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S O UT H AFR I C A N S H I P P I N G FA C E S
M I X E D WAT ER S outh Africa’s coastal shipping trade pulled through the global downturn better than most and growth prospects are encouraging. But port congestion, the recent Transnet strike, and sluggish productivity threaten to trim its speed, as Ocean Africa Container Lines CEO Andrew Thomas tells Colin Chinery. 2
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Ocean Africa FEATURE
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s this a tide of destiny? Andrew Thomas raised in Britain’s largest container port, Felixstowe, is today CEO of Durban-based Ocean Africa Container Lines, the premier regional container line in Southern Africa. But those North Sea winds are far behind him. “South Africa is now my home,” says Thomas. “A fantastic, wonderful place to live.” It’s a short walk from his office to the point where the first vessel in OACL’s distant lineage sailed out one hundred years ago bound for Port St. Johns, carrying paper, sugar and agricultural equipment. The same type of cargo is transported today along with much else in a fleet of modern,
purpose built container ships catering to regional, feeder and domestic cargoes.
Three streams for southern Africa Serving ports throughout the Southern Africa region, five OACL vessels ply westbound services between Durban and Luanda, and two on eastbound services calling at all major ports in Mozambique. Owned by Grinrod and Safmarine, OACL revolves around three work streams, the first a feeder operation where containers are moved on behalf of other shipping lines to ports to which their own vessels are not sent. www.southafricamag.com
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Ocean Africa FEATURE
“We then offer an intra-Africa liner service, typically cargo originating in South Africa and destined for Angola for example. We provide the client with the container into which they put their goods, and we carry it to the port of destination. “The final type of cargo we cater for on board our ships is domestic, moving within South Africa. And here we are offering an alternative to road freight,” says Andrew Thomas. “We move about 600,000 tonnes of cargo a year and there we go beyond the port to port role of the shipping line. We have warehouses where we store for example sugar and we deliver pallets of sugar to the back doors of supermarkets.”
Total supply chain solution This is a total supply chain solution, with growers, manufacturers, wholesalers and retailers receiving a door-to-door domestic transport service. Around 600,000 tonnes of local product are carried annually between Durban, East London, Port Elizabeth, Cape Town and Walvis Bay, products that would otherwise move by road. Twelve months ago Andrew Thomas remarked that while the global shipping industry was grappling with shrinking trade volumes and excess new ships, the South African coastal market remained largely unchanged. What is the outlook today? “The global economic issues probably came to South Africa later and may be lagging slightly in terms of recovery. We’ve seen the Angola market shrink quite significantly over the last twelve months – witness the fact that there’s no port congestion at present, while up to a year ago it was significant. Now I don’t believe they’ve created additional capacity, so I think the volumes are down. “In terms of the domestic business in South Africa it remains as it was. People are consuming just as much sugar and paper. In our feeder business we are moving cargo from international origins into Mozambique,
The Rickmers Group The Rickmers Group is a conglomerate with an international scope focusing mainly on the maritime sector. In its business division Shipowning & Ship Management the Group manages more than 100 vessels and approximately 3,200 seamen worldwide. The sizes of the container vessels are between 510 TEU and 13,100 TEU, those of the conbulkers between 35,000 tdw, or 1,600 TEU, tdw and 45,000 tdw, or 1,800 TEU, those of the bulkers 70,000 tdw and those of the multipurpose vessels 30,000 tdw. Since 2006 the Rickmers Group has counted OACL among its charter customers. Marked by a spirit of mutual trust, this working relationship has developed ship by ship. OACL currently employs four Rickmers container vessels of the 1,100 TEU class. The quality and efficiency of the technical and commercial management, low ship operating costs, good contacts with agents, suppliers and repair yards in the trade, the group-owned insurance and claims handling division, a compelling risk management system and, not least, well-trained and committed crew members are just a few of the factors through which Rickmers enjoys an excellent reputation with its charter customers and which also convince OACL. As the Rickmers Group, we wish to express our appreciation for the trust placed in us and look forward to continuing the shared success together with OACL.
