Transport World Africa May/June 2014

ENDORSED BY

Intraregional supply chain soluĆ&#x;ons from producer to consumer

Commercial vehicles Preventing fuel theft

Operations

Cross-border insurance

Logistics

North-South Corridor

New approach to logistics

Abdool Kader Tayob, CE at Bakers SA: Performance-driven A

company P10 llogistics o ISSN 1684-7946 May/June 2014 Vol.Mar/Apr 12 No. 2013 3 / R50.00 incl.

VAT ISSN 1684-7946 Vol. 11 No. 2 / R40.00 incl. VAT

Get your costs in perspective.

Over time, unplanned downtime costs you a lot more than the initial price tag of the vehicle. So isn’t the reliability of a truck more important than its purchase price?

There is a better way.

Intraregional supply chain solutions from producer to consumer onsumee r

COVER STORY ORY Y Imperial’s winning ning transport formula P6 6

INSIDE THIS ISSUE E REGULARS

SUPPLY CHAIN LOGISTICS

Editor’s Comment Operating Efficiently FESARTA Important projects at stake due to empty pockets Regional news Spotlight Performance-driven logistics company

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North-South Corridor Eastern Cape port geared for growth The future of vocational training Reducing maintenance costs A delicate balancing act

COMMERCIAL VEHICLES Fleet Operations – Stopping the flow of illegal black gold Insurance – Cape to Cairo delivery challenging Finance – Pitfalls of inadequate insurance in Africa Security – Cross-border operations

13 19 20 23

Multi-modular transport Reducing trade costs Strengthening economic growth The endgame of EU-SADC EPA negotiations Moving through the warehouse

Trucking in Africa – Using one type of truck

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in Africa pays dividends

6

13

32

47

Cargo growth trend pauses

28 32 35 36 38 39 40 42 45 47 48

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TWA | May/Jun 2014

1

EDITOR’S COMMENT

Operating efficiently

Publisher Elizabeth Shorten Editor Simon Foulds • simon@3smedia.co.za Head of design Frédérick Danton Senior designer Hayley Mendelow Designer Kirsty Galloway Contributors Raymond Abraham, Barney Curtis,

T

Editor in action

2

RUCKING EXCELLENCE and resilient supply chains are the overall themes of two of the key events on our calendar year. The former is for this year’s Road Freight Association’s (RFA) annual conference, with the latter being the theme for the SAPICS 36th annual conference.

Both are apt tiles for two industry sectors that ensure goods are delivered efficiently.

Both events are a week apart at the beginning of June and definitely worth attending, not only to meet your peers and discuss issues pertinent to your specific industry, but, to also hear key industry speakers enlightening you with vital knowledge to assist you in growing your business.

The RFA conference is taking place at the Wild Coast Sun in KwaZulu-Natal whilst the SAPICS conference is at Sun City. For further information visit www.rfa.co.za or www.sapics.org.za.

In this issue of Transport World Africa, we speak to industry experts on preventing fuel theft – it is not dubbed black gold for nothing! We also look at vehicle and trailer security and how to protect these key assets 24/7.

We also look at what is happening along the North-South Corridor as well as the Port of East London.

As usual, we have industry experts expanding on their areas of expertise looking at Incoterms 2010, customs clearance, transportation in Africa, advising on lubricants for axles and gears, as well as the current state of the EPA negotiations between the European Union and the Southern African Development Community.

Ambassador Roeland van de Geer, head of the European Union delegation in South Africa, outlines why the Fourth EU-Africa Summit was an unqualified success, marking a further and positive development in the relations between Africa and Europe.

As always, a varied read. Enjoy!

TWA | May/Jun 2014

Hester Hopkins, Sean Woolfrey, Peter Lamb, Dr Frances Wright Chief sub-editor Tristan Snijders Sub-editor Beatrix Knopjes Client services & production manager Antois-Leigh Botma Production coordinator Jacqueline Modise Marketing manager Hestelle Robinson Digital manager Esther Louw Distribution manager Nomsa Masina Distribution coordinator Asha Pursotham Financial manager Andrew Lobban Administrator Tonya Hebenton Printers United Litho JHB • t +27 (0)11 402 0571 Advertising sales Hanlie Fintelman • h.fintelman@lantic.net t +27 (0)12 543 2564

MEDIA

No. 4, 5th 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. All rights reserved.

All articles herein Transport World Africa are copyrightprotected and may not be reproduced either in whole or in part without the prior written permission of the publisher. The views of contributors do not necessarily reflect those of the publishers.

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FESARTA COMMENT

By Barney Curtis, chief executive officer, FESARTA

Important projects at stake due to empty pockets In the previous issue of Transport World Africa I copied in the letter FESARTA sent to the Secretary of State in the UK, re: the cessation of funding to Trade Mark Southern Africa (TMSA).

A

RESPONSE WAS received, stating that the Department for International Development (DFID) was not happy with the way TMSA was being run.

DFID therefore decided to cease funding.

In FESARTA’s opinion, TMSA has done sterling work to upgrade infrastructure (particularly roads) and improve the efficiency of moving goods along the corridors. DFID did not see it this way, and maybe the Secretary of State had ulterior motives, which were not in the interests of our region. Maybe she was appeasing the British electorate.

The closure of TMSA is going to be a serious loss to our region and we can only hope that some equally efficient structure will be put in its place. Now that TMSA has been closed, it is not clear as to what will happen to the many projects that were under its jurisdiction. Funding is being sought from international donors, to ensure continuity, and there will no doubt be updates from the Regional Economic Community (REC) as to the success or otherwise.

Before TMSA was closed, an important project was contracted out to Nick Poree.

The project was to identify important existing harmonisation and standardisation projects at SADC, which were either proceeding too slowly, or not moving at all. To move things along more quickly, Nick was to assess the progress made with the projects and to make recommendations on the way forward.

A draft report on his project has been submitted to SADC, but, as it has not been passed for dissemination to the public, FESARTA is not able to divulge its contents. Suffice to say that the project was at least a proactive method of accelerating the progress of the various SADC projects.

It is hoped that more information on this project can be disseminated in the next edition of TWA. There are several unsolved non-tariff barriers, relative to the road transport industry, on the Tripartite NTB system.

Two of these are very important and are causing transporters serious problems.

The first is NTB605 – security problems and resulting delays at the Kasumbalesa border between Zambia and the DRC. The underlying problem would seem to be that certain

transporters receive preferential treatment at the border, and this causes unrest amongst those drivers who do not belong to this favoured group. The unrest has escalated to the extent that two drivers have been killed.

FESARTA is working closely with the NTB system to try and resolve the problem. Unfortunately, it stems from a high, political level, and this makes the solution difficult.

The second is NTB606, security problems at Munhava, a township at the entrance to the Beira port. Foreign trucks in particular, are being harassed and attacked by thugs from the township. Tarpaulins are being cut and the goods stolen. Drivers are being pulled out of their cabs and their personal belongings stolen. Unfortunately, certain police officials are involved in this practice, so it is very difficult to find a solution.

FESARTA is working closely with the system.

Of course, with the closure of TMSA, which ran the NTB system, it is not clear how effective the system will continue to be. Watch this space!

Delay at borders

Funding is being sought from international donors, to ensure continuity TWA | May/Jun 2014

5

COVER STORY

A winning transport formula A new, asset-light, proactive and customer-focused approach to transport is yielding benefits for clients of Imperial Managed Logistics, a newly created operating company within the Imperial Logistics stable.

T

HE COMPANY IS ONE of the big success stories emerging from Imperial Logistics’ consolidation process, which last year saw the group’s structure simplified and its capabilities consolidated, reports chief integration officer Cobus Rossouw. Imperial Managed Logistics encompasses the long-standing reputations and experience of Broco and Cargo Africa, so it is certainly not a newcomer to the industry. What is new, Rossouw reveals, is Imperial Managed Logistics’ unique business model, which redefines customer and supplier relationships, as well as transport supply and demand.

The company manages logistics in an asset-light environment. “So, unlike most transport companies, Imperial Managed Logistics is not constrained by its assets.

The company seeks to understand clients’ requirements, and then make transport capacity available to serve that need,”

explains Rossouw. This is done through a dedicated fleet of 350 vehicles comprising both Imperial Logistics’ and suppliers’ vehicles and formal partnerships with some 1 000 sub-contractor transporters.

Transport capacity

Unlike traditional transport brokers, Imperial Managed Logistics has contracts in place with its transport suppliers, so that clients can be guaranteed of transport capacity, and sub-contractors can be assured of a sustainable business. “Our engagement with customers and suppliers is based on a unique model that is proving a recipe for success, and garnering praise, and business, from clients like Tiger Brands, McCain Foods and Brandhouse,” Rossouw says.

Imperial Managed Logistics’ contract for primary distribution services for JSE-listed Tiger Brands will see the company transporting close to 50 000 loads per year for the FMCG group.

A factor that contributed to this contract win, and one of the outstanding features of Imperial Managed Logistics’ operating model, is the visibility created for the client. Rossouw clarifies: Cobus Rossouw, “Historically, in transport, visibility has been chief integration officer, Imperial Managed Logistics fragmented. With Imperial Managed Logistics

“Our clients can enjoy peace of mind and a total, end-to-end logistics solution.”

6

TWA | May/Jun 2014

COVER STORY as the client’s single point of contact, end-to-end visibility of all loads, on all routes is assured.” It is provided via three 24/7 operations offices, all equipped with live satellite tracking. “This enhanced visibility enables improved decision making. It makes it possible to change the demand for transport by taking a more professional approach to understanding this demand,” he states.

contractual agreements with Imperial Managed Logistics, and regular audits are in place to ensure vehicle and driver quality. Augmenting this is Imperial’s drive to get suppliers to pursue Road Transport Management System (RTMS) accreditation. RTMS is a nationally recognised, self-regulating scheme for heavy vehicle road transport, aimed at creating a safe, equitable and competitive heavy vehicle logistics value chain.

Benefits Clients also reap the benefits of Imperial’s expansive netAfrica work and geographic footprint. “But,each client’s requireImperial Managed Logistics’ strategy going forward is to ments are managed individually, and there is no one-sizegrow into Africa, and Rossouw anticipates an increase in fits-all transport solution,”stresses Rossouw. opportunities with new customers and new volumes. For Its flexibility and scalability are further benefits of the clients moving their goods into several African markets, Imperial Managed Logistics model. “This scalability enathe Imperial Managed Logistics’ operating model has big bles us to cater for clients with very different requirements advantages. “Many asset-based operators and transportin terms of volumes, and for loads ranging in value from ers operate only between South Africa and one other R125 000 to R8 million. It is also an efficient way to handle country, which means that clients have to deal with sevthe challenge of fluctuating demand and peak periods, eral different companies to reach selected cross-border as additional capacity can be brought in as and when destinations. Imperial Managed Logistics, however, serves required.” The company did some 220 000 loads last year, as a single point of contact. It engages directly with the with 1 000 loads a day at peak, Rossouw reveals. client to assess transport requirements and with suppliers Specialised vehicles are available to Imperial Managed to provide the required capacity, routes and vehicles. The Logistics through different service providers. Rossouw best possible solution can then be designed for the client’s elaborates on the company’s approach to clients’ spespecific needs,” he concludes. cialised requirements: “Imperiall Managed Logistics’ tailor-made e solution for client McCain included d Imperial importing specialised trailerss to transport potatoes. We purchased d PERSONNEL trailers to handle 70% percent of the e client’s volumes. At peak, however, r, we bring in other suppliers’ vehicles..

