Transport World Africa Sep/Oct 2013

ENDORSED BY

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

ROAD

Scania Tanzania: 40 years

RAIL

Export line boosted

AIR

Freight shows signs of life

LOGISTICS Real price of roads

e l i t a s r e v e h T

R E T N I R P S

IIN N TH THE HOT SEAT

C Carl Johan Almqvist on the

ssa safest Volvo truck in the world P8 ISSN 1684-7946 ISSN Sep/Oct 2013 Vol.Mar/Apr 11 No. 2013 5 / R40.00 incl.

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

We’re in it for the long haul.

Intraregional supply chain solutions from producer to consumer onsumee r

COVER STORY TOR RY Mercedes-Benz’s enz’s versatile Sprinter rinter

INSIDE

P4 P 4

THIS ISSUE E REGULARS

SUPPLY CHAIN LOGISTICS 2 3 4

Editor’s comment Rocking into October!

FESARTA Barney Curtis’s comment Cover story The versatile Sprinter

IN T THE

HOT HO H SEAT S SE E

Voith opens new training facility Transportation management outsourcing Value in moving goods on time

Volvo Trucks’ Carl Johan Almqvist on the safest Volvo in the world P6

From operational to strategic Getting better results from service providers

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Regional news

What is the price of bad roads?

Shaping global economies through freight forwarding Insuring against potential losses

COMMERCIAL VEHICLES

Inter Africa gets you moving

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Carbon Tax on the transport industry Scania 40 years in East Africa RTMS in the timber industry Commercial vehicle sector in the spotlight Fuel saving Partnering with trailer experts New Volvo FH rigorously tested

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RAIL Increased efficiency boost

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AIR 52

Showing signs of life

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TWA | Sep/Oct 2013

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EDITOR’S COMMENT

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CTOBER ROCKS this year when the Johannesburg International Motor Show drives into town. At the same time, the Truck & Bus Show will also be taking place, which will give everyone the opportunity to view and chat to the OEMs from various truck companies about their products and the road ahead, whereafter you can saunter through the rest of the show looking at the latest cars being introduced to the general public.

Another event scheduled for October is the inaugural TransAfrica, dubbed by the organisers as a new transport, infrastructure and investment expo, which will bring together thought leaders and market players within the African transport industry for deliberation around topics of growth and development.

The three-day conference, themed ‘Revitalising the transport sector on the African continent’, takes place between 1 and 4 October, and more information is available at www. transafricaexpo.co.za.

Looking ahead into the future of our roads in and around Gauteng, the MEC for roads and transport, Dr Ismail Vadi, has released Gauteng’s 25-year integrated transport master plan referred to as the ITMP25. The full report can be downloaded from www.itmp25. co.za and the public is welcome to submit input and comments before 20 September 2013 to jackvdm@gautrainpo. co.za or Phumelelo.Zikalala2@gauteng.gov.za.

In this issue, we take a look at Volvo’s next generation of trucks being launched into South Africa. We discuss the impact that carbon tax can have on the industry, look at the new generation of Sprinter’s as well as highlight Timber Logistics and how RTMS has benefitted the transport operator.

Looking at supply chain logistics, we find out about outsourcing transportation as well as how supply chain management is changing from being strategically decoupled, price driven to being strategically coupled, value-driven.

Then have you ever considered the cost of bad roads? Not cost as in build, but what they cost the users who must take their trucks down them regularly to get their goods to market.

We look at this aspect and its impact.

As always, a varied read – enjoy!

Rocking into October!

Editor in action.

Simon Foulds with Scania’s Andrea du Toit (left) and Sarah Rudland

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TWA | Sep/Oct 2013

Publisher Elizabeth Shorten Editor in chief Nicholas McDiarmid Editor Simon Foulds • simon@3smedia.co.za Head of design Frédérick Danton Senior designer Hayley Mendelow Designer Kirsty Galloway Contributors Barney Curtis, Steve Cornelius Chief sub-editor Claire Nozaïc Sub-editor Patience Gumbo 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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No. 4, 5th Avenue Rivonia

PO Box 92026, Norwood 2117 t: +27 (0)11 233 2600 f: +27 (0)11 234 7274

www.3smedia.co.za Annual subscription: 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

Producing the desired results

I

THE ROAD TRANSPORT Management System (RTMS) in South Africa is certainly producing the desired results! Overloading in the sugar and timber industries has been reduced considerably, and credit must be given to not only the transporters, but also the companies and government entities that load the trucks.

In addition, those professionally run transport companies are also experiencing improvements in their bottom lines.

It is time we gave full recognition to those (both loaders and transporters) that are complying with the regulations and saving the country considerable extra costs in road maintenance.

FESARTA’s brief on the RTMS National Steering Committee is to drive the process towards extending the RTMS along the major road transport corridors into Africa.

After initial discussions and the drafting of a skeleton document by FESARTA and Paul Nordengen of the CSIR, a project was set up by SADC to pilot self-regulation along the North-South Corridor (NSC).

It has taken a long time for the project to get off the ground, but, finally, the first phase is being carried out.

This phase includes CSIR drafting standards for the pilot.

This is an essential part of the project since the system cannot operate in a vacuum. It must be controlled by professionally drawn-up standards.

Furthermore, it must have professional auditors who ensure that the certified companies adhere to the standards.

A last point on self-regulation is the acceptance of the system by government authorities to the north of South Africa.

During the East African Community (EAC) load limits and overloading control project in 2011, FESARTA sensitised stakeholders on how self-regulation was benefitting companies and authorities in South Africa.

The EAC authorities were very interested in the system and are encouraging it to be introduced into their countries. In tandem with this request is the requirement that the system be professionally run, ensuring that any certified company that

contravenes regulations is dealt with by the system most severely and transparently.

FESARTA will work on this opportunity, particularly East Africa, once the NSC pilot is under way.

FESARTA recently attended the United Nations Economic Commission for Africa (UNECA) meeting in Addis Ababa, Ethiopia. The meeting was to assess how countries were complying with the UN Almaty Programme of Action in road transport.

The focus was on the various regional protocols and bilateral agreements, and how these were being complied with.

The outcome was that only limited compliance was achieved and this resulted in much less than hoped-for improvement in intraregional trade.

FESARTA requested that more technical and financial support be given by donors to the harmonization process at Tripartite level in East and Southern Africa. Also, that the Non-Tariff Barrier system be better supported.

Overloading in the sugar and timber industries has been reduced considerably, and credit must be given to not only the transporters, but also the companies and government entities that load the trucks

TWA | Sep/Oct 2013

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THE BEST SPRINTER OF ALL TIME A new Sprinter with striking new looks

Safer, economical, environmentally friendly and more attractive than ever!

S THE UNDISPUTED number one in its class, the Mercedes-Benz Sprinter is now even more economical, safer, environmentally friendly and attractive. After seven years and sales totalling around one million vehicles, the new Sprinter is set to further bolster the successful model’s leading position.

Nicolette Lambrechts, brand manager for vans at Mercedes-Benz South Africa (MBSA), says: “It is with a great sense of pride that we usher in the market the new Sprinter. We will officially launch this vehicle at the Johannesburg International Motor Show (JIMS) in October this year. We are confident that the Sprinter will continue to solidify its leading position in the large vans segment.”

She adds: “Unfortunately, due to the inadequate availability of cleaner fuels in South Africa, we will not be introducing the Euro 6 engine. We will continue to offer our Mercedes-Benz Sprinter in Euro 4 and 5 standard engines, which are already the cleanest in its class.”

New safety features raise the already exemplary standard of safety to an even higher level. And last, but not least, drivers of the new Sprinter can look forward to a further enhanced cockpit with new electronic features and particularly dynamic and at the same time comfortable handling.

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TWA | Sep/Oct Jul/Aug 2013 2013

Visually, the new Sprinter immediately makes a clear-cut and striking impression. Fully in keeping with the current Mercedes-Benz design line, the radiator grille appears more upright and self-assured, lending the new Sprinter a more imposing presence. The three radiator louvres are swept back from top to bottom and are perforated. This increases the air flow and clearly establishes a close visual link to a consistent design line from other Mercedes-Benz commercial vehicles. The Mercedes star now rests on a vividly highlighted base. A bevelled surround highlights the signature Mercedes-Benz radiator grille.

Ancillary equipment fine-tuned for maximum efficiency throughout “The exceptionally low fuel consumption of the new Sprinter is not attributable solely to the engine technology.

The engineers at Mercedes-Benz have also fine-tuned the Sprinter’s ancillary equipment for maximum economy,” Lambrechts says. Intelligent generator management ensures that the alternator gives priority to charging the battery during braking and on the overrun. During acceleration and cruising, the full engine output is available to the drive system.

The electric fuel pump controls the fuel supply for the Sprinter according to requirements, i.e. with a variable delivery rate. Also, the compressor of the optional airconditioning system incorporates a free wheel so that it is only active when the air conditioning is on.

An excellent track record right from the word go Right from its market launch, the new Sprinter has an excellent track record to its name. It has demonstrated its

COVER STORY

reliability in comprehensive trials, from endurance tests at top speed to extreme short distance tests with a high proportion of idling and a large number of stops. All in all, the new Sprinter has covered around eight million kilometres in endurance tests, including tough deployment by customers in real-life traffic. These operations spanned a highly diverse spectrum of driving profiles, including service with a company that covers up to 280 000 km annually, using alternating drivers in a relay system.

Lambrechts interpolates: “The Sprinter has evolved greatly since its initial introduction in 1995. Always ahead of the curve, the Mercedes-Benz Sprinter offers the class-leading features that enable owners to find their edge. No surprise from a brand that has authored automotive history for over a hundred years.”

The current engine range of 4-cylinder OM651 and OM642 V6 remains unchanged and will be available as Euro 4 and Euro 5 emission, respectively. These engines output range from 85 kW up to 140 kW for the 3.0 CDI V6.

“A key focus in developing the new Sprinter was on a whole range of new assistance systems, including world premieres in the van segment. New features to be premiered with the new Sprinter are standard Crosswind Assist and optional Collision Prevention Assist, Blind Spot Assist, Highbeam Assist and Lane Keeping Assist,” says Lambrechts.

The new Sprinter is the first van in the world to feature Crosswind Assist, which is standard specification for 3.55 t panel van variants. Crosswind Assist essentially compensates for the effects of strong winds on the vehicle by using the Electronic Stability Program (ESP). Optionally, the Sprinter offers Collision Prevention Assist which warns the driver of impending collisions. It warns the driver when the distance from the vehicle ahead is too small and when there is an

acute danger of collision. The new optional feature Blind Spot Assist – another first for the van segment – that helps the driver by warning him of other vehicles in the so-called blind spot during lane changing.

The new Highbeam Assist feature is another first in the Sprinter’s class. It guarantees optimum illumination of the road by automatically switching high beam on or off according to the given situation.

Even more dangerous than careless lane changing is involuntary lane changing – when the driver is distracted or inattentive, for example. The optional Lane Keeping Assist function is now available to provide a timely warning.

“This array of new optional assistance systems underscores Mercedes-Benz vans’ pioneering role in safety technology and as a driving force behind innovative developments,” Lambrechts concludes.

“A key focus in developing the new Sprinter was on a whole range of new safety systems, including world premieres in the van segment like Crosswind Assist”

TWA 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 | Sep/Oct 2013

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HOT SEAT

THE NEW VOLVO FH SERIES

The safest Volvo The driver of a new Volvo FH will emerge from a 80 kph collision without any serious injuries. And if the truck rolled over, there is an emergency exit at hand.

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HOT SEAT

in the world T

HOUSANDS OF SIMULATED collision tests and about 100 real crash tests have allowed Volvo Trucks’ engineers to develop a safer truck cab.

Carl Johan Almqvist, traffic and product safety director at Volvo Trucks, says: “We have utilised new technology, new materials and everything we have learned since our most recent cab. We have used all this to build an even safer truck. The result is the world’s safest Volvo.”

High-strength materials such as dual-phase steel have been used in collision-absorbing beams and in the doors.

The cab too uses the strongest steel available today for body panelling – ultra-high-strength, thermoset, pressmoulded boron steel.

Robert Ritzén, head of materials in the new cab, adds: “By using these new grades of steel, we can build a stronger cab without increasing its weight. This way, we enhance safety without compromising on payload capacity.”

Customised steel panels Strength and function are also enhanced with new technology, including laser welding. This method makes it possible to join together two flat panels prior to moulding.

Ritzén continues: “As a result, we can customise each panel’s thickness and quality. With this kind of panel, we can optimise the structure and integrate Volvo’s unique safety solutions into the cab.”

Several changes in the cab’s structure also boost safety.

The cab is now larger since the A-pillars are more upright, creating more room inside the cab for the driver. The door and floor structures have also been altered to provide the best possible protection in a collision and the windscreen is bonded in place.

According to Almqvist, the windscreen previously served as an emergency exit, now the roof hatch plays that role.

A matter of safety A safe truck can also be used safely. The new Volvo FH has larger windows and a clearer instrument panel and the field of vision has been increased considerably.