Namibia and Angola, and here I think cargo volumes have been relatively robust. “Africa is continuing to consume Far East and European imports. Mineral exports recovered quite quickly and we are still producing tobacco in places like Malawi and exported to Europe and the East. “In terms of container movements and volumes in this region we’ve been relatively lucky. We continue to see investment not just in South African ports but also the regional ports. “Our economies are being driven by commodity exports, and as long as demand remains strong in China and India we will
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In 1834 R.C. Rickmers established a shipyard in Bremerhaven. Today, 176 years later, the Rickmers InIn 1834 1834 R.C. R.C. Rickmers Rickmers established established aa shipyard shipyard inin Bremerhaven. Bremerhaven. Today, Today, 176 176 years years later, later, the the Rickmers Rickmers In In 1834 1834 R.C. R.C. Rickmers Rickmers established established aa shipyard shipyard inin Bremerhaven. Bremerhaven. Today, Today, 176 176 years years later, later, the the Rickmers Rickmers Group, with Rickmers-Linie, Rickmers Reederei, Rickmers Immobilien and Atlantic unites liner shipGroup, Group, with with Rickmers-Linie, Rickmers-Linie, Rickmers Rickmers Reederei, Reederei, Rickmers Rickmers Immobilien Immobilien and and Atlantic Atlantic unites unites liner liner shipshipGroup, Group, with with Rickmers-Linie, Rickmers-Linie, Rickmers Rickmers Reederei, Reederei, Rickmers Immobilien Immobilien and and Atlantic Atlantic unites unites liner liner shipshipping, ship owning and management, real estateRickmers business and investment funds under one roof. ping, ping, ship ship owning owning and and management, management, real real estate estatebusiness business and and investment investment funds funds under under one one roof. roof. ping, ping, ship ship owning owning and and management, management, real real estate business business and and investment funds funds under under one one roof. roof. Maritime related service companies such asestate MCC Marine and EVTinvestment Elbe Vermรถgens Treuhand compleMaritime Maritime related related service service companies companies such such asas MCC MCC Marine Marine and and EVT EVT Elbe Elbe Vermรถgens Vermรถgens Treuhand Treuhand complecompleMaritime Maritime related service service companies companies such such asas MCC MCC Marine Marine and and EVT EVT Elbe Elbe Vermรถgens Vermรถgens Treuhand complement the related activities of Rickmers Group. Over 3,200 crew are employed onboard of Treuhand more thancomple100 ships. ment ment the the activities activities ofof Rickmers Rickmers Group. Group. Over Over 3,200 3,200 crew crew are are employed employed onboard onboard ofof more more than than 100 100 ships. ships. ment ment the the activities activities of Rickmers Rickmers Group. Group. Over Over 3,200 3,200 crew crew are are employed employed onboard onboard ofof more more than than 100 100 ships. ships. Over 450 people areofemployed in the offices ashore worldwide. Through a widely spread network of Over Over 450 450 people people are are employed employed inin the the offices offices ashore ashore worldwide. worldwide. Through Through aa widely widely spread spread network network ofof Over Over 450 450 people people are are employed employed in in the the offices ashore ashore worldwide. Through Through aa widely widely spread network network offices and agencies, Rickmers Group is offices represented atworldwide. more than 60 locations all spread over the world. ofof offices offices and and agencies, agencies, Rickmers Rickmers Group Group is is represented represented atat more more than than 6060 locations locations allall over over the the world. world. offices offices and and agencies, agencies, Rickmers Rickmers Group Group is is represented represented atat more more than than 6060 locations locations allall over over the the world. world.
Ocean Africa FEATURE
continue to create wealth which will translate into consumption and imports and containers. So we are reasonably optimistic that we are back on a growth track and will see an increase in container volumes as a result.” But as we talked Thomas, 39, and his team were having to deal with the vast backlog from the seventeen day Transnet strike that paralyzed large sections of South Africa’s freight logistics, and, according to Business Unity, cost the country R7 billion.
“So the focus now is on ensuring that the port workers are given the skills necessary to take advantage of the technology they have been provided with. “Skills development is a key issue in South Africa. When you have this level of investment in infrastructure without any kind of gain in productivity or efficiencies, then we’ve got to look at other areas where we are falling down. And skills development is clearly one.”
Strike blow for container sector
So for South African coastal shipping, cautious post-recessionary optimism is tempered by stark operational constraints. Ports are congested as a result of the strike, and with the World Cup followed by the peak season, could remain so to the end of this year. Thomas puts the annual voyage days lost as a result of congestion at between 20% and 25%. “I don’t think there are many trades in the world where one can consistently expect to see these levels of voyage days lost to berth congestion, but it’s part of doing business in this region.” But whatever the prevailing currents, Ocean Africa continues to command the South African coastal waters. “I think our major advantage is that we are based here; we are an African company and we trade in Africa. We are domiciled in South Africa, we are incorporated here and we pay our taxes here.”
“It had a major impact and we’ve got a significant backlog, particularly in the container sector. Some of the others, bulk mineral and coal exports etc, managed to keep moving, perhaps not at 100%, but in the container sector we were effectively shut down for 16-17 days. The deal that ended the strike gives the unions an 11% salary increase with a further one percent one-off payment on the total annual salary package. Thomas says the figures are excessive and the deal throws up a worrying feature. “There was no productivity guarantee involved in the negotiations, which I think is disappointing.” He sees this omission as part of a wider issue of low ROI in the economy. “We’ve made huge strides in the last eight years, with investment in the region of R70 billion in the last five years in terms of ports, pipelines and railway infrastructure, with a further R95 billion targeted to be spent in this area over the next five years. “But we haven’t yet seen productivity rates commensurate with that level of investment. Transnet has come out and said it wants a 20% productivity gain over the next three years, and are running an internal project called Quantum Leap which is focused entirely on this issue. Obviously we support this. 6
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Port congestion major issue
Ocean Africa – ready for business “By being on the ground our decisions are taken locally, we charter our own vessels and buy and lease our containers from here. All this, together with our background and knowledge, means we are fit for purpose “We are very focused on the markets we serve, have a very established network, and are recognised I think as being just about the best operator in the region. At Ocean Africa we are ready and open to do business.”END
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