400 This approach enables us to get fulll DEDICATED SUB-CONTRACTOR FLEET use of a specialised asset.”

272

Intermodal Intermodal solutions are also offered

by Imperial Managed Logistics, and the company is able to bring rail into the mix when it benefits the client, he adds. A memorandum of understanding signed with Transnet Freight Rail is enabling Imperial Logistics to build a relationship with the company, in order to leverage road and rail logistics capabilities to reduce road congestion and greenhouse gas emissions, and to lower transport costs for customers.

While Imperial Managed Logistics doesn’t always own the assets, it does still take full ownership of all loads. “In terms of visibility and reporting, we take full ownership of the product, so that our clients can enjoy peace of mind and a total, end-to-end logistics solution,” Rossouw asserts.

Sub-contractors’ vehicle maintenance requirements are part of their

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Below Intermodal solutions are also being offered

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TWA | May/Jun 2014

7

REGIONAL NEWS

Read more on www.transportworldafrica.co.za

ZAMBIA

KENYA

Trade strategy needed for Africa Free trade merger to boost African markets

AFRICA IS LOSING more

to improve innovation to tackle

lack of effective infrastructure

the impact of global warming by

development, says Dr Freddie

engaging in climate-smart activi-

Kwesiga, African Development

ties, such as conservation agri-

Bank (AfDB) country director to Zambia.

“Most African countries do not trade together due to limited

culture in respective countries.

The objective of the congress was to offer knowledge and

infrastructure, which is why they

information to guide informed

trade with countries abroad.”

decisions on how to increase the

Dr Kwesiga said AfDB had put up a transformation strategy, which would run from 2013 to

extent of conservation agriculture (CA) adoption in Africa.

In one of the thematic discus-

2022, to change the landscape

sions on integrating CA, in a

of trade in Africa.

holistic manner, into the farming

“The strategy would among other things, scale-up agricultural financing and technology as well as supporting regional integration.”

“With over 20% of the population living in fragile states with

system, the proposed strategy was to create platforms for sharing and learning experiences among the various stakeholders and forge synergies.

In a presentation entitled

weak economic institutions,

harnessing the power of col-

more jobs are needed, and this

laboration, African Conservation

could only be attained by sup-

Tillage Network coordinator, Ja-

porting value chains.

net Achora, said farmers should

He urged countries to develop strong energy infrastructure in order to support irrigation to reduce dependence on rains.

Dr Kwesiga said more than $35 million has been committed towards reducing fragility while

8

There was need for countries

than $30 billion in trade due to

complement each other rather than competing in the promotion of CA. Ms Achora called for addressing the entire agriculture value chain, creating partnerships that

$100 million would be spent on

promote value addition through

research, building bridges, roads

processing, and transformation

and markets, which were aimed

in farming communication.

at increasing trade.

(Source: Zambian)

TWA | May/Jun 2014

ONCE NEGOTIATIONS on a tripartite free trade area (TFTA) are concluded, it will be one of the largest free trade areas in the world with over 600 million people, presenting a huge market for investors and traders.

The TFTA, which is composed of 26 countries from the East African Community, the Common Market for East and Southern Africa and the Southern African Development Community, will be helpful in boosting trade among African countries.

The bloc is expected be launched during 2015. The region has a combined gross domestic product of $624 billion and makes up half of the African Union membership. It also contributes 58% of the continent’s GDP and 57% of the population of the African Union.

At a forum to discuss the TFTA progress in Nairobi, Joseah Rotich of the Kenyan Ministry of Foreign Affairs said the pace of the tripartite negotiation process was hampered during the preparatory period by a number of factors, including delays in submission of trade data and information required from the member states. Negotiations on the interpretation and application of the principles adopted by the summit have also been lengthy, while resistance by some member states also led to delays in constituting the technical working groups.

Rotich said, “Delays in agreeing on the tariff liberalisation modalities due to reluctance of some member states, inadequate finances to support the negotiation process, lack of consistency in participation of experts in the negotiations, and inflexibility at the technical level to establish the TFTA expeditiously, are among the challenges. The proposed rules of origin for the TFTA have now been crafted, which are expected to be simpler and easier to implement than the existing rules of origin for EAC, Comesa and SADC.” The rules of origin set conditions that products should meet to be considered eligible for preferential treatment.

Rotich adds, “A preferential or free trade area should have transparent, simple-to-implement rules that promote trade and guide against trade deflection. Strict rules of origin reduce the effectiveness of free trade agreements they apply to and these will be circulated for comments.”

If properly implemented, the TFTA will have several benefits, including the establishment of a larger market with a single economic space that will be more attractive to investment and large-scale production, and promotion of small and medium enterprises.

REGIONAL NEWS SOUTH AFRICA

SOUTH AFRICA

Hino joins PinkDrive’s fight against breast cancer JOINING THE FLEET of vehicles operated by PinkDrive, a charitable organisation fighting against breast cancer in South Africa, is a specially equipped Hino 500-Series 1626 chassis cab. The truck is fitted with a box body carrying specialised equipment for conducting mammographic screening.

Noelene Kotschan, founder and director of PinkDrive, says, “This is our second mobile mammography unit and will be used in both semi-urban and urban areas with the objective of enabling various disadvantaged communities access to education, physical examination and information on how to do breast self-examination in the fight against cancer.”

Because BIDVest is a major sponsor of this project, the group’s McCarthy automotive retailer was approached to supply the vehicle.

This resulted in Hino Selby undertaking the project, which included lengthening a long-wheelbase 1626 chassis cab and coordinating the construction and fitment of the box body.

The PinkDrive organisation has taken over this Hino-based mobile mammography unit to use in its fight against breast cancer

Wheels keep on turning ONE IS NEVER too old to fulfil a dream, and Andries Ndlehe is a great example of how one closing door opens another, leading to him living his dream.

As he approaches his 70s, Andries Ndlehe, owner and driving force behind Leeu Transport, is looking at expanding his transport services into neighbouring countries.

This growth and vision is a far cry from when Leeu Transport started in 2007.

At that time, Andries had just been retrenched from his position as driver with a company for which he had worked for 25 years. The business went into liquidation, leaving all its staff in the lurch.

Rather than sitting back, and already in his 60s, Andries used his severance package to buy a truck from his former employers with a view of starting his own transport business.

Seven years later he has a fleet of 16 vehicles and trailers to transport machinery and structural steel for a number of customers, particularly in the mining industry.

His success has been supported

by Murray & Roberts through its enterprise development (ED) programme, to which more than R143 million was committed in

Andries Ndlehe with Sheldon Mayet (Murray & Roberts’ Transformation Manager) the 2013 financial year. Leeu Transport is one of 19 companies supported by this programme.

Ndlehe says, “I am very grateful to Murray & Roberts for the help they have given me. They have helped me tremendously to grow my business, which is not yet finished. Through their support I am planning to expand into transporting into the rest of Africa.”

By virtue of being a beneficiary of Murray & Roberts’ ED programme, a significant portion of his capacity is consumed by the group.

Leeu Transport has participated in the programme since 2009.

NIGERIA

SACCI on the growth of Nigeria’s economy A HEALTHY NIGERIAN economy can be beneficial for South Africa if domestic corporates are able to strengthen business links with Nigeria, as it is a

market for value added goods.

Neren Rau, CEO of the South African Chamber of Commerce and Industry, was commenting on the fact that Nigeria is now being viewed as the economic powerhouse in Africa.

“This development is also an important signal that South Africa is not the only investment destination in Africa.

“South Africa will now face stronger competition from Nigeria for foreign investment, which means we would have to review

our policies and approach to investor confidence.

“Business needs more than platitudes to investor confidence; business must experience a welcoming investment environment. Several current legislative proposals will incur significant increases to the cost of doing business, weaken property rights and create uncertainty. Examples include the investment bill, private security amendment bill and mining legislation.”

Rau concludes, “To improve investor confidence government must consult with the business community specifically on the impact that legislative proposals might have on investor confidence and the cost of doing business. This must then be reflected in mandatory regulatory impact assessment processes for each policy proposal. To enhance certainty in the business environment, the motivation for each policy proposal should be linked to the NDP.”

TWA | May/Jun 2014

9

SPOTLIGHT

Performance-driven logistics company Thirty-five years ago, Bakers started off with a single bakkie.

Since then, the company has progressed radically, operating 500 MBSA trucks, gaining Level 2 BBBEE compliance, as well as adding warehousing and logistics to their list of activities.

Top and above Artist’s sketch of the Cape Town facility Below Abdool Kader Tayob, CE at Bakers

F

IVE YEARS AGO the company underwent a major transformation, creating Bakers SA Limited as the holding company for its three divisions: Bakers Transport; Bakers Warehousing & Distribution; and Bakers Containerised Cargo.

According to Greg Vaughan, Bakers’ marketing executive and a member of its board, this exponential growth can be attributed to the company’s strategic intent to ensure an aggressive marketing approach within key segments of the logistics industry.

“Approximately eight years ago our business was mostly involved in the line-haul transport sector. We then decided to branch out into the logistics and warehouse industry, and then we actively started marketing our business in this area,” says Vaughan. “It was following our diversification into the logistics field and our aggressive marketing approach that ensured our growth amongst blue-chip-listed companies; resulting in the rebranding of the company as a whole.”

ISO standards Another important element which has played a key role in the growth of the company, is the decision to become ISO 9001:2008 compliant. This decision has not only been implemented at the head office, but throughout the entire company.

Vaughan explains, “The whole process took approximately three years to implement. ISO is a

10

TWA | May/Jun 2014

process of maintaining standards and all business operations are documented to a specific process.

“We have a multi-site accreditation which means the whole company operates under these particular standards.

The board looked at this process as a means of managing our business. It did take a while to implement the process throughout the whole company but it was well worth it because now the whole company lives and breathes the entire process, which benefits the bottom line. It is an extensive process but it really guides the business towards being a better entity and we have seen how it has assisted our growth.”

The company has seven employees ensuring ISO 9001:2008 is maintained throughout the whole company.

Initially buy-in from employees was slow but, once accepted, it has become a significant part of the business.

