Intraregional supply chain solutions from producer to t consumer
Logistics Optimising transport routing and scheduling
Corridor Improving logistics between Durban and Gauteng
Commercial Vehicles The road ahead in 2013
Appropriate technology for Southern Africa IIN N THE HOT SEAT
â€œScania Trucks have been developed for use in the most demanding marketâ€? Steve Wager, MD, Scania SA
ISSN 1684-7946 Jan/Feb 2013 Vol. 11 No. 1 / R40.00 incl. VAT
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TRUCKS. LEASING & FINANCING. FLEET SOLUTIONS. SERVICE & PARTS
Trust means any time, anywhere, down the road. In Mercedes-Benz you have a partner who reacts immediately in an emergency to make sure that your journey can continue without delay. Wherever you ďŹ nd yourself and whatever the time, our Customer Response Centre is there for you. One free phone call is all it takes. Whatâ€™s more, you can count on our service outlets throughout South Africa to provide you with genuine parts and everything you need to keep moving. It is reassuring to know that you can always rely on service with the three-pointed star. Call: 0800 133 355 or visit www.mercedes-benz.co.za/trucks
Intraregional supply chain solutions from producer to consumer onsumer
COVER STORY ORY
UD Trucks ucks Fuel is playing g an increasingly vital role
REGULARS 2 3 4 6 8 10
Editor’s word – Eternal optimist in 2013 FESARTA – Barney’s comment Cover story – UD Trucks Hot seat – Scania’s Steve Wager FESARTA news News desk
LIGHT COMMERCIAL 24
SA’s manufacturers remain buoyant
SUPPLY CHAIN LOGISTICS Optimising transport routing and scheduling Tracking into the future
COMPANY PROFILE 12
Ngululu Carriers – Expanding into Africa
MARITIME Unlocking the great potential in Africa
COMMERCIAL VEHICLES The road ahead in 2013 MAN – Optimistic about 2013 for both truck & bus Scania – Ensuring efficient reliable transport solutions
16 18 22
REGIONAL CORRIDOR FOCUS Improving logistics between Durban and Gauteng
The role of rail in intra-Africa trade
Trailers deliver optimum performance
Transnet branch lines critical in stimulating economy
TWA | Jan/Feb 2013
Eternal optimist in 2013 T
he road ahead might be tough in 2013 but, as they say, without challenges there would be no opportunities! Am I optimistic about the road ahead? Yes, I am. But I have always been an eternal optimist irrespective of the challenges I am experiencing at the time. Here is hoping you are able to change all your challenges into opportunities and you have a safe and productive 2013! In this issue, UD Trucks outlines its commitment to leading fuel efficiency, because as we all know fuel forms a major part of the costs involved in operating a truck. The chairman of Ngululu Bulk Carriers tells us how the company became a true BEE transport company and its future plans of expanding its footprint. We have Scania’s MD Steve Wager in the Hot Seat answering our questions. We also speak to some of the OEMs in both the heavy and light commercial vehicle sectors to find out what we can expect from them during the year. At the same time, MAN outlines its optimism about 2013 for both its truck and bus sectors and Scania tells us how the company is ensuring efficient reliable transport solutions for its customers. If you would like to find out how trailers can deliver an optimum performance, carrying loads on the roads then turn to the trailer section and find out what the specialised manufacturers have to say. Optimising transport routing and scheduling is key and crucial to any operation nowadays, especially with the spiralling fuel costs and, in this issue, we look at how operators get the best value out of their fleet. An important aspect of any fleet operation is how operators can track the movements of their valuable cargo 24 hours a day and key players in this field outline tracking solutions available for fleet owners. We take a look at the Durban-Free State-Gauteng corridor, which forms part of government’s 2050 vision and is the backbone of South Africa’s freight transportation network, vital in facilitating economic growth for the country and the Southern African region. We also look at the role of rail in intra-Africa trade and how Transnet Freight Rail is revitalising and reopening branch lines in order to improve access to markets as well as increase overall freight volumes. As always, a varied read – enjoy!
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by Barney Curtis, chief executive officer, FESARTA
FESARTA and TradeMark Southern Africa (TMSA) have a close working relationship.
