ENDORSED BY
Intraregional supply chain solutions from producer to consumer
ROAD Being BBBEE compliant
SEA
Cargo insurance mistakes
AIR
LOGISTICS
Revitalise air cargo
Road to rail
IN T THE HOT SEAT
Geoff G e o du Plessis is optimistic about the
ffuture ut of MAN in Africa P6
ISSN 1684-7946 November/December 2013 Vol.Mar/Apr 11 No.62013 / R40.00 incl.No. VAT2 / R40.00 incl. VAT ISSN 1684-7946 Vol. 11
ENDORSED BY
Intraregional
ROAD
Being BBB EE compliant
SEA
Cargo insu ranc mistakes e
AIR
Revitalise air cargo
supply chain
soluƟons from
producer to
consumer
LOGISTICS Road to rail
Intraregional supply chain solutions from producer to consumer onsumee r
COVER STORY TOR RY There is a betterr way with Scania cania
INSIDE
P4 P 4 IN T THE HO T SEAT
Ge off o du Ple fut ure of ss is is op tim ist
THIS ISSUE E
ic MA N in Afr ica P6 ab ou t the ISSN 1684-7
946 Novemb er/Dece ISSNmber 1684-7 2013 946 Vol.Mar/Ap 11 No.6 r 2013 / R40.00 Vol. 11 incl.No. VAT2 / R40.00
incl. VAT
REGULARS Editor’s comment The end is nigh... roll on 2014!
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FESARTA An African perspective from
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Barney Curtis
SUPPLY CHAIN LOGISTICS Key to growth
IN THE
HOT H SEAT S
Geoff du Plessis from MAN on the highest level of technology and quality P6
Transport infrastructure projects An important day for SA Smart supply chain solutions
4 8
Cover story There is a better way Regional news
Delivering commercial value from your fleet Imperial reinvents itself for maximum client benefit Beyerskloof wines for Mozambique
COMMERCIAL VEHICLES New Volvo models launched Footprint into Africa Isuzu – better than ever With Jurgens Truck Bodies, it’s all in the pedigree Success on the move Being BBBEE compliant
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28
30
10 12 14 16 18 20
SARS to revolutionise trade on the continent SA supply chains should use CTCO RTS management system Avoid mistakes A revitalising partnership
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EDITOR’S COMMENT
The end is nigh…
roll on 2014!
T
Editor in action
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HE END OF THE YEAR is almost here and what an eventful year it has been. My first year as Transport World Africa editor has been enjoyable and I am definitely looking forward to 2014. I would like to welcome on board the South African Association of Freight Forwarders, which has decided to endorse the magazine. Freight forwarders play an important role in our industry. From 2014 expect to find out more about this sector within Transport World Africa. In this, the last issue of 2013, Barney Curtis from FESARTA highlights the issue of non-tariff barriers (NTBs). Some might think NTBs are frivolous items that should not even be taken seriously by a business entity in South Africa. But the moment you start operating cross-border, these NTBs can start affecting your bottom line. Operating north of our borders is not for sissies, but it should not mean that other elements not related to transport and logistical operations should affect your business. This is why it is so important for Barney to lodge these NTBs at the highest level, especially if we all want to ensure that intra-Africa trade increases. The Johannesburg International Motor Show took place during October and we highlight some of the exciting activities that took place. In the Hot Seat in this issue is Geoff du Plessis, chairman of MAN, who is excited about being back in the country and foresees a bright future for Africa. Volvo South Africa launched its new range at Gerotek and also present at the event was the company’s president, Claes Nilsson. We also interview Henrik Fagrenius, Scania’s executive regional director of sales and services management for Southern Africa, Asia and Oceania during his visit to the country. Being BBBEE is also in the spotlight and Keith Levenstein seperates fact from myth regarding this issue. Transnet Freight Rail is starting to work even more closely with logistics companies in its efforts to move rail-friendly cargo from road to rail, and we highlight the agreements the state-owned enterprise has signed with Imperial Logistics and Barloworld Logistics. We also look at the new customs management system by SARS, with Hester Hopkins from Customs and Global Trade at Deloitte. In addition, Dr Dinesh Kumar looks at the complete total cost of ownership within the supply chain, Oliver Naidoo from Judah Compliance Auditors discusses the ISO 39001, Carmen Pasquelle marine manager at Lion of Africa Insurance touches on how to avoid marine cargo insurance mistakes and Tony Tyler from IATA highlights how partnerships can revitalise air cargo. As always, a varied read – enjoy!
TWA | Nov/Dec 2013
Publisher Elizabeth Shorten Editor Simon Foulds • simon@3smedia.co.za Head of design Frédérick Danton Senior designer Hayley Mendelow Designer Kirsty Galloway Contributors Barney Curtis, Nicholas De Canha, Hester Hopkins, Dr Dinesh Kumar, Oliver Naidoo Chief sub-editor Claire Nozaïc Sub-editor Patience Gumbo Client services & production manager Antois-Leigh Botma Production coordinator Jacqueline Modise Marketing & events coordinator Neo Sithole Distribution manager Nomsa Masina Distribution coordinator Asha Pursotham Financial manager Andrew Lobban Administrator Tonya Hebenton Printers United Litho JHB • t +27 (0)11 402 0571 Advertising sales Hanlie Fintelman • h.fintelman@lantic.net t +27 (0)12 543 2564
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www.3smedia.co.za Annual subscription: R290 (incl VAT) subs@3smedia.co.za ISSN 1684-7946 © Copyright. All rights reserved. All articles herein Transport World Africa are copyrightprotected and may not be reproduced either in whole or in part without the prior written permission of the publisher. The views of contributors do not necessarily reflect those of the publishers.
FESARTA COMMENT
By Barney Curtis, chief executive officer, FESARTA
Moving forward
T
HE PILOT PROJECT for the extension of the Road Transport Management System (RTMS) along the North-South Corridor, from Durban to the Copperbelt, has taken another step forward. Because taking the RTMS outside of South Africa involves border crossings, it is essential that the customs authorities are brought into the process and are encouraged to play an active role. With this in mind, a meeting between the South African Revenue Service (SARS), Zimbabwe Revenue Authority (ZIMRA), TradeMark Southern Africa (TMSA), SADC, RTMS and FESARTA, was held at the TMSA offices. SARS and ZIMRA are very proactive when it comes to intraregional trade and Mark van den Broek and Bruce Ellison from SARS, and Martin Musonda of ZIMRA certainly showed a keen interest in developing a good working relationship between them and the project. It was immediately apparent that the goods on the vehicle and the vehicle itself would both have to fit the accreditation criteria, if fast-tracking through borders is to be possible. Customs is already working on the accreditation of stakeholders involved with the goods. This is linked to the requirements of the Authorised Economic Operator (AEO). It now remains for RTMS to ensure that the transporter fits with the transport requirements of the AEO system. To achieve this, the draft standard to control the pilot project was tabled and workshopped. The final draft is to be circulated to all other stakeholders in South Africa, Zambia and Zimbabwe, and then the final validation workshop will be convened.
fits with TMSA setting up a meeting of stakeholders on the Zimbabwe side. A meeting had already been held in Zambia. The National Road Transport Associations (NRTAs) and clearing and forwarding associations are drawing up a document of all the problem issues affecting Chirundu. This will be tabled at the meeting and we hope that a sustainable set of parameters will be introduced to ensure the border does not experience a repeat of the recent problems.
It remains to be seen whether our combined efforts will bring major improvements
Another serious NTB has raised its ugly head Vandals at the entrance to the port of Beira are accosting drivers as they slowly move their trucks through the Munhava suburb. Goods are stolen off the trucks and from the cabs of parked vehicles. Drivers are made to pay the vandals to get their own personal documents returned. Approaches have been made by various transport and clearing and forwarding bodies to all the authorities at the port – even as high as the governor general of the province. But to no avail. The lawlessness continues. It is clear that high-up officials are also scoring from this “industry”. Now that the NTB has been registered, we are expecting SADC to approach Mozambique and call for action to bring the situation under control. FESARTA will be working closely with the transporters and SADC to achieve the objective.
Solving NTBs is not an easy matter Chirundu border post has been in the news again The border gridlocked as a result of a ministers meeting requiring closing of some lanes and a general increase in traffic. Queues stretched for kilometres and unscrupulous officials took advantage to fleece some the drivers of their hard-earned cash! When the regional and government authorities stepped in, the border miraculously cleared and everything was back to normal – at least until the next time! FESARTA had registered a non-tariff barrier (NTB) on the problem and this
In many cases, the NTBs are government and municipal authorities introducing practices that are not conducive to intraregional trade.The practices may benefit the authorities introducing them and this means that changing the status quo is difficult. It may require changes to a country’s legislation. But at least FESARTA has the Regional Economic Communities (RECs) on its side, since the RECs want to see serious growth in cross-border trade. It’s what Africa needs. It remains to be seen whether our combined efforts will bring major improvements. There have been successes, but mainly involving the removing of practices that don’t have the authorities’ approval.
If you are travelling along the road into Beira with wheat, then you need an armed guard
TWA | Nov/Dec 2013
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COVER STORY
SCANIA SOUTH AFRICA
There is a
This has been an exceptional year for Scania South Africa, and during the Johannesburg International Motor Show (JIMS), Scania’s stand had the full complement of products and services it offers customers. Transport operators looking for a partner in the long run need to look no further. 4
TWA | Nov/Dec 2013
COVER STORY
better way S
TEVE WAGER, MD of Scania South Africa, says: “We are really pleased with the growth we have achieved this year. As evident in the National Association of Automobile Manufacturers of South Africa statistics, business is going very well for us. “Over a year ago, we forecasted a 5% increase in the extra-heavy truck market and we are very pleased to see that the overall sector has grown by 10%. We are also extremely proud that we have seen a significant share growth of 29% in the marketplace. In fact, if you look at the figures, you will see we are the only Western truck company to have gained market share this year. It is something that makes us very proud. “Our offering at JIMS this year has never been so wide and varied. “We showcased our new Streamline with its high uptime and outstanding fuel economy. The mining tipper was also on display, as was the new Scania Touring Coach.” The Scania truck rental concept, which was introduced over a year ago, is a unique offering allowing customers to hire Scania trucks without drivers during times when their business requires extra capacity for short periods. “It is a totally flexible solution for our customers to balance the peaks in their transport capacity,” says Wager. “We restructured the company in South Africa at the beginning of 2013 to have a more regional focus. Having divided South Africa into five regions is proving to work very well and our customers are giving us fantastic feedback regarding this new structure and it is part of our new way of working.” He adds: “Through our extended range of products and services we can offer operators an outstanding value partnership independent of what segment or type of industry our customers operate in. “At Scania, we believe there is a better way and it is based on total cost of ownership where we look at a client’s business from top to bottom. Working in partnership ensures that clients not n only invest in the best product on o the marketplace, but also have the financial and operational tion backup to keep them on o the road 24/7. We believe this th is the better way to do business b together.”
