Transport World Africa July/August 2016 by 3S Media

www.transportworldafrica.co.za ENDORSED BY

Intraregional supply chain solutions from producer to consumer

Commercial Vehicles Future of transport

Supply Chain Navigating smart

Corridor Corridors

SADC’s new gateway

FAW Trucks

Moving up the ranks

REAL RESULTS

“Our solution has achieved maximum uptime and produces highly accurate reports.” Grant Fraser Product and marketing director, MiX Telematics Africa ISSN 1684-7946 2013July/August Vol. 11 No.2016 2 / R40.00 ISSN Mar/Apr 1684-7946 Vol. 14incl. No.VAT 4 / R50.00 incl. VAT

Intraregional supply chain solutions from producer to consumer

ON THE COVER FAW Vehicle Manufacturers SA launched its new FAW medium-weight 8.140FL range in May 2015. Now, a mere year later, it is ranked second in the 5 tonne truck segment.

INSIDE REGULARS

FLEET MANAGEMENT

Editor’s Comment Business evolved

Uncovering crime

FESARTA Comment Paying the bond

Tired old story

Techno-safety

Regional News Africa round-up

Industry News Movers and shakers

CORRIDOR

Advertisers' Index

Gateway to SADC

SUPPLY CHAIN

COVER STORY FAW Rapid rise

REAL RESULTS MiX Telematics Customer case study

COMMERCIAL VEHICLES

Navigating smart

Full circle

Top to bottom

FREIGHT RAIL Africa on track

The drive to driverless

AVIATION

Going public

Ready for take-off

MAN with a plan

Value of air cargo

19 22

40 TWA | July/August 2016

EDITOR'S COMMENT

Survival of the

quickest H

ERBERT SPENCER coined the phrase “survival of the fittest”, which originated from Darwinian evolutionary theory as a way of describing the mechanism of natural selection. The survival of the fittest holds true for business today, although it too has evolved into the survival of the quickest – the ones who learn the fastest and those who are able to unlearn. At every level, be it personal, institutional, industrial and maybe even as a country, we’ve got to find a way to fit into the world around us. Those who argue and those who think that South Africa can just carry on in isolation are mistaken. We live in a highly interconnected world in which each player, each country’s delivery, efficiency and creativity are deeply connected to what is happening around them. The search, today, is to find the right-hand side of that equation. It’s the search for the few things that your business does brilliantly, which create the value that others don’t. There are four simple questions that each of us needs to pursue. The first is the context around us – whether it’s daily transactions, how we manage operations or the high-level forces that drive the change around us – we must start with the context around us and understand how it’s shifting. We are in a low-growth environment in which efficiency has become key, but so has innovation – the types of which can change the basic models of a business. It’s about understanding this and about looking at a business from the outside in. One of the dangers with professionals is they tend to look from the inside out. We have a system, we have a way of doing things and we’ve become dominantly thoughtful about delivering on it. But the truth of innovation is that it often starts several steps away from you, with how a product or a service is actually used. To be able to see that, from that angle, is divine, which is sometimes extremely difficult because one is so passionate about their own business and its capabilities. You’ve got to look from the outside in, because that’s where strategies originate from. Strategy is one of the most intriguing drivers of value; if you have a good strategy, it changes everything. If you don’t have a strategy, you drift along and the world will overwhelm you. And, as we all know, the world doesn’t need your permission to change.

TrWistigangill 2

TWA | July/August 2016

Publisher Elizabeth Shorten Editor Tristan Wiggill • tristanw@3smedia.co.za Design consultant Frédérick Danton Contributors Mike Fitzmaurice, Wolfgang Bernhard, Tom Halliwell, Kate Stubbs, Stacey Davidson, Tony Tyler Chief sub-editor Tristan Snijders Sub-editor Morgan Carter Client services & production manager Antois-Leigh Botma Production coordinator Jacqueline Modise Marketing & digital manager 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 Vinny Reddy • vinny@3smedia.co.za t +27 (0)11 233 2600

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www.3smedia.co.za Annual subscription: R300 (incl. VAT) subs@3smedia.co.za ISSN 1684-7946 © Copyright 2016. All rights reserved. All articles herein Transport World Africa are copyrightprotected and may not be reproduced either in whole or in part without the prior written permission of the publisher. The views of the authors do not necessarily reflect those of the publishers or FESARTA.

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FESARTA COMMENT

Paying the bond

FESARTA is working with the International Road Transport Union to simplify and lower the cost of customs bonds, which are currently equal to the duties payable on cargo for each border crossed in Southern Africa. By Mike Fitzmaurice*

YPICALLY, CUSTOMS

clearing and forwarding agents or insurance companies sell these bonds, which act as guarantees or insurance, should the cargo be diverted illegally, or if any other customs transgressions are committed. Having to buy a bond at each and every border crossing adds cost and complexity.

SADC-issued bonds differ somewhat from Comesa and TIR carnets

*Mike Fitzmaurice is the CEO of the Federation of East and Southern African Road Transport Associations.

SADC (the Southern African Development Community) and Comesa (the Common Market for Eastern and Southern Africa) are both trying to set up regional transit management systems (TMSs), which would help with tackling barriers to trade. The two regional economic communities (RECs) will likely need to collaborate on these, especially in light of the proposed Tripartite Free Trade Area. Neither system, however, has been fully implemented despite the implementation of test models. Strikingly, a large number of stakeholders, including border staff, seem unaware of the systems.

Cross-border complexity Both SADC and Comesa comprise a large number of landlocked

TWA | July/August 2016

countries, so externally traded goods often have to cross several borders to reach their final destination. Imports to Zambia, for example, arriving at the Port of Durban in South Africa, have to pass from South Africa through Zimbabwe, or Botswana, to reach their destination. Passing through three or four countries requires acquiring three or four customs bonds. Member states of the two RECs face high transport costs (up to 55% of export costs) in cross-border trade transactions. Since a bond is needed for each customs territory that is crossed, the collective cost of acquiring bonds is substantial and releasing bonds to the intended national authority takes time (from a day to a week or more) – resulting in monies being tied up in the various national bonds. While all studies consulted on the matter refer to the high cost of bonds, no actual costs are provided. In theory, regional transit bonds are single-guarantee bonds (for freight) aimed at reducing border delays and costly procedures, including revenue leakage when different bonds are required at each border crossing. The Comesa TMS is completely based on the TIR – the only universal transit system that allows goods

to transit from a country of origin to a country of destination in sealed load compartments, with customs control recognition along the supply chain. In SADC, there is a slight difference in terms of the issued bonds. In TIR and the Comesa TMS, the carnet – a customs permit allowing a motor vehicle to be taken across a frontier for a limited period – represents the regional single bond, claimable from a local institution in any country as long as it is part of a regional financial pool. On the other hand, the bond in the SADC TMS is claimable only from the local institution where the bondholder buys the bond, where the bondholder resides, or from a designated representative of the bond holder. This potentially increases the time involved in a regional transit operation, since customs authorities will have to wait for the local institution in another country to pay the demanded duties, instead of being able to contact an institution in the same country.

www.fesarta.org

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COVER STORY

Rapid rise FAW Vehicle Manufacturers SA launched its new FAW medium-weight 8.140FL range in May 2015. Now, a mere year later, it is ranked second in the 5 tonne truck segment.

N INTRODUCTION, it was

lauded as the lowest-cost-pertonne vehicle in its category, and today it is one of the most affordable and efficient trucks available in this category. Cheng Zhang, manager: Marketing

and Strategy, FAW Vehicle Manufacturers SA, says the decision to introduce the precision-designed, medium-sized truck range was a very strategic one. “Our decision to introduce a mediumweight truck range was based on customer demand and market opportunity. Our market analysis confirmed the need for a vehicle as durable and rugged as our heavy and extra-heavy trucks, but with smaller dimensions to handle a different working environment,” says Zhang.

The truck is assembled in the world-class Coega plant in Port Elizabeth

TWA | July/August 2016

FAW SA took a strategic decision to redesign and re-engineer the truck to be perfectly suited to local conditions. The FAW team paid special attention to cost efficiency combined with the best possible payload and the best turnaround time, without forgetting FAW’s quality build standards. “The FAW 8.140FL carries all the hallmarks that FAW trucks are renowned for, namely strength, reliability, easy operation and, most importantly, delivering on the promise of a ‘truck built in South Africa, for Africa’,” says Zhang. Imported from parent plants as SKD kits, the cab, chassis, axles and other subassembly components, together with the imported Cummins ISF engine and the ZF

transmission, are all carefully assembled in the Coega-based plant.

Reduced ownership cost In a business environment where total cost of ownership is always top of mind, it has become imperative that the most costeffective combination drivetrain be engineered to deliver the best levels of efficiency and durability. Adding to the innovative technology found in the FAW 8.140FL is the Euro III Cummins ISF 3.8 litre engine. This high-pressure, common rail, four-cylinder in-line engine is from Cummins’ reputable engine range and is ideally suited to the medium-weight truck category. This engine, fitted with a turbocharger, is water- and intercooled. The benefits of this particular engine include exceptional performance, low operating costs, low weight, low noise and low emissions capabilities. The six-speed, synchromesh, manual ZF 6 S 500 TO Ecolite transmission is a great match, taking full advantage of the Cummins powerhouse while adding easy driveability and full driver control. The ZF transmission adds to the mix a long tradition for technological innovation aimed at overcoming commercial vehicle challenges. The torque is a healthy 450 Nm between 1 200 rpm and 2 200 rpm, while a solid output of

COVER STORY

105 kW is on tap at 2 600 rpm. These performance levels make the combination of the Cummins engine and the ZF transmission ideal for weight-sensitive and space-constrained drivetrains. Advanced thermal engineering has made the ISF engine capable of running at higher operating temperatures, reducing the size and cost of the vehicle’s cooling package. The modular architecture of the engine allows for easy access and single-side servicing, reducing operating costs. A waste-gated turbocharger provides excellent performance across the whole rpm range, as well as good response through higher low-end torque. The four-circuit protection valve, full-airbrake system provides the FAW 8.140FL with another advantage, as these are easier

It's an impressive truck, offering a wide range of different applications to maintain than vacuum-hydraulic or airhydraulic braking systems. The braking system includes full ABS. The addition of ABS and an air-cut parking brake on a medium-sized truck is invaluable to the safety of driver, truck and payload.

Many talents The FAW 8.140FL is an impressive truck, offering a wide range of different applications depending on the body configuration. With the FAW drop-side body, this exceptional workhorse can take the punch in general cargo on any metropolitan distribution

The ergonomic cabin of the 8.140FL makes for a comfortable drive

hub. It promises to “thunder ahead of the pack” with ample turnaround and speed times. As a van-bodied vehicle, the FAW 8.140FL will provide a stable and safe conveyor of protected cargo, be it in express deliveries or general distribution. Running as a tautliner unit, the FAW has the manoeuvrability to work in tandem with any application handling palletised loads. As a roll back, this truck is ideal to pick up and carefully transport a passenger car to its destination. When matched with a dry freight or an insulated body, the new FAW truck is a perfect fit for operators such as bakeries and other sensitive goods transportation. Cheng Zhang explains: “One of the reasons for the impressive market share in such a short period has been the FAW 8.140’s proven performance and low operating cost. As a company, we rely on successful partnerships with many other worldclass regions and organisations. We take our partnerships very seriously – be they with customers or suppliers. “Our fundamental vision for this region, using South Africa as a base, is ensuring that the FAW brand becomes a household

ENGINE Capacity 3 760 cm3 Layout & type 4 cylinder in line, water-cooled, turbo charged & intercooled Power 105 kW @ 2 600 rpm Torque 450 Nm @ 1 200 rpm–2 200 rpm

MASS DATA GVM 8 999 kg GCM 14 000 kg Wheelbase 3 860 mm Overall length 6 810 mm Overall width 2 038 mm Overall Height 2 385 mm name across the length and breadth of this continent and, in so doing, we hope to significantly contribute to job creation and the general stimulation of the local and African economies. “The FAW 8.140FL is a ‘true-blooded South African’, built locally and uniquely engineered for the African environment.” Zhang affirms, “When FAW SA launched the 8.140FL truck range, we set the bar high, literally throwing down the gauntlet in this segment. A year on and our market position proves that the FAW brand delivers on its promise.”

www.faw.co.za TWA offers an ideal platform to maximise brand exposure through the publishing of a cover picture and a two-page cover story targeting the right audience. To secure your booking, contact Vinny Reddy +27 (0)11 233 2600 | vinny@3smedia.co.za