OR THIS RELATIONSHIP to continue effectively, FESARTA must align its activities with the Comprehensive Tripartite Trade and Transport Facilitation Programme (CTTTFP). This programme has been developed over recent years by the three Regional Economic Communities â€“ COMESA, EAC and SADC â€“ and the two TradeMarks (TMSA and TradeMark East Africa (TMEA). It covers items such as customs documents and procedures, regional customs bond, efficient management of border posts, harmonisation of third-party motor vehicle insurance, harmonisation of load limits and overloading control, standardisation of
vehicle dimensions, harmonisation of road user charges, driver immigration requirements, corridor monitoring and the introduction of self-regulation. The objective of the 2012 Truckersâ€™ Forum, organised by FESARTA and 3S Media, was to identify the leading problems along the corridors in East and Southern Africa, and to workshop the best solutions for them. And, it was important that the outcomes from the forum be integrated into the CTTTFP, so that there could be support for implementing the solutions. Fortunately, the main outcomes, i.e. border delays, load limits and overloading control, arbitrary and excessive charges, road safety
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and self-regulation, could all be linked to the items in the CTTTFP. It has therefore been possible for FESARTA and TMSA to develop a work programme for FESARTA, which will have the objective of implementing the solutions agreed at the forum. The next forum (renamed the Africa Road Transport Forum), will assess what has been achieved since the Truckersâ€™ Forum and workshop a revised way forward. This process, started with the Truckersâ€™ Forum, is a long one. Problems have been on the table for many years, and we would be naĂŻve to think they can all be solved in a few months. But, with the determination and commitment of all the stakeholders, there is sure to be significant progress before the 2013 forum, which will be held on the 17 and 18 April, in Johannesburg.
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Appropriate technology for Fuel is playing an increasingly vital role in the transport industry, as it forms a major part of the costs involved in operating a truck.
T IS BECOMING all the more important for customers to carefully consider the fuel consumption statistics of a vehicle before purchasing a truck,” says Rory Schulz, UD Trucks Southern Africa’s general manager of corporate planning and marketing. “In addition, one also needs to look at aspects like driver training in order to ensure the most efficient operation of a vehicle, careful route planning and optimal load maximisation.” If one makes a case study of some typical rigid vehicle applications with typical annual mileage, operating at an all-up mass of 7, 15 and 26 t respectively, the fuel cost will constitute between 25 and 27% of a fleet owner’s annual operating costs. In a typical truck tractor and interlink application, the fuel constitute around 50 to 56% of the operating cost. Schulz points out that a number of factors come into play when a fleet owner needs to calculate the possible fuel consumption of a truck. “Environmental factors, such as temperature and wind, as well as road surface type and operating conditions,
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always warrant strong consideration when factoring fuel consumption figures,” he says. “The truck’s body type and overall frontal area, the specific tuning of the engine and driveline components, tyre choice, tyre pressure and wheel alignment, as well as the load or all-up operating mass of the vehicle should be on the list of aspects that need constant monitoring and attention.” Over the years, UD Trucks has continually invested in researching the best fuel consumption practices and applications for its local product range. The company therefore believes in only introducing trucks that employ appropriate technology for the demanding road and operating conditions of the African continent. “The quality and hygiene of fuel available in many places in the Southern African region often leaves a lot to be desired,” adds Schulz. “Furthermore, it is imperative that one uses the appropriate fuel for the specific design of the fuel system of any particular vehicle; in other words, ultra-low sulphur diesel or 10 ppm for Euro 4 and upwards. Driver training also plays an increasingly important role, as the correct driving techniques can save operators a lot of money on the long run.”
Southern Africa Over the years technology has made many advances to increase fuel efficiency. Initially, mechanical advances came by the way of improvement in volumetric efficiency and combustion chamber design and shapes. Fuel measurement and metering, as well as tuning, have also improved the efficiency of trucks through the years. These also include advancements in fuel technology. “Materials and manufacturing processes are enhanced to allow for greater compression ratios and tolerances in order to increase injection pressures. The advent of forward induction systems such as turbocharging also contribute greatly to the advancement in fuel efficiency, while engine cooling improves dramatically as the industry evolves and become more sophisticated,” explains Schulz. However, the most significant improvement came in the form of electronic control units, which has allowed manufacturers to control the exact amount of fuel that is injected at a specific pressure with precision timing. This vital development results in overall combustion efficiency and also helps operators achieve lower emissions, which ultimately leads to improved fuel economy.
Schulz reiterates that there are now engines available that are especially fuel efficient at a particular rev range and engine load. To enable operators to keep the vehicle operating in this ideal range, multispeed transmissions have been introduced and further developments with electronics allow the vehicle to function in an optimum fashion with automated manual transmissions and electronic vehicle management systems. “With these systems of course comes much driver orientation and ongoing training to improve their skills to maximise these benefits. Into the future, emission levels will call for further developments, but alternative fuels to current fossil fuels, such as diesel, are most likely going to be the way to go,” concludes Schulz.