Almqvist adds: “What is most important from a traffic safety viewpoint is that the driver has a good field of vision and they can keep their eyes on the road. A quick glance at the instrument panel should be enough to give them the information they need.”

Active systems such as Lane Keeping Support (LKS), Lane Changing Support (LCS), Adaptive Cruise Control (ACC)

and Driver Alert Support (DAS) also contribute to safe driving. After all, a rested and relaxed driver is also a safer driver.

“The fact that a comfortable bed benefits traffic safety is probably not the first thought to enter your mind. But a driver who gets a proper night’s sleep, and feels rested and alert throughout the working day, actually causes fewer accidents,” Almqvist states.

Safer for car drivers The Front Underrun Protection System (FUPS) is designed to prevent a passenger car from becoming wedged under the truck in a frontal collision. The protection system in the new Volvo FH represents a major step forward from the safety viewpoint.

“Volvo fits an energy-absorbing under-run protection system as standard. We have succeeded in improving and reinforcing the system – without increasing its weight.”

Protection from criminals The new Volvo FH also spotlights another aspect of safety.

“The truck has several new features that protect the driver against breakins. Among other things, you can activate the truck’s perimeter lighting using the remote control on the key fob or deter any potential thieves by activating the truck’s horn.”

“We have utilised new technology, new materials and everything we have learned since our most recent cab.

We have used all this to build an even safer truck.” Carl Johan Almqvist, traffic and product safety director, Volvo Trucks

What goes into making a safer Volvo FH? Some of the changes that increase safety in the new Volvo FH are: • new, stronger materials, including ultra-high-strength boron steel • new technologies such as laser welding • new cab structure • improved visibility • active safety systems such as LKS, LCS, ACC and Das. Watch the film on www.youtube.com/volvotrucks.

TWA | Sept/Oct 2013

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REGIONAL NEWS

SOUTH AFRICA

Jointly exploring opportunities A MEMORANDUM OF understanding has been signed by Transnet Freight Rail (TFR) and Kirilo Savic Institute (KSI) from Serbia to explore possible collaboration opportunities within the railway and transportation sector globally. TFR chief executive Siyabonga Gama says: “The focus will be on market research in Europe and other parts, which will include engineering and maintenance initiatives, technical assessments of equipment procured in Europe, load testing of bridges, testing of locomotives, innovation in the designing of workshops, designing and placements of rail crossings, substations, as well as training and development. This is a significant move by TFR as both parties intend to support these projects by providing state-of-art expertise and assistance. We will do this by facilitating our unique expertise and experience, and provide access to the knowledge of our highly qualified and specialised business divisions.”

“The African continent is poised for an era of growth. Many of the countries projected the world’s fastest economic growth to be in Africa. This spells regional growth for SADC and a key prerequisite and vital enabler of growth is transportation. This memorandum is ideally positioned to provide expertise to the Southern African rail and logistics systems.”

Gama says this will assist TFR to achieve freight volume growth targets through modernised infrastructure and rolling stock fleet with world-class technologies, adding that this will also drive regional integration – particularly in Southern Africa and the Middle East in support of the Africa/International Business Strategy. He states that the development of public-private partnerships will spread risks and enable growth of local industry peripheral to the rail industry, promoting skills and job creation. According to Gama, TFR’s technology management has developed expertise in the specific areas of vehicle/track interaction, mechanical, electrical, traction, train design, wheel sets and material, train authorisation, communications, condition assessment, traffic management, track, configuration management and integrated railway systems.

TFR partnership with KSI will lead to collective learning, coordinating and integrating multiple streams of technologies for delivery of value to the company. Gama envisages that KSI will share its expertise, facilities and knowledge to advance rail operation and technology in South Africa. KSI, moreover, indicates that it will be offering scholarships and learning opportunities to TFR engineers to further enhance skills development.

This move is in line with Transnet’s market demand strategy and TFR’s aspirations of becoming one of the top TFR chief five best railways service providers in the world executive by 2019. TFR is currently reorganising its existSiyabonga Gama ing rail rra ail infrastructure infras inf rastru tructu cture re and ro rolli rolling llililing ng sto stock ck k in order to inc increase nccrease n rease the he e reliability re rrel e iab a ili ility tyy and a safety an sa afet ety ety of of the ra railw railway il ayy ilw network. networ wor w wo o orrk. k

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TWA | Sep/Oct Jul/Aug 2013 2013

SOUTH AFRICA

MCLI and SANEC sign new agreement THE LONG-STANDING cooperation agreement between the Southern African - Netherlands Chamber of Commerce (SANEC) and the Maputo Corridor Logistics Initiative (MCLI) has been renewed, further strengthening the relationship between the two entities.

Barbara Mommen, CEO of MCLI, says: “The new agreement sees both organisations providing broader access to their respective members, so they can benefit from our joint activities in promoting trade and easing access to markets in Mozambique and Europe.”

Mommen explains that the renewed agreement will seek to develop international marketing and PR channels through the opening of an MCLI representation office at the World Trade Centre in The Hague, in the Netherlands, as well as in the SANEC Johannesburg

Froke Gilseng (left) and Barbara Mommen signed the agreement at the MCLI offices in Nelspruit office, and for SANEC to establish a representation office at MCLI in Maputo, Mozambique.

“The two organizations have a long history of collaboration on issues of transport and logistics, and we look forward to continuing and strengthening the cooperation,” Mommen concludes.

SANEC’s general manager in Southern Africa, Froke Gilseng, and Mommen signed the agreement at the MCLI offices in Nelspruit.

For more information on SANEC, go to www.sanec.co.za and for the MCLI, visit www.mcli.co.za.

SADC

Improving infrastructure in Africa AN ACTION plan to improve transport infrastructure within the SADC region is in place and funds are being sourced to deliver these requirements by 2027.

The plan was highlighted at the SADC Regional Infrastructure Investment Conference (RIIC) held in Maputo, Mozambique, between 26 and 28 June. The theme for the conference was ‘Accelerating Investment in SADC Infrastructure through Sustainable and Innovative Financing’. The overall master plan will be implemented in three phases: short term (2013 to 2017), medium term (2017 to 2022) and long term (2022 to 2027).

A number of projects have been identified for the short-term action plan and US$16.28 billion (R160.19 billion) is required for these projects.

During the conference, the following high priority projects were highlighted and presented by Trademark Southern Africa: • update on the Tripartite Infrastructure Projects database • North-South Corridor roads • regional railway revitalisation package • scoping study and preliminary design of the South West Indian • Ocean Maritime Corridor.

Present at the RIIC were potential investors, funders of infrastructure and key international cooperating partners.

REGIONAL NEWS MOZAMBIQUE

Upgrade boosts supply to Southern Africa ENGEN PETROLEUM is significantly increasing its supply capacity to Southern African countries after acquiring seven in-country operations from competitor Chevron in the region and the Indian Ocean Islands.

The company is currently undergoing first phase revamp work on Beira Terminal, an import and storage facility in the Port of Beira, Mozambique. When complete, the terminal will be able to supply Mozambique, Zimbabwe, Zambia, Botswana and the southern region of the Democratic Republic p of the Congo. g Drikus Kotze, general manager of Engen’s International Business Division (IBD), says: “The depot forms part of the Mozambican component of the acquisition. It predated all others and was boosting security of supply in aimed at strategically boosti Revamp work on Beira the region, given Engen’s increasing market share Terminal in Southern and sub-Saharan Africa.”

The first phase of proceedings, currently under construction, is aimed at readying the facility for import and supply of petrol and diesel in Mozambique (20% of the volume requirement) and Zimbabwe (80%). This will be done via the existing pipeline to Masasa Depot in Harare.

The terminal’s designed capacity of 18 million litres (diesel) and 7 million litres (petrol) is expected to be sufficient for this purpose.

The second phase of construction will involve increasing tank- and road-loading capacity, and the construction of a new rail-loading facility to cater for Engen’s other Southern African sister companies (Engen Petroleum Zambia, to begin with).

Overall, the project is on track, with a target of reaching 90% mechanical completion (installed piping, equipment and support structures) by the end of December 2013.

Kotze concludes: “We want to have the depot fully operational in the first quarter of 2014. Engen aims to be a leading sub-Saharan African oil company by 2016, and this undertaking will be instrumental in us achieving that.”

SOUTH AFRICA

First Transnet hub for SMMEs STRIVING TO EXPAND opportunities for smaller black-owned enterprises, Transnet has opened the first of its Enterprise Development Hubs in Johannesburg.

Situated at the Carlton Centre, Transnet’s head office, the hub will be a one-stop shop for entrepreneurs and potential suppliers to Transnet. Services on offer include business development, business registration, procurement advisory services, tax registration and compliance, financial support and guidance on black economic empowerment requirements. The plan is to roll out the concept across the country.

SOUTH AFRICA

First multi-franchise dealership in SA

A NEW R60 MILLION motor dealership complex that has been opened by Super Group in Rustenburg, in the North West province, is set to become Volvo Group South Africa’s first multi-franchise facility. It is also the first dealership in Africa to represent UD Trucks, Volvo Trucks, Renault Trucks and Volvo Buses.

The dealership is a full sales, service and parts UD Trucks dealership, while being a service and parts dealer for Volvo Trucks, Volvo Buses and Renault Trucks. Super Group also has two other UD Trucks dealerships in Johannesburg and Brits.

Graeme Watson, CEO of Super Group Dealerships says: “For Super Group, the new NWT Rustenburg dealership forms part of a larger 11 brand, four facility dealer investment in Rustenburg. We truly believe in the future growth and potential of the Rustenburg area, and are proud to be associated with the Volvo Group brands in the region.”

Torbjörn Christensson, president of the Volvo Group AME: Southern Africa, believes that the new NWT Rustenburg dealership is of great strategic importance to the company.

Christensson says: “As transport operators expand their operations throughout the region, we believe the various brands within the Volvo Group have to be there to capture this market demand and support customers every step of the way. With the team from NWT Rustenburg being experts in their field and completely customer-focused, I believe they have what it takes to provide our customers in the region with unparalleled support and service.”

The dealership is easily accessible from major routes and corridors in the region, including the N4 highway, which many crossborder transport companies use to carry goods to and from South Africa’s northern neighbours.

The new facility offers a comprehensive range of inhouse services.

Brian Molefe, Transnet group chief executive, says: “We have identified the need to create an enabling environment for small players to take full advantage of the economic opportunities presented by our investment programme. Additionally, our intention is to assist blackowned entities that struggle to build their businesses into sustainable and profitable entities.”

Although the hub will primarily target potential suppliers to Transnet, budding entrepreneurs will also receive advice on a broad range of opportunities.

(From left) Mafika Mkwanazi, chairman of Transnet Board; Brian Molefe, group chief executive of Transnet; Malusi Gigaba, minister of Public Enterprises, and Mmadiboka Chokoe, executive manager: Group Integrated Supply Chain Management

TWA | Sept/Oct 2013

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COMMERCIAL VEHICLES

OPERATOR

on the transport industry The environment in wh which hich companies operate in is changing rapidly. Comp Companies are risks ffacing i new bbusiness i i k andd opportunities t iti each h dday bbecause off climate li t change.

Those that adapt to the changing environment will thrive in the future as they mitigate these risks and capitalise on opportunities.

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DIRECTOR AT Promethium Carbon, Robbie Louw discusses with Simon Foulds the implications of carbon tax on the country’s road transport and fleet management industries. Promethium Carbon advises companies in South Africa and Africa on issues relating to climate

change and carbon. Climate change links to important issues such as energy, water, regulatory risks, community vulnerability and supply chain stability. Promethium directs clients on the identification, qualification and mitigation of these climate change risks and opportunities.

Carbon Tax is going to be introduced in 2015 – how will this work?

For example, the cement industry is only able to produce cement by burning limestone.

There is no alternative to burning limestone. This falls under the category of process emissions. The cement industry will receive relief and will be able to claim up to an additional 10% tax relief on its emissions.

The transport industry is classified in the carbon tax policy paper as “other”, which has access to 10% relief for companies that are exposed to international trade. The transportation of goods inside the boundaries of South Africa can, however, not be trade exposed and therefore there are no relief measures. But it would be advisable for the industry to seek relief from government based on the fact that fuel, the industry’s main

RL Companies will pay R120 per tonne of carbon dioxide for 40% of their direct emissions, with some relief mechanisms for exposed sectors. These mechanisms include relief for process emission from industries that cannot reduce their emissions and the protection of industries exposed to international trade. Provision is also made to use carbon credits to offset the carbon tax obligation of companies.

If the first 60% of carbon tax is not taxable, how will a typical transport business calculate its tax? Since businesses will pay R120 per tonne of carbon dioxide emissions on

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TWA | Sep/Oct Jul/Aug 2013 2013

40% of their direct emissions, a business with 600 vehicles, each travelling 200 000 km per annum, will travel 120 million kilometres per annum. If we assume that the trucks carry 33 tonnes and that the return loads are empty, the emissions associated with the operation will be in the order of 18 500 tonnes of carbon dioxide per year. Tax will be payable on 40% of this, which comes to R885 000 per year.