According to Vaughan, all employees feel like they are integral part of the company, as the new process creates constant development throughout the brand. It has also enhanced how employees perceive the company and how employees deliver services to clients.

Vaughan elaborates, “It was while engaging with a whitegoods supplier a number of years ago, who wanted a quality standard as part of the tender process, that we then looked at this and decided to rather implement a market-leading standard. This insight led us to adopt ISO, so that we are able to show clients and prospective clients that we operate a clean and successful business.”

SPOTLIGHT Training academy Another important aspect for the company is the emphasis it places on training its staff.

Vaughn explains, “Our in-house training academy is a very important aspect of the business. Initially, it started off purely as a TETA accredited driver training academy and has since developed into a blue-collar training school as well.

“Every driver in the company has been trained at our academy. Before anyone gets behind the wheel of one of our trucks, they spend a week at our training facilities in Pietermaritzburg. Each driver receives refresher training at their place of work once a year.”

Funding has also been sourced from TETA for the company to train general workers into semi-skilled operators.

Last year the first eight of these workers were upskilled and employed by Bakers Transport.

“We also held a managers’ academy training session last year because we believe in upskilling and training our staff so they can grow and achieve promotions within the company.

This year we are upskilling team leaders into managers and the programme is designed around the ethos and operations of Bakers. Not only do we invest in the company, we believe in investing in our employees as we train them, enabling them to progress within the company.

“Because we have grown exponentially over the past five years and the company believes in promoting from within, employees have a great opportunity to grow as the company expands.”

Cross-border operations In recent years, Bakers has infiltrated the Southern African market. Currently, the company provides transport

The company believes in promoting from within, employees have a great opportunity to grow as the company expands

services to Mozambique, Botswana, Namibia, Zambia and Zimbabwe.

In September 2013, the company launched Bakers Logistics Namibia, with a warehousing and distribution depot in Windhoek.

This year the company is also looking at opening similar logistical operations in Botswana.

Products Bakers SA specialises in a range of logistical services throughout Southern Africa. These include: transport; secondary distribution; warehousing; containerised cargo; cross docking; network design; operational implementations; project management and logistics consulting.

The industries the company services include, but are not limited to, white goods, retail, manufacturing, FMCG and packaging.

Bakers SA “We are a highly sophisticated, independent logistics group with our head office in Pietermaritzburg. We also have 13 sites nationally – including Polokwane, Nelspruit, Durban, Jet Park and Alrode in Johannesburg, PE, and Bloemfontein.

Our new Cape Town facility opened in May 2014.

“Another important aspect of our business is that we have two truck depots – Harrismith and Colesberg, for our linehaul drivers. This enables our drivers to overnight in safe and secure depots.

“A board of executives was established in 2011 due to our extensive growth trajectory. This decision falls in line

Below Bakers promoting green energy

TWA | May/Jun 2014

11

SPOTLIGHT

Above Drivers undergo refresher training once a year Below Shabir Ahmed Tayob, national marketing and logistics director at Bakers

with our objective of being the best logistics company in Southern Africa, as well as becoming the supplier of choice operating to world-class standards. The establishment of this board is to ensure specialist business knowledge is sourced, and the continuity and acumen of the company is maintained, during this aggressive phase of the company’s developmental plan.”

The board comprises Abdool Tayob (chief executive), Shabir Tayob (national logistics and marketing director), Naseem Amajee (finance executive), Aman Kader (technical executive), Greg Vaughan (marketing executive), Paul Dorrian (group corporate strategic planning executive) and Roshan Morar (non-executive- corporate finance and audit).

Fleet The company’s fleet comprises in excess of 500 units, all Mercedes trucks.

“We maintain our own trucks and our workshops are accredited by Mercedes-Benz. Our workshops are situated in Cape Town, Pietermaritzburg and Johannesburg.

This also enables us to maintain our own inventory, thereby reducing operating costs.

“We are very loyal to our suppliers and they reciprocate this,” adds Vaughan.

“We have a unique fleet in that we have in excess of 320 linehaul vehicles, as well as a secondary fleet comprising of bakkies, along with four-, eight- and twelve-tonne trucks.

“Our replacement policy for trucks depends on their applications. Our new vehicles will be utilised on the long distance hauls along the N1 and N3 highways and these vehicles are generally not older than fouryears-old. Our second tier of vehicles is used for inner-city haulage. Our third tier of vehicles, which would go into the containerised cargo division, generally consists of older high-mileage trucks that will be utilised to move cargo locally from the port to a client’s warehouse near the respective port.”

12

TWA | May/Jun 2014

BEE and technology Bakers SA is a Level 2 BBBEE-compliant organisation holding 150% preferential procurement status, which includes 25% as a value-added supplier.

The company is also at the forefront of technology, having created a strategic partnership with Vodacom to utilise the telecom company’s high-capacity microwave infrastructure for voice and data communications.

“We have satellite dishes at every one of our sites, so we are guaranteed 100% availability at all times. We are also able to track and trace every item we deliver, from the moment it arrives in our warehouse to when it is delivered to our clients. This creates an amazing amount of visibility, so we are able to inform our clients exactly where the goods are at any given time during the course of its journey.

“We utilise the Accellos 3PL warehouse management system, which aids the management of inventory, from production through first-choice sales, returns and exports.

This system allows for smooth operations within both our warehouse and transport operations.”

The future “We have a clear strategy concerning the road ahead and we know where we want to be. Future plans include the opening of facilities in Botswana and Zimbabwe and, locally, the opening of new facilities in Cape Town. Additionally, we are extending the site of our head office in Pietermaritzburg.

“Other key components for 2014 include continuing to grow the quality of our human capital development, more frequent health and safety awareness campaigns, the implementation of the new marketing infrastructure, and making our worldclass operation a reality at all facets of the organisation.”

Vaughan concludes, “At Bakers SA, each and every employee focuses on providing the best service to our clients at all times because we are a performance-driven logistics company and this will continue as we increase our footprint.”

FLEET OPERATIONS

Stopping the flow of illegal black gold

As the fuel price steadily increases, the rise in fuel theft and fraud poses a serious threat to transporters’ operating profits.

Simon Foulds speaks to key industry players to find out what is the state of play in combatting both fraud and the theft of fuel.

Rands per litre

RSA Annual Fuel Price 2003 - 2013 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 -

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Petrol 4.00

4.31

5.62

6.92

6.55 10.20 7.52

8.02 10.09 11.04 13.55

Diesel 3.29

4.00

5.56

6.54

6.51 11.27 6.52

7.24

R

EGAN MACKIE, operations director at AfricaTrack says, “We have our clients come forward with some very interesting stories of what they have experienced; in general, the thefts are on the increase as the value of fuel increases. The small, opportunist criminals have set up mobile supplying and receiving points where they buy fuel from drivers at a reduced rate and sell the fuel to unscrupulous transporters, also at a reduced price.

9.30 10.25 12.48

Top Rural petrol station north of South Africa Figure 1 RSA annual fuel price 2003 to 2013 “The theft collusion between drivers and filling station attendants includes giving false slips and getting cash in return. They fill up a tank and a 25-litre container on the side, pay cash for the 25 litres and then drive away with a full tank of stolen fuel at the expense of the transport company.” 

TWA | May/Jun 2014

13

FLEET OPERATIONS Left Siphoning fuel from below the vehicle Figure 2 RSA monthly fuel price 2008 to 2014 Figure 3 RSA petrol price 2008 to 2013

RSA Fuel Price 2008-2014 18.00

y = 0.0867x + 6.7591

16.00

Rands per litre

14.00 12.00 10.00 8.00

y=0 0.0747x 0747x + 6 6.6325 6325

6.00 4.00 2.00 Jan'08 Apr'08 Jul'08 Oct'08 Jan'09 Apr'09 Jul'09 Oct'09 Jan'10 Apr'10 Jul'10 Oct'10 Jan'11 Apr'11 Jul'11 Oct'11 Jan'12 Apr'12 Jul'12 Oct'12 Jan'13 Apr'13 Jul'13 Oct'13 Jan'14 Apr'14

0.00

Petrol

Diesel

Linear (Petrol)

Linear (Diesel)

RSA Petrol Price 2008 - 2013

Poor fuel management

Rands per litre

15 13 11 9 7 5 3

operators, pocketing the cash and leaving their employers none the wiser. The stolen fuel is resold via the black market, or headed for neighbouring countries where fuel prices are much higher.”

Murray Price, MD of Eqstra Fleet Management adds, “There are a number of current fuel theft and fraud trends affecting the industry.

“The driver of a vehicle using a fuel card once it has been cancelled, as the fuel card is still active until it expires and physically needs to be cut up; fuel cards being used more than once within a certain period of time: for example, the fuel card being used at 14:00 and again at 16:00 on the same day – this is usually due to someone using a stolen fuel card, the card being used to fill up another vehicle’s tank, or a forecourt attendant using a fuel card and swiping it for cash.

“Then there is exceeding the vehicle’s tank capacity (filling another vehicle’s tank or using a jerry can for extra fuel).

“The fuel card is reported as misplaced or stolen but the driver is still using it; and also the filling up of multiple vehicles in one day: the driver of the vehicle has an agreement with the forecourt attendant whereby multiple vehicles are filled up without payment and the final purchase is claimed on the fuel card as oil and fuel.”

2008

2009

2010

2011

2012

2013

Low

7.35

6.01

7.86

8.73

10.61

11.86

High

10.7

8.05

8.72

10.77

12.22

13.55

“Th bi f d l t transactions t ti “The biggestt fraudulent we have come across are those of fuel-tanker drivers and fuel station transactions, where the driver offloads his consignment and submits his delivery note to the fuel attendant assisting him; the amount of fuel delivered is short-delivered and the attendant signs for a full delivery – a money split is arranged between the two.”

John Edmeston, CEO of CarTrack concurs, “Diesel-skimming operations are popping up

l i t The Th process is i simple i l – att an alarming rate. drivers pull in for a short pit stop at these illegal stops to offload two or three 25-litre drums of diesel, and at any one time there can be up to 15 trucks being skimmed. It takes just a few minutes with the help of a hose pipe, a drum and a willing driver to raid a truck’s fuel tank, and the problem often goes undetected as fuel consumption is unpredictable. Truck drivers are cashing in on the illegal trade, selling the fuel at far less than it’s worth to illegal

Looking at the danger for transport companies in having poor fuel management practices, Mackie says, “The transport company’s return on investment is severely affected, his transport cost to client also increases and runs the risk of potential loss of business due to over-quoting, because his running cost is higher than a company that manages its fuel properly.”

Edmeston adds, “As South Africans and businesses feel the brunt of surging fuel prices, CarTrack has warned that theft of fuel from trucks is expected to see a significant increase in both frequency and quantities. With larger trucks holding anything from 300 litres of diesel at an average cost of R3 990 per tank, criminals will stop at nothing to get their hands on it.