TWA | July/August 2016

REGIONAL NEWS

Read more on www.transportworldafrica.co.za

SADC

Member states sign transport agreement

THE TRILATERAL Road Transport agreement between Namibia, Zambia and the Democratic Republic of the Congo was recently signed in Lubumbashi, DRC. These countries, known as the member states of the Walvis Bay-Ndola-Lubumbashi Development Corridor (WBNLDC), now look forward to strengthened economic relations. This agreement, under way since June 2015 and signed in April this year, aims to develop a strong and competitive transport industry to ensure all operators compete successfully for a fair share of the transport market between

The WBCG is elated by the signing of the Walvis Bay-Ndola-Lumbumbashi Development Corridor’s agreement and earnestly awaits its full implementation

the territories of the member states. Signing this agreement ensures improved and a more efficient regulation of the operation and maintenance of transport and databases, permit issuing processes between member states, and control procedures. The Walvis Bay Corridor Group (WBCG) established an office in Zambia in 2005 and in the DRC in 2012 to develop business

along that corridor. The initiation of this contract was derived from an existing bilateral road transport agreement between Namibia and Zambia, which harmonised all road-related matters. At the meeting where the agreement was signed, the technical and permanent secretary committees of the WBNLDC reviewed, deliberated and agreed to establish a permanent secretariat of the WBNLDC by December 2017. Other key, related issues discussed related to customs, transit fees, security, theft and smuggling along the corridor, immigration and healthrelated issues. The African Development Bank is facilitating the running of the secretariat for a period of three years. Through this funding, the interim secretariat of the WBNLDC aims to develop a strategic plan to reduce bottlenecks along the corridor by 50%, establish a permanent secretariat of the WBNLDC, and initiate spatial development initiatives along the corridor. This agreement will further facilitate and regulate the movement of passengers and goods, while promoting their free flow between these countries. In addition, the creation of new state and private sector business development is ensured, making the Trilateral Road Transport Agreement a very lucrative transaction. The meeting of technical officials was attended by the co-chairs of each of the three member states.

SOUTH AFRICA

AARTO could be dire for fleet owners/operators While the motivation for AARTO may be sound, effective implementation is likely to be complex

FOR THE LAST 18 years, the Administrative Adjudication of Road Traffic Offences Act (No. 46 of 1998) (AARTO) points demerit system has been delayed due to various reasons, including a pending

TWA | July/August 2016

feasibility study and assessment of technological requirements. In April 2016, Thabo Tsholetane, COO, Road Traffic Infringement Agency (RTIA), announced at the agency’s provincial road show in Polokwane that the final readiness assessment commissioned by the RTIA had been completed. AARTO legislation caters for a new procedure in the charging of fleet operators, where operators are charged when drivers are

caught committing an infringement. Any infringement for overloading, transporting of dangerous goods, unroadworthiness of a vehicle or infringements where the driver is not legally licensed or does not have a valid professional driving permit will result in an infringement against the operator. When a driver has reached a certain number of points, they will be suspended from driving a company vehicle. A driver’s operating licence can, furthermore, be permanently revoked should they be suspended for a third time. Alta Swanepoel, one of the country’s foremost experts on transport legislation, will give an update on the progress of AARTO and the legislative matters surrounding it during the third annual TruckX Expo. She will specifically focus on the implications that the system may have on fleet operators. TruckX takes place on 2 August 2016 at the Sandton Convention Centre.

REGIONAL NEWS

WEST AFRICA

Mano River Union wins Albert Taylor Award AIR TRAFFIC AND NAVIGATION Services (ATNS) has announced Mano River Union (MRU) as the recipient of the 2016 ATNS Albert Taylor Award. The Sierra Leonean Minister of Transport and Aviation, Leonard Balogun Koroma, received the award from Thabani Myeza, executive: Commercial Services, ATNS, on behalf of the civil aviation authorities of the Gambia, Guinea, Liberia, Sierra Leone and the Roberts Flight Information Region – at an official ceremony held in Freetown, Sierra Leone. According to Myeza, there is marked growth in the aviation sector in Africa. “There is a need for our young, professional aviation population to be trained in the latest aviation technology and safety protocols,” he said. Accepting the award, Koroma said Africa is at a critical stage of development. “Economic development of the continent will be accelerated through the movement of goods and people.” He concluded by stating, “To accomplish this, a safe, reliable and stable aviation industry is a necessity.”

As part of the award, ATNS has partnered with the International Civil Aviation Organization Western and Central African (WACAF) Office to provide a twoweek air traffic control instructors’ course to 10 delegates from the Liberia Civil Aviation Authority (CAA), Guinea Conakry CAA, Sierra Leone, Roberts Flight Information Region and Gambia CAA. The 21st century has seen African states creating an environment conducive to establishing formidable partnerships and cooperation that have become a vehicle for enhancing capacity building within the aviation sector. ATNS believes in cultivating expertise within the aviation space, backed by worldclass learning and supportive initiatives. The award, previously known as the Albert Taylor Scholarship, was established in

The ATNS Aviation Training Academy has a long association with the MRU, dating back to 2001

2008 in honour of Albert Taylor, who – to this day – selflessly contributes his time and energy to the aviation industry in Africa. Past recipients include Nigeria, Ghana and South Sudan.

SOUTH AFRICA

Ratings agency affirms Transnet’s credit worthiness INTERNATIONAL RATINGS agency Standard & Poor’s (S&P) has affirmed its rating for Transnet’s long-term foreign currency at BBBand BBB+ for local currency. S&P said it was optimistic that Transnet’s financial credit metrics would remain in line with the ratings agency’s assessment of the company’s stand-alone credit profile at

BBB+, even as the company executes its R380 billion rolling 10-year infrastructure investment programme in a challenging economic environment. The ratings agency said it believes Transnet would continue to execute its infrastructure investment programme in a prudent manner, taking into account market variations. Furthermore, the ratings agency

said Transnet’s rail, ports and pipeline businesses pose relatively low risk compared with its counterparts in Europe, the Middle East, and North Africa. It added that Transnet’s risk management framework, relationships with financial institutions and ability to tap into unused credit facilities would enable it to meet its commitments.

Transnet has a stand-alone investment grade and raises funds on the strength of its balance sheet

TWA TWA| |July/August May/June 2016

CUSTOMER CASE STUDY

H&M Removals takes safety seriously, with MiX Fleet Manager With over 24 years of experience transporting household and office furniture across South Africa, H&M Removals has gained a reputation as one of the most trusted brands in the furniture removals and self-storage business. The company delivers higher standards of safety by using only premium wrapping and packing materials and custom storage/transportation boxes. In April 2013, H&M Removals took the safety of its customers’ belongings to a new level: The company’s fleet of 35 vehicles needed on-board vehicle telematics to maximise the safety of en-route freight and improve the running costs of day-to-day operations. H&M Removals identified driver behaviour issues as the leading cause of inefficiencies within the company’s fleet and the highest risk to cargo and road safety. Without a complete fleet control solution in place, the company was at risk of drivers using vehicles for personal business, travelling long and late hours and over speeding, which could cost the company extra when it came to maintenance, fuel and traffic fines, and result in non-compliance with the company’s industry-leading safety standards. The company also needed to find a way to track any differences between pumped fuel and used fuel in order to reduce operating costs.

More control, more savings H&M Removal’s fleet controller turned to the Internet to find a way of reducing the risks the company faced, and discovered that MiX Telematics’s track record for delivering measurable results that directly impact driver performance, efficiency standards and total running costs of a fleet spoke directly to the company’s own values. Working through Tectra Telematics, a local MiX Telematics channel partner, H&M Removals chose to roll out a complete fleet management solution based on in-vehicle telematics using a two-phase approach. First, 17 vehicles that regularly travelled long distances received on-board computers, while training on how to configure and use the MiX Telematics web portal was rolled out at the company’s Cape Town, Durban and Johannesburg branches.

www.mixtelematics.co.za

FAST FACTS

Because safety and compliance matter

CUSTOMER

H&M Removals

COUNTRY

South Africa

BUSINESS

Removals, storage and logistics

INDUSTRY

Transport and Distribution

TOTAL FLEET SIZE

CONNECTED VEHICLES

VEHICLE TYPE

Trucks

CUSTOMER SINCE

April 2013

CHANNEL PARTNER

Tectra Telematics

SUBSCRIPTION

MiX Fleet Manager

AIMS

Improve fleet control, reduce operating costs

RESULTS

Reduced fuel consumption, driver scoring up from 85% to 96%, fewer speeding tickets, 100% compliant vehicle utilisation

CUSTOMER’S WEBSITE

www.hmremovals.co.za

Working directly with MiX Telematics and Tectra Telematics, the fleet manager learnt how the new system could track driver scoring, fuel consumption and speeding, along with how to perform a comprehensive range of other fleet management functions such as costing of parts and maintenance, and reporting and maintenance management. The second phase saw installation on the remaining vehicles in the fleet. Today, H&M Removals operates a complete MiX Fleet Manager solution comprising of the FM Communicator on-board computers and real-time vehicle tracking units.

RESULTS Control and awareness changes behaviour The MiX Telematics solution has enabled H&M Removals to design and implement a comprehensive driver performance management system that, with corrective training, has improved the average driver ratings from 85% to 96%. The company reports that by making drivers aware of the companyâ&#x20AC;&#x2122;s unique safety standards, they have reduced the risk of accidents across the fleet. Over-speeding warnings and excessive idling notifications, combined with other driver behaviour monitoring parameters, have further helped H&M Removals to reduce day-to-day fuel consumption, going from an average of 2.4 km/l to 2.7 km/l. This, combined with greater control over used versus pumped fuel using measured fuel reports, has contributed to significant savings. Since the solution combines driver scoring, detailed event logging and after-hour vehicle tracking into a single, automated report, the company has also been able to exercise greater fleet management control without requiring additional fleet controllers or resources. Today, H&M Removals also relies on the system to help manage driver licences, PDP and COF, and continues to receive support from MiX Telematics and Tectra Telematics.

Corrective training & education

Driver behaviour monitoring

Customised driver performance management system Driver Ratings

Fuel Consumption

Reduced risk of accidents

Savings on fuel spend

11%

12%

The MiX Telematics Fleet Manager solution has, since 2013, achieved maximum uptime and produces highly accurate reports in terms of logging and live tracking. Weâ&#x20AC;&#x2122;ve only experienced outstanding performance, with no challenges detected during the rollout of the system. We will continue to rely on MiX Telematics for our fleet management needs into the future. Angela Julies, Fleet Controller

About MiX Telematics MiX Telematics is a leading global provider of fleet and mobile asset management solutions delivered as Software-as-a-Service, or SaaS, to customers in over 120 countries. The companyâ&#x20AC;&#x2122;s products and services provide enterprise fleets, small fleets and consumers with solutions for safety, efficiency and security.

About Tectra Telematics Tectra Telematics is a South Africa-based MiX Telematics channel partner, specialising in web-hosted management and tracking solutions for vehicle fleets, material handling equipment, construction plant and high reach access equipment. The company was formed in 1999 and operates throughout South Africa, with offices in Cape Town and Johannesburg.

COMMERCIAL VEHICLES

The drive to driverless

Dr Wolfgang Bernhard* shares some thoughts on the future of the transport industry.

HERE ARE JUST a few weeks until the IAA in Hannover. For our industry, it’s an important event that comes around every two years. It is especially important this year, however, because the commercial truck industry seldom faces such great challenges – and opportunities – as it does today.

Hands-off What priorities should the truck industry and policy now set? I’ll begin with the first technology revolution: autonomous driving. I’ll admit, at Daimler Trucks, we’re more than a little proud that we’ve blazed the trail for this technology in trucks. We recognised early on that this technology is ideal for our industry. We developed the Highway Pilot self-driving feature and – in 2014, with our Mercedes-Benz Future Truck – introduced the first-ever autonomous truck. And this past March, less than two years later, we put a platoon of autonomous trucks on the A52 autobahn. We are absolutely convinced this technology has tremendous potential. In the meantime, so are others: a leading consulting firm recently stated, in a study,

TWA | July/August 2016

that autonomous driving could reduce the number of truck accidents by about 90%. In Silicon Valley, the first start-ups have now discovered autonomous trucks. One tends to believe in the principle that Silicon Valley spawns innovative ideas before the rest of the world. But, in this case, a brandnew start-up in San Francisco is behind 130-year-old Daimler in Germany. So, we have an advantage – and, therefore, we need to keep up our fast pace, with both the technology and legal framework. We have to adapt our 20th century regulations to the 21st century. And we can’t allow ourselves to get bogged down. Before we can answer every question about autonomous driving, we must first allow partially autonomous driving. We have to allow the driver to take his or her hands off the wheel. This time last year, I called for politics to incorporate the revised Vienna Convention into German law. That has since happened – and it’s a good start. Yet, at a speed above 10 km/h, the EU-directive ECE R79 still prohibits the driver to take his or her hands off the steering wheel. There are also still no certification or regulations for the autopilot function in a truck. Our industry

has made valid arguments to change that. Otherwise, partially autonomous trucks will be ready for the market but not allowed on European roads.