Distribution D “S “Scania offers clients an unbeatable combination: the un right vehicles backed up by rig
the best services possible, creating delivery solutions above the ordinary,” says Wager. “In the day-to-day world of multiple pick-ups and dropoffs, you need continuous vehicle availability in order to serve your customers on time. Scania distribution trucks, with their robust chassis and powertrains, provide the productivity and reliability you need, along with superb fuel economy, low emissions and excellent total operating economy. And every vehicle is ready to be integrated with tailored services to keep your business in motion. From financing and insurance, through maintenance for the whole vehicle, to service contracts customised to your operations. We make it easy for you to own a Scania.”
Complete vehicles
The new Scania Streamline
“We are extremely proud that we have seen a significant share growth of 29% in the marketplace.”
He concludes: “With our commitment to one-stop shopping, you can now order complete vehicles from Scania. Steve Wagner, MD of Scania “This one-stop approach South Africa helps your business to save time and money, while ensuring high levels of quality. You have a single point of contact for all transactions, one invoice and financing on the complete vehicle, as well as full service support. “All in all Scania gives you an extensive product range and optimised vehicles, with shorter lead times. Over the long term, you’ll enjoy higher residual values – Scania vehicles always prove to be an excellent investment from a costbenefit perspective.”
Transport World Africa offers advertisers an ideal platform to ensure maximum exposure of their brand. Companies are afforded the opportunity of publishing a two-page cover story and a cover picture to promote their products to an appropriate audience. Please call Hanlie Fintelman on +27(0)12 463 2564 or e-mail her at h.fintelman@lantic.net to secure your booking.
TWA | Nov/Dec 2013
5
HOT SEAT
MAN
The highest level
of technology and quality
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TWA | Nov/Dec 2013
HOT SEAT
Geoff du Plessis, chairman at MAN South Africa, spent five years in Europe as regional head for North Europe and then as senior vice president of MAN Business Units. ETURNING THIS YEAR to South Africa, Du Plessis is optimistic about the future, especially regarding the future growth prospects of Africa and the role trucks will play in driving the growth on the continent.
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are developing our used truck brand in both South Africa and Kenya. There is no doubt for me that the used truck is often an entry point for the entrepreneur into the trucking sector. We can accommodate everyone from owner drivers to the big long haul fleet operator running big fleets.”
Africa
Telematics and driver training
“We foresee growth opportunities in Africa and we want to be part of it. For us, South Africa is the gateway into Africa. We see that with our customers who are heading north, which is giving us a great opportunity to increase our footprint and maintain our pioneering spirit in the market, be it with ideas or products and services we deliver,” he says.
Du Plessis says MAN telematics, the company’s on-board computer, which fully interfaces with the vehicle, is being introduced in 2014. “Another area where we are really focused on is the issue of driver training. We have a very professional driver training offering out of Germany called MAN ProfiDrive, which has excellent systems for driver training and interventions. “It is said in jest that the biggest nut in the truck is the guy behind the wheel. He is really the link between the vehicle and the road system. The advantages are there in terms of fuel consumption, tyre wear, maintenance costs, reliability of the truck and meeting customer requirements because drivers are driving properly,” he adds. “With the telematics in the future you will see this driver behaviour in real time on an ongoing basis. And with these parameters, it will help you focus on the respective training requirements the driver might need.”
Why MAN? “It is related to both the hardware and the software. On the hardware side, we have a really good, capable product – it is clearly in the premium sector of the market and with the premium sector of the market you not only get the premium product, which is a good truck to drive, you also get premium support.” MAN is opening its new parts distribution centre in November. Du Plessis says: “We have invested in a big parts warehouse. It is a phenomenal warehouse that will be there to support both the South African and Southern African markets. It is our commitment to the territory and the region. This way, we can ensure that when customers need parts we have them available, so we can keep our customers on the road because that is when they earn money. “On the software side of things, we try to create an organisation that is people and customer friendly, customer oriented; we try to keep arrogance out of the business. We try to keep our feet on the ground, remembering where we get our money from and that it is our customers who pay our salaries. We hope that this culture has a resonance with our customers, so they consider us nice guys to do business with.”
Broad offering Du Plessis says that MAN has a broad offering and can focus on entrepreneurs starting out in trucking. “For this market, we
The future
OPPOSITE, ABOVE AND BELOW Efficient Line trucks
“The future I think is really exciting, because we believe in Africa.” Geoff du Plessis,
“The future I think is really exciting, because we chairman, MAN South believe in Africa as the future place. Moving forward, you will see more engagement on the political side in terms of transport politics. We are already quite involved with entities like the Road Freight Association and National Association of Automobile Manufacturers of South Africa, and it is important we keep being involved and driving the metro situation forward, which will be to the benefit of transport.”
Africa
Road vs rail Du Plessis believes the road versus rail debate is one that not only rages on in Africa, but around the world. “Everyone says we should be putting more on rail, but at the end of the day, a truck’s flexibility and service gives it a huge advantage. Rail will always have its place, just as trucks will always have a role to play. “It does not make sense moving goods on road that should be moved better on rail. At the end of the day, at either side of the rail head, we are going to need the flexibility of transport. And we are quite happy to take that role.”
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REGIONAL NEWS
Read more on www.transportworldafrica.co.za
SOUTH AFRICA
SOUTH AFRICA
Tyres ahead in the BBBEE game New truck production plant
PUTTING ITS MONEY where its mouth is, TrenTyre has made all its non-managerial employees shareholders in a bold move towards empowerment and broad-based development. The initiative comes in the form of the TrenTyre Empowerment Trust, a broad-based ownership scheme that has acquired ordinary shares in TrenTyre comprising 30% of the total issued share capital of the company. All permanent, non-managerial staff members have been made beneficiaries of the trust. Nigel Sowerby, TrenTyre operations director, says: “The chief aim of the new share structure is ‘to drive sustainable and profitable growth, together’, in compliance with the country’s BBBEE and Mining Charter requirements. “We really want to create a sense of empowerment and real participation in the ownership of the company for our people. We firmly believe that this plan not only supports South Africa’s call to develop and empower historically disadvantaged people, but will also secure the company’s place as a leader in our industry and provide exciting opportunities for both our employees and our business.”
ZAMBIA
Zambia launches the LusakaBeira rail route THE COUNTRY’S Transport and Communications Minister, Geoffrey Lungwangwa, has officially launched Zambia Railways’ Lusaka-Beira route, which has reopened after 25 years of no operations. A train carrying 1 050 tonnes of inorganic fertilisers left the port of Beira in central Mozambique, headed for Lusaka, the capital of Zambia, along the Machipanda railroad. The train is the first to travel to Zambia in 25 years, following a shutdown of the service during the 1976-1992 civil war and later due to failures to meet contractual obligations by the company running the Beira railroad system. The first 1 050 tonnes are part of a bigger lot of 10 000 tonnes at the port complex. The cargo train was made up of 25 trucks that, on their return, will carry copper for export to the European, Asian, American and Australian markets. Zambia is the second SADC country, after Zimbabwe, to receive and send cargo to and from the port of Beira by rail, over a distance of some 1 000 km on a journey that takes at least 10 days. Source: (macauhub)
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IVECO ANNOUNCED at the Johannesburg International Motor Show (JIMS) that it is building a production plant in South Africa. This forms part of its strategy of manufacturing globally, while tailoring products for local needs. According to Bob Lowden, MD for Iveco in South Africa, this commitment will have considerable advantages for the company as it will allow it to complete and optimise its product offering in line with customer requirements, adding local contents as well as being able to assemble locally to improve competitiveness. Lowden says: “We have formed a local industrial joint venture with
the Larimar Group in which Iveco will have a 60% shareholding. Larimar is a diversified group of companies with interests in passenger transport, freight transport, vehicle production and engineering manufacturing.” The new production facility will come on stream in 2014 and is a completely knocked down assembly plant located in Rosslyn, near Pretoria. The company is investing R530 million in the plant, will employ 1 000 people when fully operational with a 4-mark BBBEE ranking. Its production capacity will reach 5 000 units a year, covering its commercial range.
AFRICA
MAN grows its African footprint MAN HAS EXPERIENCED SUBSTANTIAL GROWTH over the past 24 months, more than doubling its sales volumes since 2011. Four years ago, MAN established its official MAN Centre Sub-Equatorial Africa, which now incorporates 18 countries, including the island states of Mauritius, Seychelles, Comoros, Mayotte and Reunion. According to Shane Naidoo, MAN’s head of the Sub-Equatorial Africa centre: “We are expecting to sell 500 trucks and 100 buses by the end of 2013. Our dealer network, made up entirely of private-capital business partners for sales and service, now numbers 22 and growing our dealer network is a key component of our growth strategy.” Thomas Ferreira, head of after-sales for MAN Sub-Equatorial Africa, states: “Our OEM representation is driven by five MAN technical dealer support managers who engage in ongoing technical skills transfer programmes with our dealers. They are assisted by MAN Truck & Bus South Africa’s Technical Training and Driver Training academies.” Robert Clough, Head of Export Sales for MAN Sub-Equatorial Africa, adds: “With two MAN and VW assembly plants now fully operational in Kenya, MAN is well-positioned to capitalise on the cost benefits of being closer to India (than South Africa) where the CLA is manufactured and to have favourable import duties on product from Brazil where the VW range is manufactured. Our CLA derivatives are shipped from Mumbai in CKD and CBU form, with certain CBU models arriving with truck bodies already fitted.”
REGIONAL NEWS MOZAMBIQUE
Beira-Zimbabwe road to be rebuilt THE MOZAMBICAN GOVERNMENT intends investing US$400 million (R3.03 billion) in the full rehabilitation of the road from the Port of Beira to Machipanda, on the border with Zimbabwe. The rehabilitation of the road, which is 300 km long, begins in February 2014. Once complete, users will have to pay to use the road because the maintenance will be farmed out to a private company, which will charge motorists through toll gates. At present, the Beira-Zimbabwe road is in a poor and dangerous condition. The road is of key importance to the trade of not only Zimbabwe, but of other landlocked Southern African countries, including Zambia, Malawi and even parts of the Democratic Republic of the Congo.