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TWA TW T WA W A | Jan/Feb Jan J Ja an a n //F /Fe Fe b 2013 Fe 20 2 01 13 3
Developed for the most demanding markets In this issue’s hot seat we put Scania’s MD, Steve Wager, on the spot asking him key questions about the company and why ﬂeet operators should be utilising Scania’s range of commercial vehicles.
hy should fleet operators consider purchasing Scania trucks for their operations in both South Africa and the Southern African region? Scania trucks have been developed for use in the most demanding markets with high technological content, high performance and outstanding fuel consumption backed by 24/7 service and parts backup.
How is Scania ensuring it not only understands its customers but also the customer’s customers, so you can ensure you have the best transport solutions for them? It is key to understand the customer’s customer – let us call it the industry. Our customers are normally the link between ourselves and the industry. By understanding the whole chain, we can not only improve our customers’ transport efficiency, but the efficiency of the whole chain. All parties will benefitit from it. Around the world, Scania is conducting field testss within different industries to evaluate how to optimise transsport solutions for the future. That includes higher payloads, s, increased efficiency, less environmental impacts, lower er operational costs, etc. These tests are conducted with the e participation of the whole chain so that all parties can ben-efit from the knowledge that we get.
“By understanding the whole chain, we can not only improve our customers’ transport efficiency, but the efficiency of the whole chain” What makes Scania’s trucks different from its competitors? Our trucks are unique but our outstanding transport solutions package makes the real difference. These include: 1. Driver comfort and safety – Our cabs offer a high degree of safety features to protect the driver in case off an accident and conforms to the Swedish crash test. Comfortable sleeper bunks designed by a leading mattress manufacturer ensure a good night’s rest. 2. In-house insurance – As part of our one-stop-shop policyy we offer in-house insurance to our customers.
TWA | Jan/Feb 2013
3. In-house financing – Scania Finance, our in-house finance company, offers financial packages to suit customer needs and speed up transactions. 4. Wholly owned dealer network – Our dealer network is wholly owned giving us direct control over sales, services, pricing, deliveries and customers. 5. Driver academy – Our driver academy offers driver training packages to ensure trucks are operated within design parameters ensuring best returns on investment for the customer. 6. Operating economy – When operated within legal limits like loads and speed driven by a trained driver, our trucks deliver outstanding results. 7. A 24/7 call centre – Our call centre is manned by top technicians and services sub-Saharan Africa to attend to unlikely breakdowns. Scania parts are available from our dealer network with back up from our central parts warehouse.
How important is continuous driver training by Scania to those fleet owners who have purchased and are purchasing your vehicles, especially with the technology now available in your trucks? Very important! The role the driver plays is critical to the success of any transport company. The better trained the driver is, the more economical the operation of the fleet will be. But it is not only economic factors such as fuel consumption, lower maintenance and residual values that are positively affected by driver training, the range is much wider than that. Safety, environmental factors, improved employee satisfaction and retention, the list continues… Our customers are buying a premium product at a premium price and they expect a premium return on their investment. Driver training is the key to utilising the vehicle to its full potential.
Looking at the economic and political landscape in South Africa, are you optimistic about the future of Scania and Southern Africa, and why? Yes I am. South Africa has its internal challenges, but the majority of the problems that we see today are caused by external factors, very much connected to the downturn in the global economy. Looking
at the huge number of people living here, consuming goods, needing transport, the possibilities for Scania as a provider of transport solutions is great. There is a clear connection between GDP and the need of transport. When the world moves out of this recession, we will have a very positive growth in our industry.
“Our customers are buying a premium product at a premium price and they expect a premium return on their investment”
Bringing your wealth of experience from having worked in both the UK and Europe, how is the South African truck market faring compared to the UK and European markets? The European transport industry is generally far more mature than in Southern Africa, but nevertheless customers’ demands from their transport solution providers are largely the same. Operators are seeking maximum uptime to support the ever-increasing demands of their customers and of course they are looking for the lowest possible total cost of ownership. Excellent customer service and a wide range of service offerings are thus essential ingredients for a successful operation here. Scania is thus able, from its European market experience, to offer extensive transport solutions including truck rental, repair and maintenance contracts, financing and insurance, workshop takeovers – the list is almost endless.
TWA | Jan/Feb 2013
FESARTA NEWS SUB-SAHARAN AFRICA
New software platform developed by the region saves time and money THE EAST AFRICAN COMMUNITY in partnership with the United States Agency for International Development has launched the Revenue Authorities Digital Data Exchange platform in Tanzania. The Revenue Digital Data Exchange is a software platform for customs and transit data exchange, management and reporting. It allows for near realtime transmission of customs documentation to authorised public and private sector users at key border posts and cities across the five countries within the East African Community (EAC) – Burundi, Kenya, Rwanda, Tanzania and Uganda. The software saves time and money by shortening cargo processing times and reducing the number of officials needed to process cargo as some of the largest nontariff barriers to trade and cost to businesses in East Africa are delays at border crossings.