Connected That brings me to my second topic: connectivity. We all know that “connectivity”, “industry 4.0” and the “internet of things” have become buzzwords, with everybody talking about them. Experts expect another 1.5 billion things to go online this year alone. So, 3 000 things are being added every minute. It’s open to discussion whether or not it makes sense to have a running shoe or toothbrush connected to the internet, but what is clear is this: a connected truck will bring real added value – first, and foremost, for our customers and drivers, but also for the logistics system as a whole, for the environment and for society. And we have yet to fully assess the extent of that value. When we connect the truck to the cloud, it can exchange real-time information with all participants involved in transport: with freight companies and freight terminals, with the infrastructure and other vehicles, with truck manufacturers, repair facilities, and many others. The connected truck can also solve numerous problems faced by freight companies and drivers today, such as long wait times at loading and unloading stations, empty deadhead runs and traffic jams. At Daimler Trucks, we’re not new to connectivity – it has been incorporated into our strategy for many years. We want to move our industry forward. And to do so, we do not need billions of euros in subsidies. There is, however, one thing we need for connected trucks: a seamless mobile network along the autobahn. This is not about a new super network. For most applications,

COMMERCIAL VEHICLES Daimler Trucks drove the first autonomous truck on public roads in Nevada, USA

3G is sufficient – for the rest, LTE works fine. The problem is not the technology – it is availability. One study recently showed that LTE coverage in Germany is no better than in Morocco. We should not have to ask cellular service providers to do something about it, because it is in their own best interest to act. By doing so, they don’t just make the truck industry happy. Such developments would positively benefit all drivers – their customers – who want good phone service.

Electrification On to my third technology topic: electric mobility. There’s good news here. Electric drive in trucks has not been a consideration for a long while. But things are starting to change because battery technology is making great strides: from 1997 to 2025, battery costs are forecasted to drop by 60%. During the same period, battery performance is expected to improve by 250%. Granted, that’s never enough for longhaul transport. But the use of emission-free trucks for local distribution is conceivable in just a few years’ time. That means we can noticeably improve quality of life. And we aim to do so. That’s why we’re running a pilot programme with customers in Stuttgart using five electric trucks from our FUSO brand. It’s likely these trucks will be considered and subsidised under the new electric-mobility law. Of course, that would make us very happy. What also makes me happy in the realm of electric driving is that we will soon have more news for you. Unfortunately, I can’t divulge much more than this! Let me summarise what has been said so far: our industry is experiencing a revolution, spearheaded by autonomous driving,

Our industry is experiencing a revolution – spearheaded by autonomous, connected and electric driving connected driving, and electric driving; a revolution through which truck transport will become even safer, more efficient and cleaner. And that, ladies and gentlemen, is good for all: the economy, society and the environment. I stress this because our industry is frequently blamed for doing too little for the environment. Some people even claim we haven’t done anything at all in the past 20 years. I state very clearly: that accusation is false – and it does not become true by repetition.

Reduction

50%. We rolled out both Euro V and Euro VI early before those emission regulations were in effect by law. These facts show very clearly that we have achieved a lot. Why? Because there are strong market forces working towards efficient trucks. Fuel consumption is a highcost factor for our customers and one of our best sales pitches to customers is best-inclass fuel efficiency. Among all manufacturers, there is fierce competition to further improve the internal combustion engine. Competition for new drive technologies is equally fierce. In a market-driven manner, our industry has already done a lot

Many of you regularly test our trucks yourselves and know the facts: in the past 50 years, our industry has reduced fuel consumption and CO2 emissions by 60% per tonne-kilometre. We’ve reduced the fuel consumption of our Mercedes-Benz Actros alone by 15% since 2011. At the same time, we’ve reduced nitrous oxides by more than 80% and particulates by more than Concerted efforts to reduce CO2 emmissions in the transport sector continue to pay off

TWA | July/August 2016

COMMERCIAL VEHICLES for the environment, and we will do more. We’re making concrete proposals on how we can significantly reduce fuel consumption and CO2 emissions – in a way that also aligns with market forces and demand. Therefore, we would not add costs to the truck transport, increase consumer prices, or jeopardise the competitiveness of the European economy. I am talking about an integrated approach. The European truck industry introduced this concept in 2014. In essence, it’s about making use of all opportunities. We have to look at the entire truck system. If we want to reach the CO2 emission targets set by the EU, we need to look at all seven levers that are available: tractor, trailer, tyres, fuel, operations, infrastructure and fleet renewal. This would reduce CO2 emissions by 20% by 2020. At Daimler Trucks, we’ve proven this integrated approach works in practice. In 2015, in our Efficiency Run field test, we equipped a truck with the relevant components: lowrolling-resistance tyres, aerodynamic attachments, and predictive powertrain control.

This fuel and CO2 emissions-optimised truck saved 12% to 14%. The long combination vehicle even achieved 17%. We’re continuing to build on that test right now. We want to put into practice what we tested in 2015, making it robust and affordable. Regarding the long combination vehicle, the results of our Efficiency Run are so convincing we should definitely implement them and take advantage of those efficiency gains. Regulations should allow for long combination vehicles across the EU – and across our borders. A long combination vehicle must be able to cover long distances, where you can realise its full benefit. As an example: one cannot drive a long combination vehicle from the Netherlands to Lower Saxony – although both of them allow it. You have to uncouple the vehicle ahead of the border and allocate the cargo to two vehicles. To do this, one also

needs appropriate truck stops ahead of the border and behind it for reassembling the long combination vehicle. It’s a waste of time and money.

Conclusion We need to take an integrated approach. We must look at the overall truck system and take advantage of all the opportunities for more fuel efficiency there. We can then immediately achieve a lot in fuel consumption and CO2 emissions. In autonomous driving, we have to keep up our pace – especially with our legal framework. The networked truck, with its real-time data, opens up completely new possibilities. And to do so all, we need is seamless mobile phone reception. Electric and emission-free driving can be a reality in a few years. But even that is not a foregone conclusion – it still needs pioneers. *Dr Wolfgang Bernhard is a member of the board of management of Daimler AG, Daimler Trucks & Buses.

TWA | July/August 2016

WAREHOUSE AVAILABILITY 3 Modern Units for immediate lease

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24 hour on site security 12 minutes drive from Uitenhage Industrial area 20 minutes drive from PE and Coega harbours Large paved yard surrounding the units

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Going public CEO of the RFA Sharmini Naidoo succinctly described the challenges faced by the road transport sector, reports TWA.

PENING THE association’s annual convention at the Legend Golf & Safari Resort in Limpopo, Naidoo said the RFA (Road Freight Association) was extremely pleased that the Minister of Transport, Dipuo Peters, accepted the RFA’s invitation to address delegates at this year’s event. Naidoo said excessive taxes, unnecessary tariffs, exorbitant fees and fines, truck bans, the reintroduction of the permit system, congestion taxes, emission taxes linked to licensing renewals in addition to carbon taxes on fuel, rising costs, uncertainty about the wage agreement, threats of another downgrade, tighter budgets, more expensive financing, less investment in South Africa and dwindling profit margins were all impacting the industry. “The draft of the BBBEE Codes for the road freight industry has been published for comment and is of critical importance. Operators could see themselves in severe difficulties if measures to meet targets are not taken, particularly in terms of ownership

and preferential procurement. Once implemented, your BBBEE scoring will also impact your customers rating,” she added. Naidoo provided context to the transport industry, saying that 1 450 million tonnes of bulk commodities were moved by trucks in 2015 in South Africa. She explained that 20 million tonnes were moved due to a lack of rail services. “130 000 people are employed and registered with the National Bargaining Council. The trucking industry makes a contribution of roughly 7% - 8% of the country’s GDP in deliveries by operators transporting for gain, financing from banks and fuel purchases, all of which amounts to a staggering R130 billion. This is the contribution made by the trucking industry to the South African economy,” she stated.

Undue discrimination Despite the impressive figures, she said the industry was not acknowledged for its contribution and true worth. “Instead, steps are being taken to remove trucks from the road. Policy statements to shift freight from road to rail have found their way to the draft National Freight Logistics Strategy and the Green Transport Strategy, and artificial measures to make road freight less attractive and more expensive are on the cards.” She added that penalising the industry was an injustice. “It has taken many years for the industry to fine tune its processes, not to mention the investment it has made in

The transport industry was keen to hear what government has in store for the sector

the latest technologies to deliver quick and efficient services to its customers.” Naidoo said that truck accidents contributed 4.8% of the total number of accidents over the December holidays, but conceded that they have a much bigger impact. “Truck accidents most often claim lives, create major backlogs and inefficiency on our roads and impact both operators and other road users. Every new truck accident reported further damages the credibility of the trucking industry. “It doesn’t matter if you’re an operator that plays by the rules, trains its drivers or regularly maintains its fleet; you are seen as just another unscrupulous trucker that skims profits, exploits drivers and disregards the rules of the road. The introduction of AARTO is seen as a way to curb all of this,” she said. Naidoo added that the 2016 convention had been specially structured to address these issues. “I urge you to participate fully in all the discussions, as your views will feed into our future lobbying strategies. It’s worth remembering and acknowledging that the trucking industry delivers every item on the shelves of every shopping centre. Your food, clothes, and even your tablet and iPhone are delivered by truck. Ladies and gentlemen, without trucks, South Africa stops,” she concluded.

“Policy statements to shift freight from road to rail have found their way to the draft National Freight Logistics Strategy and the Green Transport Strategy.”

TWA | July/August 2016

COMMERCIAL VEHICLES

with a plan

Markus Geyer has, since May, held the position of managing director of MAN Truck and Bus South Africa, which is now headquartered in Johannesburg.

Markus Geyer (above), new MD of MAN Truck and Bus South Africa, provides insights into the company's global position and strategy.

EYER HAS worked on and off for MAN for the last 14 years, and has served on the board as a non-executive director. He has also been involved in sales in the Middle-East and Africa region. “I’m really excited to be here,” he says. “Everything is not new to me, although there are still a lot of things for me to learn. But I’m really excited, as is my family, to move out here.” Giving an update from a global perspective, Geyer says the MAN Truck & Bus Group, located in Munich, had not changed much in structure. The holding company is still MAN SC, which oversees the two company pillars: MAN Truck and Bus in Munich and MAN Latin America in Brazil.

MAN is, of course, 100% part of the Volkswagen Group. A Volkswagen Truck and Bus holding has also been created, headed by Andreas Renschler, which incorporates MAN Truck and Bus, Scania as well as MAN Latin America – making it a very large commercial vehicle undertaking.

“We needed that kind of synergy in our business in order to create economies of scale and to achieve the global footprint,” Geyer explains. “These synergies will continue, be it on the purchasing side or on the R&D side,” he adds. MAN remains a leading commercial vehicle supplier in Europe and in many other parts of the world. It currently has a truck range from 7.5 tonnes to 44 tonnes, and there are plans to expand this with a MAN van. “I think you will see more at the IAA this year,” he teases. The van launch – in Europe – is likely set for 2017, with the company considering introducing that product range in various European markets, as well as South Africa. MAN Truck & Bus AG appointed a new CEO, Joachim Drees, in March last year. Drees has worked closely with Renschler in the past. “I think the board is now complete; it is stable and we feel very confident working with them. From Mr Drees, we see some very nice strategic initiatives taking shape and being effected,” opines Geyer. “Our corporate values remain unchanged: reliability, dynamism, innovation and openness. These are what we are trying to achieve every day in our work, and in our interactions with our business partners and our customers.”