SOUTH AFRICA
Michelin Launches one-stop Truck Service Centre in Limpopo THE SECOND MICHELIN TRUCK SERVICE CENTRE (MTSC) is being launched in November 2013. The centre will provide truck and bus operators with the first one-stop shop for tyres, maintenance and service in Limpopo. Following on the success of the first MTSC branch launched in Villiers in the Free State in June this year, the new centre opens in Polokwane on 22 November and will offer truck and bus owners a host of professional services and quality products. Jaco Venter, partnership programme manager at Michelin Tyre Company South Africa, says: “Truck and bus operators are under a great deal of pressure to supply on time, which means that vehicle downtime is simply not an option. With the expansion of our MTSC network, operators can be assured of obtaining the highest quality service, top products and the best advice all under one roof, wherever they may be.“The N1 through Polokwane to the border is known for its high traffic volumes and the new MTSC is well-positioned to offer transporters peace of mind knowing they can obtain professional service using state-of-the-art equipment and world-class products along the route.” MTSC networks are currently operational in India, Thailand and Saudi Arabia. Michelin Tyre Company South Africa plans to extend the MTSC network across the country, ultimately offering a complete breakdown service.
MOZAMBIQUE
Traffic at port of Maputo increased fourfold in nine years TRAFFIC AT THE PORT OF MAPUTO rose almost fourfold between 2003 and 2012, but the facility and its associated transport corridor still have potential to grow, the Economist Intelligence Unit (EIU) reported. In a recent report on Mozambique, the EIU said that “a lot of progress was made” in setting up conditions to increase goods traffic at the port, which resulted in growth of 275% between 2003 and 2012, to 15 million tonnes of cargo per year, which even so is less than the record of 17 million tonnes per year in 1971. Empresa de Desenvolvimento do Porto de Maputo, which is controlled by Dubai Ports World and South African logistics company Grindrod, and state port and rail manager Portos e Caminhos de Ferro de Moçambique, expects traffic to reach 40 million tonnes over the next six years and investments to total US$750 million (R7.36 billion) by 2038. “We expect business and investment in the port and in the
associated corridor to continue to increase, but it will stay at below potential,” the EIU said. The Maputo Corridor includes the Johannesburg industrial hub and the South African provinces of Limpopo and Mpumalanga, which border Mozambique. Support facilities such as opening the Ressano Garcia border on a 24-hour basis have yet to be put in place. “The current congestion at the Ressano Garcia border post has been a significant obstacle to trade,” the EIU said. In its latest report, the United Nations Conference on Trade and Development gave the Maputo Corridor as a success story, but also noted that trade needed to be liberalised. The level of economic growth expected over the next few years – around 7.9% between 2014 and 2017 according to the EIU – will be the result of coal mining projects and investment in new transport facilities. “Transport, communications, industry and services will grow significantly,” said the EIU. Source: Macauhub
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COMMERCIAL VEHICLES
o v l d o e V h c w n Ne els lau d o m
Volvo Trucks South Africa has launched 15 new truck models into the marketplace. Simon Foulds attended the launch at Gerotek outside Pretoria.
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ORBJÖRN CHRISTENSSON, managing director of Volvo Trucks South Africa, says: “The launch of our flagship range, the FH, as well as the new FM and FMX ranges, signals a new era in the history of our company. With the launch, we now have almost an entirely new product offering for our customers. “We believe that the region holds untold potential and are committed to contribute to its successful development by providing products and services that suit Southern Africa’s very unique business and operating conditions. We are making these investments in order to more effectively support our dealers and customers going into the future.” Torbjörn The launch of the FH range in South Christensson, managing director Africa follows closely on the heels of of Volvo Trucks South Africa it being announced as the International Truck of the Year. The award was decided by some of Europe’s leading commercial vehicle journalists, representing 25 publications. Claes Nilsson, Volvo Trucks’ president, adds: “When we introduced the new FH in Europe in 2012, we claimed that it was
“We now have almost an entirely new product offering for our customers.”
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TWA | Nov/Dec 2013
pushing the envelope of what a premium truck could offer. The International Truck of the Year award confirms that the Volvo FH lives up to this promise.” At the FH Series’ launch in South Africa, Nilsson said that it is becoming increasingly important for the company to keep careful pace with a developing region like Southern Africa. Nilsson adds: “Going into the future, it is becoming more and more important to explore and understand a region’s local operating environment and to adapt our business in order to meet our customers’ transport requirements. Operating in South Africa for over 13 years, we believe we are able to meet these unique requirements and offer our local customers total transport solutions and support. “As transport operators expand their operations throughout the region, Volvo Trucks South Africa is there to capture this market demand and support customers every step of the way. “The launch of the FH and FM/FMX model ranges signals of one of the most intensive and exciting periods in the history of Volvo Trucks. With the most modern and innovative Volvo line-up ever, we now have an outstanding ability to help customers in all segments to improve productivity and profitability.” “We believe that Volvo Trucks South Africa is leading the way in supporting fleet owners in a modern and interactive yet very practical way.” Prior to the launch of the new trucks, Volvo Trucks South Africa spent months training its dealer staff in order to
COMMERCIAL VEHICLES effectively support their customers. Innovative support offerings include a new telematics system, a mobile phone application and numerous fuel saving features to effectively assist fleet owners in cutting their transport costs.
New FH series In Southern Africa, the Volvo FH range will be available in eight model variants. Although the company is introducing Euro 3 variants as standard due to current local fuel legislation, Euro 5 and 6 level variants are available on request for fleet owners who wish to utilise this technology. The Volvo FH Euro 3 units will be assembled at the company’s Durban plant, with the first units expected to be delivered in April 2014.
New FM/FMX range The FM and FMX models are very closely related to the taller FH Series, but are designed to be far and away Volvo’s most versatile heavy truck range. Christensson says: “The FM is a highly efficient truck platform that takes especially steering and handling in this industry segment to a whole new level. Meanwhile, the Volvo FMX is extremely robust and packed with innovative solutions and is comfortable to drive even in challenging operating conditions.”
FM range He adds: “With its multiple application areas, the Volvo FM, which is based on the same chassis platform as the new Volvo FH, is one of our most important models, and the new version takes a huge step forward in every major area. It embodies our very latest technological advances, progress on and off road is more stable, and the truck is more comfortable and efficient. Most importantly, the new Volvo FM is easy to customise to suit individual transport requirements.”
FMX range The Volvo FMX has specifically been developed for construction applications and is available in six model derivatives. Christensson says: “We believe the FMX range sets a new standard when it comes to robustness, handling and driver comfort. With its launch, Volvo Trucks breaks new ground in the construction segment.”
“The International Truck of the Year award confirms that the Volvo FH lives up to this promise.” Claes Nilsson, Volvo Trucks’ president
is equipped with Dynafleet, the coordinator can also see who is making the call. The registration number and chassis number are also transmitted simultaneously. This automated system saves valuable time and delivers help to the truck driver much faster.” VAS can also transmit the truck’s fault codes to a Volvo workshop. The fault codes allow the service technician to prepare whatever is needed from the outset, which in turn enables the truck to get back in operation as soon as possible. “Instead of needing to drive out to the truck, check it, drive back to the workshop for the right parts and then return with the necessary spares and tools, everything can be brought along on the very first trip. In this way, the VAS button cuts lead times and generates additional uptime. “Nowadays, information is a means of competitiveness in the transportation business. Keeping track of a fleet is necessary to maintain a clear overview of the operations, and exact information makes it easier for everybody involved in the transport chain to make the right decision. “Transport information systems give fleet owners full control whatever the size of their fleets. The bottom line is increased revenue through improved utilisation and lower operating expenses through fuel control and optimised administration.” Christensson concludes: “Now that the workshop can see the actual wear, it can postpone or advance the next service as needed. This allows the transport operator to avoid unnecessary visits to the workshop and can thus increase the truck’s uptime.”
The launch of the FH range in South Africa follows closely on the heels of it being announced as the International Truck of the Year
Uptime A new electronic structure in the Volvo range is a communication unit known as the Telematics Gateway (standard on the range), which links up the truck remotely via the GSM network. This allows the workshop to monitor the vehicle’s condition from afar, keeping a watch on brake and clutch wear, as well as the condition of the battery and air drier filter. Volvo Action Service (VAS) on Call is another new feature that increases security for the driver. Inside the truck, this new feature can be seen primarily in the new VAS button in the instrument panel. Press once and the system connects the truck to the VAS customer helpdesk. Information transmitted from the truck allows the driver to be connected to a coordinator who speaks the driver’s mother tongue. Christensson states: “The coordinator receives direct information about the truck’s exact location. If the vehicle
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COMMERCIAL VEHICLES
GROWING MARKET
Footprint into Africa South Africa is a key market for Scania. During his visit to the country, which coincided with the Johannesburg International Motor Show (JIMS), Henrik Fagrenius, Scania’s executive regional director sales and services management Southern Africa, Asia and Oceania, spoke to Simon Foulds about the company’s presence in Africa.
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CANIA SOUTH AFRICA and Scania sub-Sahara are very important for Scania and will grow in importance in the coming year as well. Since the markets here are growing and we are growing within the markets as well, Africa definitely plays a strategic role for our global growth going forward. We have already decided to go back into Mozambique and establish ourselves there again, so it is definitely a very important area for us.”
Africa Fagrenius said: “Mozambique has a very interesting development – there are a lot of mining activities and also natural resources in the Henrik Fagrenius, executive regional north. We also director sales & services management Southern see an increase in Africa, Asia and Oceania, Scania transport from Beira
“The professional customer in Africa is not different from the professional customer in Sweden.”
harbour into Africa and there are already quite a few used Scanias that have found their way into Mozambique. We want to be there and support the existing customers and take the opportunity to sell both new and used trucks. “Having a big operation in Tanzania also helps. We have been there for 40 years and we are in a very good position in the market and selling quite a number of trucks there, both used and new. “There is a big difference within Africa if you compare the markets – Morocco versus Tanzania, for example – but the customer is looking for the same thing.”
Similar customers “The professional customer in Africa is not different from the professional customer in Sweden, Germany or India (where I was MD). Professional customers are looking for the best deal. They want total cost of ownership, including fuel efficiency, uptime, service ability, repair and maintenance.”
The future “If we take the South African market and compare this year to last year, you will see how the company has grown its volumes by 40%. We have also increased our market share from 8.1 to 10.2%. In Nambia, Botswana and Tanzania, we have kept our premium position and due to the fact that we have a very strong captive service network in all these countries, I see a great potential for Scania in Africa in the coming years. The market will grow as such and we will grow in the market.” Fagrenius says the company is expecting even more growth. “It will be based on our existing product, but we will always come up with new development. I think we have a very good development platform product at the moment; we will keep on developing and it will be based on our current products.”
