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Intraregional supply chain solutions from producer to consumer
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Future tech today IN THE HOT SEAT
Rudrarup Maitra, CV International Business, Tata Motors Limited – Entering new markets P10 ISSN 1684-7946 March/April 2015 Vol.Mar/Apr 13 No. 2013 2 / R50.00 incl. VAT ISSN 1684-7946 Vol. 11 No. 2 / R40.00 incl. VAT
You’re not buying this. What you’re buying is so much more than a truck. It’s a commitment. A partnership. A whole system designed and built around the working life of a vehicle. Founded on the principle that Total Operating Costs are more important than initial purchase costs. Fuel, as we all know, is the big one. A significant part of the Total Operating Cost over a truck’s lifetime. So it makes more sense to buy an economical truck than a cheap one. Which is why we make economical trucks. Not cheap ones. Reliability is a huge deal as well. So you won’t be surprised to hear that Scania trucks deliver the highest levels of uptime in Southern Africa, and our wholly-owned dealer network focuses all its energy on minimising downtime. Driver capability is another big cost area, which our driver training programmes are tailored to help you manage and develop. The same goes for our finance and insurance approach. We believe in understanding the daily needs of your business, rather than just looking at the risk. Also our new Fleet Management System is the perfect embodiment of our partnership attitude, giving you access to amazing detail on everything from coasting to heavy braking, and then the coaching support you need to help manage not just your fleet, but your entire cost base. So if you’re just buying trucks, we’re probably not the supplier for you. But if you believe what you’re actually buying is a partnership, a commitment, a total transport solution, then we should talk.
There is a better way.
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Intraregional
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COVER STORY Mercedes-Benz Trucks – Future tech today
INSIDE
P6
THIS ISSUE REGULARS
IN THE HOT SE AT
2 4 6 8
Editor’s Comment Expanding horizons FESARTA All change at FESARTA Cover Story Mercedes-Benz trucks Regional News
IN THE
HOT SEAT
COMMERCIAL VEHICLES Benefits of using Takt
TRAILERS
Partnerships critical to success Wireless technology use to increase
Solutions needed for road transport challenges
17 19 20 22
FUEL 24
Taxing times for transporters
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SUPPLY CHAIN LOGISTICS Improving competitiveness 2014 facts & figures Boosting health-care delivery Intimate client knowledge reaps rewards
FLEET MANAGEMENT Unlocking data consolidation
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East Africa bordering on success
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incl. VAT
26
Law and liability
Custom design comes to life
incl. 11 VAT No. 2 / R40.00
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Compatibility for better profitability
REGIONAL FOCUS
12 13
MCV demand fastens
LUBRICANTS
Dwelling on Mombasa
Head of sales, Commercial Vehicles International Business, Tata Motors Limited P10
h today
ISSN /April 16842015 7946 Vol.Mar/A 13 No. pr 2013 2 / R50.00 Vol.
CORRIDORS
Rudrarup Maitra
Future tec
Rudrarup Maitra, CV Internati Motors Lim onal Busin ited – Enter ess, Tata ing new ma rkets P10 ISSN 16847946 March
WAREHOUSING Boxing clever warehousing
LEGISLATION
31 32 33 34 35 36 39
Fleeting labour pains
AIR CARGO Air cargo ends 2014 positively
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TWA | Mar/Apr 2015
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EDITOR'S COMMENT
Expanding horizons H
Cleared for take-off
I EVERYONE, TRISTAN HERE. AS THE NEW EDITOR OF TRANSPORT WORLD AFRICA, I’d like to take a brief moment to introduce myself to you. But first, I need to tip my hat to two gentlemen who have helped shape what you read here today: my predecessor, Simon Foulds, and retired FESARTA CEO Barney Curtis. Both have done a fantastic job in their respective roles. Both have, in no small measure, built a rock-solid foundation to which I now hitch my wagon. Gentlemen, thank you. I wish you the best, wherever the road may take you. I’ve made the short hop to transport from the automotive industry, in which I’ve spent the majority of my publishing career. It’s a wonderful industry to have worked in. But, for all the friends and contacts I’ve made, and for all the experiences through which it has enriched me, I’m happy to be venturing away from the familiarity of those shores. I’m fascinated with – and energised by – the broader, intermodal transport industry and perhaps, more so, by these beautiful, flawed African lands. For all the diamonds and gold, and copper and steel Africa has given us, it is itself still a rough diamond. Africa’s time is coming and it will shine, but we need to keep polishing it, little by little and day by day. Speaking of shiny things, we’ve placed the spotlight on the East African region on page 28, taking a purposeful look at transport infrastructure in Kenya, Tanzania, Rwanda, Burundi and Uganda. While economic growth rates and Ebola are popular topics in generalised African discourse, it is prudent to remember that Africa is in fact a continent and not a country, and the economic outlook is not necessarily rosy for one and all. That the ‘onesize-fits-all’ approach to business, economics and life in general has almost no real relevance any more has dawned quickly on me. Industry-wide testament to this can be found throughout this issue. In the corridors section, we publish the latest port, corridor and maritime indicators from Mombasa, which is faced by efficiency challenges all of its own. Back home, we reveal why medium commercial vehicles are becoming better and better suited to intra and inter-city deliveries, revealing how different brands tackle market needs uniquely. We determine what impact the revised fuel levies will have for transporters, and get an inside view on the trends shaping the vehicle telematics sector from a number of experts. Life is very much a journey, and I’m happy to have you along with me.
Tristan Wiggill 2
TWA | Mar/Apr 2015
Publisher Elizabeth Shorten Editor Tristan Wiggill • tristanw@3smedia.co.za Head of design Hayley Mendelow Designer Ramon Chinian Contributors Terina Coetzee, Réhann Coetzee, Barney Curtis, Hentie Spangenberg and Michael Frans Chief sub-editor Tristan Snijders Sub-editor Morgan Carter Client services & production manager Antois-Leigh Botma Production coordinator Jacqueline Modise Marketing and digital manager Esther Le Roux Marketing specialist Philip Rosenberg Distribution manager Nomsa Masina Distribution coordinator Asha Pursotham Financial manager Andrew Lobban Administrator Tonya Hebenton Printers United Litho JHB • t +27 (0)11 402 0571 Advertising sales Hanlie Fintelman •h.fintelman@lantic.net t +27 (0)12 543 2564
No. 9, 3rd Avenue Rivonia PO Box 92026, Norwood 2117 t: +27 (0)11 233 2600 f: +27 (0)11 234 7274
www.3smedia.co.za Annual subscription: R300 (incl VAT) subs@3smedia.co.za ISSN 1684-7946 © Copyright 2015. 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
BEST WISHES FROM THE INDUSTRY Joseph Musariri,
by Barney Curtis, CEO, FESARTA
All change at FESARTA
Barney Curtis, who has run FESARTA since 1998, has decided to give it up and pursue other activities. His final day was 28 February 2015.
A
T THIS TIME, it is not clear what will happen to FESARTA. Either, it will be picked up by members of the National Road Transport Association (NRTA) and continued in a similar format, or it will be closed. It will be a sad day if the latter comes to pass. A major constraint to the sustainability of the association is a lack of funding. The member NRTAs are not able to fund it to the extent that the person running it could receive reasonable remuneration. This seriously affects its ability to source a CEO and continue into the future. Running the association voluntarily is not an option. A further concern is the lack of support from the East African NRTAs. They have gone so far as to create their own regional association, FEARTA (Federation of East African Road Transport Associations). In 2000, there was a name change from the Federation of Regional Road Freight Associations (FRRFA) to FESARTA. This was to reflect that the association was not just for Southern Africa, but for the whole of the East and Southern African region. This has been a key objective of FESARTA and it has been pursued with vigour. The East African NRTAs have clearly not embraced this objective. The bringing together of East and Southern Africa has also been an objective of the regional economic communities (RECs), SADC, COMESA and EAC, for many years. To be globally competitive, all the countries must work together and collectively compete in the global market. Working independently is not as successful and will not create the growth in the countries that we require. FESARTA continuously lobbied for the two sub-regions to work more closely together and not cause confusion among transporters, due
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to the differing legislations. The COMESA/EAC/ SADC Tripartite alliance was the result of this objective, and FESARTA played an important role in its formation. It is hoped that the Tripartite will eventually become one REC for the whole of East and Southern Africa. While FESARTA has not succeeded financially, it has certainly gained credibility among international donors and organisations. These include the World Bank, IRU, AfDB, UN, and the RECs, among others. They have seen the need for one regional association to represent the region’s transporters and lobby for their interests at regional and international forums. They do not want to work with individual country representatives. The two main regional objectives for FESARTA: •T he first key objective is the harmonisation of many items such as road-user charges, third-party insurance, load limits and overloading control, dimensions and equipment on vehicles, market access, transit bonds. This has been a strong objective of FESARTA, and the regional and international organisations. Progress has been made, though there is still a lot to be done. •T he second focus of the association is resolving non-tariff barriers to trade along the road transport corridors. Transporters face many obstacles as they move along the corridors and across borders. FESARTA registers these obstacles with the Tripartite NTB system and works with the system to resolve the problems. There has been success with this objective, though there needs to be much greater support from the RECs when it comes to negotiations with the countries creating the NTBs. There have been many good and challenging years with FESARTA, and it is hoped that the momentum will not be allowed to fade.
president, FCFASA Transporters and stakeholders in the region will surely miss your passion, involvement, openness and, above all, your wealth of wisdom and experience. You shared with me your challenges in running a regional apex body, but I never thought that you would eventually call it quits. I appreciate that you have to move on. Well done, Barney. You played your part. Life is a relay; someone has to take the stick and pass it on so the race can continue. Brenda Horne Ferreira, CEO, Southern Africa Shippers, Transport and Logistics Council Barney will be sorely missed in all areas of the industry. He was more often than not a humble, yet very effective voice in the regional wilderness. It is sad that, as is normally the case, his true value will only come to light when he is no longer there to drive regional integration in the area of freight trucking and all the challenges faced by the industry in their border crossings. As the Southern Africa Shippers, Transport and Logistics Council, we want to express our heartfelt appreciation to Barney and to wish him well in his new endeavours. We salute you, Barney. Andrew Crickmay, director, Crickmay and Associates Barney has played an important part in our own role in RTMS. His sage advice and gentle guidance have always brought calm to a situation and assisted in getting people with different perspectives to see each other’s viewpoints, for the greater good. From what we have seen, Barney has always taken responsibility and pushed issues, often at his own cost, and for this we all owe him a debt of gratitude. Thanks again, Barney, we will miss you.
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COVER STORY
The future
MERCEDES-BENZ
MADE PRESENT Mercedes-Benz consistently pushes the limits of contemporary research and development capabilities, striving to create more cost-efficient vehicles and systems to the benefit of customers and operators. Its new hypoid axles and ‘intelligent’ systems have truly brought the future to the present.