“Given that diesel costs can account for up to 40% of the operating costs of a transport company, combating fuel theft and uncovering driver collusion is crucial to the sustainability of any transport outfit. 

TWA | May/Jun 2014

15

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FLEET OPERATIONS “If a business loses 75 litres per week per truck to theft, that’s 300 litres per month at a cost of R3 990 per month per truck.

When extrapolated over multiple trucks, the losses are alarming. In a fleet of 100 trucks, it equates to R399 000 per month, and close to R5 million per year – and these estimates are conservative.”

States Price, “Our research indicates that fuel now equates to between 38% and 44% of overall fleet expenditure, and that fuel costs are increasing on average 13% year-on-year.

Further case studies have proven that driver behaviour and fraud could equate to as much as 12% of overall fuel costs. Considering an average fleet car would use approximately Figure 4 RSA Petrol Tax/levies on fuel Below Take control of your fuel

R55 000 in fuel per year, the cost of theft can be enormous.”

Fuel advice When it comes to giving transport operators advice on curbing fuel theft, Mackie says, “My advice is to install a live monitoring system and take control of your fuel.”

Edmeston states, “As fuel costs continue to rise, illegal diesel skimming is going to take on new proportions. The reality is that rising transport and fuel costs, toll fees, vehicle maintenance costs, hijackings, fuel theft and the challenges around managing driver behaviour and collusion are all placing enormous pressure on fleet owners and companies to find effective and sustainable ways of managing fleets and drivers. Vehicle tracking, with full telematics features, is an essential

requirement to achieve optimum fleet performance and drive down operational costs.”

Adds Price, “The popularity surrounding diesel derivatives in the passenger and LDV market, with the perceived saving in fuel consumption, has caused a big demand on diesel engines and has directly impacted the supply of diesel. The one diesel pump standing in the corner, in the open, now has a dedicated line and is in many forecourts the biggest source of revenue. The continuous growth in this market is feeding the demand for cheaper diesel and more theft thereof, and a problem once concentrated to the trucking industry has moved into the entire vehicle market.

“There are many products available to manage fuel and the use thereof, such as antisiphoning devices from the fuel tank, a filler to the injector pump, including plumbing, fuel bowser and tank monitoring systems, fuel usage and cleaning programmes, and management software. It would definitely benefit any operator to invest in these systems as fuel theft is still growing daily and the market for this fuel is also on the incline. The more focus and fail-safes implemented, the closer one will be to eliminating all these risks, and minimising losses and decreasing operating costs, as every operator is a victim. The question is to what extent are you prepared to be exposed?”

TWA | May/Jun 2014

17

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INSURANCE

Cape to Cairo delivery challenging Delivering goods in Africa to customers on time is fraught with obstacles, which need to be identified and managed correctly. Hugh Reimers, MD: Eikos Risk Applications, discusses the importance of proper insurance when goods are transported through Africa.

O

NE OF THE factors he highlights is that of delays. Companies, particularly those with perishable goods that have time-sensitive supply chains, face extreme challenges when encountering lengthy delays.

Says Reimers, “A standard marine policy does not automatically cover loss or damage as a result of delay. It is imperative that customers arrange cover for loss or damage as a result of delay, should this be a risk. With insurance policies running for an agreed period of time, one can only imagine cost to company in places like Angola, or Tanzania, where delays running into weeks have been recorded.”

correct documentation and are cleared as quickly as possible, but also to ensure that they have the right insurance cover. An example of this is where a carrier may be inadvertently transporting goods which are classified as dangerous goods in terms of the National Road Traffic Act of 1996. As the list of these goods and substances is substantial, it affects many operators, and it is an offence for such goods to be consigned, transported or received, except in the manner set out in the Act. When transporting across borders, it is crucial to have knowledge of each country’s legal requirements, in terms of dangerous goods, in order to avoid loads being returned back to origin or even being confiscated.

Road is costly and, at times, dangerous The development of highways throughout Africa provides growing opportunity for road transport, but the actual condition of roads across much of the continent remains poor – the risk of damage to a vehicle is, regrettably, very high.

In the event of an accident, an insurer will only consider a claim if the vehicle is completely roadworthy; furthermore, you have a common law duty to disclose anything that is considered to be material to the risk you have insured. If you do not, your insurer also has grounds to reject your claim. If you are in any doubt as to what is material and what isn’t, rather disclose.

Transporters – the heart of the supply chain As the heart of the supply chain, transporters navigating Africa are faced with many challenges, not the least being the need to remain competitive. This may lead them to reduce costs in vital areas such as short-term insurance cover, which, in the long term, can be crippling. Africa is filled with potential for the logistics industry, and whilst we must celebrate this, it is imperative to note that successful companies will be those who have identified the risks in their supply chain and taken the necessary steps to create sustainable solutions.

Below Moving goods through Africa can be time-consuming

Inconsistent tax frameworks and costly delays Companies operating in African countries experience the array of tax systems as an added frustration in the supply chain. “Where a border official may not agree with the transfer pricing to be applied, the result may typically be double taxation: more administration, more delays. Again, these delays are particularly detrimental for cold-chain logistics providers, and must be adequately insured. Another problem facing importers and exporters working within Africa is the return of load cargo, as an empty return leg is expensive and has to be factored into the cost. This costing must be prudently done to remain competitive,” explains Reimers.

Are goods acceptable for customs?

Companies should ensure that they know exactly what they are importing and exporting, not only so that they have the

TWA | May/Jun 2014

19

FINANCE

Pitfalls of inadequate

insurance in Africa

Cross-border trade poses many challenges but one not to ignore is having adequate insurance. Simon Foulds speaks to Steve Cornelius, to find out how to ensure adequate insurance is in place when trucks have left South Africa.

What are the pitfalls of not having adequate insurance for transport operators in Africa? The three most important insurable risks facing a transporter are: first, damages to his vehicle and/or trailers; second,

20

TWA | May/Jun 2014

damage or loss of load; and third, damages to a third party. The consequences of underinsuring any of these risks can have a significant impact on the transporter’s business. Thirdparty insurance is potentially the biggest risk of the three and, if not correctly insured, can have a catastrophic impact on the business.

When travelling into different African countries, the transporter must purchase thirdparty insurance cover separately every time he goes into each country. Without this compulsory cover the authorities will impound the

vehicle and any goods on the vehicle. They will also imprison the driver until the transporter has made good on the third-party damages. This can often become a prolonged process.

How critical is insurance for transporters moving freight out of South African borders? In terms of the freight specifically, the transporter will be guided by two important factors: first, the contract between him and the consignor/consignee/transport broker, must be clear regarding the liability to insure the goods (if the transporter is obliged to insure the goods); and second, a goods-in-transit policy must be taken out for the value stated in the contract, ensuring that the geographical areas in the policy cover the transporter’s trip. If there is no contractual

obligation to insure the goods, the transporter can still be held responsible for losses that occur to the goods due to the transporter’s negligence. For this reason, a carrier’s liability policy must be taken out to cover the transporter in the event of loss due to negligence. Last, if a transporter uses a sub-contractor to move a load for which the transporter has a contractual liability to insure, the transporter should have a contingency policy which will respond if, for any reason, the sub-contractor’s policy fails to pay.

What insurance advice would you give transporters who move road freight through Africa? Make sure that you have a written agreement detailing the liability for insurance clearly.

FINANCE

“Care should be taken in terms of cover for crossborder tow-in.” Steve Cornelius, head: Specialist Risk-Automotive and Transportation, Indwe Risk Services

transporter moving goods through various countries?

Ensure your vehicle and the driver adhere to all the terms and conditions in your insurance policy.

Check that your sums insured are adequate.

Ensure the policy includes cover for the geographical areas that your truck will cover.

Make sure your premiums are paid.

Does a transporter need specific insurance for every country they move through, or does a blanket insurance cover a

A transporter needs to take specific third-party-liability insurance for every country they move through. Motor and GIT insurance are included on their existing policy, subject to the territorial limits allowed by the insurer, including the countries they travel through. If a country is not included in the territorial limits, then no cover will exist if a loss arises in that country. Care should be taken in terms of cover for cross-border tow-in. Some policies exclude this cover and costs can be very high, especially as they are likely to be priced in US dollars. Where possible, additional cover limits should

be negotiated with one’s insurers prior to undertaking the routes.

What are the most common claims received from transporters moving goods through Africa, including South Africa? The most common claims would relate to accident damage incurred to the vehicle whilst en route to, and back from, delivering a load. These claims often lead to goods-intransit and third-party claims as a result of the accident, especially where other vehicles have been involved. d.

Do you require quire rs to have transporters additional security measures like fleet tracking orr FFID chips, and so on, before you

insure them? If so, why?

Vehicles with a value of over ± R250 000 are invariably required to have approved stolen-vehicle recovery units installed in order to provide theft cover. It is a condition of the policy to have these units in a working order at all times. The problem with most of the GPS/GSM units is that in order to communicate positions outside the border, the GSM unit requires roaming to be activated. Because of the cost involved most operators do not do this. The only other way of tracking cross-border vehicles is through the installation of satellite tracking devices. The reason for this requirement is to assist with recovery of the vehicle in the event of a vehicle hijacking or theft.

TWA | May/Jun 2014

21

SECURITY

Security during cross-border operations Ensuring your trucks have adequate security, in not only deterring hijacking and theft but also in tracking both horse and trailer, is critical for every cross-border operator.

Simon Foulds speaks to Hein

Jordt (managing director: Ctrack Fleet Management) and Steven Sutherland (sales director, South Africa and Africa: MiX Telematics).

What advice would you give to cross-border operators when it comes to ensuring their trucks and trailers are safe and secure? HJ The first line of defence is always the driver. He needs to be vigilant at all times and react to any suspicious behaviour or situations. Most tracking devices come with a panic button that will inform the support centre that the driver and/or cargo are in danger.

“The first line of defence is always the driver.” Hein Jordt, managing director, Ctrack Fleet Management

SS Cross-border operators also need to consider the risks associated with operating outside of the country’s borders.

It is usually because of these risk factors that operators tend to substitute detailed fleet Above Driver waiting to cross a border post

performance telematics data for positional information. However, I would urge operators not to compromise in this instance.

While it has long been believed that cross-border operations require satellite-based tracking systems in order to ensure accurate vehicle positional information – and to some degree, this is true – operators do not have to forfeit an efficient and cost-effective integrated system, which will give them both satellite accuracy, as well as detailed fleet telematics, even in cases when GSM coverage is compromised.

Legacy-technology-based offerings dictated that you ran duplicate systems and, in some instances, more than just duplicated infrastructure and service fees were applied.

However, today’s integrated

TWA | May/Jun 2014

23

SECURITY

systems leverage both technologies – GSM and satellite. This translates into a cost-effective solution. Additionally, with GSM coverage constantly improving across Africa, the reliance on satellite is diminishing and, along with it, the excessive communication costs. An integrated system is therefore more cost-effective, as it offers a single user interface and means operators have one service provider, and have all their fleet data now in one place – this is real efficiency.