Total solution “We are offering customers the total solution to driving their business and I believe our strong service captive network is key to our success factors in Southern Africa,” he concludes
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COMMERCIAL VEHICLES
JIMS 2013
Isuzu Better than ever
The Isuzu stand at the Johannesburg International Motor Show (JIMS) was a hive of activity, not only on the media days but also due to the scintillating Isuzu-branded artworks proudly displayed alongside the company’s diverse range of commercial vehicles. ABOVE The upgraded N-Series NMR 250 launched at JIMS
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WO KEY announcements were also made during JIMS. The first was that Isuzu Trucks South Africa is to be 70% owned by Isuzu Motors (it was owned jointly by Isuzu Motors and General Motors) and the second was the launch of the new, improved NMR 250.
NMR 250 Medium commercial vehicles are traditionally favoured in urban delivery applications. The introduction of the upgraded N-Series NMR 250 into the marketplace sees these vehicles fitted with Isuzu’s Automatic Manual Transmission (AMT) in both its Freighter and Crew Cab derivatives. While the N-Series range was first launched in South Africa during 2008, it is the first time these trucks – with a payload of 2.5 t – have been equipped with AMT. It had, however, been available in Isuzu trucks with
payload capacities ranging from 3 to 8 t. According to Isuzu, the improved driver comfort and reduced cost of ownership will be appreciated by small business owners, especially during typical stop-start urban driving conditions. What makes the AMT different from traditional automatic gearboxes, which normally rely on torque converters and planetary gears, is that the AMT operates in most aspects like a manual gearbox. Shifting of gears is managed electronically, with the ability for a driver to select gears manually if desired. Power in the gearbox is transferred through a fluid coupling, eliminating the need for clutch replacements. Anton du Plessis, national sales manager, says: “Because we are now bringing AMT down into the 2.5 t segment, we can now offer smaller operators an alternative to the traditional bakkies or light commercial vehicles that load just over 1.5 t. This new model should allow us to create new markets that satisfy customers’ needs across both the light and medium commercial vehicle segment within the marketplace.”
Isuzu Truck SA more proudly Isuzu than ever As the brand continuously plays a leading role in the South African truck market, Isuzu Trucks South Africa (ITSA) believes that it’s logical next step was to be majority-owned by Isuzu Motors. In 2007, a consolidated company ITSA was formed as a joint venture between Isuzu Motors and General Motors South Africa (GMSA). Isuzu Motors has taken a 70% stake in the company, with GMSA remaining as a 30% shareholder. Craig Uren, ITSA’s COO, says: “With this announcement comes the requirement from Isuzu that ITSA take more responsibility for the sub-Saharan African territory and we have some specific objectives to achieve. We are going to aim to enhance the Isuzu sales volume, provide better customer satisfaction, enhance life cycle business and stabilise the business in South Africa by strengthening the connection between Japan and South Africa.” Uren concludes: “This is a feel-good moment for the company against a local context that is full of negatives and economic challenges. The future for ITSA domestically as it grows its footprint and spreads its wings north into sub-Saharan Africa is very exciting. We are all looking forward to it.” The existing export of right-hand drive vehicles to neighbouring countries will be enhanced because ITSA will now have more flexibility in terms of matching truck’s specifications to the specific market requirements in various countries.
LEFT Masakiyo Arai (Isuzu Truck South Africa), Chris Jonck (Isuzu Truck South Africa), Nori Murata (Isuzu Truck South Africa), Mike Sacke (General Motors), Craig Uren (Isuzu Truck South Africa), Masanori Katayama (Isuzu Japan), Malcolm Gauld (General Motors), Anton du Plessis (Isuzu Truck South Africa), Masaji Shimizu (Isuzu Truck South Africa), Yasuhito Kondou (Isuzu Japan), Eisaku Akazawa (Isuzu Japan) and Hiroshi Nishizaka (Isuzu Truck South Africa)
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TWA | Nov/Dec 2013
YOU DON’T BUY A TRUCK, YOU JOIN A TEAM.
COMMERCIAL VEHICLES
JIMS 2013
With Jurgens Truck Bodies,
it’s all in the pedigree Jurgens Truck Bodies was officially launched at this year’s Johannesburg International Motor Show.
W ABOVE Jurgens dropside rear BELOW The Jurgens flatbed
HEN THE JURGENS FAMILY came to South Africa from the Netherlands in 1950, the patriarch, Geert (Oubaas) Jurgens, brought with him a finely honed art of body building that he used to set-up business with his two sons, building bread trucks and mobile libraries. Two years later they entered the field of caravan manufacture. Now, 60 years later, the business returns to its roots with Jurgens Steelworx, expanding its operations to building truck bodies in addition to its trailers. The move was sparked by a request from a major motor manufacturer to design and produce a dropside truck body. This challenge led to an enormous amount of in-depth research to design a product that is both light and strong. The end result is a modular system that allows many components to be interchangeable between different truck sizes and makes. This
enables Jurgens Steelworx to manufacture stock and reduces lead times. Jurgens has partnered with Magnis Trucks to take this innovative new body concept to the market – a logical alliance as both companies are members of the Imperial Group.
The modular system has four unique features: • Weight reduction – Two options are available: a steel body with aluminium floor or a complete steel body and floor. The average weight saving per metre is 25% for the aluminium floor body and 10% for the steel floor body. • Financial benefits – Increased payload, reduced vehicle registration fees and lower fuel consumption. • Flexibility – Truck bodies can be assembled at the truck dealership, which reduces the risk of theft, lowers onthe-road costs and takes a four-hour build process per truck on average. The modular system also reduces repair costs on vehicles because it is a simple bolt-off, bolt-on replacement of damaged parts, which reduces vehicle downtime. • Corrosion resistance – All the components are e-coated and epoxy-powder-coated, which provides exceptional corrosion resistance in line with motor vehicle standards. It is also possible to hotdip galvanise a complete body, which is a great benefit in coastal regions.
Warranty Each truck body comes standard with a two-year warranty and the same quality standards associated with any Jurgens product.
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TRUCK BODIES
e-coat BONDED PAINT
1 day BUILD TIME
UNIQUE FEATURES
The Jurgens Truck bodies modular system allows onsite assembly within a day and can be customised to suit any truck. The modular system also allows damaged parts to be replaced quickly.
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Hot dip galvanized steel floor panels Floor lashing hooks
COMMERCIAL VEHICLES
JIMS 2013
Success on the move FAW South Africa has established a solid base in the country and is striving to become a force within the South African commercial trucking sector.
FAW displaying it diverse range of vehicles at the Road Freight Association conference (left) and at the Johannesburg International Motor Show
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HE NEW STATE-OF-THE-ART FAW truck plant currently being built at the Coega Industrial Development Zone in the Eastern Cape proves the company is committed to establishing and growing its business in a very significant way. The company’s decision to build the plant in South Africa is significant as it is, to date, one of the most important investments made by a Chinese entity in South Africa. The total investment of approximately US$100 million (R1.03 billion) has Hao Jianyu, general manager, FAW Africa Investment been financed by FAW China and the China-Afri China-Africa Development Fund. The arrival arriv of FAW in this region adds yet another bluechip auto automobile company to the province. The facility is scheduled schedul for completion in December 2013 and the plant will wi have an initial annual output of 5 000 trucks a yea year with passenger cars and light commercial vehic vehicles going into production in the near future. The first trucks tr to be assembled in the new plant will roll off the assembly line in the second quarter of 2014.
“The first trucks to be assembled in the new plant will roll off the assembly line in the second quarter of 2014.”
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China FAW Group Corporation, commonly referred to as FAW due to its original name of First Automotive Works, is a global leader in the vehicle manufacturing industry, with a 60-year history of innovation. Founded in 1953, FAW also has joint venture operations with many of the world’s leading vehicle manufacturers, including Volkswagen, Audi, Toyota, GM and Mazda. In South Africa since 1994, FAW SA has established itself in the local commercial truck market with a diverse and carefully selected product range that caters for industries ranging from transport and logistics to mining and construction. The company is in a unique position to offer competitive pricing, without compromising quality in any way, because of its policy of simplifying the mechanics of its vehicles, making it a company for the times. FAW SA has a growing network currently comprising of 20 sales and service dealerships and 10 stand-alone service dealerships, including major representation in Johannesburg, Pinetown and Cape Town, and new dealers being appointed on a continual basis. Field service is provided by trained staff in fully equipped mobile field service vehicles. FAW SA is committed to offering vehicles that are engineered, developed and rigorously tested to meet the harsh operating conditions in Africa. Along with this commitment is the desired intention to continue expansion into the emerging markets of sub-Saharan Africa, making FAW SA a major distribution hub for trucks and parts for the whole of Africa.
COMMERCIAL VEHICLES
COMPLIANCE
Being BBBEE compliant The freight industry still has a large number of businesses that are not BEE compliant and, as a result, are losing business. Simon Foulds speaks to Keith Levenstein, CEO of BEE advisory firm EconoBEE, to find out how freight transporters can obtain their BBBEE scorecard and become compliant.
Ezethu Carriers has found itself in the enviable position of being able to take advantage of the proposed BBBEE codes, which could negatively affect some of its competitors
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EVENSTEIN SAYS: “Many companies only need minimal work to increase their BEE score while others already have an acceptable BEE score but are not aware of it. “Why are small freight companies not compliant? I think it is ignorance more than anything else. A company can easily become compliant and in the process does not have to give their business away – which seems to be the perception if one reads some of the articles in the mainstream media. If their turno-
points from. Depending on the ownership of the company, it can score 23 points. “Management control at the company can earn up to 11 points. The most you would need to sell of your company to obtain these points is 25%. You can sell shares to your staff as an ownership scheme and you will also earn the points. At the same time, if you have more black managers than white managers then you can earn points and if more than 50% of your managers are black women then this also weighs in your favour. “Skills development is another key aspect and by upskilling staff, a company can earn up to 15 points on its scorecard.” He says one way to gain points is in procurement. “If you purchase from the right company you can score 20 points. Key to procurement is purchasing goods from companies that have a good BEE certificate. You need to ask your suppliers for their BEE certificates and if they produce it you score the relevant points. “Enterprise development is worth 15 points and this is achieved by approaching a small black-owned company and assisting through mentorship. The last aspect is socio-economic development or corporate social investment. The latter makes good business sense.”
“To become compliant a company earns points, and the more points a company earns the higher its BEE rating.” Keith Levenstein, CEO, EconoBEE ver is below R35 million they can easily obtain certification. “To become compliant a company earns points, and the more points a company earns the higher its BEE rating.”