T ABOVE The Actros range continuously pushes the limits of fuel efficiency
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WO MERCEDES-BENZ Actros 6x4 truck-tractors, fitted standard with the latest Mercedes-Benz RT440 hypoid rear axles, have achieved significant fuel savings of more than 5% in test runs in the Eastern Cape. There are numerous ways to improve fuel economy in vehicles, including increasing engine efficiency, reducing aerodynamic drag and rolling friction, and improving the fuel quality among other things. Mercedes-Benz engineers have developed a new hypoid rear axle for the current Actros 2644LS/33 and Actros 2654LS/33 6x4 truck-tractors that were tested under everyday conditions along Mercedes-Benz South Africa’s (MBSA) well-known trial routes in the Eastern Cape. Mercedes-Benz
TWA | Mar/Apr 2015
Trucks combined the 540 hp OM 502LA engine with the RT440 hypoid rear axle in the Actros 2654LS/33, which replaces the other air-suspended 2650LS/33. It now has a 3.583 rear-axle ratio. Christo Kleynhans, MBSA trucks product manager, says: “The new RT440 hypoid rear axles make for the most fuelefficient Mercedes-Benz 6x4 truck tractors. In fact, the fuel saving achieved was 5.67% on the 2644LS/33 and 5.37% on the 2654LS/33.” It is an ongoing quest in which Mercedes-Benz Trucks – the first manufacturer to complete the launch of a full range of Euro VI-compliant trucks in Europe – continues to reduce fuel consumption and emissions in South Africa. Kleynhans points out that South Africa is well known for its unique operating conditions, and the trucking environment, which is spread across fleets ranging from exceptional to those in dire need of help, makes for a testing ground suitable for a wide spectrum of applications. “Due to the outstanding track record of the Mercedes-Benz Testing Department, it was an obvious choice to call on its expertise to perform the comparative test between the new hypoid axles and the existing hub-reduction rear axles,” elaborates Kleynhans. Independent testing, along with thorough research, also played a significant part in Mercedes-Benz introducing yet another innovative offering in the form of the Telligent
COVER STORY Maintenance System, which makes it 2011 to 2013, Fleetboard registered a comPERFORMANCEpossible for the trucks to inform operators bined savings of over R6 million and uptime BASED and drivers when it is time for a service. savings of 2 658 hours, in 658 cases. STANDARDS The first truck manufacturer to introduce FleetBoard provides impartial, comparaGive vehicle designers this product in South Africa, Mercedesble data from all vehicles of a customer’s more flexibility to use Benz Trucks (a Daimler Truck and Buses fleet. The system provides an overview of innovative solutions and the latest techbrand) is changing the maintenance and the mileage, operational status, consumpnology to meet the servicing mentality in the country. Moving tion, and deployment profiles of the drivers required performance away from preset service intervals, this at one glance, including an evaluation of standards. Vehicles product makes individualised service interthe overall driving styles. This will enable operated under the PBS framework carry vals possible by taking its cue from the the fleet manager to determine the causes heavier payloads on actual wear and tear on the vehicle. for high consumption and promptly address longer trailers. These The truck is designed to monitor the them to ensure correct deployment of trucks, vehicles are limited condition of the engine oil, transmission oil, thus increasing the economic efficiency of to travel on a certain axle oil and general service components the fleet. road network to ensure the protection such as air filters, fuel filters and brake From an environmental point of view, the of the road infrastrucpads, based on the operating conditions Telligent Maintenance System also scores ture and also ensure of the vehicle. This ensures optimum utilibrownie points for the manufacturer and adequate road safety sation of operating fluids and service parts the truck owner. Less frequent oil and filter is maintained. without risk to the service life or reliabilchanges equate to less of these items conity of the engine and driveline. The Telligent tributing to pollution. For an Actros to qualify Maintenance System stores information about faults, but for this unique value offering, it simply needs to be activated only alerts drivers if they need to take action. on either the CharterWay BestBasic or CharterWay Service Complete contracts available at Telligent Maintenance lowers total cost the nearest dealership. of ownership However, cancellation of the The 2013 State of Logistics Survey for South Africa, pubCharterWay contract will result in lished by the CSIR, attributes increased logistics costs in the vehicle returning to fixed serthe economy to be a factor of “a disproportionate growth vice intervals. Although this offer in cost drivers – especially fuel”. Logistics costs of R393 applies to vehicles sold with effect billion in 2012 escalated to R423 billion in 2013, and the from 1 May 2014, trucks sold prior CSIR forecasted this to stand at R456 billion in 2014. Telligent to May 2014 on a CharterWay contract are eligible to be Maintenance tells the driver or truck owner exactly what converted to a Telligent Maintenance contract backneeds to be serviced, and when. dated to 1 January 2014. Mercedes-Benz Trucks is a This leads to less time spent in the workshop, and more time technological pioneer in the South African transport where the truck and driver are productive. Effective usage of industry. Its cost-effective trucks and holistic fleet the system can realise a saving of up to 14% in service costs. management and maintenance systems provide local Optimal results will be realised if used in conjunction with operators with world-class equipment and administraFleetBoard – the benchmark vehicle management and tracktive capabilities that offer a distinct edge over their www.mercedes-benz.co.za ing system provided by MBSA. Over an 18-month period from competitors.
Telligent Maintenance indicates exactly what needs to be serviced, and when
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TWA | Mar/Apr 2015
7
REGIONAL NEWS
Read more on www.transportworldafrica.co.za
MALAWI
Egyptian investor launches Lilongwe-Lusaka bus service AN EGYPTIAN INVESTOR has
Officials inaugurate the bus service
SOUTH AFRICA
500 000 professional drivers unfit for SA roads THE ROAD TRAFFIC Management Corporation (RTMC) has warned freight and public transport operators/owners that it plans to hold them liable for the failure of their drivers to renew their professional driving permits (PrDPs). According to the RTMC, 433 973 or 43.35% of all PrDPs issued and recorded on the National Traffic Information System (e-NaTIS) as of 31 December 2014 have expired. The most offending provinces are Gauteng (49.84%), KwaZulu-Natal (43.69%) and the Northern Cape (42.55%). CEO of the RTMC Advocate Makhosini Msibi warned transport operators that the Road Traffic Act placed a duty on them to exercise proper control of their drivers and ensure compliance with all provisions of the law, including requirements in respect of PrDPs. Section 50 of the National Traffic Act imposes a responsibility on traffic authorities to suspend or cancel the licence of any operator if that operator has failed to exercise his or her duties in terms of the Act. Drivers are required to produce a medical fitness certificate and maintain a clean criminal record in order to obtain a PrDP. According to Msibi, the RTMC and other traffic enforcement agencies have stepped up their vigilance and will investigate all major accidents to establish the compliance level of operators. Unannounced inspections will be undertaken on operators’ premises to establish compliance levels throughout the year. Offenders that habitually overload will be identified and stringent measures will be taken against those found to be unwilling to comply with the law. Operators are cautioned to adhere to road traffic regulations and obey the rules.
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launched an executive bus service – Blue Bus – that will operate between the cities of Lilongwe in Malawi and Lusaka in Zambia, six days a week. Transport and Public Works Minister Francis Kasaila presided over the launch at Maula Mall in Lilongwe and outlined Malawi’s continued commitment to improving and ensuring sustainable transport services. He said government recognises the role of the transport sector in economic development and, as such, government will support the sector’s development, particularly that of roads. “Most Malawians cannot afford air transport, so we need to develop road
transport. Therefore there is need for good buses to operate between Malawi, Zambia, Mozambique, Tanzania and surrounding countries. “Zambia and Malawi remain very good friends and this bus service will boost our relations by providing affordable means of transport between the countries, hence promoting cross-border trade. As such, government wants more foreign investors in the transportation industry,” said Kasaila. In his remarks, Egyptian Ambassador to Malawi Maher El-Adawy said it is great that African countries are investing in other African countries and the bus service will be of great service to the two countries by boosting trade.
ANGOLA
Angola’s railway network vital to SADC development THE RAILWAY STATION near the Luau Airport and the trans-border railway bridge over Luau River, in the eastern Moxico Province of Angola, were recently inaugurated. According to Angolan head of state José Eduardo dos Santos, this represents a turning point in Angola’s history, with a view to moving towards the development of the Southern and Central African regions. The inauguration of the Luau Station puts an end to a 40-year stoppage of the train circulation in this region. With this, Luau begins to transform itself into a ‘big Angola's war-hit entrance’ for the rail lines are regional integraslowly returning tion of the African to life
continent; boosting regional trade, strengthening cultural ties and providing the basis for Angola to become a continental power. The presidents of Zambia, Edgar Chagwa Lungu, and the DRC, Joseph Kabila, attended the inauguration as countries that share a land border with Moxico Province. According to Angolan Minister of Transport Augusto Tomás, several accords have been signed with the two aforementioned neighbouring countries, which are also members of SADC. The minister also revealed that the rehabilitation programme of the railway network in Angola, from 2005 to 2015, represents an investment of about $3.5 billion.
REGIONAL NEWS
MOZAMBIQUE
National road gets $7.6 million rehabilitation injection THE SUB-SAHARAN REGIONAL Pipeline Corporation (SSRPC) recently selected Louis Berger to provide $7.6 million in consultancy services for the rehabilitation of the N303 national road in Mozambique. SSRPC is investing $350 million to transform an approximately 350 km-long narrow and unpaved carriageway into a modern road that crosses Tete province and ends at the Zambezi River – where Mozambique, Zambia and Zimbabwe share a common border. The modernised road will be the shortest link to a railway currently under construction between the coalrich province of Tete and the port of Nacala, the deepest port in Southern Africa. The road will offer a more costeffective transportation solution, increasing the flow of goods and mineral resources, particularly copper exports. “The rehabilitation of the N303 is vital not only for Mozambique but for the region as a whole,” said Jean-Pierre
Dupacq, head of Louis Berger’s operations in Africa. “The modernised road will greatly boost the local economy, which is mainly dependent on coal mining, by allowing the development of local, smallscale enterprises along the road.” overall, this modernisation project will encompass the rehabilitation, widening and/or reinforcement of the road and the existing structures; improvement of the alignment, pavement and signage design; drainage and ancillary works; as
UGANDA
Uganda extends e-cargo tracking system to Kenya UGANDA WILL EXTEND its electronic cargo tracking system (ECTS) into Kenya as part of a strategy to curb theft and the diversion of goods destined for its market through the port of Mombasa. The Uganda Revenue Authority said the two countries had struck a deal on the scheme to be implemented in a few months. “We are currently finalising the cost estimates of the requirements. Thereafter, we will do the procurements and go ahead with full implementation,” commissioner for customs Richard Kamajugo said. The main transit routes to Uganda from the port of Mombasa have been mapped for coverage by the Internet-based tracking system. “When all is done, goods destined for Uganda will be monitored all the way from Mombasa and Nairobi in Kenya up to their destinations in Uganda,” the official said. The tracking system is already active in Uganda where it was launched in May 2014. It comprises satellites, a central monitoring centre and special electronic seals fitted on cargo containers and trucks, which give the precise location of goods in real time. The system triggers an alarm whenever there is a diversion from the designated route, an unusually long stopover or when someone attempts to open a container.
well as the rehabilitation of 19 bridges. Louis Berger will be responsible for providing pure design services for the development of feasibility, environmental and social impact assessment and resettlement studies. The final beneficiary of the road rehabilitation project will be the government of Mozambique, namely the National Roads Directorate, with whom SSRPC entered into a public-private partnership type of agreement.
TANZANIA
ABOVE The road will pass through Tete province and end at the Zambezi River
Prof Samwel Manyele
Companies urged to train drivers on handling chemicals COMPANIES THAT TRANSPORT chemicals in Tanzania have been urged to send their drivers for special training on how to handle them, especially during loading and unloading, to reduce accidents. This was said by Chief Government Chemist Prof Samwel Manyele, prior to opening a two-day training programme for truck drivers involved in transporting chemicals within and outside the country. Prof Manyele said that, when dangerous goods are transported by road, an accident could cause considerable harm to people and the environment, thus training those particular drivers was crucial.“As a hauler, you need to be aware of the laws on transporting
dangerous goods by road, and the procedures involved in classifying such goods,” he said. He added, “It is vital to increase awareness. In 2014, a total of 11 chemical accidents occurred, resulting in death and destruction to property.” Prof Manyele said that continuous efforts to improve safety during transportation and the associated handling of chemicals are part of the overall aim to improve the safety performance of both the chemical and transport industries. He made it clear that transportation companies should also consider registering their drivers to reduce unnecessary harm; adding that many if not most products used in everyday life are made from chemicals.
TWA | Mar/Apr 2015
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HOT SEAT
TATA MOTORS
PRIMED FOR
Africa
Transport World Africa puts Rudrarup Maitra in the hot seat, during the South African launch of the Tata Prima extra-heavy vehicle range. Rudrarup Maitra Head Sales - International Business Commercial Vehicles Tata Motors Limited
I
S SOUTH AFRICA the first African country to receive the Prima range? RM This is the first official launch of the Prima range in Africa. Having said that, we have seeded a few units of the Prima LX variant in Kenya, Tanzania, Uganda and Mozambique, and have received very good responses from our customers.