Upping the PACE Drees has already launched a new strategy for MAN Truck and Bus, called the Future Line, which consists of three elements: PACE 2017, greater market and product focus, and an extended business model that takes longer-term views. “PACE 2017 is what we want to achieve. We have to reinvent ourselves all the time. The markets and our competitors

MAN has excelled in German quality audits

TWA | July/August 2016

FLEET MANAGEMENT COMMERCIAL VEHICLES are moving. We have to raise our game all the time. “We have to do things more efficiently, be more customer-focused, more flexible and faster. This is what we want to achieve with PACE 2017,” explains Geyer. The initiative should be finished by the end of this year, which means that, in 2017, MAN should be able to enjoy the fruits of its labours. “The next step involves introducing new trucks and buses, and also the van, to enlarge our product range. There are significant numbers in the van segment and it’s a lucrative segment as well,” he adds. He says that MAN will complete the above, step by step, market by market. It will focus on selected markets around the world, including South Africa. “We believe South Africa has a good future. While there are one or two challenges right now, this country has a lot of potential and can become a hub for other business in Africa,” he says. “We believe in South Africa. Moving into this fantastic building is a statement that says we are not hesitating, that we are not going to move out, that we are not divesting. No, we are here to stay; we believe in South Africa, and this is shared by the board in Munich, which is always good news,” he confirms. In terms of the new business model, he says this stems from a changing environment, which includes connectivity, car sharing, and mobility solutions, not just on the car side. “We strongly believe this will be a new reality. The first steps were seen with the introduction of telematics and the professional use of that data a few years ago. I think that is only the very beginning of what we are going to see, especially in the car industry, but also in the truck industry. We also believe that, in the future, selling a bus or truck is not going to create that much value. “I think value is rather going to be

MAN's new headquarters in Modderfontein, Johannesburg

increasingly defined by the services that we and our competitors provide, in addition to the hardware,” Geyer explains. “We have decided that this is going to be the long-term future and that we must be a major player in it. Being part of the Volkswagen Group provides resources like autonomous driving and connectivity,” Meyer states. MAN has essentially ceased production of buses in Germany, shifting these hubs to Poland and Turkey. “That is working fantastically and I understand the quality levels are right up where they should be. Those two countries are more cost-competitive in bus production because a lot of labour goes in. Lots of manual work is required and Germany is a high-wage country.” The company’s German, Polish and Austrian production plants are important to South Africa, as these are potentially where special vehicles come from or where smaller vehicles like the TGL and TGM could

originate. The sister company in Brazil, with a plant in Resende, is where Volkswagen product is sourced from. “MAN is changing as we penetrate more markets,” Geyer says. “What we saw in 2014/15 in Europe is a robust market. There has been good growth in the market.” Order intake in Europe was up 9%, with truck sales up 7% and bus sales up an incredible 21%, while the company’s turnover also increased by 7%. “You can see the first effects of the PACE programme in terms of our efficiency. Operating profit improved, although it is not near where it should be. But, we are definitely on the right track. Also, keep in mind that we get some other extra costs in here for restructuring and so on,” Geyer explains. More than half (56%) of the company’s turnover comes from truck sales, followed by after sales, which, Geyer says, is gaining in importance in terms of turnover, profitability and customer retention. The bus business contributes 12%, with Top Used – MAN’s used vehicles division – adding another 7% to turnover. Geyer explains that MAN defined its brand profile a few years ago, with the three major core elements being efficiency, customer proximity and product enthusiasm. Efficiency is derived from the company’s efficient line of tools, its product lines and its telematics.

The Volkswagen range is sourced from Brazil

TWA | July/August 2016

FLEET MANAGEMENT

Crime watch

South African companies lose billions of rands each year to cargo theft. Understanding risks can help fleet owners take proactive measures to keep in-transit cargo secure.

HINK ABOUT TRUCKS in transit, and one of the first things that comes to mind is the safety of the cargo. Securing a load remains a key challenge for fleet operators in light of ongoing theft and hijackings. This is especially true since criminals are using increasingly sophisticated tactics to steal goods. When targeting high-value loads, criminals are adept at obtaining insider information about the types of products being transported and the routes travelled. Compounding the cargo theft problem are cases that have involved collusion by employees of transport companies. The national crime statistics show a 30% increase in cargo-truck hijackings in 2015. Criminals are not just stealing high-valued goods like pharmaceuticals and luxury items; they are also targeting products of lesser value, like clothing. Of all the hijackings in 2015, 17% occurred on shipments valued at less than R300 000, up from the 12% of such thefts in 2014. According to Hein Jordt, MD of Ctrack Fleet Management Solutions, vehicle tracking companies need to continuously invest in research to stay ahead of the latest modus operandi of criminals. “While companies continue to improve their methods to prevent cargo thefts, the older countermeasures just aren’t that effective

TWA | July/August 2016

anymore. Each day, criminals are getting better and better at their jobs. This calls for massive, cooperative action between fleet owners, vehicle tracking companies and law enforcement agencies,” he says. “The best security protocols include several layers of protection – from GPS solutions to better prepared drivers, to more structured, less risky routes. With the right strategies in place, all the different parties can work together to ensure cargo gets from A to B fully intact,” concluded Jordt.

Big brother The Ctrack Integrated Camera Solution allows for corroborating details of an incident – such as a hijacking – accurately to

track or give a trusted account, recordings, and snapshots of the interval before, during and after the incident. It consists of up to four cameras that can be mounted forward-facing, facing towards the driver and with views from the inside front and back of the truck. This enables critical surveillance and remote monitoring that’s ideal for most fleet operations. The mobile video recording system consists of real-time video monitoring, snapshot and video remote search and download, voice capabilities and multiscreen reporting. To ensure complete operational efficiency, the footage is automatically downloaded to the media device recorder via Wi-Fi once the vehicle enters the client’s depot.

Theft prevention tips •K eep moving. The longer a loaded trailer or container sits unattended, the higher the risk for theft. Make sure drivers are clear on trip planning. This includes identifying fuel stops, locations to layover and safe, monitored rest stops. •U se trailer tracking devices. A tracking device allows you to identify when a truck or trailer goes significantly off its route or leaves a designated area. These devices alert dispatch and allow you to communicate the position of the vehicle. •P ick-up and delivery protocols. Make sure that drivers are always properly identified and that they know exactly where they need to deliver their loads. They also need to see proper identification for personnel and make sure they are unloading in the correct location. •D o the basics. Train drivers to be aware of their surroundings and to stay alert while driving or stopping to rest. Educate them on hijacking hotspots and highrisk areas. •U se vehicle security cameras. With new advancements in data storage and WiFi, mobile video surveillance is now more accessible than ever to small and large fleet operators alike. These surveillance cameras can corroborate.

FLEET MANAGEMENT

Tired old story Tom Halliwell* provides an eye-opening assessment of driver fatigue in the transport industry today.

E ALL KNOW driver fatigue is a problem. When there is an accident out there, the drivers always shift the blame; someone else pushed them off the road, or there was an animal in the road. Drivers don’t believe fatigue causes accidents – you can’t blame them, considering their jobs are on the line. In the transport business, operators and owners face numerous big risks that are uninsurable. It is up to you to get your risk management policy in line and navigate your way through economic meltdown, varying weather conditions, draughts, the political climate and competition. The good news is that you can transfer the risk to your insurance company. You take the risks out of your business and give it to someone else. The other good news is that good risk management reduces the cost of insurance and fits more easily into your cash flow. Your claims will ultimately dictate the cost of the insurance. Therefore, it is very important that you understand your specific risk profile. It will differ from one to another.

Claims and causality In this industry, 77% of insurance claims are for vehicles and cargo damage, 9% for theft and hijacking, 7% for damage of third-party property, 4% for fire and 3% for smaller claims. From the video footage and data we have, we know that 35% of all damage to heavy goods vehicles is

caused by fatigue, with reckless driving accounting for another 20%, speeding for 18%, texting for 15% and the rest being third-party causes. Since introducing video footage, we can clearly see there is a big difference in the scale of incidents when drivers fall asleep without wearing a safety belt, compared to when they do wear them and fall asleep. Without safety belts on, the accidents are disastrous – in many cases, resulting in total vehicle and load write-offs. But, in cases where drivers use seatbelts and fall into micro sleep, they often wake up in their seats and are able to grab the steering wheel. Often, the truck is still facing forward, with the driver trying their utmost to keep it on its wheels. This limits the damage and helps keep the cargo on board. High average mileage leads to fatigue, and every driver is fatigue prone at night. Operators might tell their drivers to rest from 23:00 to 04:00, but they often violate those rules and just keep driving. It is also hard to focus when overspeeding; it is demanding. Driving 110 km/h to 115 km/h with loads on the trailer tends to tire out drivers. Texting doesn’t really lead to fatigue, but it doesn’t allow drivers to focus. And passengers on board are a distraction. Sometimes, high accident rates and fatigue are related to

salary structures. If you underpay drivers, they have to work harder to earn more money. They will use your assets to subsidise their income, which leads to fatigue.

Case study We had a case where a transporter incurred R17 million in vehicle and cargo claims in the space of 14 months, in a fleet of over 90 vehicles. So, we collected all the claim forms to establish the times and locations of the accidents, and what cargo was being carried. We learnt that new drivers were being paid far less than the more senior drivers. Subsequently, all major accidents were made by the new drivers and the majority were exceeding the company’s speed limit policy and were pushing the kilometres, violating the company’s policy on drive times. The new drivers averaged between 17 000 km and over 19 000 km a month, and they all had single vehicle accidents. We decided to implement a risk management programme that included strict rules for overspeeding and the grounding of vehicles during certain times in the evening. All vehicles were fitted with advanced 24/7 monitoring systems so that we could tell the employer when drivers transgressed. The salary structure was changed for new drivers and he upgraded his employment process and the results now speak for themselves.

*Tom Halliwell is the CEO of insurance specialists Libra Brokers.

TWA | July/August 2016

FLEET MANAGEMENT

y t e f a s o n h c e T

h e u s e of t h it W . p ra ets a bad Wiggill. g n a a t ic r is f r T A s th e case, writ ety in Sou f e a h s t r e e b iv r ’t dn Truck-d drivers could get, say, a 15% reward over s, this nee ie g lo o n h c and above their commission for good drivvarious te

ANY OF THE accidents we see on a daily basis are preventable. While it is easy to point the finger at drivers, they cannot assume sole responsibility. Corporates and business owners must make use of all the tools at their disposal to help prevent road fatalities. Businesses using or operating a fleet of heavy vehicles are expected to have the necessary insurance and take appropriate measures to ensure their vehicles are roadworthy and maintained. Drivers must also be given the necessary attention to ensure their personal well-being and ability to function behind the wheel is catered to. Incorporating technology to assist drivers and fleet managers to reduce their risks on the road is smart and an excellent way of promoting your business as a responsible entity. But, it needs to go further than that, starting with appropriate driver selection. “Driver selection is key,” says Cormac Gilligan, senior director: HSE, Pepsico. “You need to identify their basic capabilities, which can be done with simulators as a prerecruitment assessment tool. Simulators can be used for the assessment and selection of new drivers and in providing training and performance validation for employees.” The driver selection process needs to be followed up with defensive driver training, driving behaviour monitoring, and unannounced road audits. “There should also be a working driving complaints number and continuous behind-the-wheel coaching as

the main issue is modifying driver behaviour. In our experience, behind-the-wheel coaching is the most effective method of training,” continues Gilligan. There are local initiatives and projects on the go to assist truck drivers in their day-to-day commutes. In Pietermaritzburg, the KwaZulu-Natal Department of Transport recently launched a 3D truck driving simulator set to improve the skill of truck drivers. Drivers are required to complete a series of e-learning sessions online, followed by truck driving simulations, which take place in a kitted-out caravan.

