficiencies so that we can reduce costs and source materials globally to offer more competitive prices. We also look to source accessories such as load-securing devices, which can assist customers in solving their challenges, thereby giving them the edge with the latest innovations.” Understanding what customers’ objectives and requirements are – anything from refrigeration to multiple stops is required – is key to delivering an ideal solution. “We are able to customise the product to meet unique customer requirements. With our technical department, we can develop the trailer to suit client requirements. At the same time, with us being specialists, we have vast experience and the technical know-how to create solutions

Clinton Holcroft, managing director, Serco

TWA | Jan/Feb 2015

for our customers. We have invested in upgrading the Johannesburg and Durban factories to allow greater space and improved plant layout to maximise production efficiencies. We also invested in a new panel press to be commissioned in 2015 to enable us to build panels on par with the best in Europe. “We have seen noticeable growth in our sales in neighbouring countries. We currently have preferred partners that we work with in Mozambique, Namibia and Zimbabwe. We hope to grow this market in the future,” announces Holcroft.

Serco breaks ground for extensions to KwaZulu-Natal trailer plant Building works have started on extensive additions to the manufacturing plant at the Durban headquarters of Serco. The new buildings at the factory in Phoenix Industrial Park will accommodate a state-of-the-art panel press as well as improvements in factory layout for increasing production flow and efficiencies. The company’s Repair Division would move into the new buildings situated a short distance up the road from the existing plant in order to cater for the increase in space for new vehicle manufacturing. “The extension and upgrade of our Durban manufacturing operation will increase the under-roof area by more than 3 000 m2,” concludes Holcroft.

TYRES

Putting tyre safety first Every day of the week, thousands of trucks take to the roads – most of them on longhaul journeys of delivery. How safe are those journeys?

RECENT STUDY indicates that in excess of 60% of trucks in South Africa are not roadworthy – a figure that should provide a serious wake-up call to every truck owner in the country. Transport World Africa speaks to Jaco Venter, partnership programme manager at Michelin Tyre Company SA, to find out what advice he would offer truck operators. “Not only are trucks poorly maintained, drivers are often incentivised to arrive at destinations earlier than scheduled. This results in them skipping the necessary rest breaks and driving faster to make up time. In fact, it is not uncommon for drivers to work a straight 24-hour shift – with predictable consequences. “In order to address these problems, new laws are being promulgated, which hold the consignor, the consignee and the transporter liable for accidents. I advise truck owners to ensure: • every driver’s licence is checked for validity • drivers have regular eye tests, blood sugar and blood pressure tests, as well as TB tests

• RTMS accreditation is obtained and the COF (certificate of fitness) and PDP (professional driver’s permit) are renewed annually • tyres and brakes are regularly checked and maintained.” With its involvement in tyre technology, the company has embarked on setting up Michelin Truck Service Centres throughout South Africa to provide a convenient, high-quality, safety-focused service to the truck and bus industry. The affordable services on offer include alignment and balancing, fleet inspections, stripping and fitting, tyre repairs, tyre re-grooving, pressure checks, surveys at the point of sale and on-site vehicle services. “Our aim is to assist truck and bus companies to make profits that are not at the expense of lives or vehicles,” concludes Venter.

“Not only are trucks poorly maintained, drivers are often incentivised to arrive at destinations earlier than scheduled.” Jaco Venter, Michelin SA

TWA | Jan/Feb 2015

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LUBRICANTS

Enhancing

the bottom line January 2015 saw a dramatic price decrease in fuels in South Africa. With the right lubricant, these savings may be extended further with signiﬁcant improvement to operating costs. By Raymond Abraham

ITH SO MANY South African goods and services transported by road, road transport and logistics account for approximately 10% of South Africa’s GDP. Therefore, efficient fleet management remains critical for the growth of the economy. Fleet managers are under significant pressure to deliver profits that reflect the potential of the industry despite being impacted virtually immediately by the fluctuating oil price. Oil is extremely sensitive to developments in the Middle East; as a result, local fleet managers’ profits are continually under threat due to fuel price volatility, making it difficult to project – and maintain – margins. Opting for diesel vehicles is proving to be a smart way to go in many instances, given the relatively lower cost of diesel and correspondingly better fuel economy that can be achieved when compared to petrol engines. Introducing more efficient vehicles is part of the solution and matching the correct lubricant to the vehicle is equally important. Increasingly, fleet managers are now combining original equipment manufacturers (OEM) and lubricant technology to improve efficiencies. This is where operators are able to extract ‘extra kilometres’ from their fleets, as well as reduce maintenance requirements, CO2 emissions and smoke. A basic understanding between synthetic and mineral oils can give fleet managers the confidence to gladly accept an oil change, which will ultimately lead to a cleaner engine that operates more efficiently, delivers more power and consumes less fuel. Every fleet or maintenance engineer wants to be certain that, when using a lubricant in their fleet, it provides the right level of protection for the equipment. The lubricant must reduce friction and protect the engine against acids, deposits, and wear in extreme temperatures and in a range of operating conditions. The introduction of synthetic and semi-synthetic oils represents a significant change for the heavy-duty transport industry. Advanced lubricant technology, developed by Shell’s R&D team, enables fleet and maintenance managers to mitigate the risk of breakdown and keep vehicles on the road for longer. Thanks to modern refining technology, today’s high-quality

mineral oils provide adequate equipment protection and offer many benefits over traditional mineral-oil-based engine oils. Traditionally, lubricants have been based on mineral oil – a component of crude oil used in thousands of everyday applications from engines to cosmetics. Mineral-base oils however, are complex mixtures of naturally occurring hydrocarbons that may contain impurities. Synthetic lubricants, on the other hand, are made from chemicals selectively chosen and free of impurities. An important function of lubrication, for example, is ensuring the engine continues to be protected under extreme temperatures, including cold starts, and at high operating temperatures. High-quality synthetic-base oils are engineered for excellent low-temperature flow properties, high resistance to thermal degradation and low oil consumption. When combined with advanced additive technology, this results in products that are well placed to deliver best-in-class engine protection. Compared to some mineral oils, this means that synthetic products can help to extend equipment life. The latest generation of synthetic lubricants also fulfils additional functions that can help improve cost efficiencies. Traditionally, delivering enhanced fuel economy meant lower viscosity (thinner) oils, which helped to reduce friction in the engine but with the perceived trade-off of reduced engine protection. With the latest technologies, this trade-off is no longer necessary. High-quality synthetic-base oils and advanced additive technology used in synthetic products deliver the best allround engine protection. As CO2 emission standards continue to be driven by regulators, and may contribute to fleet costs through carbon taxes, Shell has spent many years developing and understanding the science behind energy-efficient lubricants, and now offers a range of lubricants that delivers reduced CO2 emissions.