What are the ideal or best products for fleet operators to install on their vehicles to ensure they are secure? HJ As we have a variety of products and solutions this really comes down to the customer’s specific business needs. Our products are technologically advanced and use real-time vehicle-based solutions and GPS information to provide greater peace of mind, safety and security for vehicles, cargo and drivers. With the real-time visibility the client will be able to react immediately on any exceptions out of the ordinary.

collect information and determine trends in and around these areas. For example, if you designate all the border posts as points of interest, you will be able to monitor arrival, departure and waiting times at these locations and use this information to determine your route planning and turnaround times.

• Trailer-tracking capabilities: trailer on-hook and off-hook monitoring ability will allow the transporter to correlate the ODOs and see if the driver is using the truck-tractor for any other activities.

• Fleet consulting services that offer a support network relevant to the countries and routes where you will be operating.

How important is it for operators to have a separate security system on their trailer, separate from that on the truck?

HJ As the theft of trailers and cargo have become more prevalent over past couple of years, it has become increasingly important to safeguard the trailers. A basic

tracking device should be fitted to the trailer to enable the operator or owner to track the trailer when stolen. A device or sensor can also be fitted to warn the operator that the trailer was hooked of, probably at a place where it was not destined to be hooked off, and they can then dispatch a recovery team to the location and track the movements.

SS Until now, fleet managers have had to rely on information derived from their trucktractors to manage their trailers.

This has made the separation between a truck-tractor and its trailer both unsafe and inconvenient – especially when

high-risk or high-value loads are involved.

Being in a position to manage trailers independently from their truck-tractors is hugely empowering for those organisations that usually rely on outsourced or sub-contracted truck-tractor companies for information on their trailers and loads. This is because it is crucial to know where your high-value and high-risk assets and loads are at any given time. In addition to tracking your fleet, you can now benefit from round-the-clock access to the location of all your assets, and ultimately gain insight into your operations by understanding and managing utilisation.

“Being in a position to manage trailers independently is hugely empowering.”

Steven Sutherland, sales director, MiX Telematics

SS When selecting a fleet management system for cross-border operations, businesses need to ensure the following features and functionalities are included: • Sufficient on-board memory to retain all the telematics and movement data while operating in out-of-coverage areas.

• Critical event-notification integration with satellite systems.

• Historical replay functionality, which includes all events, violations and associated video clips. This allows for effective trip analysis and effective driver debriefing on return.

• Flexible location-management capabilities. Premium fleet systems allow users to create ‘points of interest’, which enable transport managers to

TWA | May/Jun 2014

25

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TRU U CKIN N G IN A FRIC CA

Using one type of truck in Africa pays dividends From transporting copper concentrate from the Zambian mines to smelters and then transporting the beneficiated material from the smelter, BHL uses one type of truck.

Simon Foulds finds out which one and why.

B

UKS VAN RENSBURG, managing director of Buks Haulage Limited (BHL), says, “We primarily use the FAW 28.380 FT in our 130-vehicle fleet and I am adding a further 99 of them to my fleet.”

Van Rensburg says, “I took the decision in October last year that all my replacement vehicles will be the same FAW 28.380 truck tractor in future. We use it in two configurations – one with a side-tipper trailer and the other with a flat deck.”

BHL have been running 70 of the FAW 28.380 FT sidetippers, transporting copper concentrate from the mines in Zambia to the country’s smelters. Thereafter the company uses 29 FAW flat decks to transport the beneficiated material from the smelter, over 2 400 km from Ndola, Zambia, to Walvis Bay, Namibia, for export to China.

Asked about the vehicle-of-choice falling to FAW, and the FAW 28.380 FT in particular, Van Rensburg, says, “It’s simple – it is effective cost of ownership, together with a dependable and easy-to-operate product and great aftersales support.”

“Who can argue with 2.1 kilometre per litre on a side-tipper and 2.5 kilometres per litre on a tri-axle flat deck? Since I have incorporated the FAW vehicles I have realised a 10% saving on fuel alone. On fleet utilisation I have increased my uptime from 65% to 95%.

“Why is FAW so good? Because the FAW is easy to service and maintain at our self-service depots, in Ndola and Solwezi, Zambia, our drivers love them and BHL has optimum fleet efficiency.” Earlier this year van Rensburg decided to register a subsidiary of BHL in Namibia to pick up on the increasing business opportunities being generated in subSaharan mining operations. In 2015 a new smelter will be commissioned in Zambia, adding to the haulage business.

For the new Namibian company, Van Rensburg has ordered Above BHL vehicle of choice another 25 FAW 28.380 FT units. is the FAW “Further expansion, over the next 18 months, owing to the 28.380 FT new smelter and other increased mining opportunities, has enabled us to extend our FAW fleet by a further 100 units.

“We have seen concrete evidence of FAW’s durability, reliability and simplicity. Our drivers love their FAW trucks. BHL follows a one-driver-one-truck policy. Also our drivers prefer the manual transmission because they are quicker to repair and, frankly, much easier to drive in Africa. The 28.380 FT has the best uptime – a big incentive for drivers too. Keeping our well-trained drivers comfortable, the FAW provides a cosy cab with air-sprung seats, air-conditioning and all the necessary creature comforts.

“FAW aftersales support and personal attention is unrivalled. I have yet to enjoy better support than that from the FAW group. They are part of my ‘team’; understand my business and know what is important to my business’s viability,” reiterates Van Rensburg.

BHL’s planned FAW fleet replacement cycle is four years, followed by a complete engine and transmission rebuild and then another four years of operating life. At present individual vehicles are clocking up approximately 10 000 km a month and some of the earliest units have reached Buks van Rensburg, the 250 000 km mark. managing director, Buks Haulage

“We have seen concrete evidence of FAW’s durability, reliability and simplicicty.”

TWA | May/Jun 2014

27

CORRIDORS

North-South Corridor As a crucial infrastructure project in ongoing regional trade as well as promoting economic growth across the sub-region the North-South corridor is critical in driving regional integration.

T

HE $11 BILLION corridor consists of more than 10 000 km of road across eight countries in Southern and eastern Africa. The North-South Corridor links the port of Durban to the Copperbelt in the DRC and Zambia. In addition, spurs link the port of Dar es Salaam with the Copperbelt and links to Durban and Malawi.

Viewed as Africa’s flagship trade and logistics corridor, it is a project being driven by the COMESA-EAC-SADC tripartite integrating 26 countries in the tripartite with their combined population of 600 million.

The Common Market for Eastern and Southern COMESA-EAC-SADC Africa (COMESA), the East African Community The COMESA-EAC-SADC (EAC) and the Southern African Development Tripartite is establishing Community (SADC) tripartite regional economa Project Preparation and Implementation Unit (PPIU) ic communities (RECs) are striving to create based in Lusaka, Zambia. an economic region through working together The PPIU will coordinate, on market integration, infrastructure developmanage and monitor ment and industrial development. The pilot Tripartite infrastructure transport corridor programme, the North-South projects in the Southern and Eastern Africa region.

Corridor Aid-for-Trade Programme spanning The PPIU will prepare eight countries, three RECs and 10 647 km of infrastructure projects to a road (excluding South Africa) was launched by bankable stage once these the tripartite RECs in 2009. projects have been identified

Above Trucks at one of the wellness centres along the corridor

by the Tripartite and/or approved by the Investment Committee of the Tripartite Trust Account (TTA).

28

TWA | May/Jun 2014

Values and freight This road network is the busiest transport network in the tripartite region in terms of both

traffic and freight volumes. Approximately 95% of all freight moved in this region is transported by road with only five per cent by rail.

The road network is already under pressure in relation to its design capacities and in terms of delays at border posts.

Due to the increased levels of mining activities, there has been an increase in volumes of commodities also being transported along the roads adding to heavy loading on the road infrastructure.

Road infrastructure Roads are generally in fairly good condition although sections are in urgent need of rehabilitation and improvement.

The network comprises mainly paved roads of asphalt concrete and surface treatment.

Traffic characteristics Exports of mining and agricultural products and imports of manufactured goods make up freight carried along the corridor. The severe imbalance of freight flows is a major cost affecting transport operators due to empty return hauls. The effect is that transport costs almost double as a result.

March 2009 to February 2014 According to TradeMark Southern Africa (before its premature closure) the total kilometre of road being actively upgraded within this corridor region has increased from

CORRIDORS

25 km in 2010 to 1 090 km in 2013. By February 2014, preparation on 604 km of these roads had been completed. Due to financial restraints the preparation of the remaining 486 km is on hold.

Road financing The total financing required to prepare all priority North-South Corridor projects currently in the Project Preparation and Implementation Unit (PPIU) project pipeline (33 projects of 3 212.3 km) amounts to approximately $20.3 million. Of this a total of $14.5 million has been committed by development partners, including DFID, EDF and the AfDB. Since DFID’s withdrawal of preparation funding for TradeMark Southern Africa, the shortfall has increased from US$0.69 million to $5.74 million for preparation of all projects.

The total financing required to implement all 49 projects along the North-South Corridor (including PPIU and Partner Projects) amounts to approximately $3.5 billion. An estimated $759 million has been committed by development partners and countries (including the TTA, the World Bank, DANIDA and the governments of Botswana, Zambia and Tanzania).

The amount withdrawn from TTA by DFID in November 2013 (previously available for NSC Projects) is $73 million.

A remaining shortfall of $2.8 billion is therefore required to implement all priority NSC road projects – a total of 4 046 km.

Road Wellness Centres The North Star Alliance (North Star) is a public-private partnership promoting the health and wellbeing of long distance truck drivers. It started off as a practical industry response to an urgent health problem and nowadays offers a balanced approach BORDER POSTS IN THE NORTHSOUTH CORRIDOR that meets both the drivers and Name of Post Countries joined industry needs. Since 2006, the Kasumbalesa DR Congo Zambia non-profit organisation has estabTunduma BP Tanzania - Zambia lished Roadside Wellness centres Songwe Tanzania Malawi at critical hotspots along Africa’s Victoria Falls Zambia Zimbabwe transport corridors such as border Chirundu Zambia - Zimbabwe posts, transit towns or ports.

Kazangula Zambia - Botswana Many drivers, due to time conMchinji Zambia - Malawi straints and schedules, do not have Zobue Malawi - Mozambique access to adequate health care Dedza Malawi - Mozambique and are regarded as one of the Beit Bridge South Africa - Zimbabwe most at risk categories in terms of Lobatsu South Africa - Botswana HIV and Aids. This is where North Gabarone South Africa - Botswana Martin’s Drift South Africa - Botswana Star comes in by taking the health Nyamapanda Zimbabwe - Mozambique care to where it is needed. 