“Regular feedback needs to be given to drivers, as technology alone is not enough.” The caravan has a computer monitor that displays challenges and obstacles likely to be faced by drivers, including heavy traffic, pedestrians and volatile weather conditions. For added realism, the seat of the caravan is hydraulically operated, to mimic the inertia felt by drivers in the real world. Driver monitoring technology can provide invaluable information for incident investigation. In case of incidents, a driving behaviour chart can be downloaded that indicates actual driver behaviour before and at the time of incidents. “The number of violations accrued, per 1 000 km driven, can be categorised into first- and second-degree offences and linked to driver commission structures. Excellent

ing. A progressively severe reduction of commission based on the nature and regularity of violations could be used,” he suggests. Regular feedback needs to be given to drivers, as technology alone is not enough. “We know what technology can deliver and how it is being used to improve driver behaviour. Transport and logistics industries are very sensitive to the bottom line and drivers are a valuable asset. This is why we require accurate, reliable information from in-vehicle monitoring systems (IVMS),” says Ashok Kulkarni, manager: Downstream Road Safety, Shell. “Businesses need to adopt a risk-based approach to road safety, which includes the driver, vehicle and road,” he adds. Last year, MiX Telematics, together with Manspec Selection and Development Services, began developing a mobile application that tests driver fatigue. Drivers are expected to complete a test on the app before getting behind the wheel. If the driver should fail, a supervisor is alerted so that an alternative decision on how to progress can be made. Technology can also produce risk reports – green, amber and red can indicate a driver’s risk profile. Drivers today are faced with many distractions: phones, other passengers, the radio, two-way radios and more. Apart from keeping an eye on drivers, technology can make fleet administration easier by capturing the number of hours driven, tracking document servicing and licensing requirements, planning journeys and even helping to choose suitable vehicles for certain environments. TWA | July/August 2016

CORRIDOR

HE GROUP CONSISTS of the Namibian Transport Association, Air Namibia, the ministries of Finance, Home Affairs, Trade and Industry, and Works and Transport, the Roads Authority, Container Liner Operators Forum, the Namibian Logistics Association, the Chamber of Commerce, Port Users Association and the largest stakeholder, Namport, which runs the port of Walvis Bay. Namport CEO Bisey Uirab is chairman of the WBCG board. Associated members are based in South Africa, Zambia, the DRC and Brazil, and there are associate freight forwarders and transporters, as well as companies and individuals wanting to increase their knowledge of SADC. Focus areas include Namibia, Angola, Zambia, the southern DRC, Malawi, Zimbabwe, Botswana and South Africa. Forming a PPP was a challenge for the WBCG, as it had to be started from scratch, without any precedents to compare itself to. Neighbouring countries weren’t too excited about the PPP and the world had limited knowledge of Namibia and what it could offer. Few knew

what its infrastructure was capable of or what solutions it could offer, and it took 15 years to convince the shipping lines to buy into the concept. The WBCG first registered as a section 21 company and then focused on the corridors. It started by looking at landlocked countries to see how it could better serve them as an alternative – not to take business away from South Africa, but to be an alternative solution. In so doing, it became, in a sense, a marketing arm of the Namibian government.

Masterplan In 1990, the WBCG started with its first transport masterplan, which stated that it wanted road linkages to its neighbours as well as the creation of road, rail, air and port institutions. By 2000, it had formalised its sector by creating awareness. It started travelling to different countries, not just within

Africa, but also abroad, in a campaign to educate people on what its vision and dreams were, explaining the attraction of Walvis Bay. It extended its rail line to Angola’s border, which was the best move it could’ve made, as a lot of coal had to be railed into that country. It formed partnerships with its neighbours and concluded memorandums of agreements. It then initiated the secretariats on the two transport corridors. The WBCG had to create market presence, ensure good service delivery and learn business culture. It had to formalise Namibia as a unified group, which is why the PPP was so important. It had the ports, the customers, the rail and the logistics but everybody needed to sit around a table and work collectively. The WBCG’s core service is development, with a development manager responsible for South Africa, Botswana and Zimbabwe. There are regional offices, too, to help the WBCG understand the cultures, business ethics and process flows within different states. A core focus is trade facilitation and

Gateway

into SADC

The Walvis Bay Corridor Group (WBCG), a private-public partnership, aims to create a regional logistics hub in Namibia. By Tristan Wiggill

TWA | July/August 2016

CORRIDOR

MAP 1 Namibia is on a drive to become the destination of choice for the SADC region

Travel time Travel time through the port of Walvis Bay takes, on average: •2 days to Botswana or South Africa • 3 to 4 days to Zambia or Zimbabwe •3 to 5 days to Angola •5 to 6 days to the DRC or Malawi. In instances of congestion, whoever runs the committee on the secretariat with the affected corridor is called to sort it out. They physically go there and address the issues. infrastructure development, and the WBCG works closely with the Namibian government in terms of ports, roads and rail development.

Logistics hub The WBCG wants Walvis Bay to be seen as a logistics hub for Southern Africa and the Namibian government has invested a great deal of funds into promoting Walvis Bay as a gateway into SADC, expanding the Walvis Bay port and linking its corridors to Angola, the DRC, Zambia, Zimbabwe, Botswana, Malawi and South Africa. Its vision is to be the gateway port into SADC. The group has common PPP objectives where everybody agrees on the vision. Decisions are made collectively; one person does not head up the whole initiative. The WBCG has the passion and the desire to create the logistics hub and gateway ports into Africa. The PPP has been exceptionally successful in terms of collectively deciding on a strategy, putting it in place, implementing it and measuring it. Its first initiative was to develop the Walvis Bay port, which it started in 2014 and which should be complete by end 2017, when it will be able to handle 1 000 000 TEUs per annum. In 2000,

this figure stood at 20 000 TEUs, growing to 377 000 by 2012 and is, at the moment, in excess of 700 000 TEUs. The new container terminal was funded by the Namibian government at a cost of N$3 billion as land had to be reclaimed and dredged quite a bit. The upgraded

The WBCG wants Walvis Bay to be seen as a logistics hub for Southern Africa port will also be able to receive passenger vessels, with MSC cruisers and the like able to start calling on Walvis Bay. Much transformation has occurred within the WBCG since it started out as a transport corridor. It wants to create the best trade route for Southern Africa and has formed strategic partnerships with several neighbouring countries, with relevant associations and with governments surrounding Namibia.

Understanding According to a memorandum of understanding signed two years ago between Botswana and Namibia, the WBCG is expecting about 60 million tonnes of coal

to run on the Trans-Kalahari rail line. The feasibility study has been completed but the WBCG needs private and public partners to fund what is likely to take about 20 years to establish. About 250 km of rail needs to be built to link up with Zambian rail, which will then facilitate the DRC. Angola is far ahead though, having already implemented its rail line, and it’s a challenge for the WBCG – in terms of the copper belt – to keep volumes going through Walvis Bay. Angola has always been Namibia’s cargo rival and, since it has improved its infrastructure and services, has been able to secure quite a lot of the available cargo in recent times. Namibia’s rail infrastructure was built in 1906 and a number of lines have been refurbished since then. The country has refurbished the line going up to the Angolan border, but now the second project is to link the line to Zambia. These governments are investing their own money to ensure that rail infrastructure is on par with other landlocked countries. The Botswana line will be developed once coal is mined and the quality of the coal has yet to be determined. The WBCG also has to increase logistics capacity, with companies from outside Namibia encouraged to establish a TWA | July/August 2016

LEGISLATION CORRIDOR

RAIL, ROAD AND SEA All modes of transport are being improved, at significant cost, in order to facilitate local, regional and international trade

logistics hub within Namibia to serve increased volumes.

Location, location, location The WBCG has to optimise its location because West Africa offers shorter sailing times from the Americas, Europe and the Far East. All major shipping lines call directly on the port of Walvis Bay, which is no longer seen as a transhipment

hub or fishing port. In fact, transport and logistics have increased in terms of Namibia’s GDP contribution. The Trans-Kalahari Corridor Secretariat deals with private and public affairs on the corridor linking Botswana, Namibia and South Africa, including truck stops, border waiting times, and wellness clinics and services. The DRC, Namibia and Zambia have a trans secretariat

on the Walvis Bay-Ndola-Lubumbashi Development Corridor and the same applies there. Average border waiting time on the Trans-Kalahari Corridor between Botswana and Namibia has decreased to 30 minutes – provided all documents are in order. Reported bribery and corruption get dealt with immediately because the Namibian government is on board, so it’s easy to make a phone call and get problems sorted out from the top down.

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CORRIDOR FREIGHT RAIL

Challenges There’s a huge problem with HIV in rural areas on all the corridors. As this results in a high mortality rate among truck drivers, government has funded a large team to assist with this problem. In an attempt to raise awareness, the WBCG’s CEO took part in an HIV test in one of the mini-vans. Capacity is also an ongoing challenge; there are only 2.4 million people living in Namibia and the country is made predominantly of deserts, thus land is exceptionally expensive. Even so, regional growth really started in 2005 when the WBCG opened an office in Zambia, followed by Johannesburg in 2008 and, more recently, in Lubumbashi, DRC and São Paolo, Brazil. It will soon open an office in the Netherlands because it is finding a lot more volume coming from Europe; so, it is necessary to have representation there. Brazil is important; the WBCG wants to export everything and the linkage between port Santos and Walvis Bay equates to seven days sailing time. One could get products to South Africa within 10 days, Zambia within 15 days and the DRC within 17 days. The Brazil office is based in São Paolo, which is close to Port Santos. Brazil has an intermodal show every year. This year, 48 000 visitors attended. Brazil is an energised country that wants to attract business. In March, the government put aside $500 000 to substitute travelling expenses for companies willing to invest in and import from Brazil. The WBCG is trying to create, or rather re-establish, the route between Brazil and Walvis Bay. In 2012, it formed its new transport master plan, which was more like a logistics master plan, and began attracting investments and interest from Europe, America and South Africa. The latter opened up its own hubs within Walvis Bay, which

included everything from clearing and forwarding to warehousing, to crossdocking to transport – in other words, everything comprising the supply chain. The WBCG strategises how to grow Namibia’s economy and attract volumes to the port. It has looked at its port costs, renegotiated on different parts of the supply chain and cut fat to attract business. It tries to implement new routes and rates and receive different types of vessels.

Bridging the gaps The widening of the Katima Mulilo bridge, which links Namibia to Zambia, was a WBCG initiative. It has also assisted with infrastructure development in several other locations, in order to handle

No loads have been compromised and there are minimal issues with bribery, corruption and hijackings abnormal cargo going over into Zambia – often to the copper belt – which makes a handsome contribution in terms of volumes and subsequent revenue. The WBCG’s project focus has always been on long-term strategies that benefit regional, international and national clients and it does a lot of marketing overseas. It frequently travels to the Far East, Europe and the Americas to market the country to big players looking to invest in Africa. Many of these companies want to export into Africa and it’s the job of the WBCG to create a different, alternative route into the continent. The availability of truckers has also been an issue for the WBCG and that’s why it has attracted blue-chip companies. Road transport is the WBCG’s main

source of revenue and so it needs trucks – not just from South Africa, but also from abroad. It also needs foreign companies to open up logistics hubs within the country to serve the logistics market in terms of trucks and transport. It provided new routes because there was only one route historically, and that was through South Africa. South Africa and Namibia had a lot of cross-border issues in terms of permits. It was a challenge to get trucks through customs, but the WBCG managed to eliminate many of those issues by spending time on each side of the border. If you’re sitting in South Africa and looking at importing cargo, the first question people ask is: “Why am I going to bring it through Walvis Bay instead of Durban?” Durban is 600 km away; Walvis Bay is over 2 000 km away. The answer depends on what one’s core need is – time or cost? Basil Reed moved every component it needed to build the St Helena airport on the Trans-Kalahari corridor through Walvis Bay, with the WBCG meeting its KPIs 99%. Apart from an incident involving a Zambian syndicate several months ago, no loads have been compromised and there are minimal issues with bribery, corruption and hijackings. There’s definitely an opportunity for growth. In 2007, Namibia processed only 2.2 million tonnes of cargo and was able to double that in two years. Daily truckloads between Botswana, Zambia and Namibia grew from 182 to 377. By 2025, Namibia aims to be the new Dubai for Southern Africa, but it will need its logistics hub to be established and working efficiently by then. The WBCG’s biggest hurdle is doing more with less. In order for it to succeed, it has to look hard at its customers to understand what they need and then put appropriate solutions together for them from start to finish. TWA | July/August 2016

SUPPLY CHAIN

Navigating SMARTLY Kate Stubbs* presents a number of highlights from Barloworld Logistics’ 2016 'supplychainforesight' survey.

AVIGATING smart is about reflecting and asking South African business leaders: what have we done well over the last few years and how have we adapted to change? Following those answers, we need to further ask: what lessons have we learnt? And how are we going to go forward? We know we’re living in uncertainty, so what are the strategies and tactics we’re going to apply to navigate and lead us into an uncertain future?