Seven elements Levenstein says there are seven elements from which a company can earn
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Becoming compliant
A company needs to score 30 points to become BEE compliant. “A small freight company can easily earn five points from its socio-economic development, a further 15 points on the socio-economic front and then another 15 points through procurement, then by looking at your employment equity you realise you have reached 45 points , which is 15 points above your compliance level and you suddenly find you are a Level 6 BEE compliant company.” Levenstein concludes: “I support the whole transformation process and once companies realise they are BEE compliant they start trying to improve their scores, because as they realise having a BEE certificate can help their businesses and having a good BEE scorecard can make a difference in the business moving forward.”
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.
SUPPLY CHAIN LOGISTICS
INNOVATION
Key to growth Collaboration and innovation is critical to improving the country’s GDP, according to Dr Beverley Waugh, executive director of the South African Shippers Council.
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HE SOUTH AFRICAN SHIPPERS COUNCIL recently surveyed the industry to find out what the main issues for both cargo owners and supply chain logistical providers are. Though infrastructure is a huge issue, the need to improve operational issues rated higher for the companies surveyed. “We are trying to get our products out into the market place both as cargo owners and service
It is important to see how each aspect impacts on the next 22
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logistic providers, which is why we need to look at what the customer service issues are and the costs the industry faces.
It is important to see how each aspect impacts on the next. As a cargo owner or logistics provider, your life is ruled by the different rights: getting the right product to the right place at the right time in the right quantity and right quality – and if that is not bad enough getting it to market at the right price. “How difficult is it to get all that right, with the congestion on the roads, shortage of skills and the lack of information throughout the supply chain? How difficult is it to achieve all of these right at the same time? If we look at the different costs and how they impact each other, we see how integration is absolutely critical,” says Waugh. “We have to look at the big picture. It is not just about getting your product at the right time at the right place; it is also about managing the costs and we cannot just manage the one cost in isolation from the next – we have to manage them together.” She adds that there needs to be more collaboration between government, cargo operators, and owners and service logistical providers throughout the whole supply chain. “Gone are the days where we can all do our own thing and hope for the best. The markets are so competitive and if we do not get our acts together as South Africa we will watch our GDP decline and unemployment grow. “The Shippers Council can lobby as one voice for both cargo owners and logistic service providers when approaching
The South African Shippers Council
government with industry concerns, stating what our issues are and how we can improve our operations and work together. We are on the same team and trying to get our products to market.” “Innovation is key for everyone. If we can see what is happening in the different value chains we can really improve the whole transport sector and supply chain for the benefit of everyone,” Waugh concludes
The South African Shippers Council is a non-profit organisation, registered with the Department of Social Development. Registration number: 055-301-NPO VISION • To be the preferred voice through which South African cargo owners influence and improve the global supply chain. MISSION • to understand the needs and requirements of members to influence relevant stakeholders • to be the preferred entry to cargo owners on collective issues • to be a source of supply chain knowledge. VALUES • Integrity, confidentiality, commitment, trust and outcome-driven. CONTACT DETAIL For more information, kindly contact: admin@ sashippers.org.za
TWA | Nov/Dec 2013
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SUPPLY CHAIN LOGISTICS
CENTRAL AND NORTHERN MOZAMBIQUE
Transport infrastructure A study on the transport and infrastructure in northern Mozambique was recently undertaken and is soon to be published by the South African Institute of International Affairs (SAIIA). Simon Foulds speaks to Dr des Sören Scholvin about the study. Here is an extract from SAIIA’s Occasional Paper that is due to be published.
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URING THE PAST FEW YEARS, central and northern Mozambique has become a true El Dorado. The Brazilian mining giant Vale and its Australian counterpart Rio Tinto seek to export 44 million tonnes of coal a year from Tete Province. An Australian miner Global Metals plans to construct a heavy rare-earth mining and processing plant east of Tete. In Nacala , the Irish company Kenmare Resources wants to mine 612 000 tonnes of ilmenite, 24 000 tonnes of zircon and 12 500 tonnes of rutile a year. Near the Tanzanian border, other minerals and natural gas are to be mined in tremendous quantities.
Insufficient investment Yet, transport infrastructure remains insufficient for major investments. Mozambique stretches 2 000 km from north to south. Only one transport axis, the EN1, connects the capital Maputo to the central and northern provinces. There are no railway lines from Maputo to towns further northwards. While the 545 km from Mozambique’s capital to Johannesburg can be covered in five to six hours, non-stop road transport from Maputo to Pemba in the very north theoretically takes about 26 hours. By public transport, meaning non-scheduled mini-buses, the trip takes two-and-ahalf days. Some years ago, it would have taken six days at best with poor chances of reaching Pemba at all. In addition to distance, the Zambezi River, which is up to 8 km wide downstream of Cahora Bassa, poses a tremendous obstacle to movement. Only three bridges cross it. Nature is not favourable for maritime transport either. Mozambique’s coastal waters are shallow, and coral reefs and mangroves virtually cut them off from the open sea. Swamps abut the shores. Nacala is the only natural deep-sea port. The harbour of Beira, the second busiest of the country behind Maputo, lies at the end of a 40-kilometre access channel that has to be drained
SAIIA (South African Institute of International Affairs) SAIIA has a long and proud record as South Africa’s premier research institute on international issues. It is an independent, non-government thinktank whose purpose is to encourage wider and more informed awareness of the importance of international affairs. It is both a centre for research excellence and a home for stimulating public debate. SAIIA is situated at Jan Smuts House on the campus of the University of the Witwatersrand.
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frequently. Fully loaded large vessels cannot reach Beira at low tide because they would run aground.
Present history Since the end of Mozambique’s civil war, during which apartheid South Africa and its proxy, the Resistência Nacional Moçambicana (Mozambican National Resistance), sabotaged transport infrastructure, much progress has been made. Today, 83% of the main road network is in good or fair condition according to World Bank studies, meaning that no immediate maintenance is needed there. In 1990, the according share was 30%. Having reached the ports of Beira, Nacala, Pemba or Quelimane, one still faces serious problems to export goods though. Until recently, Beira had a total throughput of 2.4 million tonnes a year, Nacala had 740 000 tonnes, Pemba 80 000 and Quelimane 60 000 to 150 000 tonnes a year. South Africa’s largest ports, Durban and Richards Bay, reach an annual volume of 45 million and 80 million tonnes respectively. Mozambique’s harbours often lack even basic storage facilities. Those run by Mozambican state authorities suffer from serious management problems. In Beira, it takes four times as long as in Durban to get imported goods ready for transport by rail or road. Given this mismatch of enormous economic opportunities and poor transport infrastructure, overseas companies have started paying and carrying out construction work that they consider essential for their operations.
Infrastructure The present upgrading of road infrastructure is concentrated on the area around Pemba in Cabo Delgado Province, where oil and natural gas companies seek to link their future facilities with the global markets, and neighbouring Nampula
SUPPLY CHAIN LOGISTICS
projects Province. Large overseas companies usually plan and pay for according projects in order to rehabilitate road sections of up to 400 km. Overseas state agencies play a key role, in particular the Japan International Cooperation Agency, the South Korean Exim Bank and the Millennium Challenge Corporation from the US. The Mozambican government, which has identified transport infrastructure as fundament for economic development, has launched various public-private partnerships and grants concessions to consortia that build or rehabilitate roads. Major players on the global construction market have been contracted for these projects. Portuguese companies, in particular Conduril, Mota-Engil and Zagope, are predominant. Chinese enterprises – China Communications Construction Company, China Henan International Cooperation Group and Weihai International Economic & Technical Cooperative – have been granted most but not the largest contracts. Construction companies from other countries are much less involved, with Cooperativa Muratori & Cementisti (CMC) di Ravenna from Italy being an important exception.
Rail and port Upgrading the railway system is an even more pressing need than road infrastructure because exporting the tremendous resources from central Mozambique depends upon transport by rail. By upgrading the railway system, costs of transport from the coalfields in Tete Province to the port of Beira can, presumably, be reduced from US$55 (R559) to US$25 a tonne. So far, only the rail project driven by Vale is actually being carried out. When completed, the Sena Lina from the mining town Moatize to Beira will be able to transport 12 million tonnes instead of six million tonnes of coal a year. Beira’s new coal terminal, opened in June 2012, was constructed in partnership with Rio Tinto and Vale. It can handle up to six million tonnes of coal a year. In the long run, the capacity for shipping coal at Beira is scheduled to increase to 20 million tonnes a year. Given that the envisaged capacity will still be insufficient for Vale’s exports, the Brazilian giant also sponsors the rehabilitation of a railway line from Moatize to Nacala. Presently, the port of Nacala handles only 200 ships annually. If upgraded sufficiently, an annual 40 to 60 million tonnes of coal may be shipped via Nacala. Several other overseas companies have proposed comparable projects: Rio Tinto favours a railway line from Moatize to the Quelimane area, where a new deep-sea port will be built if the project is realised. Twenty million tonnes of coal will pass through the expanded port of Quelimane – or, alternatively, through a totally new one in nearby Macuze – every year.
Pemba Further northwards, Pemba is another potential deep-sea port. It may ease the export of minerals, especially graphite from the nearby Balama ore body, which contains more graphite than all other ore bodies around the world together. The
development of the very north of Mozambique, meaning the region whose potential gateway is Pemba, is somewhat different from the dynamics triggered exclusively by coal in Tete Province, Beira and Nacala. In addition to the just-mentioned graphite resources, natural gas plays a key role there. The Rovuma Basin is expected to contain 850 billion cubic metres of natural gas. Natural gas obviously requires a different transport infrastructure than solid minerals. The American company Anadarko Petroleum and Eni from Italy seek to set up facilities for liquefying natural gas in Cabo Delgado Province. Liquefied natural gas would be exported by ship, possibly to the booming Asian economies and, in lesser quantities, to South Africa. Alternatively, natural gas may be exported by pipeline to the neighbouring countries or used domestically for power generation in order to cover the demand of energy-intensive users such as the mines in Tete Province. These may also supply the inputs for coal-to-liquids conversion in Pemba. A petrochemical industry, including fertiliser plants, can be developed, too. Aluminium smelting is another option.
Beira and Nacala Beyond the national scale, the ports of Beira and Nacala are what one may call the natural gateways for Mozambique’s landlocked neighbours, Malawi and Zimbabwe, and maybe even Zambia and the Democratic Republic of the Congo’s (DRC) Katanga Province. These would greatly benefit from upgraded transport corridors through Mozambique, as these could significantly ease cost barriers to overseas trade. If there were a functioning railway line from Malawi to Beira, transport costs for Malawi’s sugar exports would decline from presently US$75 a tonne to US$25 a tonne. The port of Beira presently handles 50 lorries a day to Zimbabwe, more than 100 a day to Malawi and five a week to Zambia. Trans-shipments destined for Botswana and the DRC are increasing. Experts of the SADC expect the demand for transit traffic through central and northern Mozambique to rise to 6.1 million TEUs in 2030 and to 12.0 million TEUs in 2040. An envisaged oil terminal in Beira with a capacity of 65 000 might not only supply the domestic market but also the DRC, Malawi, Zambia and Zimbabwe.