TWA | May/Jun 2014

29

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CORRIDORS

Along the North-South Corridor Project there are sixx a sites at Roadside Wellness centres between South Africa and Zambia: • Cato Ridge (Durban) • City Deep (Johannesburg) • Musina • Beitbridge • Chirundu South • Chirundu North.

At these sites North Star offers Primary Health Care offeringss as well as Malaria diagnosis and treatment and TB screen-e ing. HIV counselling and testing are also undertaken at these sites and those who test positive are referred for CD4 countss to assess eligibility for ARV treatment.

N e North Star aims to improve the co coherence and effectiveness off d the regional response to HIV and Aid and other communicable and d Aids opp g opportunistic diseases in reducing the number of infections by making ser services available at the source.

The Roadside Wellness centres are converted shipping containers that have been refurbished as

MOVING FREIGHT FREIGH EFFORTLESSLY ACROSS AFRICA ACROS As countries across Africa gear themselves towards growing and stimulating inter-regional trade, the transport corridors being developed across the continent are important passageways for the movement of freight.

3S Media in association with FESARTA have released the Africa Road Corridors Handbook which gives transport and logistics managers all the key information they need before drivers embark on a journey.

fit for purpose health centres or primary health care clinics fit-for-purpose and which are placed at hotspots where large numbers of truckers stop.

Each centre is staffed by a qualified nurse as well as an outreach worker who is responsible for the day-to-day running of the site and they are supervised by a site coordinator.

The corridor sites also provide essential refill services to patients who are mobile but unable to access their regular health provider to obtain antiretroviral refills. It serves the purpose of ensuring drivers are able to access their treatment regardless of which country they are in.

Figure 1 Tripartite NorthSouth Corridor Source: Ernst & Young’s 2012 Africa Attractiveness Survey

Below Trucks travelling along the NorthSouth Corridor

To get your hands on a copy of the handbook, visit: www.3smags. co.za or phone Esther Louw on 011 233 2600.

TWA | May/Jun 2014

31

SEA FREIGHT

Eastern Cape port geared for growth The Port of East London is positioned to capitalise on substantial growth potential.

Simon Foulds speaks to Jacqueline Brown, port manager, about the port and its role within the South African economy.

2013/14 CARGO VOLUMES

T

HE PORT OF East London is a key player in the Transnet Market Demand Strategy (MDS), which will see Transnet spend R300 billion on capital projects nationally over a seven-year period.

The MDS will significantly expand South Africa’s port, rail and pipelines infrastructure, resulting in a significant increase in freight volumes, which the Port of East London is perfectly positioned to fully capitalise on.

The main objective of the MDS is to invest in building

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TWA | May/Jun 2014

Containers

capacity to meet validated market demand that will enable economic growth.

What makes the Port Of East London an asset to the country? The Port of East London is a key partner to both government and the private sector in driving economic development in the critical growth region of the eastern half of the Eastern Cape. The port is aggressively identifying and developing new markets and growing established ones, and is

Dry Bulk

42 000 t

committed to working with - Minerals/ores (coal) 30 000 t our key strategic partners to Grains (wheat) 77 000 t meet cargo demands and find innovative solutions to Liquid bulk (petro900 000 Kℓ leum) cargo freight challenges.

Automotive 57 000 The port’s basket of services Break bulk 95 000 t is utilised by a wide range of commodity movers, and as such we form an essential buses and trucks, farming part of a vast economic network implements. This terminal is that feeds into the Eastern used mainly by MBSA, Fiat Cape province. and Chrysler.

• Container terminal – hanWhat port facilities does dles containerised cargo e.g. vehicle components, the port offer? The port offers the following facilities: machinery, confectionary • Car terminal – motor vehicles, and pharmaceuticals.

SEA FREIGHT • multi-purpose terminal – where the primary commodities are cement and timber • grain elevator – grain products such as maize and wheat • petroleum products • break bulk cargo – scrap metal • bulk cargo – coal exports • dry dock – used for repairing ships.

How many and what types of cranes operate at the port? The port is largely reliant on geared vessels for the loading and unloading of containers. However, the port recently took delivery of a mobile gantry crane with a second one on the cards, should the volumes increase.

What are the cargo movements per hour, on average? This is dependent on ships’ gear for a number of commodities. The car terminal handles approximately 170 cars per hour, on average.

What size ships is the port able to accommodate? We can safely accommodate vessels 245 m in length, with up to 10.7 m draught. However, a need to accommodate larger vessels has been identified, in terms of the MDS. Feasibility studies are currently underway to widen and deepen the port, which would allow us to accommodate larger vessels than at present.

What is the average waiting period for ships waiting to enter the port?

There are no waiting periods and no delays.

What are the port’s operating hours? 06:00 to 22:00. However, 24-hour service is available, as and when required.

How many ships visit the port per annum? About 350, on average.

How many ships can be accommodated at any given time? There are 11 commercial berths.

What ship-repair facilities does the port offer? The Princess Elizabeth graving dock, which is 200 m in length, offers full ship-repair facilities which are undertaken by private enterprise.

What have been the latest infrastructure developments at the port? The car terminal berth has been deepened to 10.7 m and an additional 1 000 parking bays adjacent to car terminal have been added, taking the capacity up to 5 000 bays in total. Of these, 2 800 are fully enclosed undercover parking bays while 2 200 are adjacent to the undercover facility for staging purposes.

The port’s quayside leisure development, Latimer’s Landing, is in the midst of a major infrastructural upgrade.

The first new tenant, a privately run restaurant, has taken occupation following major on-site renovations, while a second new tenant, operating an exclusive jazz lounge, will be operational by the end of May. The port has also invested in extensive security and surveillance infrastructural upgrades at all port entrances. Another key security feature recently added is a 1.7 km security fence around the port perimeters to make the port precinct more secure.

In addition, R100 million has been spent on strengthening the integrity of, and rehabilitating, the breakwater, to protect the foreshore, and replacing navigational masts. Firefighting facilities at the tanker berth have also been extensively improved and upgraded.

Opposite and above Cars, containers, cement, cattle, maize and petroleum vessels make for a busy day

which will see Transnet spend R300 billion on capital projects nationally over a seven-year period to significantly expand South Africa’s port, rail and pipelines infrastructure.

A need has been identified to both deepen and widen the entrance channel to the Port of East London. This project is currently at a pre-feasibility study level and is receiving high-level attention both in the port and at a national level. In addition to the entrance channel, the port will also be looking to deepen some of its berths to allow for larger vessels, as per industry trends and demands.

What future expansion plans are in the pipeline to expand the port? The Port of East London is a key player in the Transnet MDS,

“A need has been identified to both deepen and widen the entrance channel to the Port of East London.”

Jacqueline Brown, port manager for East London

TWA | May/Jun 2014

33

ONLINE

HEAVY VEHICLE CURRICULUM A Complete Curriculum for Medium/Heavy Truck Technician Training Programme Technica CDX is now your source for a complete teaching and learning solution for Medium/Heavy Truck Technician training programs. This comprehensive curriculum consists of new interactive online courses with accompanying textbook materials from MAVCC, a leading multi-state consortium of heavy vehicle educators in the USA. This full course solution offers instructors and students the theory and practical application needed for entry-level technician training.

5FDIOJDB $%9 )FBWZ WFIJDMF t 1SFWFOUJWF .BJOUFOBODF BOE *OTQFDUJPO This is a cutting-edge online training module that offers instruction on proper vehicle inspection procedures and safety practices. All major vehicle systems are illustrated and tasks are demonstrated with live videos to provide a highly engaging learning experience.

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Michael Turnbull Marketing Manager

Tel: Cell: Fax: E-mail: Website:

R2274.00

merSETA compliant

CBMT 5FYUCPPLT OPX available

+27 (0) 11 879 6065 +27 (0) 79 502 2368 086 566 8065 michael.turnbull@technica.co.za www.technica.co.za

CH3211

CBMT Compliant CBMT approved modules only

www.technica.co.za

TRAINING

The future of vocational training The launch of Technica Learning Resources for vocational training has already proven to be a success around the world.

A

CCORDING TO TECHNICA manager, Michael Turnbull, “There is a general skills shortage in the industry and a need to develop highly skilled technicians. Based on this urgent need, we researched what was available overseas and applicable to our market and contacted CDX Automotive, a leading automotive, multimedia and e-learning provider, and requested assistance in the development of an automotive training programme suitable for South Africa. CDX is used by 70% of colleges in the UK and 100% of TAFE colleges in Australia that cater for automotive training. We decided to utilise their content on a custom-built site, with our own branding, and do something that is best suited for the local market and could be offered to the motor industry at large.”

Technica also saw an opportunity from an e-commerce point of view and developed a business model around the product for the open market i.e. workshop owners and apprentices.

The e-commerce facility enabled workshops and openmarket users to subscribe to the product and receive the user details within minutes. This saved on time and simplified online learning in the process.

Technica can be used by technicians who have never had any formal training to reinforce their practical skills with theoretical principles. The product has the largest library of the highest quality interactive automotive training products available in South Africa. The product operates on a know-see-do-prove principle and offers over 1 100 courses, with subscriptions that are valid for 12 months, and with access to all courses at any time.

Technica also provides an opportunity to build custom learning management systems (LMS) for large organisations with their own branding and with course material that is mapped to their own standards and levels. There are a substantial number of people who need to be trained with up-to-date material and there is a need to supplement paper-based material with a digitised format, where you

can deliver training to a student at any time or place. This is the focus of Technica and that’s how it is being leveraged into all markets and vocational training. In addition, Technica now offers a complete set of curriculum-aligned textbooks for the South African market.

Technica has been gratified with the acceptance by large organisations. “Corporates have shown a great deal of interest in terms of building customised LMS for their internal use. We found that a number of corporates have limited access to training material and required new and fresh content. It makes sense because corporates have access to infrastructure and they can put systems in place to facilitate the process for learners to train,” Turnbull explains.

The establishment of Technica Learning Resources as the marketing and distribution partner of CDX in the global market has led us to focus on the emerging markets, and their need for both online solutions as well as printed materials. Since 2012, there has been a major effort to develop high-quality printed textbooks in a variety of trades and disciplines, matching very closely the material presented online.

This focus on emerging markets and a variety of learning materials has positioned Technica as a global content developer, distributor and solutions provider.

TWA | May/Jun 2014

35

FUEL

Reducing maintenance costs

By Raymond Abraham

If every part of your engine is meticulously engineered, should you not be using a lubricant that has been designed to ensure equipment is well protected, works efficiently and offers you a lower cost per kilometer?

T

HE SHELL SPIRAX range of heavy-duty transmission and driveline fluids has been designed to allow fleet and owner-operators to select the oil that will deliver optimum

36

value and cost saving to their operations by wear protection, long oil life and efficiency.

Protecting axles and gears from wear can help reduce maintenance costs, extend vehicle life and maximise your return on investment.