Raymond Abraham, commercial technical manager, Shell SA

TWA | Jan/Feb 2015

FLEET MANAGEMENT

Empowering independence Gulfstream Energy formed a new company as part of its supplier development commitment to Transnet. Simon Foulds ﬁnds out about the implications for the industry.

S A SUPPLIER of quality and innovative petroleum products and one of South Africa’s larger independent wholesalers, Gulfstream Energy recently formed a new company – G&T Tsela – in conjunction with Tipublox Petroleum. As one of nine companies collectively awarded the R15.5 billion Transnet contract at the end of 2013, and as part of the latter’s Supplier Development Programme, Gulfstream made a commitment to place 20% of its Transnet fuel delivery with an empowered fuel transporter. Delivering on its word, Gulfstream decided to take it one step further and create an entirely new entity in conjunction with Tipublox. The Gulfstream portion of the tender will see the delivery of significant quantities of fuel to all ports within South Africa for a period of five years. “Even more significantly, it has provided us with the opportunity to play a greater role in the development and sustainability of our local industry,” says Shane Jegels, chairman and CEO of Gulfstream Energy. An independent wholesaler Adds Phenyo Ntshabele, financial direcand current Gulfstream tor of Tipublox Petroleum: “As an indecustomer who shares equal pendent wholesaler, we need to create ownership with Gulfstream our own logistics capability. “Logistics and in G&T Tsela. The new the required infrastructure demand sigentity’s main focus will be nificant capital. Up until now, Tipublox has logistics within the South been making use of Gulfstream’s logistics African fuel industry. Phenyo Ntshabele and Shane Jegels

Tipublox

TWA | Jan/Feb 2015

capability to ensure delivery of its own fuel orders. The new company will see Gulfstream funding the required equipment in addition to awarding a contract to deliver 20% of the Transnet order.” The relationship between Gulfstream and Tipublox has existed for many years. Having received its independent wholesale licence in 2010 from the Department of Energy, Tipublox found itself in a situation experienced by many other independent wholesalers. “It comes down to security of supply,” says Ntshabele. “In order to secure customers, you need to guarantee product supply. However, in order to secure supplier relationships, especially with the larger players, one needs to have customers.” This led Tipublox to approach Gulfstream Energy. With a value offering, which encapsulates making fuel available to independent wholesalers who are not able to access product as efficiently, Gulfstream has subsequently being supplying as much as 80% to 90% of required product to Tipublox for the last two years. The relationship between these two independent wholesalers is about so much more than product. “We benefit from the entire supply chain through Gulfstream,” says Ntshabele. “In addition to fuel supply, we receive backend office support, the passing on of rebates ensuring Gulfstream always delivers the best price possible, as well as logistics capability.” The significance of this new venture, proposed and spearheaded by Gulfstream, will see Tipublox now able to independently meet its own logistics requirements, further enabling them to take another step forward as an independent wholesaler. It is an exciting time for South Africa’s fuel industry, which is seeing an opening up of opportunities for independent wholesalers not previously available. “It’s not about competing with the larger oil companies, but rather about carving a niche for ourselves as independent wholesalers, working cooperatively with the larger players for the benefit of our country’s fuel consumers,” says Jegels. It’s also about working together as independent wholesalers. “With Gulfstream, there is an understanding that we are working together to achieve something bigger than ourselves,” says Ntshabele. “They are empowering us with regards to business in general and our place in the local petroleum industry. “If I could sum up our relationship with Gulfstream in one phrase, it would be that of ‘mentor and big brother’,” continues Ntshabele. “Dealing with one of the larger oil companies would render us a number. At Gulfstream, we are part of the family and the knowledge and support we receive from its management team continue to be invaluable.”

FLEET MANAGEMENT

Advice when insuring The world of commercial vehicles is fraught with many challenges that can make business life very tough, irrespective of whether you run a fleet of five or five hundred trucks. Simon Foulds speaks to Wayne Rautenbach about securing ideal insurance.

N INTEGRAL part of any fleet management operation is ensuring the operator has adequate insurance. If your operation is not properly insured then a truck jackknifing and having goods fall off its back could be financially damaging. Wayne Rautenbach, head of Regent Commercial Vehicles, explains what fleet operators should look for when it comes to insuring their fleet and offers some advice on getting better insurance deals. “Partnering with the right insurance company for your needs, in essence, entails ensuring the best insurance policies are in place so the operator can save costs, reduce risk and improve efficiencies. “This is achieved by ensuring the insurance company transforms all relevant data and information created by the tracking and monitoring systems into intelligence that can be utilised as a management tool to proactively bring about cost savings and enhanced efficiencies.

Driver training “Driver training is also important and can attract major benefits for the client such as: • the driver training could well lead to improved claims experience, which in turn can lead to savings in premiums and excesses paid in the future • with accidents being minimised through driver training, the insured will automatically be saved the inconvenience and financial consequences (direct and indirect) that automatically result following an accident • foreign driver access could be waivered • having an accredited assessment, training, approval and certification for the driver gives them a sense of achievement and pride, which is beneficial to any transport company. “It is also extremely important to train drivers in the trucks that they drive in, fully loaded, otherwise it becomes a fruitless exercise.”

Cross-border cover “It is extremely important for cross-border operators to ensure they have the correct insurance in place. Key to this is crossborder towing cover, also known as repatriation cover, as well as cross-border riot and strike extension.”

Goods in transit “Another important aspect for operators is ensuring that the goods-in-transit policy is comprehensive and the insurance company offers them the most value-added benefits at no additional cost. These benefits can include environmental clean-up costs, protection, along with driver wilful misconduct and deterioration of temperature-controlled cargo following the breakdown or malfunction of the refrigeration unit.”

Telematics “In conclusion, I would like to offer the following advice pertaining to telematics, which has provided the technology base for greatly increased efficiency of fleets as well as improved security, depending on the system in use. “The technology itself is in essence ‘over-capable’, in that fleet owners are flooded with mountains of data and spreadsheets that cannot be dealt with or responded to efficiently. This is why it is important for the insurer to partner with the fleet owner, assisting them to manage their telematics data thereby identifying key issues operators need to address. In doing so they can save both time and money; not only on their insurance, but also on their operations as a whole.”

“Partnering with the right insurance company for your needs, in essence, entails ensuring the best insurance policies are in place so the operator can save costs.” Wayne Rautenbach, head of Regent Commercial Vehicles

TWA | Jan/Feb 2015

FLEET MANAGEMENT

Mature risk retention strategies Simon Foulds speaks to Andre du Sart, principal broker and national commercial products manager for Aon South Africa, to ﬁnd out how insurability can be maintained while operating a complex network of thousands of trucks and buses.