THE AUTHOR
Serious shortcomings However, there are serious shortcomings of the regional embeddedness of transport infrastructure projects carried out in central and northern Mozambique. Executives of overseas companies and international donors argue that SADC plays a marginal role in these projects because of a lack of consent among its member states. The simple reason for the inefficiency of SADC on transregional corridors is probably that the ports in East and Southern Africa are competing with each other. A successful development of the Beira and Nacala corridors would, most likely, divert trade that presently goes through Durban and Richards Bay, costing South African jobs – a scenario that Rob Davies, Minister of Trade and Industry in South Africa, has already denounced as incompatible with government policy. Friction among states thus hampers the upgrading of transport infrastructure. Most prominently, Malawi’s inland port at Nsanje has not been used since it was formally opened in October 2011 because Mozambique insists on a feasibility study on the navigability of the rivers Shire and Zambezi.
Dr des Sören Scholvin is a research fellow at the Institute of Economic and Cultural Geography at the Leibniz-Universität Hannover and an associated researcher at the GIGA German Institute of Global and Area Studies. His research interests are the energy policy of emerging powers, regional economic integration in South America and sub-Saharan Africa, and transport infrastructure in subSaharan Africa.
TWA | Nov/Dec 2013
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SUPPLY CHAIN LOGISTICS
ROAD TO RAIL
An important day for SA The movement of goods from road to rail is starting to take shape, with Transnet Freight Rail (TFR) signing memorandums of understanding (MOUs) with key logistical companies in South Africa.
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HE FIRST OF THESE was with Imperial Logistics at the inaugural TransAfrica Conference held in Johannesburg. Siyabonga Gama, CEO of TFR, and Marius Swanepoel, CEO of Imperial Logistics, signed an MOU where rail-friendly cargo would be moved off the road and onto rail. Gama said: “This is an extremely important day for both TFR and Imperial Logistics and one that is long overdue. I believe relationships like this one can do really well for everyone.” Cobus Rossouw, chief integration officer at Imperial Logistics, adds: “It is a collaborative effort between us and TFR, and has been a long time coming. Prior to this signing it was very important for us to agree to the right principles in which we must make sure we achieve the specific objectives of getting the right freight from road to rail. “As two different service providers that traditionally would have competed for a client’s attention, we now have a way we can work together to make sure that we do not end up putting the wrong product on the wrong channel.” He added: “We believe we have capabilities that are complementary. At the end of the day, it is to serve our clients because that is the reason why we are in business. “We now have a more formal agreement through which Imperial logistics can take that volume that is typically referred to as long-distance volume or high volume and through multi-modal and intermodal solutions best serve our customers.”
It is a collaborative effort between us and TFR, and has been a long time coming
Siyabonga Gama, CEO of TFR, and Marius Swanepoel, CEO of Imperial Logistics
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Imperial Logistics has operated within multimodal environments before, but we believe that through a more structured agreement with TFR, it will be possible to grow the use of multimodal operations in ensuring its customers’ goods are delivered on time in the most affordable way. Rossouw stated: “Prior to this signing, we agreed upon 10 specific projects that we will embark on together. The first pallet-friendly containers have already been moved by TFR for Imperial Logistics. This is a great way of moving freight that is not time sensitive over long distances and as the partnership evolves, we will grow this capability.” Gama said: “It is great being part of this groundbreaking ceremony to celebrate what I believe has been years in the making. Following our initial discussions, we have developed a number of good multimodal solutions that we can both offer our customers. “TFR is very excited about this partnership as together we can create a much more competitive logistics system in the country. “Our long-haul expertise combined with Imperial Logistics’ road logistics distribution expertise and end-toend value chain makes this an exciting partnership. It is also exciting for our carbon footprint – not just for the two companies but on a national basis, as this partnership will have a positive impact in this regard. This is the beginning of a new era and is part of a journey that will bring down the overall costs of logistics.” Swanepoel concludes: “It has taken us four years to get to the point of signing this MOU and I am convinced that we have a solution that will suit our customers. Truck drivers are safe because rail does not provide end-to-end service, so trucks will remain a vital part of the equation. What we are accomplishing with this partnership is reducing the overall cost of doing business by moving long-haul cargo onto rail, thereby reducing the cost of logistics.”
Intermodal road and rail solutions
“Implementing Road-Rail collaboration for a complete logistics and transport supply chain, by using multimodal opportunities within the market. Lowering costs to customers and greenhouse emissions will see a growing economy and an MDS realisation.�
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TransnetFreightRail
Transnet Freight Rail a division of Transnet SOC Ltd Registration No 1990/000900/30 Transnet Freight Rail an Authorised Financial Services Provider - FSP 18828
www.transnetfreightrail-tfr.net
SUPPLY CHAIN LOGISTICS
ROAD TO RAIL
Smart supply chain solutions As a provider of smart supply chain solutions, Barloworld Logistics is a mode-agnostic company. By signing an agreement with Transnet Freight Rail to move rail-friendly freight from road to rail, is ensuring a more cost-effective level of service to its clients. Siyabonga Gama, CEO of TFR; with Steve Ford, CEO of Barloworld Logistics, after signing the agreement
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TEVE FORD, CEO Barloworld Logistics, says: “We all know the distance between points of demand and consumers is quite enormous, as is the volume of goods. We looked at where we are now and where we need to be in the future. We know there are obvious strains on the country’s road structures. Congestion on our roads creates numerous challenges for the logistics service provider. In addition, road safety and carbon footprint issues have to be considered, which means this agreement with TFR makes perfect business sense. “It is absolutely fundamental for the success of the company to have this partnership with TFR and I do not say this lightly. For the future economic growth of the country, agreements like this between logistical companies and TFR are important, especially with the economic and infrastructural issues the country faces.” Ford says that the partnership with TFR is critical for Barloworld Logistics, which is why the company is committing its best employees to work alongside TFR in order to create a world-class supply chain solution that creates value for both companies. “We are excited about signing this agreement. We have had a relationship and been working with TFR over the past
Congestion on our roads creates numerous challenges for the logistics service provider
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few years and this agreement formalises it, and it is a good step forward for us at Barloworld.” Siyabonga Gama, chief executive of TFR, adds: “We have to accelerate the process of moving rail-friendly cargo from road to rail and that requires innovative solutions. Smart partnerships are important in terms of us assisting to collaborate with current service providers and it presents us with an opportunity to provide long-haul services and integrated supply chains. “The business model is designed to allow road hauliers such as logistic companies to retain their relationships with their customers and continue to provide door-to-door services while contracting with TFR for the long-haul leg of the service.” Gama believes there are many benefits to a relationship such as this one. “It assists the economy in terms of reduced road maintenance and also in terms of reduced road fatalities. For the truck driver, it will build cohesive families. They will now need less time in terms of being away from their families and also healthier truck drivers because it will reduce exhaustion. “The other intrinsic aspect is that we do not see road and rail in being in competition. We see them as being complementary. It is through agreements such as this one that we can begin to look at the logistics space and see who is best placed to play a strategic role in the supply chain. We are not sitting here wishing truck drivers away and truck drivers do not want to wish the rail away. How can we work together because we have expertise in long haul and trucks have expertise in door-to-door service? This is going to enhance the whole value chain for our customers in South Africa and so we are really looking for a lot of multimodal transport opportunities in the logistics sector. We think this is a very good deal and a step in the right direction and the organisation thereof means there will be a lot of exchanges between TFR and Barloworld Logistics. It is a very exciting time for us and is also exciting for the economy,” Gama concludes.
Sustainable advantages created through serial innovation and smart partnerships enable businesses to adapt quickly to changing market trends. Barloworld Logistics is proud to partner with Transnet Freight Rail in offering clients multi-modal transport solutions that drive productivity, proďŹ tability and performance.
www.barloworld-logistics.com
SUPPLY CHAIN LOGISTICS
Delivering commercial value from your fleet Optimisation is not just a buzzword. In any business, optimisation is underpinned by reducing risks and cost, while improving operational efficiencies and productivity outputs. By Nicholas de Canha, managing director of Imperial Fleet Management
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ROADLY PUT, any company with a fleet of vehicles – be it one or many vehicles – is faced with three key risks: • financing costs for the fleet • maintenance costs for the fleet • human risk – particularly driver behaviour. Each of these risks also incurs considerable cost to company, but a properly structured outsourced fleet management solution can significantly reduce the fleet upkeep cost to company and absorb all risk associated with owning and/or maintaining the vehicle(s). Looking at the first of these priority risks, financing the purchase of vehicles, the cost of these assets will often take up a large portion of the company’s balance sheet, especially if the company is a logistics company. As the owner, the company is also then liable for the residual value on these vehicles – but residual values fluctuate, and the more optimistic the estimate, the more risk to the business. Through a leasing model, however, the purchase is financed off balance sheet and the residual value risk is taken entirely by the leasing company. This essentially means that the asset sits on the leasing company’s balance sheet and not the client’s, and the auditors are happy with this. The monthly cost of the lease is the only area that the lease affects the financials of the client. Further, whatever residual value the leasing company puts on the asset as part of the rental is locked in, and the leasing company takes any risk on that value and handles the disposal of the asset after the term of lease. For business owners, this means that the return on assets is boosted, and there is simpler, more predictable accounting for the expense. Maintenance and uptime, however, are the biggest concerns for any business running medium to large commercial vehicles. Also, not only are those companies more sensitive to uptime and keeping their working fleet working, it’s also much more difficult to substitute a commercial vehicle with another vehicle – especially when there are specialised bodies – and continue with business as usual, as these working assets play
A properly structured outsourced fleet management solution can significantly reduce the fleet upkeep cost to company
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a far more significant role in the business and being able to delivery on services. To manage this in a full maintenance lease (FML), the relationship between the client and leasing company is far closer and underpinned by more sophisticated service level agreements, as companies running commercial vehicles often require more services – supporting their air-conditioning units, refrigeration units and monitoring vehicle offline data rates, for instance. Added to this, a fleet leasing company worth its salt is able to provide nationwide agreements that guarantee better and uniformed control of vehicle uptime by monitoring parts stock levels and being able to manage authorisations through a large dealer network and/or tyre suppliers nationwide. Cost control is another feature of the maintenance contracts in an FML – teams of personnel scrutinise invoices to ensure discounts and labour rates are in line. FML contracts also absorb the risk of maintenance; should a truck perform well or poorly, the rate in the contract remains the same. This is budgeting heaven for customers and also removes a key risk in managing a commercial vehicle fleet. Maintenance though can only do so much to guarantee uptime of vehicles. Drivers play as important a role in keeping the vehicle in good condition, which is why driver behaviour is highlighted as such a priority risk component to businesses. Tracking technology, however, has become so sophisticated that reviewing the data can provide insights on what impact driver behaviour has had on the wear of key parts, such as tyres, breaks, clutch and gearbox, and also gives a closer determinant in the maintenance rates. The better the data that can be provided, the greater the grounds a company has to engage with its drivers and/or implement campaigns to change behaviour where needed, which in turn can reduce costs even further and improve overall business performance. Good FML companies understand this and work with their clients to highlight bad driver behaviour. Managing a fleet is not just about getting vehicles on the road, but rather keeping them there and there are several alternatives to in-house management available locally. Be it a collaborative or completely outsourced fleet management solution though, a leasing company that is able to offer flexibility, higher vehicle uptime rates and significantly reduced the cost and risk of running your fleet is one worth partnering with.