What type of presence does Tata have on the African continent? We have a presence in most of the major markets in Africa. We are represented in Angola, Côte d’Ivoire, DRC, Ethiopia, Ghana, Malawi, Morocco, Namibia, Nigeria, Senegal, Sudan, Tunisia, Uganda, Zambia and Zimbabwe (not to mention South Africa). In all these markets, we have a fairly large presence in the commercial vehicle segment and Tata vehicles are quite popular among customers. As far as commercial vehicle market shares are concerned, we have about 13% in Kenya, 36% in Tanzania and about 68% in the medium and heavy commercial vehicle market in Mozambique.
How is the Prima suited to African conditions and
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markets? Thanks to our decades of experience in Africa, we have studied and understood the customer requirements in a detailed manner. The aggregates of the Prima range have been customised to the operating needs of our customers. Customer needs have been mapped and the features have been fine-tuned to the specific applications of specific customers. There has been a lot of collaboration from our global vendors and we have sourced the best aggregates from across the world to bring a truly smart truck to our customers. Years of testing have also given us flexibility and an understanding of what is required for a particular market.
The testing regime for the Prima has been quite extensive... It has; we completed twoand-a-half years of rigorous local testing at Gerotek. We also conducted extensive field trials in Kuwait and the UAE in very hot and dusty conditions. Then we went to Russia to evaluate the Prima in extremely cold conditions. The temperature range we tested the Prima in varied from -35°C to 55°C – while
operating under extreme circumstances. This is apart from the OEM testing regimes conducted in India and South Korea. And of course, we also had to meet certain homologation processes in various markets as well.
Tata currently has a 6% share of the medium commercial vehicle and heavy commercial vehicle market in South Africa. What are your market share goals and how will the Prima help to achieve this? With the Prima range, we are entering the extra-heavy commercial vehicle segment wherein we had a very limited product offering before. This is a fairly new segment for us in South Africa and the Prima will allow us
to address a significant portion of the EHCV segment. Our market share will improve – and we are aiming at a double-digit figure at least. Having said that, it is more important that we have happy customers. Extensive work has been done in sales, after sales, training, and in the supply chain management of our parts supply to ensure customer satisfaction. We prefer to build higher CSI scores than chase increased market share at the moment.
The Prima range has an attractive warranty... The manufacturer warranty is indeed very attractive on the Prima range. For tractors, we are offering a four-year/450 000 km drivetrain warranty and for tippers it is four years/ 5 000 hours. We also understand that our clients operate across borders and, to take care of their interests, we provide a roaming warranty in 14 countries within Southern Africa. We believe that after-sales support must be uniform, regardless of country and staff. So we have provided rigorous sales and service
Trucks I Tractor Trailers I Tippers TWA | Mar/Apr 2015
HOT SEAT
training to our staff to benchmark against the best in the world.
The Prima is very much a global truck when you look at the engine and driveline suppliers used and the Eurocentric styling... We have a very long association with leading technology brands and suppliers. Tata has a joint venture with Cummins in India and we’ve used the aggregates of various vendors found in the Prima in the past as well. Our decision comes back to vehicle configuration and the need to aggregate best-suited products for each specific market.
and the UAE. The feedback we have received has been excellent. We are tracking infrastructure developments in East Africa very closely as they are a key driver for the demand of extra-heavy commercial vehicles.
Do you have plans to assemble the Prima range in South Africa? We have a local plant in Rosslyn, Pretoria, for predominantly the medium and heavy commercial vehicle segment. We want to add value locally and bring manufacturing closer to home. We will attempt to make some variants of the Prima in South Africa by the first quarter of 2016, which will reduce the cost of logistics in the supply chain.
Infrastructure development in Africa is big news right now... Our Prima tippers
Does Tata provide in-house financing?
have been designed with mining and construction projects in mind. They are ideal for road construction, among other tasks. We believe that we have an excellent range of products available, and we have already sold a number of tippers in India, Southern Africa, East Africa, Qatar
Yes; TACSA, our distributor for trucks and buses in South Africa, has set up TACSA Financial Services, which helps our customers get quick and easy financing. We have a relationship with WesBank that allows us to offer preferred financing rates to our esteemed customers.
What plans do you have for the 2015 Johannesburg International Motor Show? We will show fresher variants of the Prima, which will address the needs of different subsegments. New products will also be launched. We are very excited about our prospects and are encouraged by the enthusiasm we’ve received from financial institutions and customers during the launch of the Prima. After the show you will see a resurgence of Tata Motors in South Africa, with a fresh look and feel.
Tell us about the parts distribution centre... We have an excellent warehousing system in Johannesburg and TACSA ensures a 24- to 48-hour delivery time in South Africa for all available parts. Our spare-parts warehouse near Mumbai, India, receives parts from six different plants spread across the country and several hundred vendors within specified time lines. All fast-moving parts for the Prima have already been
stocked in South Africa to service our customers.
Tata has a workhorse perception. How will Prima change this, while remaining affordable? We have really focused on the looks, design, comfort, driving experience and safety aspects of the Prima. The positive feedback shows that our customers are recognising that this is a newgeneration truck. With a bestin-class Cummins engine and Eaton/ZF gearbox, it is truly one of the best drivelines in the world in its segment. It will take time before we are recognised as a brand that offers true value trucking at its best. The Prima offers the best of every world and can stretch the rand without compromise. In today’s economic environment, we all could do with some of that.
www.tata.co.za
TWA | Mar/Apr 2015
11
COMMERCIAL VEHICLES
MCV demand fastens FMCG companies are increasingly buying medium commercial vehicles (MCVs) for intra-city, as well as inter-city, deliveries writes Réhann Coetzee.
F
The Fuso Canter LIFT
MCG IS ALL about speed,” says Danie de Beer, general manager of Hyundai South Africa’s commercial vehicle division. “The need for smaller vehicles will increase, because a smaller vehicle can be operated at a much lower cost per kilometre than traditionally bigger vehicles. One size does not fit all anymore. We have seen a move from customers to improve efficiencies rather than downsizing - or upsizing - their vehicles for eventualities. Customer planning today is far more effective in ensuring optimum cost efficiency versus productivity.” De Beer believes a wide product offering is a competitive advantage. “Depending on the task, a customer can choose from the H1 panel van, H1 Multi-cab, the trusted H100 bakkie or the HD72 truck with its gross vehicle mass of 7 200 kg. All our vehicles come standard with service plans of varying parameters and 24-hour roadside assistance valid for the same period as the warranties. The parts basket on all our models is competitive because we regularly benchmark ourselves against our competitors. The economic lifespan of our vehicles extends far beyond the warranty and service plan expiry dates, and it is a well-known fact that our vehicles are sought after in the used vehicle market.” Fuel consumption is a key customer concern. Our truck, for instance, achieves up to 696 km/l even when fitted with a large closed-van body,” he motivates. De Beer
says customers are more informed – and more demanding – as the web becomes more accessible. “People constantly chase convenience. Consumers want to click and someone must deliver. Small to medium vehicles cater perfectly for this. One customer, in particular, handles the deliveries of a big supermarket chain. Our vehicles are a good fit for them because they predominantly deliver in residential areas.”
A lift when you need it Head of Fuso Trucks in South Africa, Godfrey Hani, says technology and process innovation ensure modernity and lend the company market relevance. “Our latest medium commercial vehicle, the Canter LIFT, offers the latest in technology to improve the efficiency of running a truck. We believe this makes our vehicle most suited to FMCG applications.” Hani says an improved engine design offers increased performance at the lowest cost of ownership, while the Duonic AMT transmission has a maintenance-free dual wet-clutch with zero torque interruption. “This transmission offers a smooth gear change, with no loss of momentum. And EcoMode ensures that the gearshift pattern is always the most fuel efficient,” he says. A pre-drilled chassis allows for different body fitments, without having to drill new mounting points. “All AMT models are fitted with stabilisers, for better handling and stability when long- and high-bodies are fitted. The vehicle also has full disc brakes with dual callipers on all wheels. Air-conditioning, central locking and cup holders for driver and passenger come standard, while fog lamps and a driver-side SRS airbag raise safety standards,” he concludes. The Canter LIFT has a 20 000 km service interval as standard, which can be increased to 25 000km.
2015 sales forecasts “I believe there will be growth in certain segments of the market, mainly due to expansions, while older vehicles will continue to be de-fleeted by customers,” says De Beer. “There seems to be a trend of outsourcing again, this means good news for warehousing and logistics suppliers. Some of the big service providers are buying out smaller operations and this should also mean acquiring new, more economical vehicles to service the contracts they have.” Hani says he sees the FMCG sector growing as part of the general growth in medium commercial vehicle sales this year. “The increase of e-commerce in the FMCG sector will guarantee growth.”
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TWA | Mar/Apr 2015
COMMERCIAL VEHICLES
Benefits of using Takt
SCANIA Takt is a Swedish word that indicates the pace of assembly that is needed to meet customer demands. Tristan Wiggill discovers how one extra-heavy truck manufacturer is using Takt while ensuring safety, quality and on-time delivery.
S
WEDE TOMMY SVENSSON, production director at Scania South Africa, explains that Takt is one of six sub-principles employed in the global Scania production system used at the Aeroton assembly plant. “Without Takt there is no balanced flow. Takt reflects customer demand and the capacity to meet that demand. At the same time, it can help identify problems (deviations) on the line,” he says. The company also uses Real-Time Management (RTM), which is about following up in real time, looking at deviations, and providing short-term and then long-term solutions to eliminate them. In this way, assembly deviations are identified immediately so that safety, quality and timely delivery, always in that order, can be consistently achieved. A meeting is held after every unit is built to track deviations. “We always want to deliver safety, quality and be on time, and we do this by following the standards that we have developed,” he says. These methods and tools resulted in a 35% increase in production in 2014, without adding a single additional operator to the line. The assembly plant was opened in 1995 and is used to assemble trucks and buses for local and crossborder customers. Fully knocked-down components arrive at the facility from Europe or Brazil, after which they are fashioned into complete trucks and buses in single, ninehour shifts. All vehicles are made using standardisations within Takt time (which includes aspects like workloads). Tools and methods are used tactically within the line in every single Takt, every day, and every week. A vehicle is
completely assembled in 48 minutes, which equates to 13 units (from 13 Takts) a day or 2 860 units a year. Typically, this comprises 11 trucks and two buses daily; depending on the specification of the bus (rear-engined buses take longer to assemble). Total production capacity is 3 100 units per year, which could be reached without employing more people, investing in machinery or adding shifts. Svensson elaborates, “We strive to work smarter, not faster. “It is not about management giving orders to the staff and telling them what to do. We support our assemblers through training, giving them responsibility and encouragement so that they find solutions for themselves and own their own space.” To this end, Tommy team leaders are appointed and given Svensson, production director, an improvement team to manage, teach, Scania South Africa train and motivate. “Staff must have insight into what they are doing because they are qualified to identify deviations in real time and understand where these deviations originate. Operators then report these deviations so that we can solve the problem in real time. “We always refer back to the ‘Scania House’, which is a metaphor for the tools and methods of production here, and around the world, and which requires compeTOP Assembled tence and leadership to implement,” he adds. Due to trucks line up continuous improvement, the lines are able to meet before quality the future demands of the company, in the most efficient inspections are way possible. performed
“We always want to deliver safety, quality and be on time.”
TWA | Mar/Apr 2015
13
TRAILERS
Custom design
comes to life
The one-design-fits-all trailer is dead and buried, learns Réhann Coetzee.
R
ATHER THAN MASS produce, the trend nowadays is to design and build tailor-made trailers for the specific needs of customers. “Although our basic-design commercial trailers still thrive in a healthy market, it happens more and more that customers ask for a custom design,” says Johnny van Rooyen of Johannesburg’s Trailrite Trailers. “We often complete custom-builds. In fact, we design and build as many commercial trailers as we sell standard products. Lately, we have been designing and building trailers for fleet maintenance companies for vocational use in local government. We’ve recently designed and built trailers to transport a large number of industrial lawnmowers.”