Will there be any relief measures for the transport industry? The carbon tax is designed to penalise or reward businesses for their emissions or for reducing their carbon emissions. In some industries, relief measures are available and in others they are not.

carbon emission contributing factor, cannot be substituted or replaced and should therefore be treated in the same way as process emissions.

If a transport company is delivering goods on behalf of a customer, who is responsible for the emissions? This will depend very much on the accounting standard that will be used to calculate the direct, Scope 1, emissions of the transport company. The operational boundaries of the transport company must be set in terms of the standard that is used. The Greenhouse Gas (GHG) Protocol, for example, allows companies to set their operation boundaries using the equity, financial control or operational control principles.

COMMERCIAL VEHICLES The quantification of the carbon tax liability will then depend on whether or not the consumption of diesel is counted inside or outside of the operational boundaries – and it can be either. The Carbon Tax Policy Paper is unfortunately silent about the accounting standards that will be used.

Will companies transporting goods outside South Africa, into Africa, pay carbon tax?

No. There is no African country currently imposing carbon tax.

This means that once a truck crosses the South African border into Zimbabwe, no tax will be payable.

The plan seems to be a tax on fuel inputs based on various emissions factors. How

difficult is this going to be to calculate this for each sector? Is it likely to lead to disputes over the emissions factor levels? The policy paper states that emission factors will be set by the Department of Environmental Affairs. As part of the ongoing Greenhouse Gas inventory of South Africa, the Department of Environmental Affairs is addressing this issue.

What about the worries that carbon tax will be unpopular in South Africa? More tax when there is so much red tape in business, and costs like electricity and fuel? Will companies feel their budgets are being stretched even further? If the carbon tax is used to increase the revenue collected by the state, then the worries are well-founded.

“The Carbon Tax Policy Paper is currently under discussion, and Promethium Carbon submitted its proposals for the government to consider when drafting the carbon tax legislation.”

Robbie Louw, director, Promethium Carbon

National Treasury should aim at having the carbon tax as revenue-neutral as possible.

The carbon tax will, however, have some distributional effects and these need to be managed properly through relief measures provided in the Carbon Tax Policy Paper. Some adjustments of the relief measures are required to achieve this.

The Carbon Tax Policy Paper is currently under discussion, and Promethium Carbon submitted its proposals for the government to consider when drafting the carbon tax legislation. These are available on the Promethium Carbon website. Promethium Carbon has introduced a carbon tax tool, available for free by going to www.carbontax.co.za. It takes into account the current tax legislation and will incorporate changes as they occur.

TWA | Sept/Oct 2013

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SCANIA

40 years in East Africa The presence of Scania in Tanzania started in the 1970s. MD Anders Friberg tells Simon Foulds how the company has grown the brand in East Africa.

The head office is situated in Dar es Salaam, with dealerships situated in Arusha, Mwanza, Mbeya and Tanga; there are plans for future expansion into other regions

12

T

WO HUNDRED TIPPER trucks were delivered during the 1970s by Scania CV AB to the Chinese authorities for the construction of the Tanzania/ Zambia railway line (TAZARA), and a further 100 trucks to the Tanzania Cotton Authority. Several buses were delivered to the Road Transport System and Tanzania Railways Authority after the decentralisation of the East African Railways and Harbours Corporation and East Africa Community.

Scania established and registered a branch in Tanzania in 1973 for the purpose of servicing and repairing vehicles that had already been delivered into the county and embarked on importation and stockholding of Scania heavy-duty trucks, buses and spare parts. Within a few years, Scania established

TWA | Sep/Oct Jul/Aug 2013 2013

its reputation through strength and reliability, generating an increase in demand. Truck sales increased and it became necessary for Scania to establish sales and services outlets around the country. To date, Scania has sold more than 5 000 vehicles in Tanzania.

Scania has worked very closely with government organisations to promote the transport sector within the country. To minimise its operation costs and reduce the expenditure of foreign currency due to importation of complete assembled units, Scania and the government of Tanzania signed a joint venture agreement to build an assembly plant in Kibaha, approximately 40 km outside the city of Dar es Salaam. In 1982, Tanzania Automobile Manufacturing Company began operations with a capacity to assemble more than 2 400 truck and bus chassis per year.

In the mid-1990s, Scania ceased operations and handed over the assembly plant to the Tanzanian government. A reduction in subsidies for vehicle assembly within the country made the venture less viable and Scania began to import ready assembled units.

Today, Scania Tanzania has an extensive network of services supporting the marque. The head office is situated in Dar es Salaam, with dealerships situated in Arusha, Mwanza, Mbeya and Tanga. ď ľ

Working on many levels.

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ABOVE Scania Tanzania has an extensive network of services ABOVE RIGHT The company also supplies buses to the region

Competence (after sales) The company tries to employ the same business model that is used across the world, thus enabling it to utilise tried and tested methods for all practices. Its technical training centre in Tanzania is familiar to a technical trainer from Europe or South Africa albeit scaled down to suit its requirements.

Scania has a technical trainer that can speak both English and Swahili, ensuring that not one person misses the opportunity to learn the skills required for them to excel both personally and professionally. This, of course, reflects directly on the service levels Scania can can pass on to its customers and makes the company somewhat unique among its competitors in the market in Tanzania.

All non-technical training, ranging from vehicle sales to management training, is done in South Africa.

Its technical training centre in Tanzania is familiar to a technical trainer from Europe or South Africa, albeit scaled down to suit its requirements

Keeping the vehicle on the road – maximising uptime Scania roadside assistance is available 24 hours a day, seven days a week, and the parts warehouse has a comprehensive stock of Scania parts to provide optimum parts

14

TWA | Sep/Oct Jul/Aug 2013 2013

availability. These are sold and distributed throughout Tanzania via our network of branches. The company has earned an indisputable and excellent reputation in the Tanzanian market and is very proud of the service it provides to its customer, ensuring that Scania can continue to provide the best-suited and most reliable products for the East African market.

When travelling the roads across the country, it is possible to see models of Scania dating from the 1970s still working and this is a true testament to the brand’s reliability and build quality even when working in harsh environments and conditions.

Driver training and the Tanzania driver competition Scania is continuously coming up with new initiatives to promote road safety through driver training and vehicle awareness. Driver competitions also help to bring an element of fun while representing Scania in a very positive light.

In 2011, Scania Tanzania held the ‘Tanzanian Driver of the Year’ competition for the first time, with the aim of highlighting the driver’s contribution to society and trying to encourage drivers into the profession. During the launch, Scania took ownership of the name ‘Tanzanian Driver of the Year’, which adds more brand awareness, thus further enhancing Scania Tanzania’s image.

The future Thanks to a long association with the people of Tanzania, Scania hopes to continue to be a market leader in this country for many years to come. This will include expansion without a doubt, but only where it is needed. Africa is a continent where businesses can easily fail or lose their standing if they over expose themselves and invest in unnecessary or under considered projects. This would directly affect the company’s customers and defy its entire strategy. Scania have good relationships with some of the country’s leading hauliers and coach operators and by catering for all our customers it aims to remain ‘king of the road’ in Tanzania.

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OPERATOR

RTMS in the timber industry How smart are truck operators for using smart trucks? Very smart, says Brian Hunt, MD of Timber Logistics Services, who explains to Simon Foulds why the company implemented the smart technology.

T

IMBER LOGISTICS SERVICES provides transport and log handling services to the forestry industry, operating a fleet of 35 timber trucks (6 x 4 rigid trucks pulling either 4-axle trailers with an overall length of 22 m or 5-axle trailers with an overall length of 25.8 m). “We also operate a fleet of 20 log handlers of varying size and capacity. Started some 20 years ago, the company commenced transport operations in 2001. In an average year, we transport about one million tonnes of logs, with the fleet covering about 7 500 000 km per annum. Monthly, we complete in excess of two thousand trips,” says Hunt.

Industry

4.1%

4.2%

3.9%

4.5%

3.9%

4.4%

3.4%

Industry excl TLS

4.7%

4.8%

4.4%

5.3%

4.6%

5.2%

3.9%

Sappi

3.0%

3.2%

3.1%

3.3%

2.8%

2.8%

2.9%

Sappi excl TLS

4.1%

4.2%

3.8%

4.9%

4.4%

3.9%

3.9%

“Like most hauliers, we traditionally adopted a policy of viewing compliance as a necessary evil in the transport industry. We engaged the services of consultants to ensure that compliance kept us legal without impacting on our day-to-day operations – there was certainly no integration of compliance-related factors into management or day-to-day operations. Pressure from customers and authorities led us to the decision to apply for RTMS accreditation.”

He says in 2008 the company was registered as an accredited transporter and also faced its first integrated NOSA audit, adding that these events proved to be a painful reality check for the company as it soon became apparent that treating compliance as an add-on and not as an integral part of its operation would not only lead to non-compliance but also fail to add any value to the business.

Hunt adds that a review of the company’s policies, procedures and systems soon showed that it had most pieces of the puzzle but that they had not been put together to give the complete and cohesive picture of the business. “Over the months that followed, we reassembled the jigsaw puzzle, found the missing pieces and then used the resulting picture to give us the overview that Jul 13 enabled us to move forward to integrate compli0 ance into the day-to-day management and operation of our company.”

0 RTMS provided Timber Logistics Services with a road map that could be used to channel energy in directions that resulted in improved operations, cost-effective savings and a general improvement 0 in the management of the company. Key focus 0 areas included: • improved payload management • improved safety and reduction in number and 0.0% severity of accidents 0.0% • reduced operating costs 0.0% • improved uptime and increased revenue.

0.0%

TLS

0.7%

0.9%

1.1%

0.7%

0.5%

0.3%

0.4%

0.0%

TOTAL LOADS Average

Jan 13

Feb 13

Mar 13

Apr 13

May 13

Jun 13

Industry

12 752

12 762

12 078

12275

11 719

13 867

13 813

Industry excl TLS

10 761

10 721

10 328

10 131

9 778

11 805

11 803

Sappi

6 211

6 702

6 712

5 498

4 777

6 550

7 027

Sappi excl TLS

4 220

4 661

4 962

3 354

2 836

4 488

5 017

TLS

1 991

2 041

1 750

2 144

1 941

2 062

2 010

Industry

518

536

475

553

457

615

474

Industry excl TLS

505

517

456

537

447

608

465

Sappi

188

216

209

182

135

182

204

Sappi excl TLS

175

197

190

166

125

175

195

TLS

13

19

19

16

10

7

9

TABLE 1

OVERLOADS

% OVERLOADS

Payloads

TLS % OF TOTALS

16

Loads

15.6%

16.0%

14.5%

17.5%

16.6%

14.9%

14.6%

0.0%

Overloads

2.6%

3.5%

4.0%

2.9%

2.2%

1.1%

1.9%

0.0%

TWA | Sep/Oct Jul/Aug 2013 2013

An analysis of the spread of the company’s payloads clearly showed a range of 12 tonnes between

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lowest and highest payloads. Although all trucks were fitted with on-board weighing, insufficient maintenance and inadequate driver training negated the positives available from the system.

These issues were addressed, resulting in a 50% reduction in payload spread between highest and lowest, a 7% increase in average payloads and a reduction in overloads from almost 8% to less than 0.5% (see Table 1 and Graph 1).

“We have achieved five-star NOSA ratings over the last four audits.”

Fleet size

The company operates a fleet of 30 timber rigs comprising: • 15 x 26 m smart truck timber combinations • 12 x 22 m timber rigs • 1 x 6 x 6 rigid and tag trailer Brian Hunt, MD of Timber • 1 x truck tractor with timber tri-axle trailer Logistics Services Hunt says the use of MAN 33.480 rigid trucks has proved to be extremely cost effective both in terms of fuel efficiency and maintenance cost. Compared to other makes that the company has previously used, the MANs have shown improved fuel efficiency of at least 10%, which, with the ever-increasing cost of fuel, is becomRTMS ing increasingly important.

RTMS is an industry-led, vol“Only AFRIT trailers have been used since untary self-regulation scheme the commencement of operations. They have that encourages consignees, consignors and transport proved to be ideal for our application and also, operators engaged in the equally important, extremely long lasting.” road logistics value chain to implement a vehicle management system that preserves road infrastructure, improves road safety and increases the productivity of the logistics value chain.

Percentage overloads 2013

Safety and accidents

Hunt states that any haulier is only too aware of the impact of accidents on its fleet, so the company has integrated safety programmes into its operations, with startling results.

“In 2008, accidents were recorded at 6.1 per 1 000 000 km, but by focusing on the causes we have been able to reduce this to 2.6.

“It was noted in 2008 that one third of accidents were attributable to driver fatigue, with a further one third caused by third parties. Obviously, these would be the focus of our attention. We found that the major causes of driver fatigue were extended shift hours and incorrect nourishment. The

6%

5%

first proved relatively easy to remedy, but the second cause proved something of a challenge. We eventually found that the introduction of a subsidised canteen providing balanced nutritional meals contributed significantly to fatigue alleviation.”

Hunt explains that accidents caused by third parties are now the single largest contributor to the company’s accident statistics, rising from 35 to 65% of all accidents. He adds that defensive driving training is now an important module in Timber Logistics Services’ training programme, which has helped curb this to some extent. Accidents caused by third parties have dropped from 2.1 per 1 000 000 km to 1.7.