Foxtrot Part of the 'supplychainforesight' survey involved asking businesses to classify themselves as either squirrels, foxes, ostriches or rabbits. A fox is seen to be dynamic, determined, creative and entrepreneurial. A squirrel is seen to be positive, progressive, thinking and responsive,

TWA | July/August 2016

although it has an element of conservativeness, and is sort of squirrelling away for a rainy day, monitoring the environment. The rabbit is frozen in the headlights, unsure of what to do, overwhelmed by all the circumstances going on and unable to move. And then there’s the proverbial ostrich with its head in the sand, trying to either ignore what’s going on or not wanting to lead. It was interesting to note, especially since the survey was done in January/February this year – quite a tough time in the lives of South Africans, especially after coming off the back of a rough December – that 47% of respondents saw themselves as squirrels and 42% as foxes. So, 89% of people were positive and optimistic about their future and their businesses. If we have a whole lot of squirrels and foxes, we’re well positioned in South Africa to navigate away from some of the icebergs we currently find ourselves stuck on. We see 'supplychainforesight' as a tool to utilise to apply certain ideas in your business, to look at what you can do better and to see how you fared compared in comparison to other players in the industry.

SUPPLY CHAIN

As always, the response was exceptional: over 50% of senior leaders, and a whole range of people from across business, from an operational perspective but also from various functions of business, engaged with the survey. I think this is truly representative of where the supply chain sits today, in terms of how its operational function is understood and used across the business. The same goes for the industry sectors we had responses from.

Services There’s an interesting shift we’ve had over the years – the last two specifically – where we’ve been getting new industry sectors emerging and there certainly seems to be a rise of service-based industries. It is interesting to note that an IBM study showed that only 40% of projects last year actually achieved their goals. At a general level, we asked respondents: how has your business fared in terms of performance? 40% of respondents strongly agreed that their business had fared extremely well in terms of the achievement of their strategic objectives, as well as achievement of market share. But then there’s a slight gap, and the gap starts getting wider as we go into more detail, in terms of how those goals related in terms of profitability and revenue growth. 37% and 34%, respectively, felt that they’d achieved their goals. 66% of respondents felt that their businesses had changed significantly over the past few years. However, only 51% found those changes to be highly effective. If you think of the amount of effort that goes into change, this raises a question of our ability to manage change, and to identify and make sure we change for the right reasons. Change merely for the sake of it is not worthwhile. It’s spoken to a lot

of our insights from the last year about leadership. From a leadership perspective, there’s a stronger need to communicate and effect change better. We’re moving to times where leaders need to make courageous decisions. ICT, retail, FMCG, professional services and healthcare are certainly feeling threatened by new market entrants. Every day, a new clothing retailer comes in, while a lot of the local brands are entering with different channels to market. We now have an

Companies able to use technology to get closer, to better understand, to predict customer changes and shifts, and to provide the right solutions will do exceptionally well omnichannel approach and people have different access and different ways of buying. Watch how technology is impacting that and changing the game.

Reality check A good 90% of respondents feel that they have improved significantly over the last few years. I have to ask for a reality check here because the last few years have been exceptionally tough and the market has contracted. Are we a bit delusional sometimes? Respondents testify to being extremely positive, but there are lots of gaps in this. So, how real are they and in what terms? Have we really achieved growth in competitiveness? Rising operating costs still remain a major challenge and focus area, but these are often a reactive response to certain environments. At what cost do you manage

the cost competitively, in terms of the longterm effectiveness of your business? We’ve seen a rise in discussions about cost management versus value management and the need for companies to start understanding which costs create value for the business, and which costs are eroding values in their business. We often feel very proud of ourselves that we’re managing our costs effectively, but do we have the data and do we understand whether we are making the right decisions and investments in terms of costings? Often, in supply chain management – depending on the industry – we decide on costly solutions, which adds greater service and, therefore, greater value. Customer engagement and technology have been and remain major focus areas, with traditional landscapes changing. This is a high-touch, high-tech challenge, with one almost countering the other. You try to build customer understanding and get closer to them, while also wanting to improve on technology. Companies able to use technology to get closer, to better understand, to predict customer changes and shifts, and provide the right solutions will do exceptionally well. There are numerous different platforms and types of solutions that are radically changing the way we do business and fundamentally changing the way we apply strategies. The shifts we’re grappling with require different thinking and different skill sets. Logistics is often that unseen thing that’s got to go on, that happens seamlessly behind you. As much as we are able to deal with such life-threatening situations, the opportunity now is for us to make critical decisions in order to navigate smartly into the future as leaders in South Africa. *Kate Stubbs is the executive: Marketing and Communication at Barloworld Logistics.

TWA | July/August 2016

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Full circle

SUPPLY CHAIN

The circular economy conversation has only just started in South Africa, as Stacey Davidson* explains.

HE CHALLENGE we are facing, as a world, is that we have limited resources and unlimited labour. All economies and industries are geared towards labour efficiency, but there’s no real rationale behind it. With finite resources, and a growing middle-class, there’s no way to drive reduced consumption. What we need to look at is how we manage resources efficiency. The problem lies in the way our products are costed, as they are only costed for a part of their life. In a linear economy, we dispose – which means products live a life half-lived. By paying for waste collection, you subsidise polluters. Fundamentally, we need to get the principles right. One needs to understand what it costs to take a product that’s at its end of life and reintroduce it into the economy through collection, storage and processing systems, and then through secondary industry. In the tyre industry, REDISA has calculated that cost to be R2.30/kg. The question now is: how do we take that R2.30/kg and incentivise a good behavioural pattern along the way? We need to ensure that products being designed in the future can be processed through established recycling technologies. Hence the fact that REDISA spends funding on R&D and has the Product Testing Institute, which will issue environmental ratings to every tyre manufactured in the country, to determine the fee to be paid. If you become resource-efficient, it is cheaper to deal with the product at the end of the line. That is where you want maximum value to be extracted from the product that’s deemed to be waste, because you want to reintroduce it into the economy.

Tyres produce the smallest wastage and benefit from simplified logistics because of the way they are traded. In a country like South Africa, the beauty of the circular economy is the high uptake of low-skilled labour, with the key driver for job creation being in collection. What we’ve tried to do is formalise an informal sector so that we can get data out of it, without trying to stipulate how its businesses should operate. We want to encourage that kind of thing, because this is how the community starts cleaning up their own environment. When you place value on something that was previously a liability, people no longer burn it, they collect it. By creating an incentive for people to collect tyres, we can start to incorporate those tyres back into the South African economy.

Recognition The REDISA model was recognised at the World Economic Forum this year and at the Circular Awards, primarily because it looks at both downstream and upstream incentives. We’re really not about collecting tyres; we’re about creating resource efficiency within the tyre industry. That requires a multipronged approach and incentive schemes. We’ve been able to take the processing rate of tyres up to 42%, while the Department of Environmental Affairs

had a baseline report that estimated that only 4% of tyres were being recycled in South Africa. But tyre recycling only deals with two types of technologies: pyrolysis and granulation crumbing. By the end of last year, we had seen growth in recycling, up 22% and 23% respectively for crumbing and pyrolysis. In South Africa, 44% of households are not serviced by waste collection and most consumables are packaged in unrecyclable materials. We need to start impacting those industries by making them circular. But that’s looking at things from a micro level – what happens to products once they leave the plants is the nation’s problem. While we need micro level activities, we also need a macro programme, where all producers subscribe to a plan that ensures their products can be processed in a recycling industry. So this is why the Product Testing Institute that we are developing is not a tyre testing institution – it’s a product testing institution. Should we go into other waste links, it will also be able to look at and test other products, and apply the same principles of issuing environmental ratings. I think it’s about time that we have an environmental rating. I mean, you wouldn’t use a laptop that doesn’t have an electrical certification, would you?

*Stacey Davidson is the executive director at REDISA.

TWA | July/August 2016

SUPPLY CHAIN

Top to bottom

Supply chains are both critical to success and vulnerable to disruption. Transport World Africa asks Brad Householder* how an efficient supply chain can become a critical element in moving cargo.

HIGH-PERFORMING supply chain can add bottom-line efficiencies and top-line growth. This might sound like a tall order, but there are things companies can do to manage the supply chain as a strategic asset to boost performance and profitability. Getting the supply chain right moves the business strategy forward and sets it apart from its competition.

Household name Householder has 30 years of experience in areas of supply chain planning, supply chain network optimisation, transportation management and supply chain organisation design – key focus areas of moving cargo from the warehouse to the end user. “Be clear about what the business competes on: innovation, customer experience, quality or cost. Though all four elements are important, find the one that puts you ahead of the competition. Thereafter, design the supply chain with the customer in mind,” he says. “Supporting competitiveness goes hand in hand with building resilience in the supply chain. Successful companies recognise that different customer value propositions are vulnerable to different threats. So they map their supply chain capabilities to different potential risk profiles,” he elaborates. It is critical, he says, to put the right people in the right places. “High-performing supply chains need more than just technical and operational expertise – communication, collaboration and relationship skills are equally important. “Leading companies fuse their supply chain with other business functions,” he

states. “When cross-functional groups work together as teams, surprising innovations can emerge. It might be a new product or service, or even a groundbreaking way of serving customers.” Key to getting the right people talking about the company is to ask whether the company has the right resources in the right place, at the right time, to address its customers’ needs. All functional managers regularly ask themselves that question; however, at leading companies, managers work together to make these resource deci-

“Successful companies recognise that different customer value propositions are vulnerable to different threats.” sions through cross-functional processes, including sales and operations planning. Multiple perspectives and varying experiences are more important than ever in today’s constantly changing environment. “Getting the leadership involved is essential to set the right example. Different business units and functions may not immediately recognise the advantages of greater collaboration. Employees do well when they see the benefits of internal collaboration, such as faster innovation, higher customer satisfaction, and increased efficiency. Reward them based on results, no matter where they work in the organisation,” Householder opines.

Realism “Successful transformation starts with setting realistic goals. Changes can range from incremental improvements, such as making processes more consistent and predictable, to breakthrough innovations, like brand-new ways of competing in your industry. “To achieve supply chain excellence or innovation, you need strong top management leadership and dedicated operational teams,” he states.

Key questions to ask include: •D id the company achieve its goals? • Can we sustain and continue to improve our performance? Householder states that it is imperative to ask these questions when evaluating the success of your transformation initiatives. To get the full picture, track outcomes against a comprehensive set of metrics. Business and operational metrics, like margins and on-time delivery, are certainly important. But, pay as much attention to what ultimately drives performance, such as the level of process maturity. “Industry leaders all have one thing in common: they want their supply chain transformation to lead to permanent improvement. They are not interested in temporary fixes. They are realistic about the resources they have, and are prepared to move, train or hire people, if they need to. And they invest in processes and infrastructure to make sure people can keep improving the way they work every day,” he concludes. *Brad Householder is a principal at PwC and leads its global supply chain planning team.

TWA | July/August 2016

FREIGHT RAIL

Africa on track Rail transport contributes towards sustainable development, and can positively influence economic, environmental and social sustainability. By Tristan Wiggill

AILWAYS HAVE the advantage of being bulk carriers and, because of scale, their operators are able to charge lower rates than road transporters. This means that the transport component of logistics on the continent is lowered. Railways are also efficient in terms of the utilisation of fuel. If you calculate fuel consumption per kilometre, you will find that rail consumes about a quarter of what road transport does. It also has a positive impact on emissions. In this regard, rail emissions are about a third of what road transport emits. The land requirement to build a railway line is also less than what is required for other transport modes. In Africa, there are a number of issues to do with border challenges and border delays. Railways have the advantage of not having serious border challenges. In sub-Saharan Africa, there are some border stations where a road truck can wait up to seven days because of delays. The railways have better safety records, too. For African railways, the issue is really about how they organise themselves in terms of the movement of international transport. Policymakers provide input but, to a greater extent, the issues are influenced by rail’s operational modalities.

TWA | July/August 2016

The more rail transport is used, the less fuel is used per kilometre. SADC countries import fuel; so it is possible to save in terms of the overall fuel demand. Rail can also contribute towards extending the life of finite resources, of which fuel is but one. From environmental and safety points of view, the use of railways promotes African economies positively, which leads to better quality of life. The use of railways is also bound to promote regional competitiveness. In Malawi, 55% of the relevant cost of a product comes from transport. Imagine what would happen if a cheaper mode of transport were used, instead of the current road transport method.