“Although our basic-design commercial trailers still thrive in a healthy market, it happens more and more that customers ask for a custom design.” Johnny van Rooyen, Trailrite Trailers
Trailers are custom-made to fit the needs of customers
14
Loadshedding has propelled innovation. “We were approached by a supplier of generators. His clients needed the generators to be more mobile, so he asked us to design trailers for his product offerings.” Van Rooyen says you need to be flexible to stay in the trailer game. “If you believe your product offering is the only one that customers would ever need, you are wrong. You need to listen to your customer and stay on top of developments. “An interesting request recently was from a service provider in the mining industry. We generally build trailers that are used as a means to transport goods from point A to B. But, for this client, we
TWA | Mar/Apr 2015
designed and built a trailer with a lighting setup that can extend very high and then fold up in a fairly compact space when it needs to be transported again.”
Smart trailers Marius Kearney, sales and marketing director at Payloader Kearney, says his company’s philosophy now is to offer ‘intelligent’ trailer technologies to customers by providing solutions that are safer, offer lower costs per kilometre to the operator, have improved longevity, and boost productivity. He says customer-driven innovation is a cornerstone of this new approach. “We have developed a manufacturing process that uses the best design tools, materials and components available in the world market.” Kearney says, by using the best imported products available – from 3D-animation design tools to high-tensile steel, premium quality running gear and ancillary equipment – they are able to significantly push the payload envelope without compromising on build strength.
Fit for purpose It is important that a trailer be built for the purpose it will serve. “You need to plan around your tow vehicle. Your vehicle load capacity and needs must all be in proportion,” says Van Rooyen. “You can always upgrade later when your budget allows for a bigger tow vehicle, or just buy an extra trailer if you have another tow vehicle. “The aerodynamics of a box-shaped trailer is important; not only for fuel economy, but it will also make the trailer more comfortable to tow due to less buffeting. Kearney says a new range of interlink side tippers featuring a patented constantvelocity hydraulic tipping action that eliminates stresses, shock loads and stability issues during the tipping process is availible.“This is the only side tipper of its kind in South Africa, and its merits are being proven in top fleets. It has a low height, and therefore a lower centre of gravity, making it the most stable side tipper on the market. “Technologies such as electronic braking sytem (EBS), roll-over prevention, electronic stability programme (ESP)
TRAILERS
and automated tyre inflation also boost overall vehicle safety,” he adds. “The constantvelocity 45-degree tipping action discharges product away from the vehicle in a smooth stroke, effectively improving vehicle longevity by reducing stress on the hydraulic rams, load bins and trailer chassis. The use of Domex steel and low-maintenance, European running gear has brought the
for trailers and meet customer demands in multiple operations.
“Lowering trailer tare mass and total cost of ownership is the holy grail of trailer manufacturing,” says Kearney. “We have an exciting basket of products to really drive the industry forward in terms of safety, durability, overall cost-efficien-
their trailers. “We have managed to save from 15% upwards of the total weight of the trailer. Although these materials are 10% more expensive than steel, it saves time, there is less welding needed and less distortion. Joining can be done with adhesives and this works especially well with event trailers. As always, buyers should beware because some manufacturers do not fully comply with
trailer tare mass down significantly, allowing for a class-leading payload of 38.4 tonnes. With this new approach, Payloader assists the industry by providing the necessary technology available, to create that safety net
cy and payload productivity, because quality is long remembered after price is forgotten.” Although people may think steel is steel, says Van Rooyen, they have started using composite materials for specialised bodies on some of
legislation. “Be very careful where you buy. It might seem cheaper initially, but there are reasons for paying less than what reliable and trustworthy manufacturers would charge for their products,” he cautions.
Weigh-in
TWA | Mar/Apr 2015
MMI
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FLEET MANAGEMENT
FAW TRUCKS
Partnerships critical to
success Norma Mansoor, sole owner of a readymix concrete supplier, is an extraordinary woman in many respects.
N
ORMA STARTED HER own business three years ago with a loan of R450 000, one FAW 33.330 FC 6 m3 mixer truck – which she drove – and a small plant in Olifantsfontein, outside Pretoria. Today, she runs a fleet of 10 personally owned FAW 6 m3 readymix vehicles, an 8 tonne FAW flatbed, and owns two plants – with possibly a third on the horizon. “The mixers in my fleet provide great cost Norma Mansoor, owner, Mix Masters efficiencies and are real ‘die-hard’ trucks,” she testifies. “They are robust, get the job done and seldom, if ever, have downtime – critical in my line of busiactive in the concrete industry, she has moved through ness. The chassis are sturdy and strong, and the drivetrain the ranks at a pace seldom seen – from processing prois simple and easy to maintain. I think it’s the simplicity of duction orders and programming truck logistics to sales, the vehicles that contributes to so little going wrong with before ultimately becoming a key account representative them.” Vehicles under warranty are serviced through the to the blue-chip clients of her employer at the time. Norma manufacturer’s network, while a full-time diesel mechanic was the youngest person and only woman in the company services older ones on-site. to be offered a production plant manager position. She Norma has built her reputation on a superb underbranched off and became one of the most-renowned standing of her concrete products, and an exceptional regional brokers in the readymix concrete industry. understanding of the challenges facing customers and In 2011, Norma took the plunge and, with a great track their logistics frustrations. What makes her unique are the record in hand and a lot of guts, she approached aggreprinciples and values she applies to her business. One gate supply companies who were prepared to extend seldom sees her type of commitment to her customers, as a line of credit from the beginning – highly unusual in she will personally stay on a customer’s site when there this business. are logistics issues. She will stay into the dark hours to “I run a tight ship with a highly hands-on style. My manensure that a particular order is executed perfectly. She agement team consists primarily of my daughter, who demands respect for herself and her employees, looking is responsible for all our logistics planning, my trusted after their needs before her own. accountant and cost controller, and my operations man“Honesty, integrity, respect and self-belief have contributager. But I also allow my team to make decisions based on ed to my success,” she claims. “I’m privileged to have had their expertise – that’s how I learnt over the years, so that’s a number of superb mentors. All of them are well known in how my team members manage their portfolios. this sector, believed in my passion for the business, and My drivers are well trained, love their trucks and look after saw that I was prepared to learn and work hard. They treatthem as their own, and I hold them responsible for quality ed me as a serious professional and not merely a ‘woman’, driving and keeping our running costs in check. They, too, and gave me the opportunity to grow my knowledge and share in the business responsibilities and contribute to experience.” During the three decades Norma has been our collective success – we are a real family-oriented and partnership-based business.”
“My drivers are well trained, love their trucks and look after them as their own, and I hold them responsible for quality driving and keeping our running costs in check.”
TWA | Mar/Apr 2015
17
2nd Annual
COAL TRANSPORTATION AFRICA SUMMIT
Date: 19 & 20 May 2015
Venue: Indaba Hotel, Fourways, Johannesburg
CONFIRMED REGULATORY SPEAKERS
CONFIRMED INDUSTRY SPEAKERS
Sipho Khumalo Chief Executive Officer CROSS BORDER ROAD TRANSPORT AGENCY (C-BRTA)
Rowan Kartsel Chief Executive Officer BEACON HILL RESOURCES PLC
Mahesh Fakir Chief Executive Officer PORTS REGULATOR OF SOUTH AFRICA
Divyesh Kalan General Manager: Group Commercial TRANSNET SOC LTD
Whity Maphakela Director DEPARTMENT OF TRANSPORT
Brenda Horne Ferreira Chief Executive Officer SA SHIPPERS COUNCIL
Pheaga Gad Kwata Director: Small-Scale Mining DEPARTMENT OF MINERAL RESOURCES
Siobhan Fox Business Development Manager : South Africa WALVIS BAY CORRIDOR GROUP
Carel Snyman Senior Manager SANEDI
Nico Singh Middle Manager ESKOM
Kgomotso Modise Deputy Director: General-transport DEPARTMENT OF PUBLIC ENTERPRISES
• • • • • •
SPECIAL OFFER!!! Register and pay for 5 delegates and receive the 6th delegate FREE
STRATEGIES TO BE DISCUSSED INCLUDE:
The role of the Ports Regulator within coal transportation Transnet’s next step in creating export capacity Enhancing productivity and sustainability in the transportation of coal by road Collaborative advocacy to ensure coal supply chains are optimised Eskom Coal Transportation by Road – call for industry standardisation towards safety Innovative logistics solutions to ensure economic viability of coal supply- practical example
•
• • •
Addressing the guidelines associated with small scale mining Discussing current infrastructure and future developments to improve the logistic capacity and efficiency in Mozambique Transporting coal – an energy analysis Working in synergy with neighbouring countries to seamlessly transport coal on a national and international scale
ITC is a proud member of:
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FLEET MANAGEMENT
CTRACK
Wireless technology use to increase The degree of wireless penetration in the local fleet management sector is set to increase as new distribution deals are concluded.
A
CCORDING TO a recent report by Frost & Sullivan, telematics penetration in South Africa is expected to reach 22.5% by 2021. Ctrack COO Mark Rousseau says that some of the main factors driving the country’s interest in telematics include volatile fuel costs, a competitive automotive insurance industry, and a high incidence of vehicle theft, poor driving habits and road accidents. He says unique features, optimised for telematics applications – such as advanced diagnostics with dual accelerometers, highly sensitive GPS technology, programmable platforms, and 3G/4G LTE certified network options – will be made available in a variety of compact designs for a variety of vehicle types this year. Despite a new agreement with international wireless hardware providers, Novatel Wireless Technologies, the company is proud of its local concerns. “We have a manufacturing and
assembly facility in KwaZulu-Natal, where our telematics units are currently produced for both local and export markets.” He says operations at the local production plant will remain unaffected for the time being, as the company looks at streamlining its operations to ensure that it improves on its revenues. “There are hundreds of data points that owners and operators can use to improve operations and there is no one-product-fits-all solution. Our intellectual property – especially our firmware – will drive the success of these products in the market. “We’ve spent decades refining our algorithms and conMark Rousseau, COO, tinue to spend millions of rands Ctrack South Africa per annum on research and development of our back-end Key Frost & Sullivan research findings processes,” he explains.
“There are hundreds of data points that owners and operators can use to improve operations and there is no one-product-fitsall solution.”
• T he evolution of the value chain with new entrants, alongside local partnerships, will drive market growth. • T o cater the needs, the telematics industry must improve technological and service infrastructures. •C ontinuous growth is expected in the demand for telematics services involving vehicle maintenance and driver management. • T he South African commercial vehicle telematics market is considered to be price sensitive and a highly competitive environment. • T he lack of proper government regulation and standardisation presents a daunting task for new entrants. •S outh Africa offers relatively significant opportunities as a sizable part of the commercial vehicle telematics market is still untapped. • T rends within large fleet operators are increasing towards real-time data and integrated platforms. •V ehicle OEMs are fairly new to the CV telematics environment in South Africa. They are expected to partner with third party vendors, encouraging customers to use telematics to improve fleet functionality and efficiency. •A rapid shift in focus towards mid-tier and high-end services is expected after 2016. TWA | Mar/Apr 2015
19
FLEET MANAGEMENT
Unlocking data consolidation Information has become essential for improving efficiency and driving competitive edges across all industries.
T
HE TRANSPORT and logistics sector is no exception and, as a result, telematics and transport management systems are increasingly being embraced. However, despite the wealth of information delivered by telematics systems, many fleet owners and logistics organisations remain unable to unlock any insight from this data, since there are so many proprietary solutions that do not integrate with each other. Being able to utilise this information to improve processes and control, and thus deriving maximum value from telematics data, requires a centralised platform to consolidate data. This, in turn, enables fleet owners and logistics providers to holistically control and manage their operations, without being forced into a single service provider situation.