“Apart from reduced downtime, substantial savings in the cost of accidents were achieved. In 2008, our cost of accidents was R0.51/km. This has been reduced to R0.21 in the current year, which, adjusted for inflation, reflects a savings of over 60%,” says Hunt.

“As a consequence of the increased focus on safety and integration of safety into operations, we have achieved fivestar NOSA ratings over the last four audits. We recorded over two million lost time injury-free hours since our last disabling injury, which occurred in May 2009.”

Driver training & monitoring • drivers must pass a stringent medical examination • training modules have been developed to focus on the following key areas: - defensive driving - health and nutrition - fatigue - confined space operations - economical driving - payload management - basic daily truck and trailer maintenance • driver performance is analysed weekly using the Mix Telematics system, and corrective action taken as necessary.

Maintenance “OEMs are tasked with all truck maintenance and operate from our premises for this purpose. The nature of our operations has led us to the view that, although most manufacturers are now extending service intervals, the service intervals on our fleet has been retained at 30 000 km.”

Trailer maintenance is handled in-house, with trailers being serviced when trucks are brought in. All trailers are fully reconditioned every two years.

4%

Conclusion 3%

2%

1%

0% Average

Jan-13 Industry

18

Feb-13

Mar-13

Industry excl TLS

TWA | Sep/Oct Jul/Aug 2013 2013

Apr-13 Sappi

May-13 Sappi excl TLS

Jun-13 TLS

Jul-13

“RTMS on its own is not the solution to a successful business but there is no doubt that it has helped us to focus on core issues and to operate an integrated structure. All of us have been faced with challenges of compliance and compliance reporting in terms of safety, employment equity, black economic empowerment and other statutory requirements and there is no doubt in my mind that the RTMS programme has provided us with many of the tools and much of the information now required,” says Hunt.

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JOHANNESBURG TRUCK & BUS SHOW

Commercial vehicle sector in the spotlight The show takes place from 16 to 27 October and will be co-located with the Johannesburg International Motor Show. It features product updates and new product launches in the commercial sector, including trucks, trailers, buses, bodybuilders and utility vehicle specialists.

O

CTOBER IS TRADITIONALLY Transport Month in South Africa and all facets of road transport will be celebrated at this 12-day gathering of the industry’s finest.

Visitors to the Johannesburg Truck and Bus Show can expect to see the latest technology and developments in the commercial sector, with an extensive media launch programme in place over the two media preview days, on 16 and 17 October.

A new addition to the programme of events is the recently announced Truck and Bus Industry Conference sanctioned

EXHIBITORS • Afrit South Africa • Benetrax

• Irizar Southern Africa

• Cummins South Africa

• Isuzu Truck South Africa

• DAF Trucks

• Iveco South Africa

• Mercedes-Benz South Africa

• FAW Vehicle Manufacturers SA

• JMG & Sons

• Mitsubishi FUSO

• Jost South Africa

• Powerstar

• Kia Motors South Africa

• SA Truck Bodies

• Freightliner • Henred Fruehauf

20

• Hino South Africa

• MAN Truck and Bus (SA)

• Hyundai Automotive South Africa

• Marcopolo South Africa

TWA | Sep/Oct Jul/Aug 2013 2013

• MCV South Africa De Haans Body Works

• Scania South Africa • Serco Industries • TATA Motors • TFM Holdings

• VDL Bus & Coach South Africa • Volkswagen Commercial Vehicles • Western Star

by the NAAMSA (National Association of Automobile Manufacturers of South Africa) Heavy Commercial Vehicle Division and Bus Forum, with an impressive line-up of topics and speakers. Topics that attendees will debate include: • South Africa’s truck & bus industry: Performance review & medium term prospects • Heavy commercial vehicle fuel standards & specifications • Sub-Saharan Africa cross-border transport challenges • Transnet/Portnet Logistics: Integration of transport modes in sub-Saharan Africa • Challenges confronting the South African bus transport industry • South Africa’s BRICS membership: Implications for the South African truck & bus industry • Managing the influence of strategic operational cost variables: e-tolls, fuel standards, Portnet and Transnet operations.

The show opens to the public and industry visitors from 18 to 27 October 2013.

A visit to the Johannesburg Truck and Bus Show will provide commercial vehicle sector fleet owners and operators a one-stop shop to view the latest vehicle models, trailers, technology and developments.

Diarise 18-27 October 2013 JHB EXPO CENTRE, NASREC

www.jhbmotorshow.co.za In association with

Endorsed by:

Accredited by:

Show Hours: 09h00 – 18h00 Costs: Adults R100*, Children 6-12yrs R20, Children 13-16yrs R50 *Right of Admission Reserved MSS JMS 001

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LUBRICANTS

Fuel saving The correct fuel and lubricants are essential to ensure trucks operate efficiently and operators save on their overall fuel bill. Simon Foulds finds out about our fuels and whether fuel additives actually improve efficiency.

Total trucks

T

HE FUELS AND lubricants’ technical manager at Total SA, Thomas Surmon, says: “Currently, the national diesel grade (500 ppm sulphur) is available at all service stations and complies with SANS 342: 2006. This is the equivalent to the Euro 2 emission enabling fuels. Most petroleum companies market a 50 ppm sulphur-containing diesel meeting the requirements of Euro 4 emission enabling fuels. Currently, the Department of Energy is reviewing our national fuel specifications. The new specifications will be in line with Euro 5 enabling fuels.”

Riaan Henn, fuels technology manager at Engen, states: “Engen Dynamic Diesel is the next generation of the current Dynamic range, offering dramatic restoration of power for dirty engines and keeping new engines clean. Engen Primax Unleaded has the same detergency benefits, as well as other advances that address enhanced performance and economy. The technological advances ensure that motorists and commercial customers no longer have to choose between performance and economy.”

Raymond Abraham, commercial technical manager of Shell South Africa, adds: “At Shell, we have introduced a fuel economy diesel called Diesel Extra that helps customers to save up Riaan Henn, fuels to 3% on fuel consumption.

Engine manufacturers tell us technology manager, Engen

“Engen Primax Unleaded has the same detergency benefits, as well as other advances that address enhanced performance and economy.”

22

TWA | Sep/Oct Jul/Aug 2013 2013

that when fuel burns inside the engine, it leaves behind carbon deposits that alter the spray pattern of the injectors. The diesel injector has tiny holes through which fuel is sprayed into the engine accurately at the exact quantity and time to ensure the engine performs optimally. If these injector nozzles (tiny holes) become blocked, they alter the overall performance of the engine causing an increase in fuel consumption and emissions over time. Shell Diesel Extra is designed with a powerful detergent chemistry that removes these problem deposits to ensure that the engine is free from these power robbing deposits. So by using Shell Diesel Extra, transport operators can save up to 3% on the fuel bill.”

Additives When asked about additives in the market place claiming to improve fuel efficiency, the three men are adamant these should be avoided.

According to Henn, Engen Dynamic Diesel already contains an additive pack and should aftermarket additives be used it could impact the guarantees offered on the products.

“The multifunctional detergent additive package in Engen Dynamic Diesel contains a unique combination of deposit control chemistries (consisting of a detergent, anti-foam component, corrosion inhibitor and demulsifier), which begins to restore lost power as soon as fuel containing it is introduced to a diesel engine. It does so by counteracting the problems of injector fouling in diesel engines (injector tips are precision instruments – excessive dirt will impact the proper spray pattern and combustion, waste fuel,

COMMERCIAL VEHICLES reduce power and fuel economy). Engen Dynamic Diesel’s effects also apply throughout the fuel distribution system (beyond injector nozzles, also the fuel filter, fuel pipes, fuel pump and fuel tank),” Henn continues.

Abraham states that engine manufacturers do not recommend the use of aftermarket additives in the fuel.

Surmon says: “Be very careful of using aftermarket additives. Many of these additives are not manufacturer-approved and can be extremely harmful to the sensitive equipment fitted to modern engines. The additives are normally high aromatic chemicals that can attack seals on fuel systems.”

Next generation fuels Truck manufacturers complain that they are unable to offer the latest fuel-efficient vehicles onto the marketplace because the country cannot provide cleaner fuels. The same goes for the rest of the continent. However, the fuel companies are in the process of addressing this issue.

Surman states: “Most petroleum companies are in the process of upgrading the various refineries to meet the challenge of the new clean fuels specification set out by the Department of Energy. Most of the African countries are in the process of changing to the new fuel specifications, especially the neighbouring countries that get their fuel supplied from South African sources.”

Henn adds: “Currently, 50 mg/kg diesel is available in South Africa at selected Engen sites. Diesel fuel quality linked to Euro 5/6 emission levels is 10 mg/kg sulphur, but this will

Shell’s fuel-saving tips According to Raymond Abraham, Shell has compiled a number of fuel-saving tips for the driver, which he believes can reduce fuel consumption by up to 30%.

• Keep a constant speed of around 85 km/h on highways and use speed control. At 90 km/h, a 2 km/h increase in vehicle speed results in a 2% increase in fuel consumption.

• Avoid driving in a low gear unless it is necessary. Change down for gradients and climb smoothly, making the best use of your vehicle’s momentum.

• Keep idling to a minimum when waiting to unload goods. An hour of idling can result in a 1% increase in fuel consumption.

• Don’t brake unnecessarily. Use the engine brake first where possible.

• Avoid heavy traffic as it may increase fuel consumption by 2 to 10%.

• Plan your journey by choosing alternative routes where the road surfaces are good.

• Use air conditioning and heating only when necessary as these increase fuel consumption.

• Avoid carrying unnecessary weight and ensure the truck’s curtains are fully closed when carrying open loads.

• Regularly check tyre pressures and fill tyres with nitrogen. Every 10 psi of underinflation increases fuel consumption by 1%.

• Choose Shell diesel fuels with fuel economy formula (saving up to 3% fuel consumption) and a low viscosity, fully synthetic Shell driveline lubricant such as Shell Rimula R6 LM (saving up to 5% fuel).

24

TWA | Sep/Oct Jul/Aug 2013 2013

depend on the vehicle manufacturer’s configuration. The Petroleum Products Amendment Act (Regulation Gazette No 35410 – 1 June 2012) says that by 1 July 2017, we should have 10 mg/kg diesel nationally. Truck suppliers introducing units with Euro 5/6 emission standards would have checked that equipment supplied locally is able to operate at the local fuel quality level and should be contacted if unsure.

Generally, in the rest of Africa, specifications (depending on the area) are behind Europe and it will take time for fuel quality, especially sulphur, to reach current European low levels.

However, there are exceptions, such as Namibia, which has recently introduced 50 mg/kg diesel as an additional grade.”

Abraham says: “South Africa will have Euro 5 compatible fuels by 2017 when all the refineries will need to comply with the government regulations for 10 ppm sulphur fuels. The current specs in Africa are typically between 500 ppm and 5 000 ppm sulphur, which typically cater for up to Euro 2 type engines.”

Achieving fuel savings Next to the purchase of the vehicle, a transport operator’s fuel cost is the biggest expense. How can operators save on their fuel bills?

According to Surman there are many factors that can influence the fuel economy of an on-road, heavy-duty diesel truck. These include selecting a quality fuel and using the correct grade of fuel that has all the required detergency to maintain the sensitive fuel injection componentry. “Another key factor is vehicle technology. In general, fuel economy can be improved by using electronically controlled engines instead of old mechanical engines, direct drive transmissions instead of overdrive transmissions, tyres designed with tread and materials that provide less rolling resistance, and using the correct vehicle for the correct application.”

He continues saying that the better a truck’s aerodynamics, the better the fuel economy that can be achieved by taking a few simple steps: reducing trailer gaps through cab extenders, using cab roof devices such as deflectors or full roof fairing, using air dam front bumpers or tractor side skirts, using vans that have smooth sides rather than exterior posts and removing any components that interfere with the air stream and cause drag, for example.

“Another key factor is maintenance practices. Poor maintenance can have a significant negative effect on fuel economy.

Fuel economy decreases if air-conditioning systems are poorly maintained; debris should be removed from the airside of cooling system cores to minimise blocked airflow.

When services intervals are not adhered to, filters block and the engine will not perform as it was designed to, and always ensure the tyres are inflated to the correct pressure.

“For optimal fuel economy, it is best to minimise stopping and maximise steady-state driving. Flat highway routes offer more potential for steady-state driving. Mountainous interstate routes require more fuel because drivers must accelerate uphill and reduce speed downhill,” explains Surman.

He adds that driver behaviour, ranging from idling, speeding, excessive use of brakes, unnecessary acceleration, and poor shifting techniques, is one of the biggest factors affecting fuel economy. Using cruise control can reduce fuel economy inefficiencies caused by driver overcompensation when accelerating uphill.

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TRAILERS

Partnering with trailer experts Trailer manufacturers can assist customers in saving on fuel costs and also offer transport operators sage advice on how to get the ultimate optimisation out of ttheir heir ttrailers railers dduring uring tthe he llifespan ifespan of of the the product. product.