EDUCING OPERATIONAL costs and managing exposure to risks demand a robust, effective risk management programme to ensure the business is able to grow. Adopting high standards for risk assessment has ongoing benefits across the business by identifying risks before they happen and thus reducing costs – both financial and human – as well as managing the insurability and the cost thereof for your fleet. Du Sart explains: “Given the tough economic climate, the reality is that the insurability of commercial fleets is no longer a simple ‘given’ as underwriters have become

A thorough risk audit that identifies and addresses weak links in the insurability of a fleet or business is essential in order to prepare a case for the underwriters

TWA | Jan/Feb 2015

increasingly risk selective and expect clients to have a proper plan in place to minimise and mitigate risks. The emphasis right now must be on the preparation of a scientifically grounded insurance proposition for transport operators and their assets, premised on structured risk management interventions and risk retention.” From the outset of an insurance application and even at renewal time, a thorough risk audit that identifies and addresses weak links in the insurability of a fleet or business is essential in order to prepare a case for the underwriters. This also provides a basis from which to evaluate the risk financing options available which may include elements of self-funding of the risk (own cash resources) as well as insurance to manage and recover any losses should they occur. “Assessments may differ from case-to-case depending on the nature of the business and the associated risks, but there are common elements. Not all of them are necessarily directly insurance related, but as a collective they contribute towards the insurability of the fleet. For example aspects such as regular maintenance, avoiding overloading, use of genuine parts, implementation of vehicle tracking and fleet management systems including telematics, driver training and health checks and so on are all important check points that can help avoid unplanned and increased maintenance, breakdowns, vehicle damage, accidents, thefts and so on, all of which essentially boils down to an insurance issue at the end of the day.” “Effective claims management is important as well, in that control of a claim from the scene of an accident or incident

FLEET MANAGEMENT

and taking ownership of the repair process helps with the cost of each and every claim, which, in turn, generates a good claims history that underwriters acknowledge. These and many other interventions generate economies that can be used across the business to improve the bottom line directly and indeed allow the business to grow and expand.” Most crucially though, having such a mature risk management approach in place provides invaluable actuarial and statistical information in terms of risk patterns and trends, which in turn will inform the nature of the risk retention structures to be implemented such as an aggregate fund or premium deposit burner. An aggregate fund and premium deposit burner are mechanisms aimed at fleet owners who better manage their risk and insurance costs, all of which are premised on having a mature and scientific risk retention strategy in place from the outset. These mechanisms work as follows:

Having such a mature risk management approach in place provides invaluable actuarial and statistical information in terms of risk patterns and trends

Aggregate fund This involves a measure of self-insurance whereby the business sets aside a portion of the premium funds, usually off balance sheet, and often in a self-fund. This fund would cover any specified claims events up to a specified limit (called a stop loss) while the insurer would pick up any claims over and above that limit. To illustrate, if the total annual premium for a fleet is R2 million, this could be split on say a basis of R1 million which goes into an aggregate fund which would cover claims for own damage, windscreens and so on up to the specified limit. The insurer would still cover any ‘catastrophic loss’ as well as the balance of any claims that are above the stop loss limit, or if the fund is depleted. Let’s say the stop loss limit is R250 000. For any claims under this amount, the cost would be covered by the aggregate fund. But if the claim value is say R350 000, the aggregate fund would cover the first R250 000, while the insurer would pick up the balance of R100 000. The client in conjunction with their broker would define up front what the aggregate fund would cover, for example own damage, assessor’s fees and so on. Aon usually advises clients not to include third party claims in the aggregate fund as the quantum on these claims is usually quite large and can rapidly deplete the fund. The stop loss limit is determined by how much risk the client is able to take on in terms of a financial quantum, and at what point they would want to transfer that risk to the insurer. The aggregate fund still forms part of the contract with the insurer and in this regard claims to the fund get treated like any other and would still get assessed and documented by

the insurer. In this regard the guidance and advice is invaluable in managing, processing and documenting all claims whether through the fund or insurer. The key benefit of an aggregate fund for client is the ability to manage their claims better so that should they have money left in their aggregate fund, they can put this towards their insurance premiums for the following year. It’s an ideal solution for fleets from around 30 vehicles and where there is a mature risk assessment strategy in place.

Premium deposit burner A premium deposit burner is typically put in place where a client’s claims trend shows a consistently ‘lower-than-premium paid’ trend. For example, if a client’s annual premium is R100 000, and claims typically over a period of say three years are only 60% of that premium, they can then arrange to pay a premium deposit of R70 000 (70%) and retain the balance in a self-fund. If claims paid in a 12-month period are less than 65% of the deposit amount (ie R45 500), then the insurer would not call for the balance of the premium of R30 000. Obviously if the claims exceed this, then the client would need to pay the balance of the premium of R30 000 to the insurer. A premium deposit burner can be put in place on a stand-alone basis or in conjunction with the aggregate fund. Concludes Du Sart, “Providing clients with a choice of product tailored to their business objectives is the ultimate outcome of the needs analysis undertaken by the broker for the client, ensuring that cover is tailor-made and cost effective without exposing them to undue risk. For any fleet owner, there are significant financial benefits to be derived from having a mature risk management and retention strategy in place that is premised on actuarial and scientific analysis of their risk and claims profile.”

TWA | Jan/Feb 2015

SUPPLY CHAIN LOGISTICS

Understanding supply chain capabilities Disruptions are events that interrupt the ﬂow of products and information between raw materials, production and the end user. Often, the prescription to minimise the impact of such disruptions is to develop more resilient supply chains. Dr Steven Melnyk outlines his concept to Simon Foulds. Foulds.

ESILIENCE REQUIRES two critical capacities: the capacity for resistance and the capacity for recovery. The first defines the supply chain’s ability to delay a disruption and reduce the impact once the disruption occurs. The second defines the supply chain’s ability to recover from a disruption.

The challenge of defining resilience The concept of resilience, central to much of the current thinking about supply chain risk management, traces its roots back to the work of ecologist Crawford Stanley Holling in 1973. Since then, the notion of resilience has been studied within the fields of ecology, psychology, systems thinking, disaster management and – more recently – supply chain management. For some, resilience is a reactive capability that occurs after a disruption or shock has taken place; others see resilience as more proactive efforts toward preparing for a disruption. It is not surprising that there is confusion surrounding this key concept.

Supply chain resilience defined

While possessing a high capacity for both resistance and recovery is preferable, it is more likely that firms have a mix of these qualities. Given resource constraints and competitive factors, there may be need for firms to choose where best to invest their limited resources. Supply chains exhibiting low capacities for resistance and recovery would experience nearly every disruption while also having slow and weak recoveries. These supply chains are ‘fragile’. The long term prognosis for such supply chains is very poor since they likely will not last nor grow, unless protected by unique market or regulatory conditions. In contrast to fragile supply chains, those that exhibit high levels of resistance are able to alleviate potential risks more easily. When they also possess the capacity for effective recovery, they quickly rebound unavoidable events. Such supply chains are classified as ‘hardy’. Between these two extreme states exist two positions. Supply chains that are characterised by an ability to adequately minimise disruptions, but insufficient ability to quickly recover, are ‘resistant but sluggish’. These supply chains exhibit high levels of resistance, but if the system is ultimately disrupted, the supply chain impacts are negative. ‘Sluggish’ here refers to an insufficient capability to restore operation. While the ‘fragile’ position is clearly less desirable to the coveted ‘hardy’ position, the existence of the two mean positions requires acknowledgement that firms may reside there for several reasons: there may be limited resources with which to invest in both capabilities or there may be limited control over the environment in which a supply chain operates. The different manifestations of this lack of control in a supply chain require firms to consider the notions of supply chain resilience, risk and uncertainty.