Complexity Transport and logistics companies are faced with a level of complexity when it comes to leveraging telematics data. OEMs are driven to implement their own telematics systems, and with this abundance of different systems, the
20
TWA | Mar/Apr 2015
By Michael Frans*
availability of data is not necessarily the problem. However, this information may be uncoordinated across the various systems, which can cause complications for logistics companies. The challenge remains achieving the insights necessary to improve fleet control, optimise fleet management, analyse vehicle deployment, and compile information in a centralised management portal. Logistics companies need to be able to simplify dispatching, deploy fleets more efficiently; check up on the status of goods in real time; and leverage real, value-adding insight from their data. As smart cities become a reality, logistics companies and fleet owners also need to implement a future-proof and flexible information interface that will enable them to understand, among other elements, how their fleets impact on traffic and how data from the city will impact on their business. The key is to link logistical and technical fleet information, integrating this data to minimise downtime and improve efficiency. Telematics systems are used increasingly in the transport and logistics sector, where the focus is particularly on
FLEET MANAGEMENT
truck telematics. When trucks and trailers are combined into convoys, however, valuable information is often lost, or manual data reconciliation between different systems is required. This results from the previously mentioned abundance of proprietary telematics solutions that have limited integration capabilities.
Centralised In order to improve competitiveness, logistics service providers require central data visualisation or a standardised interface, independent from vehicle manufacturers or telematics providers. If they can be integrated into a vendorneutral portal or platform to provide consolidated data and analytics, telematics solutions can offer transport and logistics a number of benefits. Precise, up-to-date information enables better utilisation of the fleet and the minimisation of waiting times and empty runs. This in turn results in an increase in overall productivity, a reduction of costs, and the full documentation of transport histories. In addition, right-time information on the flow of goods is increasingly required in order to optimise and control the logistics processes. This essential information is currently provided in incomplete form only, which limits its applicability. Open-source platforms that bring data together from various systems enable fleet owners to unlock the value of their information and connect with customers, while still purchasing vehicles and/or traditional tracking systems, regardless of brand. To be sure of success in the long term, transport and logistics providers need to operate economically and cost-effectively, and must offer their customers an attractive service by delivering goods reliably and on time.
Deriving maximum value from telematics data requires a centralised platform to consolidate data
The big deal about big data •A dvanced telematics, and the ‘big data’ that can be derived from it, is more than just a device that spits out a whole lot of information. It’s an end-to-end solution – implemented in close collaboration with a service provider – that makes continuous improvement possible. • ‘ Big data’ gives businesses the ability to capture, integrate and analyse data from vehicles and drivers. This real-time insight represents multiple opportunities to boost efficiency and safety performance. • T he use of ‘big data’ in telematics bodes well for businesses and fleet managers alike, as it allows them to track and monitor drivers, field workers, vehicles and other mobile assets such as forklifts. • T he ability for ‘big data’ to be transferred over a network requires little human interaction. Accessing this data is easy for fleet owners and managers. When it comes to the reporting and analytics, this is where your service provider should be by your side, converting the data into intelligence value. The concept of fitting a black box for a customer and ‘abandoning the mission’ is fortunately becoming outdated. This approach is no longer sufficient when you consider the massive opportunities that fleet management offers. *Courtesy Steven Sutherland, Mix Telematics
Integration Integrated, vendor-neutral telematics platforms enable a full array of services: from fleet control to fleet management, vehicle deployment analysis and a maintenance portal. Using real-time data and smart solutions, providers can instantly locate vehicles and retrieve all important data with the click of a mouse, opening up a host of possibilities. Integrating telematics data into a vendor-neutral platform enables central data visualisation, a standardised interface for monitoring order-related vehicle and cargo data, customer-specific connection facilities for logistics systems, data integration of truck and trailer telematics systems, and more. By integrating telemetry devices and data from vehicles into cohesive, integrated information platforms and providing insight and analysis, consolidated telematics platforms enable smart decision-making and improve operational efficiency. Logistics providers are empowered to holistically control and manage their operations, without being forced into a single service provider situation. The ultimate goal is to see improvements in profitability through the employment of intelligent tech nology.
*Michael Frans, head of business development, Business Operation Automotive, T-Systems, South Africa
TWA | Mar/Apr 2015
21
FLEET MANAGEMENT
Solutions needed
for road transport challenges MIX TELEMATICS
factor. The benefit of digital communication bodes well for businesses and fleet managers, allowing them to track and monitor drivers, field workers, vehicles and other mobile assets. However, to ensure efficiency, safety compliance and security – in the drive to becoming a digital business – fleet managers should constantly be on the lookout for tailored telematics products and services. Choose a supplier that doesn’t ‘cookie-cut’ an offering, but rather endeavours to understand the business operation in isolation to other businesses.
Technology
Fleet operators face a number of inescapable challenges that have a huge impact on their bottom line. By Steven Sutherland*
A
FRICA IS BOUND to global oil fluctuations and, as such, the fuel price is constantly changing – leaving businesses with very little room to plan effectively. Fuel is a critical pillar in the effective operation of fleet businesses, so managers need to look for ways to reduce this expenditure. A proven way of doing so is to address the driving events that increase fuel usage, such as route divergence and, very importantly, driver behaviour. Excessive idling and speeding means excessive fuel consumption.
Carbon emissions Should the government go ahead with carbon taxes in 2016, as proposed, it will see businesses pay R120 per tonne of carbon dioxide emissions on 40% of their direct emissions. A fleet that emits 18 500 tonnes of carbon per year, based on a business with, say, 600 vehicles each carrying 33 tonnes and each travelling 200 000 km per annum, will cost R885 000 per year in taxes.
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While the reduction of carbon emissions is a long-term goal, fleet owners are at the epicentre of the dilemma and should be taking the necessary steps to support the change process. Reducing fuel consumption, then, brings the added benefit of pre-empting the effect of carbon taxes on top of the cost-saving benefit of using less fuel.
Driver safety While legislation is not currently in place to monitor driving hours, driver fatigue remains one of the leading causes of accidents. Maintaining serviced vehicles, including proper tyre management, is another challenge made easy through fleet management technology. Now more than ever, operators need to identify and commit to a comprehensive solution they can rely on for the smooth-running, maintenance and organic growth of their fleets. As the market shifts to a highly digitised environment, the fleet management mix, and the value it delivers, will become more accessible and more appealing to fleet owners. Telematics, as a result, is also becoming more integrative, which furthers the convenience *Steven Sutherland is sales director for South Africa and Africa at MiX Telematics
Advancement in technology also positively impacts cross-border operations and the risks associated therewith, such as hi-jacking and vehicle-location monitoring. A comprehensive fleet management solution that uses GSM and GPRS, or satellite tracking, places the muchneeded control in the hands of fleet managers. It also helps them to protect and support their drivers, in case of emergency. As the technology landscape changes in Africa, the role of mobile devices in the telematics space represents great growth potential. While business owners may not be able to archive and back-up systems, or may not have the resources to engage in expensive IT systems or even have access to electricity, they often run their entire business using a mobile device. Forward-thinking transportation and logistics managers are seeking new ways to compete in challenging markets, by making use of mobile technologies that support telematics. Fleet management via mobile translates into real efficiency, as it allows managers to quickly and easily make decisions and take corrective action. Knowing where a vehicle is in relation to a customer site, and assigning jobs accordingly is one way in which efficiency and service can be boosted. The positive impact that innovative, premium fleet management has on a business cannot go unnoticed. And correctly implemented solutions can pay for themselves within twelve months.
www.mixtelematics.co.za
FLEET MANAGEMENT
Discover end-to-end supply chain solutions at the 37th Annual SAPICS Conference The leading event in Africa for Supply Chain Professionals
the pulse of africa’s supply chains
Conference Date 31 May - 2 June 2015 Sun City Register at www.sapics.org.za +27 (0) 11 023 6701
Partner Associations:
TWA | Jan/Feb 2015
23
FUEL
Taxing times for transporters world, but not necessarily in places that are very stable. Also, shale gas has a big influence on the oil price and should contribute to keeping fuel prices lower. “However, due to the high cost of extracting shale gas, some plants might have to close down and the oil price will react to that – increasing to around $60 or $70 a barrel.” Schüssler says, at the current low oil prices, there will probably be a shortage of oil in the future. “This is because very few new oil fields will be developed due to the current low oil price. Another worrying factor is that the US dollar looks ominously strong against other world
The 30.5c per litre increase in the general fuel levy, as well as the 50c per litre increase to the Road Accident Fund levy has major implications for the transport industry, writes Terina Coetzee.
T
HE RETAIL PRICE of both petrol and diesel are set to cost somewhere between R1.50 and R2 less per litre than at the fuel price peak of April 2014, says Mike Schüssler, chief economist at Economists.co.za. “So there will still be a saving for transport companies, although not as big as it was earlier this year,” he says. “The future price of fuel really is a mystery. I have never seen such a wide variance between forecasts. Some economists are forecasting an oil price of as low as $20 a barrel of brent crude, while the general secretary of the Organisation of the Petroleum Exporting Countries (Opec) is aiming at $200 a barrel. “I think we can expect lower prices all round, but unfortunately, because of exchange rates, the saving here in South Africa will not be as big as elsewhere. Also, the increase in the general and Road Accident Fund (RAF) fuel levies have
ABOVE The retail price of fuel has seen major fluctuations in recent months
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increased the fuel price by more than might otherwise have been the case. His advice to transport operators is to look at inserting escalation clauses in their contracts. “That should stabilise profitability, even if it means that at times the escalation clause means you charge a lower fee because of a drop in the volatile fuel price.” He says there is enough oil in the
TWA | Mar/Apr 2015
currencies – including the rand. And because the oil price is quoted in dollars, there is a strong possibility that the rand might be heading for a huge drop. “I have no idea when, but it seems as if that is where we’re heading – another period of the strong dollar, like at the end of 2000. It might even be as bad as in the mid 1980s to 1990s, where fuel prices increased due to our weakening currency. Most economists are often wrong about commodity and currency prices, but I forecast a dollar-dominated, rather than Euro-dominated, future. The Euro will weaken against the dollar due to the uncertainty of European economies like Greece and Spain.” He says that instability in Eastern Europe will also contribute to the volatility of the Euro and drive investors to the dollar. “The next 10 to 15 years will be the dollar period. Some economists say there will be parity between the dollar and the Euro next year, and then the dollar will strengthen further. A subsequent cost of R12.50 for a dollar is a very real possibility. “I’m not an expert on the RAF, but there seems to have been some management problems in the past and it now needs more funding. There is greater pressure on the RAF because it has become a social security income. If an accident victim becomes disabled, he or she would find it much harder to gain employment and therefore the claim from the fund would be much higher than just for medical expenses.” The 50c per litre increase in the RAF fuel levy will add an extra R10 billion to the RAF’s annual revenue, while the 50c increase will raise its primary source of income from 104c to 154c per litre of fuel sold. This is expected to give the fund about R2.7 billion a month, from July. Minister of Finance Nhlanhla Nene said in his Budget Speech that the increase in the levy would be used to clear the fund’s backlog of R98 billion in unfunded liability. “Next year, I predict that government will again increase the tax on fuel by around 30c per litre and maybe another 15c per litre for the RAF. That might then close the huge shortfall. Within two years, the RAF should then be relatively healthy again, depending on how it is managed, of course.”
LUBRICANTS
Compatibility for better profitability
Y
OU CHOOSE your commercial vehicles for a specific business purpose. According to Hentie Spangenberg, technical manager at Shell South Africa, you should give the same level of thought and specificity to the choice of lubricants for commercial vehicles, in order to protect engines and prolong component life. “Shell understands the impact of lubricants on commercial vehicles, having worked with a lot of OEMs on engines across the world,” Spangenberg says. Over the course of its 150-year history, the company has built up specific knowledge on various engine types and their lubrication requirements. As technology develops, it continues to advance its own technology to ensure that its lubricants are compatible with the changes and advances in commercial vehicles.