Fully loaded trailers

S

IMON O FOULDS O SS SPEAKS S to key industry players – Paramount Trailers, Trailerkings and SERCO – to find out how they assist clients in getting the best out of the products and to also find out how the trailers manufactured in South Africa compare globally.

Fuel savings

Clinton Holcroft, MD of SERCO

26

Clinton Holcroft, MD at SERCO says: “By improving the aerodynamics of the trailer, it is possible to reduce wind drag and hence fuel consumption. SERCO has partnered with Freight Wing to offer a unique trailer side skirt, which has been proven to save from 2.5 up to 7.5% fuel.”

Collin Mangena, CEO at Trailerkings adds: “The use of composite, high tensile steels and low weight running gear results in exponential fuel savings. Plus more streamlined bodies and aero packages further reduce drag and yield additional savings for clients.”

Paulo Ribeiro, financial director at Paramount Trailers states: “Many of the current innovations in trailer manufacturing to achieve fuel savings can be found in trailers with bodies, i.e. tautliners. A lot of research is being spent on enhancing the aerodynamics of the body to reduce drag and thereby increasing fuel savings. Other aerodynamic aspects include trailer skirting and under tray systems. Tyre manufacturers are introducing new tyres to the market that have lower rolling resistance and reduced tyre wear-and-tear.”

TWA | Sep/Oct Jul/Aug 2013 2013

Key to building long-lasting partnerships with clients is offering them advice on how to ensure the products last while fully loaded.

“We advise clients to first of all drive slower and ensure driver training is handled by professionals in the industry, as well as to utilise modern air suspension,” says Mangena.

Ribeiro adds that the most important aspect is to engage with the customer so as to understand the environment in which the trailer will be operating and the application thereof, and therefore design and manufacture a trailer that can operate sustainably in the indicated operating environment, i.e. build a trailer which is fit for purpose. He explains that the customer and drivers need to be educated on how to perform ongoing self-maintenance and safety checks on the trailers to reduce wear-and-tear.

Holcroft says: “Creating a partnership with the innovative suppliers can lead to practical solutions, which can help reduce costs in the long run. Transporters need to be willing to drive green accessories by fitting these and measuring their fuel consumption accurately to be able to measure the costs savings. The biggest obstacle to buying the available accessories are that transporters are not always able to measure the tangible costs savings and hence avoid these new concepts.

Good decisions should be made on a return on investment basis and hence it is important to measure costs accurately.”

World class South African trailers are world class, and when it comes to designing robust trailers for what at times can be viewed as harsh driving conditions, South Africa can stand proud.

“We may not manufacture the most innovative or design world-class trailers, but we engage with the customer to manufacture a trailer that will meet and exceed their expectations. Yes, we have many South African customers who trade across the border as well as customers based in the SADC region. Due to our relationships with our customers and constant interaction over the years, we have developed and continue to develop trailers that are sufficiently robust to operate cross border. Many of the global players may not have to deal with similar road infrastructure that we deal with in South Africa and the SADC region,” says Ribeiro.

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NEW VOLVO FH

Rigorously tested The new Volvo FH has been subjected to a range of gruelling quality tests. It has been cooled and heated. It has been shaken and thrown around. It has been driven for mile after mile in extreme environments. It has taken the punishment.

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EVELOPING AN ENTIRELY new truck generation – with all-new components and technical solutions – imposed huge demands on the quality tests. The focal point for many of the tests that were conducted on the new Volvo FH is customer needs.

Volvo Group Trucks AME: Southern Africa is launching the Euro 3 FH model at the Johannesburg Motor Show in October.

In this article we look at how the Volvo FH was tested in Europe to ensure it would meet customer requirements. In the next issue of Transport World Africa, we will find out how Volvo Group Trucks AME: Southern Africa conducted its test to ensure the truck meets Africa’s conditions.

“These tests are customer operation related. In other words, the test drivers use these vehicles in exactly the same way as they use their own trucks.”

Hans Johanzon, test engineer

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European tests Initially, individual components such as the chassis, cab and electrical system were tested separately. Once they were approved, it was time for the complete truck to be tested.

This was done at both Volvo Trucks’ own laboratories in Sweden and the company’s proving grounds as well as in regular commercial traffic with field test haulier.

One of the many proving grounds that Volvo Trucks uses to test trucks is located in Kiruna in northern Sweden. During the winter of 2011/12, the lowest temperature recorded was minus 44°C and this ice-cold climate was perfect for testing how the new Volvo FH would behave in such extreme conditions.

Hans Johanzon was one of the test engineers and he made sure that all the drivers knew what was expected of them. “These tests are customer operation related. In other words, the test drivers use these vehicles in exactly the same way as they use their own trucks. They drive them, sometimes carry passengers, sleep in them and check them to make sure that they start in the morning, even after a freezing cold night,” he says.

Test period During the test period, every truck was driven for at least 20 000 km in the freezing cold, where one of the greatest problems was that all the components in the truck – from the hardest material to the electrical system – became brittle.

The challenge was to develop components that withstand

COMMERCIAL VEHICLES

these ice-cold conditions without failing. Johanzon explains: “Making sure that the truck is able to withstand not only an extremely cold climate but also rapid changes in temperature is another quality challenge. So we normally drive from northern Scandinavia, where it can be 40 degrees below zero, to the Norwegian coast, where the climate is milder and humid and the temperature is often above zero. Twenty minutes later, we drive up into the mountains again, where the temperature drops once more.”

Tests of a different kind were conducted at the proving ground in Hällered near Gothenburg in Sweden. A large number of test drivers worked intensively to perform a series of very demanding accelerated endurance tests. This test regime corresponds to 10 years and 1 250 000 km out on the road. It includes demanding road conditions such as driving on hills with gradients between 10 and 20% and driving over a range of severe obstacles, such as potholes, washboards, Belgian pave, dips and water channels. The test procedures include other elements such as opening and closing the door over and over again.

One of the most rigorous parts of the accelerated endurance tests is driving the truck on durability track. Here, the truck is subjected to the same kind of obstacles it encounters in standard traffic situations, but in a much shorter time period. By driving round and round the track, which poses a wide range of challenging obstacles, the test is significantly accelerated.

An even more accelerated test was conducted at the Volvo Trucks’ shake rig laboratory, where the truck is shaken around the clock for between six and eight weeks. For a customer, this corresponds to driving more than a million kilometres.

During the test period, every truck was driven for at least 20 000 km in the freezing cold

Feedback All feedback from the verification test is followed up to understand the cause of any failure and to find durable technical solutions.

The new solutions are then subjected to a new test and the procedure continues in this way until the specification for the component in question meets the requirements specified for it.

In order to also validate the product from the end-customer perspective Volvo Trucks also performed field tests.

Johanzon concludes: “This requires testing the new Volvo FH Series in commercial traffic. We have had almost 50 trucks placed with customers in Europe, Australia and Brazil. In this way, we are able to cover different operating conditions, types of transport, climates and driver behaviour.”

When the quality of a truck is tested, extreme situations are not the only important aspect.

Volvo Trucks has a huge number of customers who operate in more “normal” driving conditions so the new truck has also been designed to suit them.

TWA | Sept/Oct 2013

29

SUPPLY CHAIN LOGISTICS

INFRASTRUCTURE

What is the price of bad roads?

Reduced profit means less tax

Prof Wynand Steyn of the University of Pretoria who, together with Wilna Bean of the CSIR, has been doing research on the impact of road quality, says: “We know that bad riding quality on a road has potentially negative effects on logistics, operations, and the cost of business. It causes structural damage to vehicles, which results in increased vehicle maintenance and repair costs, and ultimately higher logistic costs to the company. But this has far-reaching implications. If the road is in a bad condition, it’s going to cost them money. If the company’s profit drops, the tax drops in tandem – meaning government loses revenue – and that in turn means there’s less in the fiscus to pay for upkeep of the roads.”

Steyn and Bean have been doing something that they believe has only been done in California. They are trying to quantify an overarching cost of poor road quality that pulls together not just the damage to tyres and engines, but also the damage or loss to the actual freight carried, as well as other losses such as lost time due to slower trips, and damage like additional carbon emissions. They are hoping to arrive at an assessment that, though it is unlikely to ever be perfect, will give an idea of the total cost of what pavement engineers (those working on road surfaces) call ‘poor riding quality’. This can then be weighed in the balance against the cost of repairing or upgrading roads.

When your truck is trying to avoid potholes or bouncing over corrugated dirt roads, have you ever wondered how much these roads cost you as a user who must drive their trucks down these roads on a regular basis?

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IVISON MASHOKO of the Council for Scientific and Industrial Research’s (CSIR) Built Environment says: “There is a positive correlation between the provincial logistics capability (PLC) of a province and the provincial economy. And of all the criteria you use to measure PLC, infrastructure – road, rail, ports, pipelines and information technology – far outweighs anything else, followed by labour (its costs and skills).”

Some of the best roads in South Africa are in the three provinces that contribute the most to the country’s GDP, i.e.

Gauteng, KwaZulu-Natal and the Western Cape.

Mashoko’s calculations spell out a dismal picture for provinces like the Northern Cape and Limpopo. While Mpumalanga comes in fourth after the big three, the bottom three are Eastern Cape and Limpopo, with Northern Cape stone last (Free State and North West tie for a middle spot).

And their poor infrastructure plays an important role in that ranking.

Livison Mashoko, CSIR) A great deal of our agriculture and mining for minerals takes place in provinces like the Northern Cape, Limpopo and Eastern Cape. This means a lot of hauliers take their trucks over less-than-delightful roads regularly to move produce and product from source to distribution or storage point. What costs do these poor roads exact from the freight businesses?

“There is a positive correlation between the provincial logistics capability of a province and the provincial economy.”

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TWA | Sep/Oct Jul/Aug 2013 2013

Extensive road network “There is, believe it or not, something called the international roughness index, which is used to measure the condition of roads. According to the scale, 1.5 or better on this index is good; 6 and higher mean a really terrible road, with the ideal being less than 2. For every jump of 1 point on this index, your fuel consumption jumps by 2%. Our national average on Sanral roads is 1.68, but several of our roads weigh in at over 2 – Eastern Cape, KwaZulu-Natal and Mpumalanga, for instance, with the Free State’s roads scoring a whopping 3.87,” explains Steyn According to Steyn, the effects of poor road conditions can be significant, even if you simply take into account the impact on fuel costs and vehicle maintenance. Analysis of the country’s 22 main road corridors (such as the route from Gauteng to Durban) and comparing national roads with provincial roads reveal that poor road conditions result in an additional 28 864 kilolitres of fuel consumption, an extra R28.5 million in tyre costs and an additional R359 million in vehicle repair and maintenance costs.

Add to that losses thanks to damaged freight and you lose 0.62 kg of wheat per tonne, which may seem small but adds up to over millions of tonnes, and it is beginning to look as though repairing and maintaining roads in the best condition possible will be good for farmers, hauliers and fiscus alike!”

Voith opens new training facility

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OITH SOUTH AFRICA has established its dedicated training facility as a Centre of Excellence covering the products in the company’s portfolio.

According to the company, the launch of the training facility is the answer to a growing need for skills in the engineering field.

The technical training officer at Voith, Ashan Ramchuran, says: “As a result of the high level of skills shortages throughout the industry, OEMs are constantly in challenging positions, which could be viewed as a threat to the brand. A strong emphasis is being placed on training and development in order to keep personnel abreast of technological advancements and skills improvements.

“The training that Voith offers is structured in the same manner as in Germany, whereby there is a theoretical as well as a practical module that is hands-on orientated, and offers customers an opportunity to work on current

equipment. Customers can even simulate actual live situations that they have experienced in the field.”

There are currently five maintenance courses available, covering the DIWA and Brake Retarder product ranges. All the courses are available either at the Centre of Excellence or can be held on-site at the customer’s premises with a tailor-made programme designed to suit their specific needs. In addition, there is a “Train the Trainer” course for OEMs to allow their product trainers to conduct on-the-job training for technicians. The fact that Voith is building facilities in key areas not only proves the localised commitment of Voith in these markets, but also demonstrates the sustainability and long-term orientation of the company.

The commercial vehicle range of products, along with Mining & Metals and Power, Oil & Gas divisions, will be developing courses with the view of empowering Voith’s customers with the skills and expertise required.

(From Left) John Lansdell, technical manager: Commercial Vehicles; Peter Wraight, divisional manager: Commercial Vehicles and Ashan Ramchuran, technical training officer

TWA | Sept/Oct 2013

Rely on Our Service.

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Our keys to ensure you maximum availability and lowest cost per kilometer: t Service exchange stock on hand to fit applicable OEM chassis t Spare parts and 24hr field service t Repair and overhaul facilities using genuine Voith parts

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Quick turn-around times and installation sign-off by Voith technicians Technical consultancy on reducing operating costs p/km Health checks and preventative overhauls Diagnostic and service training

Contact us for more information or to set up an appointment.

Tel: 011 418 4000 www.rsa.voithturbo.com

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SUPPLY CHAIN LOGISTICS

TRENDS

Transportation management outsourcing Global trends and best practices in what to outsource and what to ‘insource’ in the transportation management process have shown that it’s not a simple on/off choice.