SUPPLY CHAIN LOGISTICS
IMPERIAL LOGISTICS
Imperial reinvents itself for maximum client benefit Imperial Logistics has been reinvented – and the newly consolidated group is in a better position than ever before to offer tailored solutions to boost its customers’ competitiveness.
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OBUS ROSSOUW, chief integration officer, reveals: “We are perfectly positioned for our next step forward, which is essentially focusing not on what we can do, but what we can do for our clients. “Imperial Logistics’ diverse and expansive experience and capabilities extend from procurement to brand activation, and include all the logistics services in between. The challenge is to improve our clients’ competitiveness by customising our experience in outsourced value chain management.” The group has simplified its business and honed in on its capabilities in order to better meet customers’ requirements. One such consolidation merged group companies Volition and e-Logics, as well as their associated businesses, into a powerhouse of business process knowledge and technology expertise. Rossouw elaborates: “Dubbed Resolve, this new business amalgamates all of our experience and expertise in business process and technology outsourcing.” Similarly, Imperial Managed Logistics was established following the consolidation of BROCO and Cargo Africa. Rossouw explains: “The strength of this business lies in its capacity to move large load volumes through its comprehensive and well-managed national network of service providers.” Notably, the reinvention process also saw the formation of Imperial Retail Logistics, previously known as TFD Network Africa. The company focuses on enhancing customers’ logistics and supply chain network capacities and capabilities through its services offering. A growth strategy with three dimensions will ensure that Imperial Logistics continues to offer its customers the best possible solutions. Rossouw adds: “Today, Imperial Logistics is the only company that can take your product from manufacturing to the point of purchase. The three dimensions of our growth strategy are new geographies, new industries and new capabilities. We will achieve this by effectively deploying and customising our existing skills and expertise, by partnering with other players where necessary, and through acquisitions.
“Accordingly, we moved into Africa’s consumer market with the acquisition of CIC Holdings, through which we are now operating within the FMCG industry, with a service offering that includes distributorships, merchandising, warehousing, distribution, debtors’ administration and staffing solutions.” Imperial Logistics entered the pharmaceutical space with the acquisition of RTT Medical. It also entered the logistics sector of the fast growing Nigerian FMCG, telecommunications and pharmaceutical industries with the acquisition of 49% of MDS, a leading logistics provider in Nigeria. The recent acquisition of mobile technology firm ForeFront Africa has seen the group further explore the
“We are perfectly positioned for our next step forward, which is essentially focusing not on what we can do, but what we can do for our clients.” Cobus Rossouw, chief integration officer, lmperial Logistics mobile and telecommunications industries and ensure it is well placed to partner with clients in leveraging the potential of mobile commerce in their value chains. Outlining other elements of Imperial Logistics’ strategy, Rossouw notes that the group is playing a growing role in the mining, construction and petrochemicals industries. Rossouw concludes: “Imperial Logistics’ success over more than three decades in business has been built on our people, real experience and ability to do more than one thing. Now, with the advantage of a simplified and consolidated organisation, our focus going forward will be on customising our vast experience for the benefit of each of our customers, in order to most effectively drive their competitiveness. Our goal is to be seen not as the biggest, but as the best for our customers.”
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SUPPLY CHAIN LOGISTICS
Beyerskloof wines for Mozambique A contract to distribute Beyerskloof wines into Mozambique has been secured by Imperial Logistics group company CIC Holdings.
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ILTON VELLIOS, managing director of Marulo Comercio – the CIC Holdings operating company that has partnered with Beyerskoof – explains that local expertise is crucial for the success of this venture. “To expand operations in Mozambique, it is important to understand the legislation, ordinances, political environment, networks and infrastructure. Marulo Comercio netted this contract based on its ability to meet all of these requirements.” The company has been operating in Mozambique for almost two decades. Vellios adds: “Road infrastructure is poor and it is often difficult to move freight in this country. A further challenge is the illegal importation of wine and spirits into Mozambique. Some unscrupulous operators don’t pay import duties, so we must compete with them as they offer the same product at a lower price. Unfortunately, the borders continue to be porous and these products get through without having paid the steep duties that are being applied.”
With four warehouse and distribution facilities in Mozambique and a sales team that operates from Maputo and Matola up to Inhambane, Marulo Comercio serves a diverse range of clients in the wholesale, retail and hospitality sectors. Marulo Comercio is in the process of expanding to Beira and is setting up a warehouse and distribution facility from where a whole new sales team will be looking after all the northern provinces of Mozambique. Vellios concludes: “We are delighted to have this opportunity to assist one of the Cape’s foremost wine brands to make inroads into the Mozambique market.” From humble beginnings in 1988 when renowned winemaker and cellar master Beyers Truter set out to produce wines of “exceptional character”, Beyerskloof has gone from strength to strength to produce outstanding multi-award winning wines. The Beyerskloof Faith Cape Blend 2009 was recently honoured as one of the top three Cape Blends in South Africa at the Perold Absa Competition. CIC Holdings, which is wholly owned by Imperial Logistics, operates within the fast moving consumer goods industry in eight African countries, offering sales, merchandising, warehousing, distribution, debtors’ administration, staffing and security solutions to blue chip manufacturers.
Local expertise is crucial for the success of this venture
TWA | Nov/Dec 2013
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SUPPLY CHAIN LOGISTICS
CUSTOMS
SARS to revolutionise trade on the continent The new customs management system by SARS marks a significant syst milestone for businesses all over m South Africa. By Hester Hopkins, senior manager of Customs and Global Trade at Deloitte
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HE NEW SYSTEM, INTERFRONT, which went live over the weekend of 17 August with virtually no interruption to trade and business, is a transition from the old legacy system implemented as far back as 1970. The new system is seamless – and impressive in that there were no major logistical disruptions and bottlenecks, unlike other parts of the world where similar systems were implemented by other customs administrators. So what does this mean for business and trade? Firstly, the fact that SARS now has a single integrated software platform for customs will result in many benefits for business. These include fewer interventions that are costly and often create delays in the supply chain. This is
The new system is seamless – and impressive in that there were no major logistical disruptions and bottlenecks
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TWA | Nov/Dec 2013
due to the fact that integral to the new customs system is a sophisticated risk engine that determines which shipments should be stopped. Once stopped, customs then has the ability to send the container through an X-ray scanner, in a non-intrusive way, to determine whether the risk profile of the contents justifies a full unpack and inspection. This is a major saving for business both in terms of accessing its product efficiently, as well as reducing handling and storage costs at the port, which could amount to anywhere between R10 000 and R20 000 in some cases. A further benefit of the new system is its case manager functionality, which randomly allocates selected shipments for inspection to checking officers at one of SARS’s four processing centres around the country. The system also includes a price reference database, which will help to combat undervaluation of imports – an issue that is hurting South African businesses and industries. SARS has also developed Easy Docs and Easy Packer and made these available to trade for free, to help streamline the process and to reduce the amount of manual paper required. These packages help to convert documents into the required electronic format for processing through the new system. On the flipside, SARS will now have much more data and intelligence on traders, which will make its audit capability much stronger. It is therefore important for businesses to equally invest in their customs staff, processes and systems – first to ensure that they continue to improve their compliance levels and, second, to maximise the current and future benefits of this new system and the overall modernisation programme (for example the recently launched Preferred Trader programme). The key to the success of this project, which clearly has taken years of careful planning from SARS, is the collaboration and partnership that SARS has had with the trade community throughout this journey. This process started as early as 2010 and, in some cases, meetings between SARS and the trade community were held on a weekly basis to ensure that all glitches and unforeseen issues were dealt with and that the systems were adequately tested. Some interesting facts are that SARS processes 5.5 million declarations per year at a customs value of R2.5 trillion. This amounts to 4.3 million containers across 4 862 km of sea line, 2 798 km of land line, 10 seaports, eight airports, one inland port, 17 SACU (Southern African Customs Union) land borders and 35 non-designated borders by roughly 3 000 customs staff. This is a great step forward by SARS and helps to reinforce South Africa’s position as the “gateway to Africa” for international investment on the continent.
SUPPLY CHAIN LOGISTICS
EFFICIENCIES
SA supply chains should use CTCO Considering the complete total cost of C ownership within the supply chain. By Dr Dinesh Kumar
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HOUGH SOUTH AFRICA ENJOYS the limelight among developing nations, and is part of the Brazil, Russia, India, China and South Africa (BRICS) focus group, it still experiences challenges with its local and African supply chain. As the BRICS economies struggle to deliver anticipated growth, supply chains in South Africa are under pressure to compete with the rest of the continent’s growing supply chains. The majority of supply chains in this country are in the ‘survival’ stage of maturity. This means that there are no defined objectives for the supply chain and no optimisation. In turn, this creates additional pressure on South Africa’s home-grown industries operating in the wider African continent perspective. South Africa has enormous potential for attracting international companies and thus foreign direct investment,
focuses on improving efficiencies, reducing costs and increasing service levels. In order to survive this downturn and to continue increasing efficiencies in BRICS economies, companies should consider a complete total cost of ownership (CTCO) model. This model, which is more relevant in this economic climate, focuses on longer-term sustainable gains over the life cycle of the products in the supply chain, rather than on immediate savings. The approach in South African supply chains is based on costing models that take into account only the hard costs. Hard costs, including material, transportation, warehousing and customs clearance, are well defined and measurable. However, the changing dynamics in consumer behaviour and increasing risks and issues in the supply chains make managing soft costs equally important. Soft costs, including skills shortages, red tape and corruption, are difficult to quantify. Companies normally measure supply chain costs that are easy to ascertain and manage. However, the true impact of producing a good or distributing into Africa is not well represented if managers are not calculating the CTCO. To quantify these soft costs, supply chain managers firstly need to assess their supply chain set-up, the processes involved in bringing products and services to market and possible economic, regulatory and market constraints. Secondly, managers need to obtain benchmark data from similar supply chains locally or globally to determine acceptable limits for these softer costs. Thirdly, managers need to set up a regular mechanism to measure and monitor these costs. Accurate data is crucial for this approach to work. Obtaining expert opinion is one of the mechanisms that can be used to verify the validity of that data. However, if data is not available, managers can use a percentage of total cost as a rule of thumb. Over a period of time, the CTCO set-up is enriched with continuous feedback and fine-tuning. Buy-in from the organisation’s wide stakeholder base is equally important to drive a change in behaviour in the supply chain. South African supply chain managers need to employ the CTCO model to harness efficiencies and save costs at the right place and the right time. This will enable them to move from a ‘survival’ to an ‘optimal’ level of maturity in the supply chain life cycle. This will allow them to compete more successfully with global supply chains.