In order to help fleet managers select the correct lubricant for their fleet, Shell has developed an online lubricant recommendation tool called LubeMatch. Originally designed for use by the company’s technical staff, the company has now made this information accessible to those interested. This gives fleet managers instant access to a vast bank of data on engines and driveline lubricants, including the quantities required and applicable oil-drain intervals. “Fleet managers can now match lubricants to their commercial vehicles,” Spangenberg continues. This is part of an added value that is offered across a number of sectors, including mining and manufacturing. “LubeMatch ensures that the lubricant is applicable for the vehicle’s components, design and use. Compatibility of the lubricant is important to protect the engine and prolong vehicle life. LubeMatch allows fleet operators to fully reap the benefit of high-quality lubricants by extending component life, uptime and drain intervals while saving time and money. All fleet managers will agree that this is critical to reducing costs and increasing profitability,” he concludes.
Using the right oil in your vehicle makes a significant impact on your bottom line. Shell scientists have carried out rigorous laboratory tests, which demonstrate that, if chosen and applied correctly, lubricants can save resources and deliver tangible business benefits.
Hentie Spangenberg, technical manager, Shell South Africa
TWA | Mar/Apr 2015
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CORRIDORS
T
HE DASHBOARD is generated from data that is sent to the Northern Corridor Secretariat (NCS) by various stakeholders. It commits both the public and private sector to undertake measures to increase efficiency in the port and throughout the Northern Corridor as a whole. Data is turned into reports, which are discussed at weekly meetings, and various interventions, including infrastructure, service delivery and operational efficiency, are proposed and deliberated upon. Reports are then presented to the Port Charter steering committee for validation and follow-up with key policy-makers. The first monthly Port Charter report, published in September 2014, showed that cargo dwell time was, on average, between 45 and 62 hours in Mombasa, while processing time, at the Document Processing Centre (DPC), ranged from 80 minutes to two-and-a-half hours. Dwell time is measured by the time that elapses from the time cargo arrives at the port
to the time goods leave the port premises after all necessary permits and clearances have been obtained. While greater levels of weighbridge compliance were recorded at the Mariakani and
foremost non-tariff barriers to trade in East Africa. Northern Corridor routes are considered to be among the most expensive trade routes in Africa. Key challenges include inadequate cargo offtake and delivery infrastructure within the precincts of the port, poor infrastructure and inadequate staff at the Malaba border post, the poor state of the Athi River and Gilgil weighbridges, inadequate acceleration lanes at the Webuye high-speed weigh-in motion scale, extortion at highway police checks, traffic jams, and overloading. There is no holding yard, warehouse or verification scanner at the Malaba customs office. KRA officers have decried the delays occasioned by the ongoing construction work of the OneStop Border Post (OSBP), which have pushed them to undertake the verification exercise on the Ugandan side of the border. Transit truckers have to contend with delays at the border due to operational inefficiencies largely caused by ongoing construction of the Malaba OSBP and inadequate staffing at the customs office.
Dwelling on
Mombasa
Transport World Africa takes a look at the port, corridor and maritime indicators of Mombasa, Kenya, as recorded in January’s Northern Corridor Performance Dashboard.
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Athi rivers, the opposite was true at Busia and Gilgil. Transit time, on average, between Mombasa and Malaba was recorded as anywhere between 60 and 100 hours.
Challenges Poor infrastructure and lengthy port and border processes have been identified as the
CORRIDORS
The OSBPs are meant to reduce the number of stops in cross-border trade and other transactions by combining border control activities of the agencies at a single location in each direction for each one-stop border crossing. The construction of the Malaba OSBP is still ongoing, contrary to earlier indication that the work was due for completion in early 2014. Lack of system integration and frequent system downtime have also been identified as major causes of delays at the border. Clearing agents frequently complain that drivers waste a lot of time at the border for personal reasons, thus contributing to delays in cargo delivery and increasing operating costs.
Dwell time It took an average of 5.02 days for cargo to be evacuated from the Port of Mombasa in the month of December 2014. This is considered to be an improvement compared to the November 2014 dwell time, but still lies well above the set benchmark of two days. The Kenya Ports Authority (KPA), in collaboration with other stakeholders, had wanted to achieve a dwell time below three days within four months of signing the Port Community Charter in June 2014. The charter requires that the agencies involved in clearance processes achieve a joint, effective and efficient physical
verification of cargo. This was to be done within the first three months of signing the charter to boost the clearance process. Yet average time taken at the DPC increased from 2.16 hours to 2.55 hours between the month of November and December 2014. Simultaneously, time spent at the One-Stop Centre increased by approximately one day –from 3.4 days to 4.4 days. Average time taken to evacuate cargo from the port after customs release increased from three days to 3.4 days, implying that the rate of cargo pick-up by transporters and traders is still low compared to the set benchmark of 24 hours.
Weighbridge traffic Gilgil registered the highest average number of traffic weighed in December 2014 followed by Athi River. Mariakani and Athi River showed a rise while Gilgil and Busia showed a drop in traffic volumes entering the weighbridge in December compared to November. Trucks that comply with weight limits pass through the high-speed weigh-in motion and are not diverted to the fixed weighing scale. Better compliance rates reduce the amount of traffic weighed at the fixed weighbridge. The high traffic weighed at Gilgil might be due to cargo that originated from Nairobi and its environs. Weight compliance at Mariakani and Athi River increased from 75.66% to 77.73% and 82.45% to 85.54% respectively. Busia Though port turnaround times are improving, there is still a long way to go
Rubber-tyred gantry crane at Mombasa weighbridge registered a compliance level of 90.31%. However, this is a drop compared to November 2014. Gilgil has also registered a drop in its compliance level. It is expected that all the trucks should achieve 100% compliance with very few exceptional cases.
Transit time Transit time in Kenya is an estimate of the period from the time cargo is removed from the Port of Mombasa to the time the export certificate is issued after crossing the border at Malaba or Busia. It includes delays after customs release cargo, the time before the cargo is evacuated from the port, and other delays along the corridor. Transit time from Mombasa to Malaba decreased from 7.8 days to 7.4 days between the months of November and December. Time taken to Busia increased from 8.9 days to 10.1 days. Several sections of the road to Busia from Nakuru through Kisumu are undergoing construction. Berthing time was reduced from 2.41 days to 2.31 days. Ship turnaround time was reduced from 6.5 days to 6.3 days. Container uptake at the privately managed container freight stations (CFSs) has helped to decongest the port. Cargo delivered to the CFSs is either client nominated or KPA nominated. All local cargo, and some transit cargo, is cleared from the CFSs. It is important that the policy establishing the CFS is followed to the letter to ensure that the services and charges at CFS are the same as the port.
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REGIONAL FOCUS
East Africa bordering Transport World Africa looks at the intermodal transport infrastructure in Kenya, Uganda, Rwanda, Tanzania and Burundi. authority unveiled development plans for the railways in May 2008, under the title Kenya Railways Vision 2050; this called for a 16-year overhaul that would involve laying 2 156 km of new railway line.
Jomo Kenyatta International Airport Caption please
KENYA Kenya’s extensive transport system includes road, rail, air, and coastal and inland waterways. The chief port is Mombasa, whose history predates the colonial era and which is now the largest port on the East African coast. It is operated by the Kenya Ports Authority (KPA). The port has 16 deep-water berths (of a draft of 10 m or more) and five container berths, plus oil jetties, bulk cement berths and other specialist facilities, including two dedicated passenger-ship berths. At times, the Port of Mombasa also serves South Sudan, the now landlocked Ethiopia, parts of Somalia and even north-western Tanzania. About 70% of all cargo handled today is container traffic, which is growing at around 12% per year. KPA expects to handle one million TEUs in 2015. The modern container-handling terminal at Mombasa was opened in 1983 with the capacity to handle 250 000 containers. KPA also operates the country’s three inland container depots: Embakasi, serving Nairobi; Eldoret; and Kibos, serving Kisumu. Kenya boasts one of the few profitable airlines in Africa.
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Kenya Airways (KQ) has operated its own international service since the break-up of East African Airways in 1977. In 1992, it underwent major reorganisation, in preparation for partial privatisation and, in 1992/93, the airline turned its first profit. The airline’s route network has expanded rapidly, especially across Africa. It flies to 23 African countries, and serves five Kenyan destinations daily. Its long-haul destinations extend to London, Paris and Amsterdam in Europe, and Guangzhou, Hong Kong and Bangkok in the Far East.There are two international airports in Kenya: Jomo Kenyatta International in south-eastern Nairobi and Moi International Airport at Mombasa. Wilson Airport in south-western Nairobi, Eldoret Airport and airports at Malindi and Kisumu handle internal flights. A 590 km road between Kitale and Juba, in South Sudan, provides an all-weather road link between that country and Kenya. The railway in Kenya was built between 1896 and 1901. It runs from the coast at Mombasa, through Nairobi, to western Kenya, and on to points in Tanzania and Uganda. The East African Community (EAC)
UGANDA Uganda’s road network consists of approximately 10 000 km of national or trunk roads (of which some 2 200 km are bituminised, and the rest gravel), 25 000 km of district or feeder roads, 2 800 km of urban roads (comprising roads in Kampala City, the 13 municipal councils and the 50 town councils in the country), and 30 000 km of community roads. There are also private roads, some of which are open to the general travelling public. Road transport remains the dominant mode of transport in terms of scale of infrastructure and the volume of freight and passenger movement. The national road network carries 80% of Uganda’s passenger and freight traffic; it includes international routes linking Uganda to neighbouring countries and the sea (via Kenya and Tanzania), and internal roads linking highly populated areas and large administrative and commercial centres. It provides the only form of access to most rural communities. The government is implementing a programme of continuous upgrading of key gravel roads to bitumen standard. A rail wagon ferry service connecting Jinja with the Tanzanian
Port of Tanga, via Mwanza, was inaugurated in 1983, thus reducing Uganda’s dependence on the Kenyan Port of Mombasa. In 1986, the Uganda Railways Corporation and the Kenya Railways Corporation began the joint operation of Lake Victoria Marine Services, to ferry goods between the two countries via Lake Victoria. The International Airport is at Entebbe, on Lake Victoria, some 40 km from Kampala. There are also several small airfields.
TANZANIA In 2004, Tanzania had an estimated 85 000 km of classified roads, of which some 5 169 km were paved. A 1 930 km main road links Zambia and Tanzania, and there is a road link with Rwanda. A 10-year integrated roads programme, funded by international donors and coordinated by the World Bank, commenced in 1991. Its aim was to upgrade 70% of Tanzania’s trunk roads and to construct 2 828 km of roads and 205 bridges. Steamers connect with Kenya, Uganda, the Democratic Republic of the Congo, Burundi, Zambia and Malawi. A joint shipping company was formed with Burundi in 1976 to operate services on Lake Tanganyika. A rail ferry service operates on Lake Victoria between Mwanza and Port Bell. Tanzania’s major harbours are at Dar es Salaam (eight deep-water berths for general cargo, three berths for
REGIONAL FOCUS
on success container ships, eight anchorages, a lighter wharf, one oil jetty for small oil tankers up to 36 000 gross tonnes, offshore mooring for oil supertankers up to 100 000 tonnes, one 30 000 tonne automated grain terminal) and Mtwara (two deep-water berths). There are also ports at Tanga, Bagamoyo, Zanzibar and Pemba. There are 53 airports and landing strips. The major international airport is at Dar es Salaam, 13 km from the city centre, and there are also international airports at Kilimanjaro, Mwanza and Zanzibar.
RWANDA Rwanda’s external trade is heavily dependent on the ports of Mombasa (Kenya), Dar es Salaam (Tanzania) and Matadi (DRC), and about 80% of Rwandan exports and imports pass through Uganda and Kenya. There are no railways in Rwanda, although plans exist for the eventual construction of a line passing through Uganda, Rwanda and Burundi, to connect with the KigomaDar es Salaam line in Tanzania. Rwanda has access by road to the Tanzanian railways system. There are road links with Uganda, Tanzania, Burundi and the Democratic Republic of the Congo (DRC). Internal conflict in 1994 caused considerable damage to the road system as well as the destruction of several important bridges. There are services on Lake Kivu between Cyangugu, Gisenyi and Kibuye, including two vessels operated by Onatracom. Kanombe International Airport at Kigali can process up to 500 000 passengers annually. There is a second international airport at Kamembe, near the
border with the DRC, and there are airfields at Butare, Gabiro, Ruhengeri and Gisenyi, servicing internal flights.