Simon Foulds speaks to Rod Stout, director at Transnova, to find out more about the process.

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VER THE PAST two decades, the global trend towards the outsourcing of transportation management has grown significantly within the cargo owner community. This in turn has fuelled consolidation within the logistics service provider (LSP) network, resulting in the emergence of the ‘mega LSP’ whose organisation often dwarfs that of the client they are servicing.

South Africa has paralleled this global phenomenon.

Simultaneously, these LSPs have rapidly expanded the range of services that the client can outsource to them, resulting in an even greater loss of control over the transportation process for the cargo owner. But what activity should be outsourced and what should be kept in-house? While there is no definitive answer to this question, research is showing that outsourcing is not as simple as a ‘light switch’ – either on or off; all or nothing.

due to rising living costs, spiralling food and petrol prices, and above-inflation price increases on basic services such as electricity and water. To ensure business survival, companies now need to operate more effectively and efficiently than they have had to in pre-recessionary market environments. A new solution needs to be found.

The management teams of the mega LSPs are under increased pressure to perform as shareholders want to see positive growth in the form of new business wins. What this means is that to ‘keep the lights on’, 3PLs often have to drop rates and margins in order to secure new contracts knowing fully well that they are going to make little or no profit on the business, at least in the initial phase of the contract. This is a lose-lose situation for both 3PLs and cargo owners as it ultimately leads to a non-sustainable business relationship.

The contract maturity life cycle 3PLs under pressure A glance at the financial results announcements of the major players in the South African third-party logistics provider (3PL) industry shows a common trend: profitability under pressure due to difficult economic conditions. The CEOs of these 3PLs attribute their less-than-stellar results to factors such as increased global competition, stagnant domestic economic growth, labour unrest and geopolitical change.

The situation is not much better for manufacturers and retailers who are faced with declining consumer demand

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TWA | Sep/Oct Jul/Aug 2013 2013

An outsourced general freight transportation contract is typically of a multi-year duration and when negotiated on the basis of very low profit margins, it is doomed to fail. What normally transpires is that in the initial phase, the 3PL adds value and improves service levels mostly by taking care of the ‘low hanging fruit’ – the easy wins to improve efficiencies in the client’s logistics operation. The client is happy and the 3PL is off to a good start although often at low levels of profitability.

By the next phase, the honeymoon is over and as profits remain flat for the 3PL, service levels start slipping. Into the

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SUPPLY CHAIN LOGISTICS next phase, the 3PL typically dedicates fewer resources to the contract in order to overcome the pressure for profits. In this instance, customer service levels can deteriorate significantly and the whole cargo owner/service provider relationship frequently becomes adversarial.

In the final phase, the relationship between cargo owner and 3PL can break down completely to the extent that the 3PL resigns itself to losing the business when it goes out to tender again and therefore focuses primarily on maximising profitability before the contract expires.

Ultimately, this type of business engagement is not healthy and leads to a breakdown of trust between the client and its service provider. The cargo owner is What is the number one reason faced with spiralling costs and service for a failed 3PL partnership? degradation over the period of the conAccording to cargo owners tract whereas the 3PLs feel hard done • poor customer service (50%) and that there is nothing in it for them in • failed expectations (24%) • cost (10%) the long term. While this may be more • more competitive options (7%) the case for general freight contracts as • loss of control (6%) opposed to a dedicated fleet, similar • cultural dissimilarities (2%) • other (1%). parallels can exist.

According to 3PLs • failed expectations (50%) • poor customer service (16%) • cultural dissimilarities (10%) • more competitive options (9%) • other (7%) • cost (6%) • loss of control (2%).

The argument for outsourcing over insourcing

The downside of insourcing has been well documented before, mostly by companies promoting the benefits of Source: Inbound Logistics’ 3PL Perspectives outsourcing; however, these criticisms Report 2012 are still valid. For most manufacturers and retailers, retailers transport trans logistics is not a core competence and the argument for focusing on what you do best still holds strong. By outsourcing the transportation management process, cargo owners no longer need to worry about purchasing new vehicles or maintaining their fleet and those assets can be moved off the balance sheet. Likewise, you do not need to manage drivers and operational staff as that is the problem of the LSP. By outsourcing logistics, companies are also able to benefit by partnering with a provider that will make investments in technology on their behalf although more often than not that is used as a ‘lock-in’ strategy by the LSP as a means to retain the contract over a longer term.

Insourcing vs outsourcing

“What is critical of a successful outsource relationship is that the cargo owner has deep visibility across the entire supply chain.”

Rod Stout, director, Transnova

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TWA | Sep/Oct 2013 | Jul/Aug 2013

Whether choosing to insource or outsource the transportation management process, retaining strategic and in many cases management control is critical to a successful outcome. Depending on their level of supply chain maturity, some clients may choose to outsource more of the process than other companies while others may initially decide to outsource but then bring back some of the key functions in-house, such as the planning process. Often clients only focus on one aspect of their supply chain for outsourcing, such as the primary transportation, and view their primary and secondary transportation TWA

as almost disparate activities (frequently with different outsourcing philosophies and even different outsource partners). What is critical of a successful outsource relationship is that the cargo owner has deep visibility across the entire supply chain – firstly, as a means to understand and maintain customer service levels and, secondly, to ensure that cost is optimised for the cargo owner’s behalf (particularly through transparent rate visibility).

The solution? A collaborative transport community Fortunately, a new generation of transportation management technology is available that enables leading manufacturers and retailers to achieve the advantages of outsourcing without the unwanted loss of control.

A true software as a service (SaaS) multi-tenant transportation management solution enables all users (cargo owners, carriers, suppliers, consignees and other trading partners) to conduct business on the same software instance on the same platform. The transport data, from millions of loads and billions of rand in spend, flows through this single system and enables network-wide visibility, collaboration and business intelligence by providing a “single view of the truth” for cargo owners and suppliers, carriers, 3PLs and trading partners.

As a result of this uniformity, transportation network data – such as rates, carrier performance and transit times – provides comparable data sets to create market level indices.

SaaS transportation management systems (TMS) solutions help cargo owners improve performance by providing an industry frame of reference, beyond historical-only company data, allowing unparalleled visibility to industry network data.

SaaS transportation network members utilise quantitative benchmarking to identify what can be improved, why differences exist and how to improve performance. By accessing network data, users are able to make smarter decisions for continuous improvement.

A multi-tenant SaaS TMS platform provides unique functions that can only be delivered through the power of a collaborative network: supplier-inbound management, appointment scheduling, benchmarking and network-wide reporting, a private transportation marketplace to obtain capacity and lower costs, and total supply chain visibility. As the transportation network expands, so too does the opportunity for higher levels of success in customer service and collaboration.

Supply chain visibility, cost structure, flexibility and scalability, as well as business intelligence, are key benefits of true SaaS TMS platforms. A fundamental critical success factor when choosing a multi-tenant SaaS TMS platform is that the platform provider should be independent and not linked to any LSP. If the platform is provided by an outsource partner it can be counter-productive, driving the wrong behaviour and ultimately not providing the appropriate level of visibility for the client due to the inevitable conflict of interest.

Fundamentally, what this new generation of technology provides for the cargo owner is much-needed control over the transportation management process. In so doing, it enables the flexibility to effectively implement and manage the correct balance of outsourced and insourced activities by providing the unparalleled level of visibility necessary to support this approach.

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SUPPLY CHAIN LOGISTICS

WAREHOUSE

Value in moving goods

on time

Transport World Africa toured Value Logistics Tunney warehouse in Johannesburg and Simon Foulds walked away with the knowledge of how the company is able to move 80 000 parcels per day during peak periods.

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N TODAY’S VOLATILE market, companies’ successes are dependent on a robust distribution channel that is able to provide a framework to deliver their goods effectively.

The Value Group was born from Value Truck Rental, founded in 1981 by Group CEO Steven Gottschalk with one vehicle and listed on the JSE (Transport Sector) in 1998.

The company has grown from strength to strength, starting with the purchase of Freightpak, on the 1st March 1999, followed by the acquisition of Rent-a-Bakkie in late 2000.

During 2001, Fleetrent and Fridge Fleet were acquired and 4PL solutions have been offered since.

Positioning itself as a leader in its field through expanding its services from basic truck rental to fully outsourced supply chain solutions that include customised door-to-door offerings via road, air and sea, the company understands its customers’ requirements.

Warehouse The Tunney facility is approximately 100 000 SQM under roof catering for between 55 000 and 80 000 parcels moving through the warehouse daily. At this particular warehouse consumer electronics, FMCG, retail, furniture and general freight is accommodated. What makes this facility a unique operation is that it has been designed in such a way that

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TWA | Sep/Oct Jul/Aug 2013 2013

it allows for the integration of warehouse, cross dock and transport operations. This allows for the economies of scale to be achieved through optimal consolidation opportunities.

The facility is sustainable and allows for the growth of existing customers as well as for new client take-on, leveraging on flexibility and standardisation of infrastructure procedures and capacity for growth.

It was designed in order to save on electricity costs without compromising operations. This was achieved through the use of natural lighting by installing sky lights in the warehouse roof and it was also designed with a natural ventilation system that automatically ventilates the building without any electricity.

The design is based on the insight gained by CEO Steven Gottschalk, divisional director Jattie van Wyk and senior analyst Dirk Bruwer when visiting similar facilities operating in England, Germany, France, the Netherlands and Belgium.

Through the ideas generated by visiting these European facilities and working with designers Les Greening and Associates, the Tunney facility was designed and built into what is a world-class multi-principle warehouse.

Operating a multi-principle warehouse means that Value provides warehousing to several different principal customers all within the same premises. Being a third-party logistics provider, the company specialises in catering for the specific business requirements of multiple customers. Through leveraging from standardised logistics activities, best practises and infrastructure, the company is able to provide its customers with the most efficient service.

Another interesting aspect of the Tunney operation is it has been designed in such a way that it is easy to change the interior configuration of the warehouse to accommodate different stock or to utilise the warehouse to its maximum capacity.

Ensuring good management control of all goods moving thorough the warehouse is managed by the Warehouse

SUPPLY CHAIN LOGISTICS Management System and Distribution Management System, which are used as management tools throughout the facility to track stock and ensure inventory management best practises are carried out on a day to day basis. Standard operating procedures are formally documented to ensure that the procedures are followed and managed accordingly.

The warehouse can accommodate over 150 vehicles simultaneously. All vehicles are fitted with tracking systems and are monitored and tracked continuously through Value’s internal tracking department. Dedicated controllers monitor specific routes within a live system, which allows for the identification of any deviations from routes, speeding and emergencies.

Key to the successful growth of the company is ensuring all stock is delivered on time, within the time schedule, to the correct destination. Value achieves this by agreeing to lead times and KPIs with each client and the process is then managed through the Warehouse Management System and distribution management system ensuring that all stock is picked and dispatched on the right day and is delivered according to the lead time agreed upon with each client.

Master data is well maintained and mapped into the systems to ensure that all delivery points are continuously updated according to each client’s changing customer base.

The operating fleet at this facility is flexible and fleet configuration is changed daily subject to specific requirements and peak periods, ensuring a lean operation always able to

meet clients volumes.

Vehicles for the logistics division are pulled from the truck rental operation, which offers in excess of 4 800 vehicles, including forklifts.

Vehicles are used for local, cross-border, regional distribution centre deliveries and inbound collections from customers.

Ensuring its trucks do not return empty, therefore getting greater efficiency out of truck operations, vehicles returning from deliveries will collect stock from customers in the afternoon returning to Tunney with the stock to be cross docked.

Vehicles will also perform as many drops as possible per route and it is for this reason that some vehicles may return empty from time to time, however the distance from the last drop to the facility is generally negligible due to the efficient distribution planning of each route. Linear Programming models are used in order to optimise the routing of vehicles.

Key to the successful growth of the company is ensuring all stock is delivered on time

TWA | Sept/Oct 2013

37

SUPPLY CHAIN LOGISTICS

STRATEGY MANAGEMENT

From operational to strategic

Supply chain management is changing from strategically decoupled, price driven to being strategically coupled, value driven.

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HIS IS THE VIEW of Steven Melnyk PhD (a professor of operations and supply chain management at Michigan State University in the US) and Nick Little (assistant director of Executive Development Programmes at the Eli Broad Collage of Business at Michigan State University in the US). Simon Foulds met the two internationally recognised supply chain experts when they visited South Africa.

According to Melnyk and Little, supply chain management is changing from being strategically decoupled, price-driven to being strategically coupled, value driven.

While the two may look similar in terms of functions, investments and staffing, there is a world of difference in terms

A strategically coupled, valuedriven supply chain is far more complex as it is focused on the outcomes desired by its key customers rather than making cost the dominant outcome 38

TWA | Sep/Oct Jul/Aug 2013 2013

of performance and impact. The first type of supply chain can be described as output driven, with the focal outputs often very well defined and highly specific. This is the most common type.

In contrast, a strategically coupled, value-driven supply chain is far more complex as it is focused on the outcomes desired by its key customers rather than making cost the dominant outcome. In many cases, this type of supply chain allows firms to focus on the higher levels of performance.