Supply chain resilience is ‘the ability of a supply chain to both resist disruptions and recover operational capability after disruptions occur.’ The dual capacities of resilience, resistance and recovery, are complimentary. Resistance capacity is the ability of the system to minimise the impact of a disruption through avoidance or by containment, that is, minimising the time between disruption onset and the start of recovery. Recovery capacity is the ability of the system to return to functionality once a disruption has occurred. The process of system recovery is characterised by a (hopefully brief) stabilisation phase after which a return to a steady state of performance stages of resilience can be pursued. The final achieved steady-state are: avoidance, performance may or may not reacquire original containment, performance levels, and is dependent on many stabilisation disruption and competitor factors. and return.

The four

TWA | Jan/Feb 2015

Risk and uncertainty The distinctions between supply chain resilience, risk and uncertainty are often blurred and unclear. Unfortunately this

SUPPLY CHAIN LOGISTICS issue is exacerbated by the fact that some e use risk and uncertainty interchangeably, implying that these se two concepts are the same. This is not the case; while linked, ed, they are separate and distinct concepts. Risk exists, so firms have to deal with the possibilities of encountering situations that can adversely versely affect them. However, not all future events are equally ually unknown. Past experience offers some insight regarding g what events could occur, probability of occurrence, and possible impact. Firms can predict the likelihood of events ents over a set time period to help them determine e how to potentially react to these events. Events with a greater likelihood and significant potential al impact require greater preparation. In contrast, uncertainty considers unpredictable events. These are eventss that have not been previously encounntered. To understand the differences, connsider the Fukushima Daiichi nuclear plant ant following the Tohoku earthquake and tsunami. unami. This disaster was the largest nuclear disaster since Chernobyl in 1986. It caused the evacuation of 100 000 people from their homes and reduced the capacity to produce electricity by some 40%, as 11 of Japan’s 50 nuclear reactors were closed immediately following the earthquake. The disaster and the events that followed had a significant impact on supply chains as key air and sea ports shut down. Among others, this affected the global supply of semiconductor equipment and materials for consumer electronics, as well as Boeing’s 787 Dreamliner parts sourced in Japan for the wings, landing gear, and other major parts. Yet, in studying the events that took place at Fukushima, one can see the interplay of risk and uncertainty. When the plant was first built in the 1960s, the expected maximum height of a tsunami was 5 m. The resulting seawall built to resist this potential risk event at the plant was 5.7 m. The tsunami that hit the plant was 13 to 15 meters high. This event reflects that uncertainty is always present. While plans were made to resist a tsunami wave, the planners did not foresee such a large tsunami hitting the plant. You could argue that what Fukushima Daiichi needed was a system that was ideally hardy but at a minimum, vulnerable but responsive. However, what they had was a system that was resistant but sluggish. The notion of a resistant but sluggish supply chain and a vulnerable but responsive supply chain also may be considered in this context of supply chain risk and supply chain uncertainty. Under conditions of uncertainty, the best approach to building resilience may be to invest in recovery capacity. However, faced with the known risk of a chemical spill, for example, the chemical industry’s policy of avoiding such disruptions is more appropriate. By differentiating between risk and uncertainty, we can uncover an important rule of thumb for resilience – when faced primarily by risk, it makes sense to invest in improving resistance. When dealing with uncertainty, it is more appropriate to invest in improving recovery capabilities.

Investing in supply chain resilience Resilience is a derived system property: the result of the investments a firm makes over time, not a ‘free’ benefit of

Risk exists, so firms have to deal with the possibilities of encountering situations that can adversely affect them existence. Firms can create resilience through many different types of investments. Some of these investments, such as buffers, are direct investments. Indirect investments also have an impact on resilience. Although such investments are not focused directly on enhancing system resilience, they offer capabilities that the firm can draw on to deal with unexpected disruptions. Supply chain resilience can be generated in many different ways. Furthermore, these investments can be mapped to specific stages within the four phases of resilience. The challenge for the firm is determining the choices between concern for supply chain risk or uncertainty and determining which quadrant is both most appropriate and representative of the best value for the firm’s investments. Many of these investments affect multiple stages of resilience. Note that these investment values are qualitative approximations of value; other values may be realized in various types of supply chain situations.

Conclusion In today’s increasingly dynamic and turbulent world where the supply chain plays an increasingly important role, organizations have to be prepared to deal with supply chain risk and supply chain disruptions. One approach is developing supply chain systems that are resilient. However, this notion of resilience, which is at the heart of so much of our current thinking, is often not well enough defined and subject to a great deal of confusion. Companies can make investments in resilience through multiple venues. Consequently, you can now build the type of resilience that is both appropriate and makes sense to the parties involved. Resilience is now becoming a supply chain property that you can shape and influence; it is no longer a happy accident.

TWA | Jan/Feb 2015

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WAREHOUSING

Fat and lazy supply chains

Do warehouses add real value to the supply chain? Surely, if we get our act together, we can organise supply direct from source to the customer and eliminate en-route storage. If we can organise a really lean supply chain, we could reduce the role of the warehouse – and reduce costs accordingly. By Martin Bailey, chairman, Industrial Logistic Systems

ERTAINLY, IF YOU believe the gurus – driven by a missionary zeal – who have ‘discovered’ that lean supply chains are the way of the future, the strategic role of the warehouse is severely diminished. The idea is that your supply chain must be lean and agile, without an ounce of fat. Do things just in time. Do it fast and react perfectly to customer demand. If you adopt their version of the Toyota Production System, you will quickly create the ultimate supply chain. Thus when your supply chain resembles a bulimic model in a size-10 dress – preferably with ADHD – you are well on your way to ensuring your systems are optimised and you will be running a perfectly efficient network that has zero fat. However, there are real enemies of our lean systems. Enter the infamous buyer. He sprouts philosophies such as

“The idea is that your supply chain must be lean and agile, without an ounce of fat. Do things just in time. Do it fast and react perfectly to customer demand.” Martin Bailey, chairman, Industrial Logistic Systems