BURUNDI Like Rwanda, there are no railways in Burundi. Plans have been under consideration since 1987 for the construction of a line passing through Uganda, Rwanda and Burundi, to connect with the Kigoma-Dar es
Salaam line in Tanzania. This rail link would relieve Burundi’s isolated trade position. Lake Tanganyika is a crucial component in Burundi’s transport system, since most of the country’s external trade is conducted along the lake between Bujumbura, Tanzania and the DRC. Bujumbura is the principal port for both passenger and freight traffic on Lake Tanganyika, and the greater part of Burundi’s
ABOVE Part of the KabaleKisoro road in Uganda external trade is dependent on the shipping services between Bujumbura and lake ports in Tanzania, Zambia and the DRC. The international airport at Bujumbura is equipped to take large jet aircraft. The network of roads is dense, but few of the 12 322 km of routes are paved, and these are the roads that connect Bujumbura with Gitega, Kayanza and Nyanza-Lac.
The Dar es Salaam TAZARA train station
TWA | Mar/Apr 2015
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SUPPLY CHAIN LOGISTICS
Improving competitiveness South Africa is often considered the gateway to the African continent, and is currently in a strong position with regard to international shipping and trade – both into and out of Africa.
H
OWEVER, THERE ARE a number of other ports on the continent that are becoming increasingly competitive, increasing the risk for local logistics providers who rely on international business. While South Africa’s infrastructure is good, there is always room for improvement and, as a country, we cannot afford to rest on our laurels. Enhancing South Africa’s competitiveness in the African transport and logistics environment includes, among others, lowering the costs of manufacturing and distribution, and then optimising the timescales of these; eliminating the wastage of resources in both manufacture and distribution; providing faster data analysis to provide quicker access to business intelligence and implementing faster distribution of business intelligence to enhance decision-making. If South Africa is able to leverage the advantages of improved supply chain visibility, the overall transport and logistics costs will be reduced, making the country more attractive to international suppliers and increasing the attraction value for foreign investment. Enabling South Africa to become more competitive around its products and services in the global transport and logistics marketplace requires (among other areas)
significant improvements in visibility of the supply chain, utilising next-generation ICT services. These services can help improve supply chain foresight; limit the physical impacts of late deliveries, damage, shortages and accidents; and reduce the financial impact of excessive costs and wasted scarce resources. They can also increase information visibility by eliminating system failures and creating information
“Enhancing South Africa’s competitiveness in the African transport and logistics environment includes, among others, lowering the costs of manufacturing and distribution.” Tony Willis, ICT enterprise architect, T-Systems availability, and improve collaboration through increased communications and technology utilisation. Delivered using cloud, mobile, big data and telematics technologies, these next-generation ICT services are key to unlocking South Africa’s potential as a world-leading source, destination and enabler for goods, services, transport and logistics.
Ports remain the gateways to African trade
TWA | Mar/Apr 2015
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SUPPLY CHAIN LOGISTICS
production and distribution delivering any value-add that can be digitised. Software and content are obvious, but consider also digitised artwork and print-on-demand packaging, vehicle entertainment systems or anything else that customers will pay for, but that need not be made of atoms.”
4
2014
31% of SCM World’s respondents say they use social media to inform product innovation priorities, O’Marah reveals. “This number keeps rising, while the share of respondents who see ‘no effect’ of social media on their supply chain strategies keeps falling. No one is very good at this yet, but skipping it altogether is starting to look stupid.”
critical customer fell significantly. Economic risk is trending down while political risk is trending up. War in Ukraine and the Middle East certainly fits here, but so does political incompetence in both Washington and Brussels. And who isn’t at least a little bit worried about what Beijing will declare next?”
8
35% of high-tech companies say they have fully implemented social and environmental responsibility initiatives with key suppliers. “Compare this to health care and pharmaceuticals where only 9% have made such moves. This gap is too large,” he stresses.
FACTS & FIGURES 5
9
1
10
Kevin O’Marah* gives Transport World Africa his top 10 supply chain facts of 2014, based on the fourth annual Chief Supply Chain Officer Report.
53% of supply chain practitioners surveyed across the industry think of cloud computing as interesting, but of unclear usefulness. O’Marah believes that this is a tepid view, considering the zeal that most in IT show for the cloud. “My guess is that the cloud is cool for those used to selling ERP, B2B or whatever craze happens to be in vogue. Supply chain managers, it seems, are in no rush to rip out what’s there already.”
2 32
10% say they are supporting a smaller number of
TWA | Mar/Apr 2015
SKUs in response to digital demand. “This flies in the face of the macro trend towards more SKU complexity, but hints at a key opportunity –delivering product personalisation post sale,” he comments. “The obvious example is apps, or other software enablement ‘shipped’ electronically to consumers already in possession of a mobile device.”
3
The second most ‘disruptive and important’ technology among respondents is digital supply chain. “This is the light-speed version of
Fewer than 17% view emerging markets primarily as low-cost sourcing opportunities; 34% are looking mainly for new sales growth and 48% equally seek sourcing and sales in emerging markets. “It seems fair to say that the era of ‘lowcost-country’ sourcing is almost over. Globalisation from here on out is very much a two-way street,” O’Marah contends.
6
Mexico is the sixth highest-rated growth opportunity among the 920 respondents who answered this question, trailing only BRIC and the United States. “In total, 93 individuals chose it as one of their top-three growth countries.”
7
Geopolitical instability jumped 20% as a risk concern between 2013 and 2014. “This is by far the biggest jump, well ahead of natural disasters, which rose 8%. On the other hand, financial failure of a
The penultimate fact is that 31% of respondents declare sales an ‘essential’ skill for supply chain professionals. “This may mean direct experience in sales or just an ability to persuade. Considering how highly respondents rate change management (74% say it is essential), perhaps this is really about selling internally.” 26% of those surveyed say that finding supply chain talent is extremely challenging. “This is well up on previous years and is now the number-one people management problem,” he says. “We have to make supply chain cool or the kids won’t want to play. Millennials demand meaningful work and we can give it to them.”
*Kevin O’Marah, Supply Chain Management World’s chief content officer
SUPPLY CHAIN LOGISTICS
Law and liability Liability affects everyone in the import chain, but it’s something about which some parties in this chain are oblivious. *
L
IABILITY IS DEFINED as an obligation, responsibility, or debt – in this case to the state. Section 44 of the Customs Act states that liability for customs duties commences when the goods are deemed to have been imported. This could be either when they enter the South African territorial space or when they have landed in the country. Thereafter, liability is transferred from one party to another until the goods are cleared for home consumption/export, whereafter there may still be respective liabilities. Liability is generally shared between the importer and another party – usually a clearing agent, approved bond store or the container depot. This means that when there is a contravention of the Customs Act, a demand for the loss of revenue will be addressed to the importer and another party. When one looks as it simplistically, each party involved in the importation process has limited liability to the extent that it was involved in the process. For example, the
container depot has liability under the Customs Act to the extent that it stored the cargo. Practically, this means that if the container depot stores a container said to contain fridges but, upon investigation, it is found to contain clothing, then customs cannot hold the depot liable for the misdeclaration of the contents of the container. However, if the container depot receives three sealed 40-foot containers, and upon investigation only two can be accounted for, the depot can be held liable for the missing container. The depot operator remains liable for the duty until the goods are delivered, after due entry has been made, to the importer or his agent or, if not entered, delivered to the warehouse. It is therefore extremely important that the ‘holder’ of the cargo be fully aware of the risk and liability attached to the removal, transportation or storage of the cargo, until that cargo has been cleared and the importer has taken delivery thereof. Furthermore, liability always ceases at some point.
*Hester Hopkins is a customs and compliance specialist at Deloitte South Africa
Each party involved in the importation process has limited liability to the extent that it was involved in the process
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SUPPLY CHAIN LOGISTICS
Boosting health-care delivery A contract for the development of a $20 million world-class pharmaceutical warehouse in Nairobi, Kenya, has been awarded to Imperial Logistics group company Resolve Capacity.
IMPERIAL LOGISTICS
A
RNO HAIGH, managing executive, notes that the project will help to ensure the supply of quality medicines to all stakeholders in East Africa and will enable health-care suppliers to meet patients’ needs more efficiently. “While pharmaceutical warehouses and stores are largely invisible to patients, they are essential to ensuring that health commodities are available and maintained in compliant, quality facilities,” Haigh stresses. “Poorly constructed, maintained or managed storage facilities put products at risk of damage, diversion or expiry, all of which put health programmes and patients’ health in jeopardy.” Resolve Capacity’s turnkey solution for the provision of this 12 500 m2 pharmaceutically compliant, temperature-controlled warehouse includes the procurement of land, the warehouse design, tender evaluation and awarding, as well as construction project management. All aspects of materials storage handling and equipment will also be undertaken from
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TWA | Mar/Apr 2015
the design through to tenders, procurement, installation and commissioning,” Haigh says, adding that, in addition, Resolve will design the HVAC system and fire control systems that are compliant with FM Global Insurance’s stringent requirements. The facility will be operational by the end of October 2015, just over 12 months since the project commenced. Haigh explains that this remarkable time frame could be achieved through the use of Resolve Capacity’s diverse and innovative team, as well as local professionals and contractors who share their passion for client satisfaction. Resolve Capacity has secured this contract on the back of a decision by sister company Imperial Health Sciences to consolidate its multiple East African warehouses into one substantial facility. “Also contributing to the need for the new Nairobi warehouse is Imperial Health Sciences’ new partnership with global healthcare company GlaxoSmithKline (GSK), which will see Imperial Health Sciences warehousing
TOP Artist's impression of the completed facility ABOVE The warehouse will occupy 12 500 m2 of prime distribution space and distributing all of GSK’s pharmaceutical and consumer- related products in the East Africa region.” Sustainability is a key element of this project, and green features that Resolve Capacity has incorporated into the warehouse’s design include solar water heating, lighting and electric fencing, as well as a water treatment plant, rainwater harvesting, sensor-controlled LED lighting throughout the facility and state-ofthe-art, energy-efficient HVAC plant, wall and roof panelling.
Thiloshini Ramdass t 011 677 5000 www.imperiallogistics.co.za
SUPPLY CHAIN LOGISTICS
Intimate client knowledge reaps rewards Winning an expanded transportation contract requires in-depth knowledge of your capabilities and a vast appreciation of your client’s needs.
C
OMPANIES MUST SHARE a culture of striving to operate at the highest level of efficiency, and organisations should have a strong focus on continuous improvement,” says joint managing director of Imperial Managed Logistics Johan Truter. “Through a structured approach, we aim to create real value by focusing on continuous operational improvements and customising our services to drive competitiveness.” Imperial’s appointment as Simba’s single transport man-
national operations at a glance. It will also ensure operational continuity and daily skills transfer between it and personnel on-site at various facilities,” he notes, adding that a further advantage of the command centre is that it will enable the client to reap the benefits of economies of scale, as a result of resource sharing. Truter says fleet scalability contributed to the con-
agement partner will provide significant value to the brand. “The benefits include access to centralised planning, operational visibility, consolidated KPI reporting (with a single version of the truth), specialised transporter management, and the continuous drive to implement best practices.” An operations command centre forms part of the scope of the contract. “Based in Stellenbosch, with site representation in Isando and Parow, we will operate a command centre in order to offer an unrivalled, total solution 24 hours a day, 365 days a year. This centre will be the single point of contact. “The provider’s planning capabilities will ensure that all possible permutations for load and fleet optimisation are considered, and it will allow for full 360-degree visibility of
tract win, with the company managing logistics in an managing director, Imperial Managed Logistics asset-light environment. “So, unlike most transport companies, we are not constrained by our assets. We seek to understand clients’ requirements, and then make transport capacity available to serve that need.” This is done through a dedicated fleet of 535 vehicles and formal partnerships with some 900 The partnership subcontractor transporters. “It is an efficient way to handle will add the challenge of fluctuating demand and peak periods, as significant additional capacity can be brought in as and when required,” value to the Simba brand he concludes.