It is dynamic because the value proposition continuously changes as a result of customer demands and expectations, corporate strategies, governmental legislation, competitive actions and technological advances. In contrast, strategically decoupled, price-driven supply chains are static in nature because the focus is always on cost, quality and delivery.

The challenge ahead is how to transform strategically decoupled, price-driven supply chains into strategically coupled, value-driven supply chains. The answer to this challenge lies not in the supply chain but in the firm’s business model. Simply put, supply chains become strategic when integrated into the firm’s business model.

Business model To develop and maintain a sustainable competitive advantage, the business model must be aligned with the desired outcomes, not specific outputs. That is, the outcomes desired by a key customer (and for which the key customer

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SUPPLY CHAIN LOGISTICS is willing to pay) must be aligned with the promise of the value proposition (the desired outcomes offered to its key customer), and the outcomes ultimately delivered by the firm, through its capabilities.

Corporate success, as measured by performance (the fourth element), is strongly dependent on this alignment and synchronisation. This means that if we understand the business model, we must also understand the desired outcomes and how they should be structured to deliver value – the overall purpose of any supply chain. A good way to think of this is to segment the company’s supply chain operations according

Managing with a supply chain perspective is not inherently strategic; supply chains are only strategic when they are integrated into the firm’s business models

Strategic response cycle In today’s turbulent environment, it is not enough for firms to merely develop and implement business models, they have to be able to respond quickly to changes, altering their business models rapidly when needed and to subsequently deploy these changes. It is this ability to respond rapidly to strategic changes that differentiates the successful firms from those less successful.

Key to this rapid response is the ability to manage the strategic response cycle, which consists of the following six elements: 1. Sensing – the ability of the firm to quickly identify systematic changes in the environment or new developments and to separate these factors from the other more random changes.

2. Assessing – the ability of the firm to quickly assess the developments flagged in the preceding step and to determine whether these developments are sufficiently important to merit a change in the business model.

3. Formulating/responding – if the development is sufficiently important, then we have to formulate a response.

4. Deploying – once the response has been developed, it must be deployed (implemented). This element concerns itself with how well the response is implemented.

5. Recalibrating – when a significant strategic change takes place and a response has been formulated and successfully deployed, then it is very likely that the prior goals and objectives are no longer relevant. Consequently, new goals and objectives must be developed and implemented.

6. Learning – whenever a change takes place, the firm must be prepared to assess past actions with the goal of determining what went wrong, what went right and what was missing. This information can be used to improve further response cycles.

Transforming tomorrow’s supply chain operations to be truly strategic

Nick Little (left), assistant director of Executive Development Programmes at the Eli Broad Collage of Business at Michigan State University in the US and Steven Melnyk PhD (a professor of operations and supply chain management at Michigan State University in the US)

40

to customer needs as capable of satisfaction through the business model(s).

Blended outcomes When supply chains focus on a single outcome, it becomes difficult to use the supply chain to create differentiation, a real source of competitive advantage. What is needed is a method of blending the outcomes so that they generate a desired outcome that is highly attractive to key customers, while also helping the firm differentiate itself in the marketplace.

The attraction of this approach is that it creates strategic richness, which helps firms competing in the same market for the same customers to differentiate themselves even if their desired outcome is the same. It provides a set of guidelines that can help direct decision-making, helping guide management in determining how to respond to “problem” situations.

Furthermore, this approach helps organisations segment their supply chains and realise that there is a lack of homogeneity and a need to manage and control the critical supply chains impacting current and future financial success.

TWA | Sep/Oct Jul/Aug 2013 2013

Managing with a supply chain perspective is not inherently strategic; supply chains are only strategic when they are integrated into the firm’s business models. Supply chains, after all, define capabilities. These capabilities have to be in sync with the needs of the key customer and the promise made toward the value proposition. Maintaining this alignment over time is not easy as there are pressures acting on the elements of the business model seeking to pull them apart. Yet, when management can maintain this alignment, it effectively makes the supply chain strategic. By focusing on the business model, we observe the emergence of a new competitive thrust. By emphasising the business model, we effectively change how firms compete in today’s turbulent environment.

In the 1990s, we focused on firms competing against firms.

The focus shifted to supply chain against supply chain. The second decade of the 21st century is seeing another shift – of business models competing against business models.

Those supply chains that are integrated into the business model and that contribute to the business model’s evolution over time are effectively strategic in nature – the goal of effective supply chain management.

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SUPPLY CHAIN LOGISTICS

Getting better results International supply chain pundit Kevin O’Marah has shared his knowledge with supply chain logistics stakeholders and the media in South Africa as part of the Imperial Logistics ‘Fast Forward’ skills development initiative.

O

’MARAH CONTENDS that the challenge is for companies to manage their service providers in a way that delivers optimal value for money for their customers and enables their businesses to grow and prosper in a competitive marketplace.

Service providers like consultants, technology firms, logistics specialists and contract manufacturers play a crucial role in how most companies’ extended supply chains operate today. But many firms struggle to manage these suppliers.

“Many large companies now have individuals or, in some cases, entire functions dedicated to improving the results they get from third-party providers. And it’s an area that has continued to grow despite – or perhaps because of – the

42

severe economic pressures in many sectors during the past five years,” O’Marah states.

He adds that a key finding is that those who use deeper forms of engagement and interaction effectively with their key service providers, such as a governance model for the relationship, report more successful business outcomes than those who only use the fundamentals of RFP-based sourcing, service-level agreements and key performance indicators.

“Our data indicates that this is particularly true in logistics and transportation, as well as warehousing and fulfilment – the two areas of supply chain capability most widely bought in from third-party providers,” he states.

TWA | Sep/Oct 2013

Transport World Africa Online is a leading news and resource hub focussing on for the transport, logistics and freight industry. It is a leading news hub, with in-depth articles, videos and podcasts, an events calendar, and full social media functionality.

LIKE INF LIKE NFRA RASSST STRU RUCT CTUR UREE NE NEW WS ON FACEBO FACEBOOK Have your say or get the conversation started about anything and everything related to the transport and logistics management industries.

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STAY IN TOUCH A weekly newsletter keeps you up to date Sign up online for our FREE weekly newsletter and get an instant summary of the latest news, events and developments in the transport and logistics management industries.

The @twaeditor tweets will keep you updated on all the latest, exciting and, of course, interesting happenings in the transport and logistics management industries.

SUPPLY CHAIN LOGISTICS

from service providers According to O’Marah, getting the best value from key service partners over the long term requires a strong alignment of business interests and a collaborative, rather than purely transactional, style of relationship. He says discussions with supply chain practitioners across a range of companies and industry sectors suggest that there are five broad areas of good practice for those seeking to deepen their engagement with service providers.

O’Marah explains: “The first requirement for a successful supplier relationship is to set it up on the right footing at the outset. Taking a collaborative approach from day one means aligning interests, processes and systems during the sourcing stage; getting suppliers’ input on service design and metrics; and awarding longer term contracts that give providers the confidence to invest.”

He states that engaging in open and ongoing dialogue with service providers is the second recommendation.

Collaborative companies actively share both operational and strategic information (from demand forecasts to business strategies) with their key service partners to enable

them to continuously refine and improve their performance.

They also help them to understand and navigate the organisation’s cultural nuances and ways of working.

He continues: “Thirdly, build personal relationships between account managers. Establish honest communication and trust between an empowered ‘single point of contact’ at each company – a key account manager on the provider side and supplier/contract manager on the client side.

This is essential for making the relationship work optimally.”

O’Marah adds that facilitating interaction and a ‘one team’ mindset – through workshops, factory tours, strategic reviews, co-location of staff and shared objectives – is another way in which leading companies build effective engagement with their service providers.

“The fifth and final area to look at is mutually beneficial results. Successful collaborators make ‘win-win’ a reality by understanding their providers’ business interests; sharing cost savings and other forms of value; and rewarding strong performance with relationship continuity, as part of a balanced sourcing strategy,” he concludes.

TWA | Sept/Oct 2013

43

SUPPLY CHAIN LOGISTICS

FREIGHT FORWARDERS

Shaping global economies through freight forwarding The South African Association of Freight Forwarders’ (SAAFF) fifth annual congress is taking place in October. Since its inception, the congress has grown in terms of delegate numbers and industry support, entrenching it as the definitive knowledge event focused on the trends, opinions, issues and opportunities facing today’s evolved freight logistics providers.

M

ANAGEMENT CONSULTING, technology services and outsourcing company Accenture released a report in 2012 that researched the global forwarding industry over the period from 2008 to 2011. The industry’s four core customer segments – health care and pharmaceuticals, electronics and technology, automotive and industrial equipment, consumer packaged goods and retail – are all continuing to globalise. And as the four industries enter new and especially emerging markets, they are demanding much more than traditional transportation and warehousing services from David Logan, CEO of SAAFF freight forwarding and contract logistics providers. Leading logistics companies are becoming integrators of specialised service solutions, building scale and expanding, both by acquiring other players and investing in new logistics infrastructure and customer-facing technologies.

David Logan, CEO of SAAFF, says: “The freight forwarding market has been a major beneficiary of an increasingly globalised world SAAFF congress, exhibition and HR workshop economy.

The The two-day SAAFF congress, exhibition and HR workshop takes significant yearplace from 8 to 9 October 2013 at the Hilton Hotel, Sandton. For on-year growth more information about the congress or to book your seats, conin international tact the congress organiser, Teresa Settas Communications on +27 (0)11 894 2767 or e-mail nadine@tscommunications.co.za. trade volumes has driven the evolution of the freight forwarder, inherently linked to the success of global trade and the development of new markets. Against this backdrop, it hardly seems surprising that the congress continues to grow and attract robust debate from key players in the market. This year’s event also receives the endorsement and support of the South African Express Parcel Association (SAEPA), which represents the multibillion rand South African courier industry – another major role player in facilitating global business.”

“The freight forwarding market has been a major beneficiary of an increasingly globalised world economy.”

44

TWA | Sep/Oct Jul/Aug 2013 2013

Logan explains that having long-abandoned the image of transport intermediaries, today’s freight management logistics providers manage an array of complex functions and issues, and are responsible for an entire array of services within the supply chain.

He says the two-day congress will highlight and debate many of the pressing issues, from customs modernisation, security and piracy to supply chain efficiencies, trade credit, risk management, political risk, legislation, financial advisory and intermediary services (FAIS), economic trading factors, transformation, training and in-demand skills, and more.

“Our industry is also in a unique position to tap into the incredible growth currently shaping the African continent where some of the fastest growing economies reside.

Added to this, the rapid reconstruction and development projects taking place throughout the continent will rely heavily on the services of freight forwarders. Africa’s abundance of commodities is estimated to generate about one third of the continent’s growth. All this requires trusted partners in the movement of goods to facilitate global trade and the forwarders best positioned to capitalise on this are those that have robust infrastructure, global capability, solid expertise and a deep understanding of trade in African countries, which is not without its fair share of risk,” reports Logan.

According to Logan, global pressures on world markets are impacting SAAFF members and the congress is an ideal platform to get to grips with the realities and challenges of the current trading environment. “It’s an ideal platform for sponsors and suppliers to engage directly with the senior decision-makers of freight forwarding companies, government, suppliers and policy makers.”

Running alongside the congress will be a two-day industry supplier exhibition as well as a one-day training and education workshop on 8 October, covering important issues regarding skills development, industry qualifications, talent management, training, BBBEE and more – all critical issues for HR managers and directors in the freight forwarding industry.

Africa Ports and Rail Summit 17th & 18th October 2013, Dar Es Salaam, Tanzania New Build, Expansion and Capacity Upgrading in Africa`s Logistics Sector

Noppen Conference & Exhibitions Pvt. Ltd. will host Africa Ports and Rail Summit on October 17-18, 2013 at Dar Es Salaam, Africa.

Africa is undergoing tremendous changes in terms of infrastructure and government has turned its focus towards ports and rail building. This not only will connect Africa as a whole but would also act as a backbone WR ERDVW LPSRUW H[SRUW DV ZHOO DV EXVLQHVVHV EHQHÂżWLQJ GLUHFWO\ IURP WKLV GHYHORSPHQW 7KHUH DUH KXJH expansion projects underway or to be initiated in near future giving it the facelift that it required.

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Keeping all this in perspective, some of the major issues to be addressed at the 2013 event are: ‡ ,PSURYLQJ LQQHU SRUW DV ZHOO DV LQWHUPRGDO WUDQVSRUW ‡ $GGUHVVLQJ LQYHVWPHQW RSSRUWXQLWLHV WR LPSURYH LQIUDVWUXFWXUH DQG SRUW UDLO GHYHORSPHQW ‡ ,QVLJKWV LQWR SURFXUHPHQW SROLFLHV UHTXLUHPHQWV FRPSOLDQFH LVVXHV ‡ 'HDOLQJ ZLWK OHJDF\ UDLOZD\ V\VWHPV ‡ 'HYHORSLQJ UDLOZD\V XVLQJ H[LVWLQJ DQG QHZ LQIUDVWUXFWXUH This Summit will provide delegates access to networking sessions, panel discussions, one-to-one business meetings where the manufacturers can meet the top leaders and potential clients and an opportunity to showcase latest equipments and technology.