TWA | May/Jun 2014

3S Media’s AWARD-WINNING MAGAZINES keep you informed www.3smags.co.za

• • • • • •

Topical and relevant news and articles Projects and case studies Unique content Expert analysis from industry experts and thought leaders Updates on activities of companies and key roleplayers Industry association endorsements

FUEL Higher fuel efficiency can be achieved by fleet operators if they choose quality lubricants for their axles and gears.

Lubricants that have tailored frictional properties provide increased mechanical and fuel efficiency.

Large scale business operations are constantly reviewing their supply chain management systems to procure efficient fleets.

The Shell Spirax range of axle, gear and automatic transmission oils has been developed to enable drivers, fleet owners and owner-operators to select oil that delivers value, enhanced wear protection, and long oil life.

The latest advancement in this range is their synthetic oils that deliver exceptional wear, pitting, bearing failure and corrosion protection for heavy-duty axles, transmissions, and gears operating under highly stressed conditions.

The longer an oil goes on protecting its components, the less maintenance a vehicle requires, so it can continue to operate with less interruption, and reduce an operator’s maintenance costs.

The range contains oils that are designed to offer value through exceptional oil life, and

protection that enables oil-drain intervals and component life to be extended.

In summary then, the key benefits are: • Extends oil-drain intervals up to 240 000 km under severe conditions, or 480 000 km under normal duty operations.

• Meets most transmission OEM warranty requirements example, e.g. Allison.

• Exceptional wear protection for longer transmission life and lower maintenance costs.

• Excellent shear and oxidation stability for long life.

• Superior friction characteristics and friction retention.

• Excellent low-temperature performance.

The benefits have been demonstrated through extensive laboratory tests and over 20 million kilometres of field trials.

Shell’s axle and gear oils are developed in close

cooperation with customers and equipment manufacturers, globally.

The range is approved by many vehicle and automotive component manufacturers.

The longer an oil goes on protecting its components, the less maintenance a vehicle requires

TWA | May/Jun 2014

37

SUPPLY CHAIN LOGISTICS

A delicate balancing act The South African supply chain is now under mounting pressure as operators face a two-pronged attack from increased foreign imports flooding the local market. Dr Frances Wright says this has created the worrying situation of an off-kilter balance of trade.

T

HIS IS AS a result of a ‘perfect storm’ of market conditions, namely a shift towards the sourcing of cheaper materials and equipment on the one end of the scale and a shrinking manufacturing industry on the other. In addition, with scarce commodities such as essential oils, resin, phosphorus and many more, producers now have far greater power in the supply chain. Operators are left feeling highly vulnerable to price fluctuations and inefficiencies, and subject to even tighter margins, due to heavy penalties for issues such as late delivery and inventory loss.

As a result, supply-chain operators are forced to undertake a delicate balancing act on a daily basis, scanning globally for suppliers while keeping up to date with changes in the local environment, such as new legislation and the burden of cost reduction. In addition, supply-chain operators work to try and keep the supply chain standardised as well as efficient and effective. The result is that the current, highly complex supply chain has veered away from the traditional approach to procurement and, in fact, the entire logistics function.

At the coal face Given that the supply chain is at the coal face of business operations it is highly vulnerable to risk that must be constantly identified and mitigated. This

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TWA | May/Jun 2014

requires complex scenario planning and the development of action plans – total quality management has to permeate not just the supply chain, but the entire organisation.

A rapidly changing environment intervention to ensure operational efficiency throughout the supply chain cannot be a mere one-off occurrence. Processes have to be put into place to provide products on a continual basis at the right time and place, according to customer requirements and this despite any competition, external power or cost-cutting exercises. The entire supply chain has to be viewed as a holistic network, both upstream and downstream. Processes should run through from the beginning to where the end-customer purchases the product, resulting in customer satisfaction and repeat business.

Total integration There also needs to be total integration of the logistics process, starting with the realisation that the procurement office is not the only part of supply-chain management. This will be underpinned by the realisation that production, human resources, finance, quality control and marketing are also key aspects of the process.

This cohesive approach can be created through combined strategies that lead to relevant research and development and the ongoing improvement of processes. Process improvements are necessary, especially with regard to customer requirements, buying trends, new technologies and perhaps most importantly, solid supplychain relationships underpinned by thorough cost and performance negotiations to mitigate the risk of failure.

At the end of the day, it is about all players working together in a structured manner with one goal in mind – to provide quality without undue power of one participant over the other, while taking care not to exclude new entrants in the market.

Overall it is clear that supply-chain management is a complex function that is not always given the attention it deserves, despite challenging trading conditions. It’s an ever-moving and constantly developing arena, worth far greater time and attention than it currently receives, in the long-term pursuit of decreasing costs and increasing effectiveness.

INCOTERMS

Multi-modular transport

By Peter Lamb

Incoterms 2010 introduced two new rules, DAT (Delivered at Terminal) and DAP (Delivered at Place). Both these terms are applicable to any mode of transport and are not limited to the exclusive use of the sea or inland water-ways.

T

HE DRIVING FORCE behind the trend to multi-modular transport is the increasing use of the container.

In most circumstances when a container is used in multi-modular transport, the use of Incoterms that relate only to the sea is not appropriate if the parties intend risk to transfer at the commencement of the carriage, which often is inland. Generally, Incoterms that relate only to the sea are best suited for bulk commodities.

The 2010 Incoterms can be divided into two broad categories: those which relate to any mode of transport and those which relate to specific modes of transport. Incoterms FAS (free alongside ship), FOB (Free on Board), CFR (Cost and Freight) and CIF (Cost, Insurance and Freight) relate to sea or inland waterway transport only.

This distinction is often not appreciated in practice, which is a shame as it is a useful first step to take in deciding what Incoterm to use. For example: a Zimbabwean furniture supplier sells tobacco to a South African manufacturer, in terms of a contract of sale stating “FOB, Harare”. FOB means that the seller delivers the goods on board a “vessel nominated by the buyer at the named port

of shipment or procures the goods already delivered”. In this example Harare has been identified as the port of shipment. This is clearly incorrect there is no port in Harare in which a vessel can dock; Zimbabwe is a landlocked country.

The use of the incorrect Incoterm gives rise to uncertainty. In terms of an FOB sale, the risk of loss or damage to the cargo transfers to the buyer when the cargo is loaded on board the vessel. If the cargo is damaged shortly after its departure from Harare, who sits with the loss? The buyer or the seller?

Remember, the cargo was never loaded onto a “vessel”. Due to this ambiguity, the contracting parties will then have to have recourse to the choice of law and dispute resolution clauses in their contract of sale.

This enquiry could lead to further disputes between the parties as to what the contractual terms mean. Did the parties intend the land equivalent of FOB? All these additional enquiries defeat the purpose of using the Incoterms in the first place.

The main aim of Incoterms 2010 is to foster business efficiency between the contracting parties. By using the Incoterms correctly, the buyer and seller are clearly dealing with

a number of issues that are inherent to the contract of sale, amongst others, the transfer of risk, who must arrange for the contract of carriage and insurance of the cargo, and the place of delivery of the cargo. Certainty on these important issues facilitates other commercial transactions, which are ancillary to the contract of sale, for example the letter of credit or marine insurance policy.

The contracting parties should have used either the Incoterm EXW (Ex Works), or the Incoterm FCA(Free Carrier), the latter being preferred as it is more appropriate to international trade. EXW and FCA are generally considered the equivalent to Incoterm FOB for any mode of multi-modal transport. If the parties had agreed on “FCA, Harare”, the seller would deliver the cargo to the carrier or another person nominated by the buyer at the seller’s premises or to another named place.

With the place of delivery, namely Harare, being clearly identified as the place of delivery in the contract of sale, if the cargo was lost subsequent to delivery, the buyer would bear the loss as it sits with the risk of such loss.

Figure 1 Incoterms 2010: transfer of risk from the seller to the buyer

TWA | May/Jun 2014

39

CUSTOMS CLEARANCE

Reducing trade costs The World Trade Organisation’s Agreement of Trade Facilitation promises to streamline customs clearance procedures around the world, which is good news for both small and big business, says Hester Hopkins.

T

HE WORLD TRADE Organisation’s (WTO) Agreement of Trade Facilitation (ATF) was concluded at the 9th Ministerial Conference in Bali, Indonesia in December 2013. Ten years in the making, the agreement binds all 159 WTO members to accelerate the movement, release and clearance of goods, improve communication between members on customs matters, and help developing countries meet the agreement’s obligations.

“The ATF is aimed at assisting developing and least developed countries, such as South Africa, in taking advantage of its new provisions, which align trade logistics and processes to maximise trade efficiency,” says Hopkins. She believes that once it has been implemented, the ATF will significantly reduce trade costs and will make customs processes much easier.

Bottom Accelerating the movement of goods Below Hester Hopkins, senior manager: customs and global trade at Deloitte

40

Levelling the playing fields “The ATF aims to alleviate the main barriers to trade, in order to create a fair playing ground,” asserts Hopkins.

She acknowledges that the costs of trade affect small and medium-sized enterprises disproportionally due to the high cost of compliance with customs and border procedures, in some cases rendering them uncompetitive. Minimising trade transaction fees such as the cost of clearing goods, documentary administration costs and border delays, are all part of the agreement’s objective to facilitate trade. It’s estimated that the ATF will cut trade costs by almost 14.5% for lowincome countries and 10% for high-income countries, and could potentially boost global GDP by $1 trillion.

Some of the provisions of the agreement include utilising common customs standards, reducing documentation and

TWA | May/Jun 2014

formalities, promoting the use of a “single window” or onestop submission of customs information, and uniformity in border procedures and documents. “The agreement aims to modernise, facilitate and harmonise the customs and trade processes between countries, decrease trade costs and remove the red-tape barriers often found in moving goods between borders,” states Hopkins.

Implications for SA and other developing countries From a South African perspective, manufacturers, producers of perishable goods, freight forwarders, logistics providers, express carriers, and entrepreneurs seeking to enter the export market, all stand to benefit from this agreement. “The ATF comprises two sections,” explains Hopkins. “The first deals with trade-facilitation measures and obligations, while the second focuses on flexibility arrangements for developing and least developed countries.”

Developing and least developed countries will be given an extended period in which to comply with the ATF, as well as being provided with donor assistance to build capacity. The agreement, which comes into effect in 2015, will be binding in developed countries, although developing and least developed countries will have some flexibility in fulfilling the ATF’s obligations. “The biggest challenge lies in the implementation of the trade facilitation commitments within the given time frames, the high implementation and regulatory costs involved, as well as the training and implementation of new policies and regulations,” says Hopkins.

Given these challenges, monetary and training assistance has been made available to developing and least developed countries by donor organisations. WTO members are also expected to keep a high level of transparency and predictability within their customs processes and maintain information which is accurate, reliable and updated immediately.