TWA | Jan/Feb 2015

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WAREHOUSING volume discounts, stock cover, safety stock, opportunity buys and such horrible concepts, which lead to bloated stocks. We thus may end up with an obese supply chain filled with stock – with its arteries clogged and high blood pressure, it is ready to collapse. Added to this, we have the unreliable supplier who cannot supply on time. His lead times are unpredictable and you need extensive stock cover to buffer his inefficiencies. The other driving force over the last 30 years in the industry has been an imperative to centralise. Bigger is better, and with the world’s population moving to the cities, our supply chains have centralised themselves to a few hubs, where we can drive down inventories, increase control and reduce overheads. In theory, our size-10 model thus now lives with lots of other models in a modern apartment in the centre of the city, where she can eat sushi and sip her imported mineral water, knowing that all is well and life is good. What about some strategic reality? In the past, as fuel and electricity prices increased, inflation matched these increases, and our cost inputs (in percentage terms) remained reasonably constant. Things are changing. With the decline in the rand and problems at Eskom, energy costs are now rising at a far higher rate than inflation. Transport is a continually growing portion of the supply chain – and is likely to become a lot more expensive. This is coupled to a general goods-railway network in South Africa that is largely collapsed and unlikely to be resuscitated in the foreseeable future, increased toll roads as a way for government to pay its way, labour escalation above inflation, and a drop-off in labour productivity – our prime drivers in the supply chain are rapidly changing. We are thus going to have to think about our rapid response philosophies. Perhaps just-in-time deliveries of small quantities and make-to-order (as dictated by demand) will need to be adjusted, and ensure trucks are full and our transport costs are optimised. Our constraints in the supply chain are changing and we have to adapt accordingly. Warehouses are going to continue to grow ‘fatter’ to meet the supply chain constraints, and our strategies are going to have to adapt. Nobody is proposing that we will ever need a really fat supply chain, but perhaps we are going to have to temper our philosophies. That size-10 model may have to become a well-built size 12, as we adjust our thinking. That crossdock facility in Bloemfontein with no stock may have to hold a few days’ stock so we can reduce our transport costs. Those goods we send overnight, because we

believe that’s what our customer wants, may now have an extra 24 hours’ lead time. Those goods beautifully packaged may no longer be in the perfect box, and customers may have to adjust their expectations. Our way of doing business is thus going to have to adjust to a world of dwindling energy resources. Certainly, the thinking that drives our supply chains is going to change and the gurus that shape our thinking are going to need a whole new set of rules. I guess well-built supply chains will never be as attractive as lean supply chains. Right-speed systems are never going to sound as good as agile systems. And, with apologies to the Cheetahs, who in his right mind wants to decentralise to Bloemfontein? Many will argue that lean is not simply a process – it is a whole business philosophy. A lean approach is a great business philosophy for our supply chains, but we need to temper it with our resource constraints. What we do need to ensure is that we keep enough flexibility in our networks to guarantee that, as the inputs change, we can adapt – to a changing world where scarce resources may dominate our thinking, rather than a pure focus on being lean and agile. So we will continue to build fat warehouses, and these will balance our supply chains, ensuring high-quality customer service. Happily, that will ensure the supply chain stays balanced and the warehousing industry continues to grow.

Large and well-stocked warehouses are still important to ensure transport costs are kept to a minimum

TWA | Jan/Feb 2015

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KZN SA’s burgeoning

CORRIDORS

industrial hub

Simon Foulds speaks to Andrew Layman, CEO at the Durban Chamber of Commerce, and Ravi Ronny, design and construction manager (Eastern region) at Sanral, asking them about the growth of KwaZulu-Natal as an industrial hub, and how the road infrastructure will assist in growing the economy.

WAZULU-NATAL’S emergence as a hub of industrial development in sub-Saharan Africa may be attributed to its unmatched natural resource endowments, exceptional productive capacity, well-developed first-world infrastructure and advantageous coastal location. Economic activity is concentrated in the metropolitan areas of Durban, Pietermaritzburg and Richards Bay. Two of Africa’s sea ports are found in KwaZulu-Natal, and the world-class King Shaka International Airport and the Dube TradePort, now a Special Economic Zone (SEZ), provide a key competitive advantage and ensure the province’s importance for economic growth, effectively repositioning the country to increase its share of the global market. TWA, in this special feature, looks at the significance of the province and how it continues to establish itself as an economic hub counteracting the expansion taking place at Port KwaZulu-Natal Maputo, ensuring the is the second largest economy Port of Durban remains the port of choice in the country, for freight heading contributing towards Gauteng. around 16%

16%

towards South Africa’s GDP.

The KwaZulu-Natal provincial government has established the Provincial Planning Commission in line with the National Planning Commission. Through this, they have established the Provincial Growth and Development Plan (2011 to 2030), through which key strategic objectives are to be achieved over the next 20 years. The strategy is to select economic and development strategies to enhance benefits into Africa and the global economy. KwaZuluNatal relies on trade and industry and is a major manufacturing hub intent on exporting into Africa. The province’s leading sectors in the local economy are automotive, aluminium smelting and sugar manufacturing, which are already integrated into the global economy. Industrial Development Zones (IDZ), such as the recently launched Dube TradePort IDZ (DTP IDZ), will make significant contributions to the economic success of KwaZulu-Natal in particular and developing nations in general. The DTP IDZ has been established as a key priority Infrastructural Development Project for the province of KwaZulu-Natal and will be

An aerial view of the Durban N3

TWA | Jan/Feb 2015

CORRIDORS responsible for the development of an integrated aerotropolis strategy. The strategic positioning of Dube TradePort next to an international airport will open doors to endless opportunities for the freight-oriented aerotropolis to become the gateway for commercial business to South Africa, Africa and the world at large.

How is KwaZulu-Natal establishing itself as an economic hub within South Africa? AL The value of the ports has been highlighted more aggressively in recent years and one is conscious of a much greater recognition of the potential of a maritime industry. The announcement about the

investment in the dig-out port has had a lot to do with people being more aware of this. The MEC in charge of economic development is a very focused man who drives things forward, and Trade and Investment KwaZulu-Natal is also very active. Dube TradePort has also increased its profile and its activity. It is an important economic development hub in the province. In addition, the province has a growth and development plan and strategy with substantial buy-in from business. I think the logistical importance of Durban means that the province can’t help but be an economic hub. RR The N3 is South Africa’s principal freight and logistics corridor. Hence, plans are underway for government’s The Durban N3 highway

TWA | Jan/Feb 2015

second Strategic Infrastructure Project (SIP 2), also known as the Durban-Free StateJohannesburg Logistics and Industrial Corridor, linking the Port of Durban with Gauteng, South Africa’s economic heartland. In terms of project size and value, it is the biggest of government’s SIP projects. Durban is by far South Africa’s busiest port with over 80% of goods moving along this corridor by road. In excess of 80 million tonnes of freight per annum are carried on the N3 corridor, with approximately 9 000 heavy vehicles using the national road per day. Therefore, ensuring the seamless flow of freight is very important to this corridor and ultimately the economy.