Limitations Rail is a surface transport mode. In other words, once there is talk of crossing the high seas, railways are no longer an option. There are cases where railways have been used to cross seas, however. But, in the main, when we talk about seaborne traffic, of boats and freight and

passengers, railways cannot really play a role. In some cases, the railways are even used to carry other modes of transport. Railways have issues at the ports; while they can enter and exit ports, there are issues surrounding overseas markets that come into play. The railways should be part of a multimodel system, where goods are moved from roads, to rail, then to sea, then back to rail or road. When one talks about railways, one must always keep in mind this concept of multimodalism. There are cases where rail can provide the service from source to destination; looking at total or global trade, however, the transport component of railways is really restricted to land. In Africa, rail is a surface transport mode only, unlike in Europe. If one considers transport in the UK, there is the Euro tunnel, which is around 300 km and runs under the sea. When considering this issue of going under the sea – of linking two continents – the challenges of international laws are bound to arise at some point. In Africa, we have certain economic zones that are restricted. We have economic zones for coastal countries but, beyond that, we have open seas. As a

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result, there will be serious investment issues to consider, as these limitations cannot be easily changed. Railways must work around all limitations. There should be solutions for all of them. We have to do the best with what we have and always strive to overcome the challenges faced.

Investment The second weakness is not operational, but has a direct impact on the operational limitations of the railways. Railway capacity requires significant investment. For the railways to improve in moving certain traffic efficiently, they require good infrastructure, including the track itself. They need to have good locomotives and a number of human skills available. We are talking about investment in infrastructure and equipment, and the initial capital outlay for railways can be very, very prohibitive. In 2010, the World Bank published a report called, ‘Africa Infrastructure in Times of Transformation’, in which it estimated that constructing a railway line on normal, flat terrain with no hills and no bridges would cost at least US$1.5 billion. When the terrain is hostile, costs could rise to $5 billion. In this terrain, the estimated cost equates to between $9 million and $11 million per kilometre. That initial capital outlay is huge. The measuring costs are also huge. Operationally, these will reflect in the operation of the railways through capacity limitations. We are talking about small improvements. If the cost of constructing a railway line is, say, $2 million per kilometre, it means that 100 km of rail requires $200 million and 1 000 km would require $2 billion. Given the size of most of our economies, this becomes a challenge. Most of the railways we have were constructed many

years back, when the mining sector was doing very well; the railways were owned by the private sector – the owners of the mines. They had an interest in taking the output to overseas markets. The business case was there for them; right now, though, because of the size of the economies, there is low demand. The business case for rail is currently weak; a business person looking for profit will have limited options where the railways are concerned. Participants will share in the profitability, if money is invested, if the line operates and if it is maintained. That is why you find that the role of government in railways is usually pronounced. Africa’s railways are beset with significant political involvement – for two reasons. The

From environmental and safety points of view, the use of railways positively promotes African economies first relates to public goods and the issue of low profitability. The second concerns the benefits that the railways can offer. Railways provide fertile ground for policymakers to manipulate economies – in a positive direction, for that matter. And, because of the investment challenge, we have governments playing leading roles, with private sector playing a complementary role. We have issues relating to social service obligations. If we look at passenger trains in Africa, there are fewer operating today than there were just a few years ago. Generally, if it is not a tourist train, you rarely come across a passenger train that makes a profit. Each train contributes towards a company’s losses.

This is where policy intervention is needed, through a subsidy or some other way of ensuring that the railways are supported. Insofar as the investment requirement – especially in the railroads and railway infrastructure – you find that there have been policies based on whether to separate operations from infrastructure, in the hope that rail transport can operate just like road transport. You find that there has been a huge mix around the issue of trying to improve the profitability of railways by hiding away the infrastructure pattern.

Flexibility The next disadvantage relates to the inflexibility of railway lines. You cannot, directly as railways, address the issue of dispersed traffic. In other words, there are no door-to-door services. The railways also have an issue with equipment, some of which can be repaired, but some can not. This contributes to the inaccessibility of rail services. This is one area where railway operators need to engage more on. The railways were the first mode of transport in the region. Originally, at inception, each railway organisation had its own road transport wing. There are private sidings for private customers who are trying to improve access to railway services. Operators can also offer huge scope and enter into partnerships with road transporters. There is scope for bountiful resolutions, including rail, but there is also a need for investment, to ensure that the railways remain relevant.

Jointly responsible The other weakness or limitation of railways in Africa is that they provide joint services, especially with international traffic. If you imagine cargo moving from Lusaka, Zambia, to Durban, South Africa, that cargo could be handled by Zambia Railways Limited, the National Railways of TWA | July/August 2016

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Railways provide fertile ground for policymakers to manipulate economies – in a positive direction

Zimbabwe, Botswana Railways and Transnet – and only then does it get to the port. Controlling the quality of that service is a challenge. There are issues relating to joint services provision. It is a complicated affair and it is difficult to control the quality and efficiency for railway customers. Customers pay operators to discuss matters of concern with all the railways or with an established joint operations centre, which must be done to set their minds at ease as well as resolve, or at least make railways aware of, the problems customers may have with rail operations and infrastructure. The decision-making is also slow because there is extensive consultation required for a person to get cargo from Zambia to Durban. So, the decision-making, quotations, and even the pricing – because each rail operator has different cost structures – are significant challenges. For rail operators, a fair rate per kilometre requires that the players engage in serious discussions. There are also issues of carbon tracking in terms of litigation. The railways have legitimate agreements; they have corporate management groups and joint corporation centres. There is a policy with a section that talks about a one-stop shop. It addresses how international traffic should be handled. The railway should also have the technology to mitigate some of these limitations. In terms of suitability, the railways are affected, in a way, when one considers some types of cargo. Rail operators look at low-weight, high-value cargo; they look at short distances, they look at fragile cargo. The railways’ participation or contribution in these spheres is limited. With lighter goods of high value, the railways are given the opportunity to charge any premium. But, they cannot; it is not an issue, because it affects the short distances in pricing. So it comes back to the issue again of rail infrastructure provision. Rail operators need to invest in specialised equipment. They also need funding for railroads. Railways need to ensure that they do better with what they have. They need to ensure that they have a platform where they can share ideas and focus on available technology. Africa’s railways may have limitations, but there are also opportunities for them to improve and to do better with what they have.

TWA | July/August 2016

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AVIATION

Transport World Africa speaks to a panel of international aviation experts to understand the challenges and opportunities facing the African aviation industry today.

OR KIERAN GLYN, sales and marketing executive, Engine Lease Finance Corporation, long-term planning is crucial. “With the vision that Ethiopian Airlines has set for 2025, it’s clear they plan not just three years ahead. So, you can and should plan long term. It’s a good example to follow the success stories because there are a number of those in Africa,” he said. Tabassum Qadir, chairperson, Skywise Airlines, adds that the industry needs more collaboration and cooperation. “When you enter an airline, you enter the business with emotional intoxication. When you go into this business, you must be well aware that you will make minimal profit. If you [were to] use the same amount of money in any other business, you’d probably make much more profit. “When you go into this business, you need to understand that it’s not a commercial decision, it’s more of an emotional decision. If you’re ready to burn large amounts of capital, it’s okay to go with emotional intoxication and with passion. But, if you’re jumping in, you have to have backup capital to support you for the first year,” she warns. “With African airlines, there is skepticism in the market. On entering the market, none of the travel agents will support you because they want to see you at least six

months into the operation. In the first six months, you will be flying with 30% or 40% load factors. “If you’re lucky, somebody might hold your hand and then you can continue. But, when you try to go from good to great, it’s ‘not okay’ in this industry. There is a deep-rooted rivalry we should acknowledge and accept.

Ethiopian Airlines took the continent's first order of an Airbus A350

“There are two sets of challenges. In the air, it’s about fuel efficiency, the business plan, the aircraft, etc. And there are other sets of challenges. This is not an industry in which you run your own race. You have to be very aware of that,” she offers.

Rules and regulations Michael Adams, business development manager, Solenta Aviation, explains that

the biggest challenge facing African airlines is regulatory in nature. “Regulation is, of course, necessary because of the game that we play and because of the people’s lives that we’re responsible for. But regulation needs to enable airlines, not inhibit them.” Steven Graham, director, Avalon Aerospace, says the industry needs to look at not just the challenges, but the positives, too. “When you look across Africa, there are some great success stories – Ethiopian Airlines, clearly, but also Royal Emerald, Mango and Comair. So, there are some great success stories out there and I think airlines around Africa should leverage those success stories. Information needs to be shared in that regard.” Size also doesn’t matter. “You don’t have to be big to be successful. We have placed an aircraft into Nile Air that is delivering this month in Egypt. Nile Air is currently operating with four aircraft but they are profitable and have positive cash flow. Success stories like that need to be replicated across the region. “Once we see business models that are sustainable, we are going to be there, ready to work with the airlines. We want to be seen as partners, so we want to work with airlines as they are trying to get across the issues, not just when they’re looking to finance aircraft,” Graham explains. George O’Neill, senior vice-president, Dubai Aerospace, agrees that the biggest TWA | July/August 2016

AVIATION The conference's panel of aviation experts discussing the state of African aviation

challenge facing African aviation right now pertains to its many regulatory issues. “There is a lot of good in Africa; it’s home to a billion people, it’s a huge continent, it’s increasingly urbanising and there’s massive growth. There’s going to be 50 cities with over a million people in the next four to five years. “But, the issue then becomes fragmentation of the market, as there are over 50 national governments. Compare that to India, which has a similar population but one government and one civil aviation authority. African governments need to get together and address the regulatory/ red tape issues,” O’Neill opines. Nick Vlok, GM: Operations, Mango Airlines, adds that airlines must have a viable business plan that makes provision for positioning themselves in the market. “Most failures occur because the viability of the business plan was suspect from the word go. If you don’t get that right, you will never succeed. Airlines need to be cash positive. Unless you are cash positive, you have no resilience; there’s little to no upset that you could withstand. Also, you need to have a safe, compliant and productive operation. Those are the fundamental basics of getting an airline going and keeping it going.” Avi Bhatt, sales representative, Willis Lease Finance Corporation, backs up Vlok’s view, saying, “Once you start the airline, you have to have the business plan. You have to have the finances. It’s not a short-term plan; the capital that you require to start this business is significant. The profitability is almost negative in the first two or three years. “If you have a hiccup, you have to have the necessary cash reserves to support that structure. You don’t have to start with new aircraft. You don’t need to own everything. If you look at how Mango started,

TWA | July/August 2016

they don’t own any of their assets – they lease all of them and they seem to be pretty stable; they seem to be profitable,” states Bhatt. “Comair started with old aircraft and they operate efficiently. They have new aircraft on their balance sheet today but, in the past, it was all old aircraft. They made their profits and they went on. But, you need to have the necessary assets, the right equipment and then you have to meet the regulatory environment and

African airlines carry just 18% of all intercontinental traffic to and from the continent ensure that you are compliant. Not being compliant means safety issues come into play. “We’ve had one airline grounded recently as a result of non-compliance. Then you’ve got Africa’s inter-governmental or intragovernmental issues where politicians across countries don’t share the same vision. If you do get into the local airline industry as a domestic player, you’ve got to meet a whole lot of other regulatory issues. It’s not a game or organisation where you produce stuff.”

Decision time Only 12 of 54 African nations have been willing to execute and proceed with the multinational liberalisation of African skies, promulgated by the Yamoussoukro Decision (YD). The African aviation model is all about seeking local partnerships and using the “mothership”, as some describe it, to provide services into a number of separate operating entities.

What is required is the creation of an Africa-wide regulatory authority. Active participation of the 12 countries would be a real positive, as they would correctly understand the benefits of such an authority, and decide its responsibilities, operations and worthiness. Such an authority could address a number of key issues not merely related to costs. One can imagine the benefits and perception of global aircraft finance lessors of seeing a well-funded, well-resourced, unified body responsible for oversight in these dozen countries. All the concerns about resilience and value would simply fall away.

Networks Africa needs a proper passenger aviation network to feed back into economic growth. Solutions have to come from the various governments and from the airlines. If Africa can get that right, it stands to benefit greatly. It is not that there is no will to implement YD, but rather that there are many things that need to change first in terms of legislation in several African countries – South Africa being one of them. That process to change legislation in order to properly adopt YD is not particularly easy. That’s been the hold-up, certainly in the case of South Africa. Once YD is implemented, the way African airlines do business will fundamentally change and there is no guarantee that some of the current business models will survive. Within Africa, we don’t have a central body to control airspace or aircraft maintenance. In fact, forget Africa; just within sub-Saharan African countries, we don’t even have consistency. So, once you have that consistency sorted out, you can then start to implement open skies within two or three countries. Once you’ve adopted open skies within those two or three countries, then you might see it opening up. If you were to open it up tomorrow, you’d have a lot of failures. It’s all about momentum; once you have momentum in something, others will follow. If they see it as a successful model, they will follow. Competition, though, in a managed way, will also be good; it will lead to more efficient business models, better service and better welfare for customers. Airline competition would likely drive cost disciplines, like what has happened in Europe, and it would also drive efficiencies and more agile businesses.