However, as Hopkins notes, “This could prove problematic in countries where IT equipment is outdated and technology training is almost non-existent.”

For some countries, implementation of the ATF could involve passing new legislation. “Developing and least developed countries should aim to implement the provisions of the ATF on a timely basis, taking advantage of the assistance of global organisations such as the World Customs Organisation and the Organisation for Economic Cooperation and Development,” advises Hopkins. “The benefits that will arise from this new modernised, transparent customs system far outweigh the costs of implementing it.”

COOPERATION

Strengthening economic growth

At the Fourth E–UAfrica Summit that took place in Brussels at the beginning of April, 78 countries and 61 heads of state and government, comprising 40 African and 21 European, were present.

“Africa and Europe are heading towards a future of cooperation and partnership in a wide variety of fields.”

Ambassador Roeland van de Geer, head of the European Union delegation in South Africa

T

HIS WAS THE first EU-Africa Summit taking place in Brussels and the largest meeting ever organised by the EU. All African and EU countries were present, the exceptions being Guinea-Bissau and the Central African Republic, that were not invited, and Sudan and Zimbabwe, that decided not to come after first accepting the invitation.

Ambassador Roeland van de Geer, head of the European Union delegation in South Africa, outlines to Simon Foulds why this EU-Africa Summit was an unqualified success, marking a further and positive development in relations between Africa and Europe.

“Africa and Europe are heading towards a future of cooperation and partnership in a wide variety of fields. This relationship is consolidated in the joint Africa-EU strategy that

42

TWA | May/Jun 2014

was adopted at the Second Africa-EU summit in 2007 held in Lisbon. It was then further developed in the Tripoli Declaration of the third summit held in Libya in 2010 and also now in the EU-Africa roadmap 2014-2017, as a result of the fourth summit taking place at the beginning of April.

“This roadmap focuses on ‘Investing in people, prosperity and peace’ and will be concentrated on the following priority areas: peace and security; democracy, good governance and human rights; human development; sustainable and inclusive development and growth and continental integration; and global and emerging issues,” states Van de Geer.

During this summit there was a broad agreement on how to approach growth and job creation, regional integration, including

economic partnership agreements (EPAs) as a step towards continental integration, private sector involvement in infrastructure, agricultural transformation and open trade.

Van de Geer elaborates, “The summit showed that the EU-Africa relationship is alive and well, and cooperation is better than ever.

The cooperative atmosphere and positive interventions from both sides left everyone feeling this was a genuine partnership of equals, committed to making progress on things that concerned both continents.”

On trade, strong support was expressed for World Trade Organisation-compatible EPAs, with good progress in the margins of the summit on the Southern African and the East African EPAs. On the investment climate, the message conveyed by businesses at the summit was

COOPERATION transparent and clear. Namely, that the rule of law is essential and more flexible financing is desirable.

“Overall, the summit marked a shift away from aid to investment as the focus of economic relations. In addition, there is a growing commitment by the African leaders to take responsibility for security, but also a preparedness to accept support in this field.

“The EU is Africa’s most important partner in areas such as peace, security, trade and investment, development cooperation and humanitarian aid. As such, the EU recognises the ongoing transformation of Africa from an aid recipient to an increasingly important economic and trade partner,” explains Van de Geer.

South Africa is one of only a few countries in the world with which the European Union has an annual summit.

“Our economic cooperation is equally impressive; the European Union is by far South Africa’s largest trading partner and our open trade relation under the Trade, Development on Cooperation Agreement is likely to develop even further once the EPA is signed between

South Africa, Botswana, Lesotho, Swaziland, Namibia and Mozambique.

“Europe and Africa are developing a new relationship and the outcome of the Fourth EU-Africa Summit is a powerful expression of the two continents to progress together.

Both continents are interacting as partners in progress and it is in this light that we in Europe feel that South Africa should play a leading role in the further development of the relations between Africa and Europe,” he concludes.

TWA | May/Jun 2014

43

“ Reduce costs, increase revenue, “

and delight customers

Discover end-to-end Supply Chain Management insights at the 36th Annual SAPICS Conference.

1 - 3 June 2014 | Sun City

Sponsors:

www.sapics.org.za | T: +27 (0)11 023 6701 | Email: sapicsconference@upavon.co.za

36th Annual Conference & Exhibition

BILATERAL AGREEMENTS

The endgame of EU-SADC EPA negotiations Sean Woolfrey, tralac researcher, comments on the current state of the

EPA negotiations between the European Union and the Southern African Development Community (SADC).

D

ESPITE THE WORLD Trade Organization’s Doha round negotiations displaying signs of life with the conclusion of the Trade Facilitation Agreement during the Bali Ministerial in December last year, the negotiation and conclusion of comprehensive bilateral and regional trade agreements by many of the world’s industrialised economies, including the United States, Australia, Japan, Canada, South Korea and the European Union (EU), continues apace.

In Africa, the bilateral and regional trade agreement agenda has been dominated for the past few years by two negotiating tracks. The first has involved efforts to promote increased intra-African trade through deeper integration within the continent’s various regional economic communities, and the establishment of a Tripartite Free Trade Area as a stepping stone towards the creation of a Continental Free Trade Area. The second has involved efforts to conclude Economic Partnership Agreements (EPAs) between various regional groupings of African countries and the EU, the African continent’s most important trading partner. The prominence of the EPA negotiations has increased in recent months given the October 2014 deadline for the conclusion of the EPAs. The EPAs, which are comprehensive reciprocal trade and economic agreements between the EU and regional groupings of African, Caribbean and Pacific (ACP) countries, were supposed to replace the EU’s unilateral trade preferences for ACP countries, provided under the framework of consecutive Lomé Conventions and the Cotonou Agreement, which expired in 2007. Although EPA negotiations were initiated in 2002, only 36 ACP countries had concluded EPAs with the EU by the end of 2007 and, with the exception of the EPA concluded between the EU and the Caribbean countries, all of these were interim agreements concluded to preserve access to the EU market. Under Market Access Regulation (MAR) 1528 of 1 January 2008, the EU granted duty-free quota-free (DFQF) market access to all exports from those countries with which it had concluded an EPA (including interim EPAs). Since the beginning of 2008, other ACP countries have exported to the EU under the Generalised Scheme of Preferences (GSP), which among other preferences, provides DFQF access to exports from least-developed countries under the Everything but Arms EU initiative.

Negotiations towards the conclusion of EPAs between the EU and the African regional EPA groupings have continued since 2008, but these negotiations have not always progressed smoothly, and at times have been acrimonious.

A number of stumbling blocks have surfaced during the negotiations, leading many on the EU side to question the commitment of African countries to concluding the negotiations, and many on the African side to question whether the agreements being proposed by the EU really will promote sustainable development and support regional integration, as claimed. By 2011 only four African countries – Mauritius, Madagascar, Seychelles, and Zimbabwe – had finalised their EPAs, and in September that year the EU announced it was imposing 1 October 2014 as a deadline for the withdrawal of MAR 1528. Any countries not having ratified an EPA or ‘taken necessary steps’ to do so by this deadline stand to lose DFQF access to the EU market, unless they are eligible for preferential access under the GSP. While heavily criticised on the African side, this deadline appears to have given some momentum to the EPA negotiations. By March 2014, it was being reported that an EPA deal had been struck between the EU and the Economic Community of West African States EPA grouping, while negotiations on the East African Community and Southern African Development Community (SADC) EPAs have been reported as entering their final stages.

Below Striving towards a continental free trade area

TWA | May/Jun 2014

45

MATERIALS HANDLING

Moving through the warehouse The global forklift industry grew by 6% in 2013, while the South African market had a disappointing and largely unanticipated decline in sales of 21 % (source: World Industrial Truck Statistics).

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OOKING AT THE forklift industry in South Africa Simon Foulds speaks to Mike Norton, Toyota forklift national sales manager. According to Norton, Toyota forklifts, which are distributed by EQSTRA Industrial Equipment, managed to maintain market share position over the past year.

“The downturn in the overall market may be a correction after a couple of years of good growth in 2011 and 2012, but the fact remains that overall market conditions are tough.

Things are not likely to ease with issues such as the looming annual strike season, the government elections and low GDP growth expected for 2014, based on South Africa’s real GDP growth of just 1.9% in 2013.”

When it comes to advising warehouse managers to assist them in ensuring they have the best and proper equipment in the warehouse, Norton offers this sound piece of advice.

“Always invest in products which are sourced with both product and customer support, in order to avoid any downtime.

Key to this is ensuring that the support offered means that genuine parts are readily available and the company has field technicians on call 24 hours a day, seven days a week.”

“Overall market conditions are tough.” Mike Norton, Toyota forklift national sales manager, EQSTRA Industrial Equipment

TWA | May/Jun 2014

47

AIR CARGO

Cargo growth trend pauses Data released by the International Air Transport Association (IATA) shows air freight markets in March were up 5.9% compared to a year ago, and capacity grew 3.4%.

Tony Tyler, director general and CEO, IATA

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HILE THIS MARKS a significant improvethis period, innovators have created a new value proposiment in volumes compared to March 2013, tion for shippers and consumers based on an end-to-end much of the growth took place in the final model, speeding up deliveries through integrating the airline quarter of 2013 (over and above the usual and ground components of freight, challenging the existing year-end volume growth). Since the beginning of the year, business model for many participants. At the World Cargo air cargo volumes have been basically flat. This plateau in Symposium in March, IATA’s global head of cargo, Des volum volumes is consistent with the recent pause Vertannes, challenged the industry to cut in im improvements to business confidence the end-to-end air freight shipment time by IATA FACTS and world trade.

48 hours by the year 2020, to enhance the Total market shares, in terms African Afr airlines expanded 5.9% comcompetitiveness and value of air cargo. of freight tonne-kilometres by region of carriers, are: pared pare to March 2013. Growth in the region • Asia-Pacific 39.7% remains rem volatile, but the average for the • Europe 23.3% • North America 20.1% first quarter was an expansion of 1.5%.

• Middle East 12.4% Growth Gr has been affected by a slowdown • Latin America 2.9% in the South African economy. Capacity • Africa 1.5% grew g broadly in line with demand, at 5.5%.

Tony Tyler, IATA’s director general and CEO says, “Cargo markets had a boost in the last quarter of 2013, but have now levelled off. It is a competitive industry with w growing capacity chasing weak demand. The business ne cycle will eventually swing upwards but the air cargo industry ind also needs to improve its value proposition if it is to attract growth when markets improve. Modernising air cargo ca processes and infrastructure offers the potential to cut end-to-end shipping times by up to 48 hours. We cannot let market doldrums hold us back from this critical competitive gain.”

In the 40 years since the introduction of the 747 freighter, the end-to-end shipping time for goods by air has remained unchanged, at six to seven days. During

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TWA | May/Jun 2014

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