Which SIPs are in the pipeline to grow the economy and how will

CORRIDORS these affect the movement of goods through the province? Where is the funding coming from for these SIPs? AL There

Right City Deep container depot in Johannesburg

are 18 SIPs. The Durban-Free State-Gauteng Freight and Development Corridor SIP is the most important one to KwaZulu-Natal. SIP 7 will benefit Durban, and the city has already embarked on what it calls Go!Durban, a new integrated rapid public transport system, and SIP 3 involves KwaZuluNatal in the link with the Eastern Cape. Obviously the province will also benefit from the SIPs that are ‘national’ in conception. The planned dig-out port is not one of the SIPs, but has to be considered a major catalytic infrastructure project. The dedicated freight route is still under investigation and it is not clear whether this will involve a separate, new highway for the exclusive use of trucks, or whether it will be an additional, dedicated lane on the N3. Government does not have the funds for this, or even some of the other SIPs, at present, and private sector investment will have to be solicited. RR The KwaZulu-Natal Department of Transport (DoT) coordinates SIPs 1, 2, 3 and 7 for the province, which affect the movement of goods through the province. SIP 2 has a major influence on the movement of goods within the Durban-Free State-Gauteng Corridor and is the busiest freight route in the country, as the Port of Durban is the busiest in Africa. Funding is a major challenge. For example, on the SIP 2 programme, the majority of the projects are unfunded and sources of funding still need investigation.

computer systems linking the port with the truck stops? How will this improve the efficiency of the Port of Durban, while at the same time catering for heavier traffic volumes expected once the proposed dig-out port and Cato Ridge dry port are in operation? AL

How far is the 20-year plan comprising upgrades to road and rail systems, the construction of truck stops, weighbridges and the introduction of

Below The N3 outside Pietermaritzburg

Almost all these developments are planned for the future. There is still debate about a dry port at Cato Ridge, road traffic management is not nearly as sophisticated as it should be considering the available technology, congestion is rife, port efficiencies need improvement, the Navis system continues to give trouble from time to time and is not fully embraced by the logistics sector. Economic times are hard, which makes roll-out much more difficult. I don’t think this is going to improve markedly in the short term. However, commitments to a plan have been made,

and that is better than no plan. Political will requires strengthening, the private sector needs to be brought more actively on board – and must include better consultation – and everything must be focused towards economic growth. Then these things will happen quicker. We are too easily distracted in South Africa. RR In terms of Sanral’s planning, the N2 and N3 corridors will be developed to handle all road-based freight traffic from within the existing and future dig-out port, and other areas within and outside the

KwaZulu-Natal relies on trade and industry and is a major manufacturing hub intent on exporting into Africa

province. This planning is being done jointly with Transnet as part of the SIP 2 project, and is looking at a 30-year horizon, at least. In addition, existing weighbridges are being upgraded and additional ones are being investigated. The Cato Ridge dry port is still under discussion and as indicated previously, the KwaZulu-Natal DoT has commissioned a study for hubs within the province.

How will the establishing of the Dube TradePort as an SEZ benefit the province as well as the transport and logistics industry? AL This all hinges on the attractiveness of the incentives which, to my knowledge, have not been completely finalised yet. Samsung’s investment there is important because it will draw more investment, perhaps in a cluster. In some ways, the attraction of clustering is even more of a draw card than incentives. RR Dube TradePort will attract local and foreign investment. This will help fast-track Dube TradePort’s development and growth, thus boosting the economy of KwaZulu-Natal and creating jobs. Out of this will emanate freight that needs to be taken care of on the various corridors – the critical ones being the N2 and N3.

TWA | Jan/Feb 2015

PORTS

Port of

Durban

As the busiest port in South Africa, Durban is the second largest container port in Africa. Simon Foulds looks at the current state of the port. What makes the Port of Durban an asset to the country? The Port of Durban ranks second in Africa and fifth in the Southern Hemisphere in terms of container throughput. 61% of all container imports and exports in South Africa pass through the Port of Durban. It is strategically placed as the closest South African port to Gauteng, making it the primary gateway to the South Africaâ&#x20AC;&#x2122;s

302 km of rail tracks in the port

58 berths operated

by 20 terminal operators

TWA | Jan/Feb 2015

economic hub. It is also a gateway to the Southern African region and Africa for imports and exports. The Port of Durban is the leading multi-cargo port in the SADC region and the premiere trade gateway between South-South trade, Far East trade, Europe and USA, and East and West Africa regional trade. The Port of Durban occupies a focal point in the transport and logistics chain, with 60% of all South African imports and exports passing through the Port of Durban. Thus, the port assumes a leading role in facilitating economic growth in South Africa. Main trading partners in terms of volume are China, the

EU, the Asian bloc, the Americas and the Middle East, which is driven by oil.

What are the operating hours of the port? The ports operates 24/7, 365 days a year.

What are the ship sizes the port is able to accommodate? The Port of Durban has a promulgated draft of 12.2 m. The entrance channel and harbour mouth have been deepened and widened to accommodate ships of up to 14 m, however not all the berths are able to accommodate ships of this draft. These bigger ships are managed under special tidal conditions.

The Durban harbour

How many and what type of cranes operate at the port? As part of the Transnet Port Terminals expansion programme, Durban Container Terminal: Pier 2 acquired seven new tandem-lift, ship-to-shore cranes and 13 new twin-lift Terex Noell straddle carriers to complement the new cranes and boost the straddle carrier fleet to 41. The new cranes simultaneously handle two 12 m containers or four 6 m containers, and can lift up to a maximum of 80 tonnes, while accommodating new-generation vessels with 24 containers stowed across the deck.

PORTS

21 km distance around the port

4 000 commercial vessels visit the port each year a time, and to provide an additional bunker barge facility to cater for growth in bunker barge operations, has been completed.

Why does Transnet want to expand the Port of Durban? Anticipated future

This improved capability is expected to see a rise in gross crane moves an hour (GCH), from 26 GCH in 2013 to 33 GCH by 2015 – a 27% improvement in productivity. DCT: Pier 2 also launched a world-class rail dual-cycle operation on the container-planning system, Navis. This method allows terminal trucks, straddle carriers and rail-mounted gantries to run loaded at all times. Pilot studies indicated a 50% reduction in turnaround time and improved rail GCH. In March 2014, the first live production run was successfully completed.

What volumes move through the port annually on both the container and break bulk terminals? In 2013: • containers: 2 632 151 TEUs • break bulk: 3 399 278 handled.

How many ships visit the port per annum? Over 4 000 commercial vessels visit annually.

What is the tonnage moving through the port? Around 86 million tonnes of cargo in 2013, with all cargo converted to tonnes.

How many ships can be accommodated at any given time? There are 58 berths, and 40 commercial vessels can be berthed at any given time.

What have been the latest infrastructure developments at the port? The latest development is the new sand hopper, which is to be commissioned in January 2015.