INDUSTRY NEWS

Thanks to its acquisition by BPW, JMR's footprint is set to expand rapidly

Raising the stakes

BPW Axles has acquired a majority stake in the JMR Trailer Parts Group as part of BPW’s global strategy to expand its presence in the aftermarket.

PW DISTRIBUTES its spare parts in Southern Africa through a wide network of independent distributors, among which JMR Trailer Parts performs a major role. JMR is a reputable spare parts distributor, with eight branches throughout South Africa, offering a wide range of quality trailer parts and accessories to more than 1 500 transport companies. The objective of the acquisition is to create supply chain synergies and efficiencies between the two companies to better support the customers’ needs, which will always remain both BPW’s and JMR’s highest priority. The acquisition will allow BPW to better understand the aftermarket and expand its product solutions for transport companies in a customer-oriented manner. BPW has no intention of solely distributing through JMR and it is important to BPW that its other existing distributors are protected and have a fair opportunity to compete. Similarly, JMR has no intention of only distributing and promoting BPW products. All suppliers’ products will be approached with the same support intensity as before, in line with JMR’s strategy to place its customers’ requirements first. JMR prides itself on service excellence and expertise and these will remain its primary goals moving forward.

The parent company of the BPW Group, BPW Bergische Achsen KG, repositioned itself in 2013, promoting its commitment to partnerships in the transport industry, being not only a system partner to vehicle

The objective of the acquisition is to create supply chain synergies and efficiencies between the two companies builders, but also a mobility partner to vehicle operators. Product support forms a major part in these partnerships and, hence, this acquisition is in line with similar actions in Europe. Prior to 2015, the BPW Group’s direct involvement in the aftermarket was limited to European countries outside Germany. However, since 2015, BPW has started establishing a spare parts presence within Germany through its subsidiaries, BESKO Nutzfahrzeugteile GmbH (Büdelsdorf) and T-Parts GmbH (Steinach), and has recently also acquired a majority stake in NTV Nutzfahrzeugteile Oesterhaus KG. At the turn of the year 2015/16, BPW Bergische Achsen KG also acquired a

majority stake in PE Automotive GmbH & Co. KG, one of the leading suppliers in the independent aftermarket. This will open up opportunities in the local market, not only for the BPW/JMR partnership, but also for other existing BPW distributors. The company will still operate under the JMR brand and will be considered a member of the BPW Group. The head office of JMR will still be situated in Alrode, but will move about 1 km from its current premises to a much larger facility at 5 Barium Street, Alrode, 1451. All other branches will remain within the same premises on the date of acquisition. The two companies will retain their autonomy in terms of staff, structure and culture. Both companies want to ensure continuity in all areas. This reflects BPW’s integration approach for new partners, which is based on retaining a decentralised group structure. BPW will continue to supply and treat all its existing business partners in the spare parts market, as before, at the standard market conditions, whether or not they are members of the BPW Group. JMR can learn from BPW and vice versa. The industry expertise provided by BPW and the strong profile of the brands in the BPW Group will open new doors for JMR and, in particular, for the company’s customers, who will have access to an extensive European network of dealers. The acquisition will also allow JMR to accelerate its expansion plans to establish a national footprint by opening up more branches and/or working closer with other distribution partners. The acquisition will give BPW even better access to its customers’ needs, through which it can expand its solutions for transport companies in a customer-orientated manner. A strong cultural fit and customer approach were identified between BPW and JMR and it is trusted the industry will embrace this information.

www.bpw.co.za TWA | July/August 2016

INDUSTRY NEWS

FAW has Universal appeal FAW VEHICLE Manufacturers South Africa has delivered 20 J6 truck tractors to Universal Trans-Logistics LDA (UTL) in Mozambique. The deal is worth an estimated R20 million. “UTL, based in Beira, Mozambique, is convinced of this strategic partnership with FAW SA,” says Juber Shaikh, operations manager, UTL. “While this is our first investment into the FAW truck brand, we are satisfied with our choice following reports from other fleet owners and our due diligence indicating reasonable costs of operation.” Having commenced operations in 2010, UTL is a provider of transportation and logistics management services throughout the south-east African region. Eugene van der Berg, national sales manager, FAW; Lionel Hanford, principal dealer, FAW Isando; Kari Scott, general manager, Capital Foods in Malawi; and Juber Shaikh, operations manager, Universal Trans-Logistics LDA.

Farmers get bale Dave Logan, CEO, SAAFF

Congress plays it forward THE SOUTH AFRICAN Association of Freight Forwarders (SAAFF) will have a high-powered line-up of local and international expert speakers at its 2016 Congress, which takes place on 6 and 7 September 2016 at Gallagher Convention Centre in Midrand, Johannesburg. “We are pleased to introduce two international speakers who bring a combined 98 years of experience to this year’s congress: Issa Baluch, director at FIATA, and Stephen Morris, chairman of the Customs Affairs Institute of FIATA,” says Dave Logan, CEO, SAAFF. Baluch is the chairman of US-based agricultural development company Africa Atlantic Holdings and serves as a director of Wentworth Resources Limited, an East Africafocused oil and natural gas producer. He is also a board member of the UAE-based airline cargo management company Air Cargo Trader. Baluch is an active industry consultant to supply chain organisations around the world. Stephen Morris brings over 45 years of knowledge and experience in regulatory compliance of customs, bio security, transport security and other trade-related matters. As a director of several international non-governmental organisations, he represents the interests of service providers in international trade logistics and supply chain management.

TWA | July/August 2016

MERCEDES-BENZ TRUCKS, in association with SA Crisis Support, has delivered over 100 bales of hay to a farming community in Winburg, Free State. The manufacturer provided an Actros 2654, a trailer, driver and the fuel needed for the two-day operation, which saw a large quantity of donated feed moved from Bronkhorstspruit. Cattle in the province were in desperate need of the hay, and Daimler provided the critical transport link. “As winter is upon us, the cattle feed will go a long way in ensuring farmers in the Winburg area can feed their cattle for the foreseeable future,” said Karen Schwendtke of SA Crisis Support. According to the South African Weather Service, South Africa received the lowest rainfall between January and December 2015 since the recording of rainfall began in 1904. Since 1904, rainfall in all nine provinces has averaged 608 mm per year, while in 2015 South Africa received only an average of 403 mm (66% of the annual average).

Last year, SA's rainfall averaged only 403 mm (66% of annual average)

PAGE STRAP

Fatigue gets a shake-up EUGENE HERBERT, managing director, MasterDrive, says fatigue among truck drivers in South Africa is a serious concern, as they often drive long and monotonous routes. “Research conducted by the Interdisciplinary Accident Research Centre in South Africa shows driver fatigue to be one of the main causes of truck crashes, with 41% of accidents being fatiguerelated. Of the problems faced by truck drivers, 39% were related to fatigue,” he says. If you already encourage your drivers to take regular breaks and do not place undue pressure on them to make deliveries, what else can one do to prevent fatigue-related crashes? “IUM (Insurance Underwriting Managers) has introduced Seeing Machine technology to South Africa, which uses a motor to shake

TPT wins big TRANSNET PORT TERMINALS (TPT) came out on top at the PMR Africa Awards. Its Cape Town terminals were recognised for their exceptional contributions to the Western Cape region with the Diamond Arrow award as well as a Golden Area being presented to terminal manager Pamela Yoyo. The results of these awards are based on PMR Africa’s annual country survey on the City of Cape Town and Cape Peninsula region that is independently conceived, implemented and funded by PMR Africa. The ratings are sourced monthly from top decision-makers to identify contributors to the economic growth and development of SA’s municipal districts, provinces and the SADC countries.

Safety, Uber alles CTRACK HAS partnered with Vulindlela Underwriting Managers (VUM) to encourage Uber driver partners to improve their driving behaviour and lower their insurance premiums. Driving style is measured by a Ctrack telematics device installed in Uber vehicles, which creates monthly driving behaviour scores. Harsh braking and cornering, excessive speeding and distances travelled are all taken into account when determining scores and subsequent premiums. The device informs VUM as to the number of kilometres the driver covers in a week, with the insurer charging a set amount per kilometre, which is deducted weekly from the driver-partner’s fares. “This model has huge potential for the South African market where road fatalities are at unacceptable levels, as good driving styles can only lead to improved safety on the road,” says Pierre Bruwer, managing director, Ctrack SA. “As the adoption of such technology increases, so does the awareness of and contribution to improving driving habits in the country,” he adds.

Driver fatigue is an issue every driver and fleet manager needs to take seriously

the seat on which a driver is sitting if they fall asleep. It uses algorithms, sensors and cameras to track eye and face movement and consequently notify an alarm system if the driver appears to be falling asleep or if they are driving distracted. The sensors are not only linked to alarms within the cab, but to a control centre, which can alert the fleet manager to take necessary steps to assess the driver’s alertness,” explains Herbert.

Delivery method scoots traffic SAVINO DEL BENE has embraced a two-wheeled delivery solution as it tries to beat congestion. Before considering a scooter, the company used a bakkie to deliver tyres to key clients, which was frequently plagued by late deliveries. Vespa then approached with an offer to create a two-wheeled delivery solution, designing bespoke brackets with safety locks that allow four tyres to be transported at once. “When we say the modification possibilities are endless, we mean it,” says Debbie McCallum , national corporate manager: Client Liaison, Vespa. “For pizza restaurant Col’Cacchio, we made custom top boxes that are bigger than the standard and can fit approximately 20 pizza boxes at a time,” she adds. For most corporate fleets, a Primavera 150 3V or a GTS300 Super are the most suitable scooter models. “Delivery scooters can be fitted with tracking devices, so managers can keep track of their fleets wherever they go,” indicates McCallum. All Vespas offered through corporate packages come with an 80 000 km maintenance plan. “At the end of the term, the fleet of Vespas can be traded in, if they’re in good condition,” she concludes.

TWA | July/August 2016

AIR CARGO

The value of air cargo Many of the expectations that people have are shaped profoundly by the value that air cargo creates. By Tony Tyler*

OR THE AVERAGE person, air cargo is probably not top of mind. That same person, however, expects life-saving medicines to be globally available. They rely on smartphones and other personal electronic devices that are built through global supply chains. Most likely, they take for granted that perishable goods grown more efficiently in other climates are available on the shelves of their local store. Thus, people’s expectations are shaped by the value that air cargo creates. Much of that value is based on speed and quality. Air cargo moves goods quickly and efficiently. Over a third of goods traded internationally – when measured by value – get to market by air. But the air cargo business has been stagnant for the last five or six years, with anaemic volume growth and falling yields. Global economic trends are certainly part of the cause. Years of operating on razor-thin margins may also be taking their toll on the innovation that keeps industries at the forefront of change.

Technological innovation In just over a decade, the passenger business has reinvented itself. The on-board product of today has changed dramatically – on-board Wi-Fi being

the latest addition. The whole process of moving passengers through airports has changed with e-tickets, online check-in and mobile connectivity, to name just a few. And the shopping experience is about to undergo a major shift as the impact of the New Distribution Capability standard works its way through the industry. Shippers, on the other hand, have seen less dramatic changes. The majority of shipments still need paper documents. The e-air waybill is still used for less than 40% of shipments. In short, the click-ship-and-follow culture of e-commerce is still a long way off when it comes to air cargo. There are indications that customers expect better. Only about 7 out of 10 shippers in a recent

In just over a decade, the passenger business has reinvented itself industry survey were satisfied with the service they received from air cargo. If we weren’t selling a premium product, that might be a fair result. But for a mode of transport where speed and efficiency are the selling points, it is not good enough. Recently, I spent time with leaders of the air cargo industry at the World Cargo Symposium. There was universal agreement that business conditions are tough. There was also a stronger commitment to change across the air cargo chain than I have seen before. A paperless air cargo industry may not be what the average person dreams of, but achieving it – through cooperation across the value chain – would go a long way towards satisfying customers with modern processes. This would be good news for just about everybody. *Tony Tyler is the director general and CEO of IATA.

Index to advertisers Barloworld Transport 30 BPW Axles IBC Cape Logistics 2016 34 Ctrack OBC Etihad Cargo IFC

TWA | July/August 2016

FAW OFC Sutherland Transport 14 MiX Telematics 10 N3TC 24 REDISA 28

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