“We seek to understand clients’ requirements, and then make transport capacity available to serve that need.” Johan Truter, joint
TWA | Mar/Apr 2015
35
WAREHOUSING
Boxing Port ofclever
warehousing Port warehouses have some unique requirements that inland warehouses do not, as Transport World Africa finds out.
W
AREHOUSES IN and around ports often need appropriately surfaced, open yard areas to accommodate the handling of heavy containers. These warehouses frequently specialise in heavy lifts, project and abnormal cargo, meaning their architectural design and material handling equipment requirements differ from inland warehouses. Forklifts, front-end loaders, reach stackers and gantry cranes facilitate the handling of a variety of commodities at the ports. A port warehouse needs to consider the use of overhead gantry cranes to lift heavier items and/or containers and it is often necessary for an on-site rigger to be employed to oversee special lifting jobs. Due to the nature of the goods being imported and exported, fumigation, lashing and dunnaging services are often needed, while private rail sidings are used to assist in the movement of bulkier items.
Software While warehouses at ports are different to those inland, they do share several similarities. The accurate tallying, receipting
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TWA | Mar/Apr 2015
and dispatching of cargo, for instance, are typically managed by a high-tech scanning, weighing, and electronic warehouse management system (WMS). The chosen WMS software package helps with the management of inventory, storage locations and workforce, ensuring that customer orders are efficiently picked, packed, and shipped. A typical WMS manages every item in a warehouse, irrespective of type or location. It evaluates a warehouse’s physical dimensions, its storage locations and how it is packed by vendors, meaning it can orchestrate the flow of people, machines, and product.
Automation Warehouse automation enhances warehouse efficiencies, reduces operating expenses and increases throughput and performance. Automation can yield better returns on investment and lowers the reliance on labour, which, in South Africa, can be expensive and is often interrupted by industrial action. Automation also lends companies a measure of prestige, streamlines their supply chains, and is an environmentally
WAREHOUSING
Security Theft, vandalism and damage to stored goods can be mitigated with a combination of round-the-clock CCTV video recording, high-tech access control systems and metal detectors. Smartly located fire sprinklers and smoke detectors, alarm systems at emergency exits, and burglar alarm systems are used to secure the premises. For the goods themselves, pallet wrapping and container liners secure and protect goods from damage during transit. Expanded metal ensures the safety of people and warehoused items inside the facilities. When compared with conventional fencing, expanded metal offers increased security, coupled with unimpaired visibility. It is particularly ideal for applications that include inventoryholding sections of manufacturing plants and warehouses.
Safety Warehouse accidents and injuries are a global concern. But it’s possible for warehouses to reduce accidents and limit injuries by taking proper safety precautions. This means ensuring that staff and managers are continually trained in warehouse safety. Adherence to all relevant fire and safety codes, such as those stipulated in the Occupational Health and Safety Act, No 85 of 1993, need to be practiced religiously and not just be verbally agreed to. Many accidents can be avoided if staff are frequently trained on the subject of safety. This includes proper forklift operation and hazardous materials handling training. Warehouse staff should also know how to use fire extinguishers and know where they are located. Regular racking inspections will need to be carried out to check racking integrity and strength. Attention must be paid to the warehouse floor, which should be free of clutter, tidy, and smooth. Pallet stack heights must be limited and forklift/pedestrian separation barriers, cameras and light signalling systems should be introduced. The fitment of guard rails along vehicle paths, and around employee areas and machinery, is vital. In more sophisticated warehouses, vertical reciprocating conveyors are used as an alternative to forklifts in certain areas. Automated guidance vehicles, or AVGs, also work as suitable replacements for manually driven forklifts.
Warehouse automation enhances warehouse efficiencies, reduces operating expenses and increases throughput and performance greener practice. There are varying levels of automation available and the choice to fully automate, partly automate or automate a particular task only, will depend largely on one’s individual requirements and budget. But, while there are advantages to automation, there are also disadvantages. The most significant disadvantage is inflexibility, followed closely by the need for considerable capital outlay. South Africa is challenged by high unemployment levels, and job creation has to be considered before replacing human resources with costly robotics and conveyors that require maintenance and servicing by pricey experts. If something goes wrong, it’s likely that everything comes to a grinding halt until it’s fixed. Automation works best for companies that can project long-term stability and growth, and where labour costs, stock volume and stock movement are high. Most labour costs are spent on picking, so products that are uniformly packed and easily moved are the ones that benefit the most from automation. Products that differ in size and packaging are more suited to manual picking processes.
Energy Environmentally friendly measures help save on energy requirements and lower a warehouse’s carbon footprint. Solar photovoltaic roof panels generate electricity, while solar thermal panels heat water. Ground-source heat pumps heat and cool offices, while rainwater collection systems are used to flush toilets. Improved lighting systems offer warehouses and clients that use them the potential for significant savings on electricity, while transparent building materials are used in the development phase to increase the amount of natural light that enters the warehouse.
TWA | Mar/Apr 2015
37
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LEGISLATION
Fleeting labour pains learns about the legislative impact of recent amendments to the Labour Relations Act on the fleet industry.
O
N 1 JANUARY 2015, significant amendments to the Labour Relations Act 66 of 1995 (LRA), came into effect. Subsequently, the South African fleet industry will have to comply with the stipulations contained therein. According to Hugo Pienaar, director in the employment practice at Cliffe Dekker Hofmeyr, the amendments introduced to the LRA signal movement by government to streamline the country’s labour environment and have required that South African businesses, including those in the fleet industry, adjust the way they have traditionally employed and managed staff within their organisations. Discussing some key features of the amendments to the LRA, pertaining to the fleet industry in particular, Pienaar states that companies who use labour brokers for seasonal employment (a common occurrence in the fleet industry) will now have to ensure that their contracts meet the requirements set out in the LRA. “The amended LRA seeks to more actively regulate nonstandard employment relationships,” explains Pienaar. “This ambit includes the employees of labour brokers (TES) (section 198A of the LRA), employees employed for a fixed period of employment (section 198B of the LRA) and part-time employees (section 198C of the LRA). In the premises, employers must pay careful attention to the various amendments when making use of seasonal workers, labour brokers or successively renewing fixed-term contracts of employment. These amendments invite closer scrutiny of labour practice. “In terms of section 198B of the LRA, fixed term employees, who earn below R205 433.30 per annum (the current Basic Conditions of Employment Act 75 of 1997 threshold), are protected by placing limitations on the right to employ employees for a fixed period of employment. This includes not being treated less favourably than employees employed on a permanent basis performing the same or similar work, unless the difference in treatment can be justified. In the premises,
section 198B (3) of the LRA states that fixed term contracts of employment for longer than three months, may only be used if there is a legitimate justification for it. In the absence of such a justification, the fixed term employee will be deemed to be employed for an indefinite period of time,” says Pienaar. “The amendments are primarily intended to limit the use of these employees, who earn below the threshold, to true shortterm contracts, being agreements equal to, or less than, three months. Should an employer wish to enter into contracts of this nature for periods in excess of three months, their reason for doing so would have to justify this type of employment relationship. Without limiting the grounds upon which employers can rely, the LRA now identifies specific justifications including: replacing another employee who is temporarily absent, or persons employed to work exclusively on a specific project that has a limited or defined duration. The underlying principle guiding section 198B of the LRA is justifiability. In the absence of such justifications, fixed term employees will be deemed to be employed for an indefinite period of time and TES employees will be deemed to be the employees of the client,” he notes. Pienaar explains that collective labour law is also affected by the amendments introduced to the LRA. These amendments are aimed at promoting the inclusion of non-standard employees in the collective bargaining framework and expanding the application of organisational rights. This will effectively expand the employee pool in a workplace for purposes of procuring organisational rights. These amendments will have the effect of creating a more inclusive collective bargaining arena in the workplace. Hopefully, this will lessen the need felt by smaller unions to use industrial action as the only route to obtain organisational rights, previously ordained for more representative unions only. Large trade unions like AMCU and NUMSA have started organising within the road freight industry. Although the LRA now accommodates and empowers smaller and other trade unions in the industry, it cannot be guaranteed that these smaller and other trade unions will respect agreement’s entered into with existing unions. This will affect the Hugo Pienaar, director at Cliffe Dekker Hofmeyr collective negotiation process and the way forward.
“The amended LRA seeks to more actively regulate non-standard employment relationships.”
TWA | Mar/Apr 2015
39
AIR CARGO
Air cargo ends 2014 positively Measured by freight tonne kilometres (FTKs), full-year air cargo data for 2014 showed 4.5% demand growth compared to 2013. Tony Tyler, director general and CEO, IATA
A
IR CARGO MARKET expansion gathered momentum as 2014 progressed. The year finished on a positive note, with growth in December accelerating to 4.9%, compared to December 2013. The vast majority of the growth in 2014, however, was in the Asia-Pacific and Middle East regions, which respectively contributed 46% and 29% of the expansion in FTKs. Growth was recorded in all other regions, but was particularly weak in Latin America. After several years of stagnation, the air cargo business is growing again. This is largely being driven by the uptick in world trade over the second half of 2014. Recent concerns over the health of the global economy and a corresponding fall in business confidence have not yet impacted air cargo. But it is a downside risk that will need to be watched carefully as we move through 2015. egional analysis R All regions, with the exception of Latin America, reported a strengthening of demand in December. • A sia-Pacific carriers grew 5.9% in December compared to December 2013, and 5.4% for 2014 as a whole. Volumes have benefited from increasing import demand in addition to continuing manufacturing strength. Japanese and Chinese markets were particularly important contributors. Overall, capacity expanded 5.7% leading to a slight fall in load factor to 55.4%, although this remains the strongest load factor of any region. •N orth American airlines reported demand growth of 2.8% in December and 2.4% for 2014 as a whole. After a slow, weather-affected start to the year, growth accelerated, driven by import and export demand. Carriers in the region cut back capacity by 0.5%, helping to underpin the load factor (35.3%).
To move forward, the industry is focusing on providing a stronger value proposition to meet evolving customer needs
• E uropean airlines saw FTKs expand by 2.3% in December, and by 2.0% in 2014 overall. The Eurozone remains weak and close to recession, with the effects of Russian sanctions also having an impact. Load factors also fell in 2014 as capacity expanded 3.0%. •M iddle Eastern carriers enjoyed the strongest growth of any region, expanding 11.3% in December and 11.0% for the year. Airlines in the region have extended their networks and grown capacity by 11.1% to make the Middle East a hub for freight traffic. In fact, they have been responsible for over 37% of the total increase in global freight capacity in 2014. •L atin American airlines reported FTKs falling 4.5% in December. Latin American volumes have been affected by economic slowdown across the region, particularly in Brazil and Argentina. Capacity grew by 0.3% in 2014. •A frican carriers expanded FTKs by 12.2% in December and 6.7% for the year as a whole. Although major economies Nigeria and South Africa underperformed during parts of 2014, regional trade activity held up, supporting demand for air transport of goods. Capacity rose just 0.9% for the year as a whole, helping to strengthen the load factor. Despite the improving growth trend, big challenges remain. Yields declined for the third straight year in 2014, with no immediate prospect of improvement. Cargo revenues remained basically unchanged at $62 billion, some $5 billion below their 2011 peak. To move forward, the industry is focusing on providing a stronger value proposition to meet evolving customer needs. That’s what is driving efforts such as cutting shipping times, ensuring high-quality handling of temperature-sensitive goods, or benchmarking quality to improve customer transparency. It’s all about delivering value as a supply chain with a strong vision of the future. This focus on value is delivering change: In 2014, electronic air waybill penetration reached 22%. But airlines are targeting 45% penetration by the end of 2015.
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2015 supplychainforesight EMBRACING CHANGE FOR A SUSTAINABLE FUTURE
The certainty of uncertainty.
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