What future expansion plans are in the pipeline to expand the port? During 2013/14, Transnet National Ports Authority completed muchneeded scour protection of the Pier 2 berths. The authority is currently in an EIA process related to the proposed lengthening and deepening of the North Quay berths 203 to 205. The project is still to go to tender. Planning (proposed 2018 to 2022) includes the Phase 2 expansion of Pier 1, known as the Salisbury Island infill. This

will increase container capacity from 700 000 TEUs to around 2.5 million TEUs. The development of the Durban Dig-Out Port (DDOP), which has unfortunately been delayed, is very much part of the port’s long-term plans. The multi-cargo Maydon Wharf Berths 1 to 4 and 13 and 14 are undergoing major reconstruction, which is scheduled to be complete in 2016. The reconstruction of Island View Berth 2 is complete, Berth 5 is being completed while Island View Berth 1 will be the next to undergo reconstruction. Island View Berth 10’s extension of its bunker barge berth to cater for more than one barge at

cargo volumes indicated that the existing Port of Durban will run out of capacity despite the plans for its expansion. The DDOP is an answer to a wider, holistic and complementary plan of investment and infrastructural development. The global shipping industry has seen the advent of a new generation of shipping vessels that are longer, wider and deeper. These ships will require a modern, deep-water port and other facilities. When completed, the port may consist of: • a 16-berth container terminal to handle around 9.5 million TEUs • an automotive terminal • a liquid bulk handling facility • construction of road, rail and other basic port infrastructure. It is envisaged that it will take about 30 years to develop the

Above Durban Container Terminal Right The port’s gantry crane operations are hard at work 365 days a year

TWA | Jan/Feb 2015

PORTS

60%

generated SA revenue

2nd

largest container port in Africa port to its fullest, but a time frame for the DDOP is not available at present we are still finalising the pre-feasibility phase.

What plans are there to improve the feeder systems in and out of the port? The DDOP and a Durban-Gauteng rail corridor are being developed. A road study is being undertaken jointly between Transnet National Ports Authority and the eThekwini Metropolitan Municipality to determine how feeder roads can be improved.

TWA | Jan/Feb 2015

PORTS

The

reefer peak season

South Africa is among the top 10 deciduous fruit exporters in the world and the Cape Town Container Terminal gears up for the peak season every year to ensure efficient service.

IMON FOULDS speaks to Cape Town Terminal’s terminal manager, Brenda Magqwaka to find out how the terminal geared up for this year’s Reefer peak season.

How much deciduous fruit moves through the Cape Town Container Terminals during the peak season? This differ each year. There were 387 551 TEUs containing fruit for the 2013/14 peak season (October 2013 to March 2014). This was an 8% growth compared to the 2012/13 peak season (October 2012 to March 2013), there were 359 730 TEUs in the 2012/12 TEUs containing fruit in the 2012/13 financial year. These TEUs all contained deciduous fruit such as pears, grapes, apricots, nectarines, plums, peaches and apples.

How does Cape Town Container Terminals gear up for the peak season? For this peak season specifically, CTCT has beefed up its operations in preparation for the reefer peak season. The terminal’s straddle carrier fleet will increase from eight to twelve in order to ensure uninterrupted operations on the landslide during the wind-bound conditions. Reefers will be kitted with five straddle carriers while seven will be used to service general purpose containers.

How much planning goes into ensuring you are able to accommodate demand timeously? A

lot of thought goes into the planning. Integrated planning, communication and coordination underpin all of TPT’s efforts in this regard; hence the National Planning Centre exists in order to monitor reefer vessels for improved turnaround time.

When do you start planning for the peak season? Planning for the reefer peak season takes place twice a year, at the end of the season we normally look at how we have performed, and what lessons we learnt post season. During September each year we gather our intelligence for the coming season.

As you state in your release, you have to gear

up differently how does each season differ from the other – in what way – please elaborate? Each

Brenda Maggwaka, terminal manager at the Cape Town Container Terminal

season comes with its own challenges. For each season, all TPT efforts employed are aimed at reducing delays and to make sure that vessel turnaround in good time as the fruits they move are either fresh for consumption, canning or the production for dried fruit. This season, two recently acquired ship-to-shore cranes will facilitate the deployment of seven gangs on the waterside operation, to complement TPT’s reefer season plan.

turnaround time for each vessel? We handle three

How many ships do you load during the reefer season and what is the

reefer vessels per week at an average vessel turnaround time of 24 hours.

What are the main challenges for the Cape Town Container Terminals at this time and how do you ensure these challenges do not affect the through flow of goods and ships? One such challenge is strong winds. As such, reach stacks will be deployed in rubber-tyred gantry crane stacks during windbound conditions.

TWA | Jan/Feb 2015

TRAINING

The human investment Skills shortages continue to bedevil the logistics and supply chain industry, with practitioners reporting shortages of up to 64% in positions that require a bachelor’s degree. By Dr Mario Landman, head of the Institute of Logistics and Supply Chain Management

VEN AT OPERATIONAL level where candidates need either a matric qualification, a diploma or a certificate, companies experienced a 27% shortage in 2013. In South Africa today, the skills shortage is the fourth highest supply chain constraint. This is according to the CSIR’s 10th Annual State of Logistics Survey for South Africa (2013), which reports that the lack of skilled personnel at all levels continues to be a major concern to the performance of supply chain management. It is a challenge that affects virtually every one of South Africa’s key economic drivers. Industries such as mining, manufacturing, retail and farming, for example, would be incapacitated without these skills and services. Every year investment in road, rail, port and airport infrastructure continues to be a high priority with billions of rands invested in various projects in these areas. In 2013, logistics costs were estimated at R423 billion and, as a percentage of transportable GDP, have grown significantly over the last four years, primarily due to fuel increases. Developing efficiencies within end-to-end supply chain integration is now critical for strong financial performance and mitigating the effect of volatile fuel costs. Thus, strategically, investment in logistics and supply chain management skills would be a vital contributor to a profitable bottom line. In such a rapidly developing and changing industry, skilled practitioners need not only the required hard skills (traditionally taught academically) and soft skills, but also the work experience, especially if they want to progress in the industry and use the benefits of such change to their

TWA | Jan/Feb 2015

organisation’s advantage. Soft skills are of such importance to the industry that in surveys conducted by the University of Johannesburg, it was found that practitioners place softer skills, particularly customer-focused management, well ahead of the required hard skills. Students, however, prioritise such skills much further down their lists. This discrepancy could be accounted for by the lack of real-world experience in the industry on the student’s part; it does, however, create a gap between the needs of employers and the skills pool available. Such a gap results in many candidates, despite having degrees, not being fully qualified for a position, particularly as they look to move into more tactical and strategic roles of supply chain management. It is at this juncture that the industry runs the risk of losing skilled candidates to other courses and even careers. While many industry practitioners do recognise the need for more skills and believe further qualifications like a National Diploma or Bachelor of Business Administration degree could help them, very few are able to take these traditional routes through academia due to the financial constraints and those of their working environment. For instance, attending regularly scheduled classes can be difficult for a practitioner with the type of work schedule common in the logistics industry. The traditional distance-learning alternative is also not viable, as this often does not offer suitable support. It is this gap that needs to be filled by more responsive professional certifications, graduate training programmes and vocational associations. While APICS’ Operations Management Body of Knowledge Framework found that the quality of tertiary degrees in the field were on par with other BRICS countries and adequately taught the hard skills, professional certifications and membership of professional associations lagged behind and it is through these institutions that a better understanding of the soft skills could be developed. Indeed, empirical evidence is showing that partnering with education providers is a highly effective route for companies seeking to build their skills capacity and improve their overall performance.