In order to survive this downturn and to continue increasing efficiencies in BRICS economies, companies should consider a complete total cost of ownership model making the country a hotspot for future growth, but that growth has to be supported by resilient supply chains. The current survival mode is not a suitable maturity level for supply chains to excel and to prosper. Some chains have to look towards migrating to a mode that
TWA | Nov/Dec 2013
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SUPPLY CHAIN LOGISTICS
ISO 39001
RTS management system ISO 39001 is a voluntary standard that promotes self-regulation and compleIS ments law enforcement as an effective and sustainable means to improve safety and compliance on our roads. By Oliver Naidoo, Judah Compliance Auditors
I The framework for ISO 39001 is based on the Plan-Do-CheckAct cycle
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SO 39001:2012, ROAD TRAFFIC SAFETY (RTS) management systems is a significant contribution to the United Nations’ Decade of Action for Road Safety 2011-2020. The fundamental goal of the ISO 39001 standard is the elimination or minimisation of death and serious injury in the road transport network. In order to achieve this objective, it is necessary for all road stakeholders to minimise the impact (or risk) of their activities on other road users. This ISO standard provides a mechanism for an organisation to implement a structured management system that would effectively regulate its road safety performance. “The standard has been developed with the support of experts from 40 countries and 16 liaison organisations, including the World Health Organisation, the World Bank and the International Road Federation,” according to Peter Hartzell, secretary of ISO/TC 241. Road crashes result in approximately 1.3 million fatalities annually, and in South Africa, the figure is around 15 000. There is a clear need for concerted effort by government agencies and private
TWA | Nov/Dec 2013
sector entities to act decisively to improve safety and compliance on our road networks. ISO 39001 can be used by governmental and private sector organisations to implement a formal programme with specific and measurable safety performance indicators. The standard can be implemented by various organisations such as: • goods transporters • passenger transporters • consignors & consignees • road agencies • toll concessionaires • road construction companies • law enforcement agencies • government entities • car rental agencies • emergency services. The principles and audit methodology is similar to that of other ISO standards such as ISO 9001 and ISO 14001. The Plan-Do-Check-Act framework is advocated with the focus on continual improvement of the RTS management system. The ISO 39001 standard comprises 10 elements, each of which prescribes specific requirements that an organisation
SUPPLY CHAIN LOGISTICS would need to comply with. These requirements include the following: • identification of all processes and activities that can impact on road traffic safety • address all associated risks (risk exposure factors) and opportunities for improvement • establishment of RTS policy & objectives • develop RTS performance factors • formalise final safety outcome factors • implement intermediate safety outcome factors • adequate crash & incident investigation • monitoring, analysis and evaluation of performance factors/indicators • internal audit of the system • management review • handling non-conformity and corrective actions • promoting continual improvement. Implementation of ISO 39001 requires intermediate safety outcome factors to be integrated into the organisation’s practices and systems. Such safety parameters include the following criteria: • road design and safe speed (including separation, side areas and intersection design) • use of appropriate roads based on vehicle type, cargo, route dynamics, etc. • adequate road markings and signage • safety warning at road construction sites
• contingency planning for emergencies e.g. electricity cuts, chemical spill • use of personal safety equipment e.g. seat belts, child restraints • use of safe driving speed (weather, day/night, etc.) • fitness of drivers (fatigue, alcohol, drugs, medical) • safe journey planning (defined routes, designated stops, route risk assessment) • safety of vehicles (safe design, maintenance, tyre management, load securement, etc.) • appropriate authorisation to driver (licence, competence) • post-crash response (emergency preparedness, recovery and rehabilitation). ISO 39001 is a voluntary standard that promotes selfregulation and complements law enforcement as an effective and sustainable means to improve safety and compliance on the roads. It was released by the International Organisation for Standardisation in October 2012 and introductory training in South Africa will be conducted by the Council for Scientific Research in collaboration with JC Auditors. Information on training schedules will be available on the website www.rtms-sa.org.
Road crashes result in about 1.3 million fatalities annually, and in South Africa, the figure is around 15 000
TWA | Nov/Dec 2013
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SUPPLY CHAIN LOGISTICS
MARINE CARGO INSURANCE
Avoid mistakes As South Africa continues to strengthen its international trade ties, it is becoming increasingly important for cargo owners to get to grips with the complexities of arranging marine cargo insurance. Simon Foulds speaks to Carmen Pasqualle, marine manager at Lion of Africa Insurance, to find out what these are.
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ASQUALLE SAYS: “With the rise of cargo ship accidents worldwide, including the bulk carrier Smart that recently ran aground off the main beach at Richards Bay, cargo owners can not afford to skimp on cover, or make costly mistakes that could present their businesses with even bigger problems, in the event of an accident. “Marine cargo insurance helps cargo owners to cover the physical damage or loss of their goods while being transported by sea. Failing to arrange appropriate cover can potentially harm a business and have a severe impact on its revenue stream.” She says that it is important to take note of the following when taking out marine cargo insurance cover: • Limited cover – Inexperienced cargo Carmen Pasqualle, marine manager, owners often view insurLion of Africa Insurance ance as a grudge purchase and risk not having adequate cover in place. This exposes their businesses to financial and liability risks in the event of an accident.
“Cargo owners cannot afford to skimp on cover.”
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• Picking on price – During tough economic conditions, businesses have the tendency to shop around for cover only using price as a determining factor. Businesses should rather focus on what the policy covers, instead of basing their decision solely on price. Rushing to sign a contract without fully understanding the terms and conditions of the policy is a mistake. Each business is unique and has its own insurance needs. • Reducing liability – Opting for lower liability, or other limits, in order to save on monthly premium costs is certainly not advisable. First seek advice from brokers and insurers to arrange the right amount of cover for the business, as well as to protect personal assets. • Unaffordable deductibles – Avoid opting for deductibles that you cannot afford. A deductible, commonly known as excess, is the amount that a business will have to pay upfront before an insurer can settle a claim. While choosing a higher deductible may help to reduce monthly premium costs, it is best to choose a deductible that will be affordable in the event of a claim. Pasqualle states: “Businesses should also be familiar with general average, which is independent from marine cargo insurance. It is an agreement between the ship owner and cargo owners to share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole during an emergency. General average claims can arise from the ship being stranded, catching fire, damaged engine and when the ship is in any danger of sinking. “Marine cargo policies come in two forms, namely: open policy, which covers a number of consignments, and a specific policy, which normally covers specific consignments. There is also an option to take out an allrisk or total loss cargo policy, which covers against all fortuitous losses.” She concludes: “Regardless of the nature of business, it is advisable to seek advice from a broker or insurer before arranging any type of marine cargo cover, to fully understand exclusions and avoid being over- or underinsured in the event of a loss.”
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AIR CARGO
A revitalising partnership The International Air Transport Association (IATA) is calling on all participants in the air cargo value chain to work together. This is towards the common goals of improved quality and increased efficiency through the a-Air Waybill (e-AWB) and e-freight.
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IR CARGO IS SUFFERING FROM a prolonged slump that has seen falls in yields, revenues and market share. Since 2010, world trade has grown by 12% whereas air cargo demand growth has been basically flat with only a 2% increase. A divergent trend in passenger demand, with growth continuing in the historical 5 to 6% range, has complicated the situation. As airlines grow fleet capacity to meet rising passenger demand, capacity has been introduced into weak cargo markets, putting considerable downward pressure on yields. Cargo revenues in 2013 are expected to be US$59 billion (R583.23 billion), some US$8 billion below the 2011 peak. Tony Tyler, IATA’s director general and CEO, says: “No business or business model survives over the long term without evolving. Air cargo is being buffeted by forces for change. These include changes in the economics of just-intime manufacturing, longer delivery lead times, innovation by alternative modes of transport and environmental pressures. In the face of these challenges, air cargo needs to work together as an industry to improve competitiveness and protect its value proposition. “By working together, we have made global air cargo safe, secure and reliable. So reliable, that it is often taken for granted. It is the unsung hero of the global economy – underpinning global supply chains and delivering products to markets. But if we are to return the business to growth, the industry must collectively embrace an agenda for enhanced quality, efficiency and security.”
Quality IATA has announced that it will work with FIATA [International Federation of Freight Forwarders Associations] and the
Global Air Cargo Advisory Group to enhance the Cargo 2000 (C2K) master operating plan to measure the service promise of the industry to shippers. C2K is an industry initiative working towards embedding benchmarked quality standards across the industry. Tyler adds: “We need to see air cargo through the eyes of our customers who have high expectations right across the value chain. Air cargo is a premium product. Customers valuing speed or a 100% cool chain need to be certain that their goods will be delivered on time and be handled appropriately. By working together, I know that we can generate real momentum in the race to drive up quality and reliability.”
Efficiency IATA has also reiterated its commitment to improve competitiveness by modernising industry processes with the e-freight program. Replacing paper process with electronic documentation will drive both efficiency and quality improvements. It will also improve customer service by enabling shippers to have the same level of data about their shipments that they get from the integrated delivery companies. Tyler states: “E-freight will improve the competitiveness of air cargo. Delivering it is a mammoth task involving a complex chain of stakeholders, which includes governments and customs. Progress has been slower than expected. Even the e-AWB penetration – a critical enabler of e-freight – has only reached 9%.” “Airlines alone cannot deliver e-freight, but we can do a lot on the e-AWB. It is encouraging that the whole air cargo industry is aligned behind the target of 100% e-AWB adoption and there are some excellent examples of success in markets like Hong Kong, Singapore, Seoul and Dubai. But more airlines and forwarders need to sign up. We cannot build a better, more competitive future for air cargo without individual contributions and leadership.”
“Airlines alone cannot deliver e-freight, but we can do a lot on the e-AWB.” Tony Tyler, director general and CEO, IATA
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