6RPH RI WKH FRQÂżUPHG VSHDNHUV DUH 5LFKDUG $ < $QDPRR $FWLQJ 'LUHFWRU *HQHUDO *KDQD 3RUWV +DUERXUV $XWKRULW\ +LGHR (JXFKL &KLHI 5HSUHVHQWDWLYH .HQ\D -DSDQ ,QWHUQDWLRQDO &RRSHUDWLRQ $JHQF\ 7RQLD .DQdiero, Country Manager Tanzania, African Development Bank; Ronald Phiri, Managing Director, Tanzania =DPELD 5DLOZD\ $XWKRULW\ *DJDQ 6HNVDULD &)2 +HDG Âą ,QYHVWPHQWV ,&76, $IULFD -RKQ\ 6PLWK &(2 :DOYLV %D\ &RUULGRU *URXS 1DPLELD DQG 1LFR 9HUWRQJHQ 'LUHFWRU 3RUW RI $QWZHUS ,QWHUQDWLRQDO 3RUW RI $QWwerp among the other eminent speakers.

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- Port de Cabinda This event is enriching because itâ&#x20AC;&#x2122;s showing how different regions of Africa are facing the same challenges, FRQVWUDLQWV DQG RSSRUWXQLWLHV 3RUWV GHYHORSPHQW UHPDLQV H[WUHPHO\ OLQNHG ZLWK WKH DYDLODELOLW\ RI HIÂżFLHQW WUDQVSRUWDWLRQ ZD\V DQG JRRG PDQDJHPHQW RI FURVV ERUGHUV FRUULGRUV WUDGH WUDIÂżF - Port of Djibouti Thank you for the event, I was happy to be a part of it. The sharing of the knowledge was good. The number of delegates was right for me as it was some enough to participate and network successfully. Letâ&#x20AC;&#x2122;s hope that the private sector will push forward to introduce chances.

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SUPPLY CHAIN LOGISTICS

ABNORMAL LOADS

Insuring against potential losses

W

HERE SUCH a vehicle or load cannot be dismantled into units that can be transported legally without disproportionate effort, expense or risk of damage, it is classified as an abnormal load.

When the movement of an abnormal load is considered to be in the economic and/or social interest of the country, a special permit may be issued to allow it to operate on a public road for a limited period. Permits are normally issued by the provincial road authorities and, if necessary, input is obtained from local and metropolitan authorities.

The permits are issued by the local provincial road authority and will require a combination of: • abnormal warning signage • amber flashing lights • marker lamps and reflectors • escort vehicles.

Insuring an abnormal load

Certain vehicles and loads cannot be moved on public roads without exceeding the limitations in terms of the dimensions or mass as prescribed in the Regulations of the National Road Traffic Act.

by Steve Cornelius* Cornelius 46

TWA | Sep/Oct 2013

Transporters must take into account a number of potential liabilities that can be attached to the transportation of an abnormal load as losses can occur in the following situations: • damage to the goods being transported • damage to the vehicle transporting the goods • damage to third-party property • injury or death of third parties • environmental damage

SUPPLY CHAIN LOGISTICS â&#x20AC;˘ professional liability of independent, professional engineers involved in route clearance and conveyance specifications.

The structuring of the correct insurance cover will depend on the contractual and statutory arrangements that apply between the transporter, consignor and consignee.

The above-mentioned potential exposures cover a wide range of insurance categories, including motor, marine, liabilities and professional indemnity. These are mostly specialised insurance products and will need to be placed with specific insurers that have the capacity and expertise to provide the correct solutions. Risk can be mitigated by ensuring that the correct vehicles are used, vehicles are correctly maintained and drivers have the required special driving licences.

Additional cover when transporting hazardous and dangerous goods Hazardous and dangerous goods are listed in Standard Specifications by the SABS 0228 and governed under the South African Dangerous Goods Act. This Act addresses issues such as professional driving permits, transport emergency cards and dangerous goods declarations.

The major challenges related to the transporting of hazardous goods are the risk of spillage, resulting contamination, loss or damage to the conveyance carrying the goods, loss of the goods being conveyed, damage to third-party property and the death or injury to third parties. Indwe Risk Services specialises in insurance products that are designed to cover

rehabilitation and recovery costs, and particular changes to existing motor vehicle products are required to deal with the transportation of hazardous goods.

Liability in case of a spillage In recent years, the average cost of spillage, recovery and rehabilitation has run at over R400 000 per incident. Local authorities around the country are becoming stricter in their enforcement of spillage and clean-up costs, and in holding the transporter and owner accountable for consequential damage resulting from spillage. Civil liability can also be a catastrophic risk and needs to be insured.

In conclusion, it is clear that if a transporter is involved with either abnormal loads or hazardous goods transportation, it is essential that they adhere to statutory compliance requirements. Itâ&#x20AC;&#x2122;s also important that all potential risks attached to these loads are identified, quantified and insured. The role of qualified brokers and specialist insurers cannot be ignored, and Indwe Risk Servicesâ&#x20AC;&#x2122; team of experts is on hand to advise transporters of the correct insurance to cover their liabilities and risk, whatever their cargo.

Risk can be mitigated by ensuring that the correct vehicles are used, vehicles are correctly maintained and drivers have the required special driving licences *Steve Cornelius, head: Specialist Risk â&#x20AC;&#x201C; Automotive and Transportation at Indwe Risk Services

TWA | Sept/Oct 2013

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SUPPLY CHAIN LOGISTICS

ONLINE SUPPORT

Inter Africa gets you Trucking through Africa is not easy but the rewards can be great. That is if your management and support structures are in place to make sure that the wheels keep turning. Inter Africa offers the best management and support solution.

48

TWA | Sep/Oct 2013

interAfrica

SUPPLY CHAIN LOGISTICS

moving W

ITH ITS TRANSPORT Forex programme, you can manage your trucks’ fuel and cash requirements throughout Southern and Eastern Africa from the comfort of your office.

Currently on offer Zambia: Book cash for your drivers in Kazungula, Livingstone, Chirundu, Kasumbalesa, Lusaka, Kabwe, Kapiri Mposhi, Ndola, Kitwe. Fuel can be booked for your trucks in Lusaka, Kabwe, Kapiri Mposhi, Ndola, Kitwe, Chambisi, Kasumbalesa, Solwezi and Chipata. Kwacha debit cards can be issued to your drivers in which you can deposit their salaries. We also offer same-day electronic bill payment solutions to any of your service providers.

Zimbabwe: Fuel can be booked for your trucks in Beitbridge, Bulawayo, Harare, Kadoma, Mutare, Victoria Falls and Chirundu. We can issue your drivers with US dollar cards.

Namibia: Book cash and fuel in Katima Mulilo, Buitepos and Swakopmund.

Mozambique: Book fuel and cash in Tete.

Botswana: Book fuel in Martins Drift, Pandamatenga and Tsootsha. Book fuel and cash in Sekoma.

DRC: Book fuel and cash in Lubumbashi.

Tanzania: Book fuel and cash in Tunduma, Mbeya, Morogoro, Shinyanga, Mwanza and Dar es Salaam.

The company covers most of the major transport corridors throughout Southern and Eastern Africa, and the few it doesn’t will be added to its programme in the imminent future. The rates and commissions are incomparable as this is Inter Africa’s core business. This is evident in the level of service and fee structure.

The company’s footprint is extensive and well established on all the major transport routes. Your trucks can now use any of these routes with the knowledge and assurance that they will be able to refuel regularly, and that they can obtain cash if they need to do payments. All this without having to send large amounts of cash with your drivers to cover their expenses.

All of the above services are obtainable from your office. Register with Inter Africa Transport Forex, and manage your fleet from the comfort of your office. Book orders for your trucks and do payments for orders online and make sure your trucks keep moving.

The company’s footprint is extensive and well established on all the major transport routes

TWA | Sept/Oct 2013

49

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RAIL

EXPORT COAL LINES

Increased efficiency boost

A new 200 wagon train service from Transnet Freight Rail (TFR) will enable the Richards Bay Coal Terminal (RBCT) to exceed 81 million tonnes per annum in the next financial year, should the coal be available. It will run directly from RBCT to the mines in Mpumalanga.

T

HE NEW SERVICE, called Project Shongololo (millipede), entails bypassing the Ermelo yard leg of the service, which will significantly reduce train handling processes.

Prior to the introduction of the service, trains were built at the Ermelo yard through a process involving dispatching 100 empty wagons to the mines for loading and then returned to the Ermelo yard to be built into 200 wagon trains, which were then forwarded to RBCT. This process was cumbersome, involving significant train handling and shunting to couple and decouple wagons.

Siyabonga Gama, TFR chief executive, said: “This service will drastically reduce cycle times from an average of 58 to 41 hours for locomotives and for wagons a decrease from 63 to 48 hours.”

Gama stated that decreasing the handling processes of trains will allow for higher reliability, which will equate to improved sustainability and service predictability, adding that this is part of the scheduled railway philosophy introduced by TFR two years ago.

According to project manager Pragasen Pillay: “The service will increase weekly railed export coal capacity from the current 1.4 million tonnes per week to a potential capacity of 1.85 million tonnes, equating to a 30% increase on current capacity.” He added that the number of export coal trains per day will increase from 25 to a potential 32, and moving into the fourth quarter of this year the company will see 34 trains per day.

“This will give confidence and guarantee the delivery of 1.7 million tonnes per week. As TFR ramps up in the fourth quarter, this capacity will increase to 1.95 million tonnes per

“The service will increase weekly railed export coal capacity from the current 1.4 million tonnes per week to a potential capacity of 1.85 million tonnes”

50

TWA | Sep/Oct Jul/Aug 2013 2013

week, enabling the company to provide capacity to emerging miners.”

TFR will now be poised to deliver for the coal sector, both domestic and export, in excess of two million tonnes per week – an annualised delivery of 96 million tonnes.

The service will additionally free up train slots, which can be utilised to address other domestic demands such as coal for Eskom’s Majuba Power Station. Customers can now increase production by making investments to ramp-up efficiencies in their operations because of the increased capacity available to them.

Coal stemming from the Lephalale and Waterberg regions will also enjoy the benefits of this unlocked potential. In addition, the debottling of Ermelo will allow TFR to run longer general freight trains, thus increasing capacity for general freight business as well. For example, chrome traffic from Pyramid South will be increased from 75 to 100 wagon trains, which translates to 1 800 tonnes more per train, as a direct result of the efficiencies introduced to the yard.

Project Shongololo introduces a new efficient use of technologies – the wire distributed power and AC/DC traction will be used concurrently to render the service. This methodology will also be deployed in the general freight once it has been embedded on the coal line.

Introducing this methodology allows TFR to fulfil its mandate, which is to lower the cost of doing business in South Africa. Further to this, the coal mining industry becomes a more viable and profitable business to venture into, a move which will place South Africa on the map as a serious global market player.

The main dictate of the company’s market demand strategy is to capture rail-friendly cargo from road to rail; continued interventions, such as the Shongololo project are constantly being explored in order to assist TFR in reaching the targets as set out in the seven-year business plan.

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AIR

AIR FREIGHT VOLUME

Showing signs of life June figures show a 1.2% year-on-year expansion in global air freight demand. Although weak, this is an improvement when compared to the 0.9% year-on-year demand growth recorded in May and the 0.1% growth realised over the first half of the year.

W

HILE PREVIOUSLY THE global economic trend has been defined by robust emerging economies and stagnant growth in developed markets, the strongest improvements in business confidence are now occurring in some developed economies. Nevertheless, overall business confidence, which is a key indicator for air freight, continues to be weak.

From May to June, global freight volumes increased by 0.8%. A quarter of that improvement was captured by European airlines, which saw a 0.9% improvement in demand compared to May and 2.6% up compared to June 2012. In contrast, Asia-Pacific carriers (the biggest players in global air freight) and North American airlines recorded year-on-year declines of 1.8 and 1.2% respectively.

Tony Tyler, IATA’s director general and CEO, says: “It’s too early to tell if June was a positive turning point after 18

months of stagnation. Air freight volumes are at their highest since mid-2011, but that good news needs to be tempered with a dose of reality. The global economic environment remains weak and the basis for the acceleration of air cargo growth in June appears to be fragile.”

IATA also released the July edition of its Airline Business Confidence Index, which showed nearly 58% of respondents expecting freight volumes to increase over the next year. Despite this, a much greater percentage of respondents (72.2%) expected no change in weak cargo yields despite their expected increase in demand over the same period. The macroeconomic trend remains challenging.

Recent declines in global export orders do not bode well for trade growth.

African airlines recorded relatively slower growth in June, up 2.4% on June 2012. This lags the year to date trend of 4.3%, which is the second best of all regions. With economic growth in some key African markets looking strong, demand for high-value lightweight consumer goods should rise, helping air freight volumes in the months to come.

“Air freight volumes are at their highest since mid-2011, but that good news needs to be tempered with a dose of reality.”

Tony Tyler, director general and CEO, IATA

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