ALCOHOL

Behavioural implications Organisations are required by law to comply with the Occupational Health and Safety Act (OHSA), which speciﬁes a zero tolerance approach to intoxication in the workplace. Employees under the inﬂuence of alcohol are a danger to themselves and their co-workers. By Rhys Evans, director, ALCO-Safe

LCOHOL LOWERS inhibitions, fuels aggression and affects judgement, and in hazardous environments such as mining, manufacturing and construction – where employees need to operate machinery that requires sound judgement – alcohol use is a serious area of concern. Importantly, the ongoing behavioural impact of alcohol use in the workplace can have a negative knock-on effect to health and safety, increasing risk for organisations and their employees alike.

Alcohol affects judgment Employees operating with impaired judgement as a result of alcohol consumption disregard policies put into place for their safety. In the activator-behaviour-consequence model of behaviour, alcohol acts as an activator for undesirable behaviours. They may fail to accurately assess a situation, underestimate the danger involved, and subsequently act in a manner that puts themselves and their fellow workers at risk.

Creating negative feedback loops The consequences can also negatively impact the behaviour of the offender’s colleagues. If nothing negative occurs, the perpetrator may feel that they can continue with such behaviour. Colleagues may also see this and emulate the undesirable behaviour, which further increases the employees’ risk, not to mention the company’s. If someone is injured or even killed, the organisation is liable for damages as well as breaching the OHSA, impacting the morale of workers. For example, an employee who is qualified to lift a certain load with a forklift may feel, under the influence, that they are able to exceed the load limit. Alcohol can create a feeling of bravado. This may cause them to injure themselves or damage equipment. If there is no consequence, it imparts the impression that this type of behaviour is acceptable. A vicious cycle is then created with employees ignoring processes and regulations put into place to ensure their safety.

Damaging the bottom line Undesirable behaviours can also potentially impact the company’s bottom line in a negative fashion. Loss of time and

an overall loss of productivity in the long run can affect a company’s profits and their production abilities. Addressing this challenge will help to ensure that businesses operate effectively and with maximum productivity, which will therefore ensure maximised profitability.

A multifaceted approach is needed Alcohol consumption in the workplace remains a challenge for a number of reasons. Overcoming this challenge requires a combined approach of the right policies, education and equipment to curb alcohol use and abuse in the working environment. Alcohol abuse policies are a crucial first step. These must clearly define and outline an organisation’s zerotolerance approach to alcohol consumption, as well as all of the procedures involved. Policies should define the parameters the company and employees must adhere to in order to ensure compliance with OHSA standards. It is also essential to drive awareness – of the policy, the consequences of breaching it, and the effects of alcohol on behaviour. The behavioural changes affected by the use of alcohol are often not understood, and education can help employees to understand the benefits of abstaining from, or reducing, alcohol consumption. Finally, policies and education should be backed by the use of appropriate technology for testing alcohol consumption. Without the ability to check employees, the policies will be ineffective ctive in changing behaviours. The possibility of random testing can be a significant deterring factor.

In conclusion Changing behaviours requires a combination of policies, education and appropriate technology to ensure that risk can be minimised and OHSA adherence better assured.

TWA | Jan/Feb 2015

AIR CARGO

Air freight

still flying high Global air freight market data for October 2014 shows the strong performance of air cargo is continuing.

CCORDING TO the International Air Transport Association (IATA), demand, measured in freight tonne kilometres (FTK), rose 5.4% in October 2014 compared to October 2013. This outstripped capacity, which grew by 4.4%. Compared to September 2013, demand grew by 0.7% – bringing freight volumes to a new record monthly high. The good results reflect the improvements in world trade and business activity, which have been evident since European summer 2014. World trade is growing steadily, supporting increased air cargo shipments. Regional differentiation in performance, however, is very apparent. Carriers in the Middle East, Africa and AsiaPacific saw demand grow faster than the global trend, while North America, Europe and Latin America grew more slowly. More significantly, however, carriers in all regions except for

“We are now back to levels of demand not seen since the 2010 post recession bounce-back.” Tony Tyler, director general and CEO, IATA Europe improved on their year-to-date performance. Cargo demand for European carriers grew by a weak 1.4% compared to the previous October, reflecting economic uncertainty and the impact of sanctions as a result of the Russia-Ukraine crisis. Tony Tyler, IATA’s director general and CEO, says, “We are now back to levels of demand not seen since the 2010 post-recession bounce-back. But the industry is still in the hot seat and under pressure to improve its value offering. Customer expectations have evolved dramatically. Other modes of cargo have improved their competitiveness. Shippers expect the efficiency of electronic processes that

they experience in almost every other sector. And when shipping specialty products – such as those requiring cold-chain control – they expect end-to-end quality. The industry is investing to build its future by meeting these expectations.” Analysis in detail: • African airlines reported strong growth of 9.6% year-onyear. Regional trade volumes are still volatile, but the improvement in key economies such as South Africa is supporting this improvement. Capacity fell 2.4% • Asia-Pacific carriers reported a 6.7% increase in FTKs, boosted by the release of the iPhone 6, and solid increases in trade and exports from emerging Asian economies. Looking forward, the rate of growth in the Chinese economy continues to slow down, which may impact on air cargo. Capacity grew 5.7% • European airlines improved cargo volumes by 1.4%. The Eurozone economy only just avoided recession in the third quarter. Poor business confidence and the ongoing sanctions against Russia will continue to weigh on European cargo in the months ahead. Capacity expanded 4.4% • North American carriers recorded an increase of 3.1% in October. Growth was slower than the September figure of 5.4%, but the overall trend is showing an acceleration on growth for the year to date (2.7%). Underlying indicators are positive, which bodes well for increased cargo growth in the future. Capacity contracted 1.2% • Middle Eastern carriers once again recorded doubledigit increases, expanding 13.0%. Carriers in the region have diversified, expanding their services in perishables and linking growing markets in Asia and Africa. Capacity expanded 15.8% • Latin American airlines grew FTKs by 4.1% year-on-year. This solid growth reverses the trend from September, when volumes fell 0.7%. Stronger export growth across Latin America is supporting better air cargo performance. Capacity grew 2.3%.

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TWA | Jan/Feb 2015

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