Poor maintenance “threatens roads in sub-Saharan Africa” ROAD TRANSPORT IS ONE of the focal
Efficiencies at borders are now achieved through advanced notification of shipments and completion of documentation before goods arrive. Advanced completion of customs declarations can save up to 12 hours in transit time at border crossings. The Revenue Digital Data Exchange is owned, operated and maintained by the revenue authorities of East Africa and was developed by the EAC along with the national revenue authorities with support from the USAID East Africa-funded Competitiveness and Trade Expansion (COMPETE) programme.
sectors for the European Development Fund cooperation strategy with most sub-Saharan African countries. Financially, it is by far the most important cooperation sector, with approximately €7.4 billion (R86.61 billion) in European Development Fund (EDF) commitments made in this region between 1995 and 2011. However, improper road maintenance and vehicle overloading is putting the sustainability of sub-Saharan road network into danger. In sub-Saharan Africa, roads are the dominant mode of freight transport, accounting for more than 80% of total movements of goods and services and transport needs are growing rapidly.
Rail link to streamline Southern African trade FIVE SOUTHERN AFRICAN COUNTRIES plan to coordinate their rail services to bolster trade through Africa’s largest port in Durban. The deal will do away with bilateral agreements, which complicate the export of copper, grain and containers across five countries through South Africa. “The main objective is to align the five railway lines towards a unified railway system on the North-South Corridor by establishing a Joint Operating Centre in Bulawayo,” says Nyameka Madikizela, head of international business at Transnet Freight Rail.
TWA | Jan/Feb 2013
Railway companies in the Democratic Republic of the Congo and landlocked Zambia, Zimbabwe and Botswana will streamline their existing rail infrastructure to facilitate transport to South Africa’s Indian Ocean port. The lack of a regional deal causes many delays in exports and imports. Increased outside trade with the continent has seen a greater need for intra-regional cooperation to get important resources across vast areas to ocean ports. “The opportunities exist in copper, chrome ore, etc., where the mines need some confidence in rail and, by cooperating through this agreement, we can develop a strategy that will provide capacity immediately,” explains Madikizela. The deal will see rail take over volumes that the region’s roads mostly carry at the moment, she adds. It will also bolster Durban’s competitiveness against ports in Tanzania on the Indian Ocean and Angola on the Atlantic. The rail centre, run from Zimbabwe, is due to launch this year.
The aid-recipient countries visited by the European Union (EU) do not do enough to ensure the sustainability of road infrastructure. In all partner countries visited, roads are affected to varying degrees by premature deterioration. Most of these countries have adopted institutional reforms, notably entailing the creation of road funds and road agencies, and made significant progress on road maintenance. However, many challenges remain to be addressed in all of them to ensure appropriate maintenance. Although spending on road maintenance has increased over time it remains insufficient to cover the needs. “In Europe, we are used to several options for our transport. In sub-Saharan Africa, if it is a question of transport, that means roads. Unless the EU Commission and its partners in sub-Saharan Africa start taking sustainability of the roads very seriously, they will be in danger of losing what we’ve built together,” says Szabolcs Fazakas, the Economic Commission for Africa member responsible for the report. “They [African leaders] need to take responsibility for enforcing load limits and to maintain the roads properly.”
FESARTA NEWS EAST AFRICA
Transport ministers discuss Isaka-KigaliMusongati rail project study THE THREE EAST AFRICA GOVERNMENTS of Tanzania, Rwanda and Burundi have reiterated their political will and commitment to hasten the proposed Isaka-Kigali-Musongati construction project of a railway line, which has been in discussion for 10 years without formal implementation. Transport ministers of the three countries: Dr Harrison Mwakyembe (Tanzania), Alexis Nzahabwanimana (Rwanda) and engineer Moise Bucumi (Burundi) have also agreed to sign a Memorandum of Understanding, binding the countries to results of studies and agreements on how to go about implementing the project.
The findings of the completed phase one feasibility studies were conducted by DB International of Germany in 2009 and Burlington northern Santa Fe (BNSF) of the United States. The two firms then considered the project to be economically viable and financially feasible. Current project coordinator Josephine Uweneza of Rwanda, in her presentation to members of a Joint Technical Monitoring Committee of the three countries, highlighted this study in her report adding that a detailed study would be completed by the end of March 2013.
The highest amount of bribes from transporters and drivers along the transport routes A SURVEY BY TRANSPARENCY INTERNATIONAL KENYA and TradeMark East Africa has revealed that regulatory authorities in East Africa demand the highest amount of bribes from transporters and drivers along the transport corridors. According to the report, titled Bribery as a non-tariff barrier to trade: a case study of East African trade corridors, Tanzania’s regulatory authorities rank worst at US$12.64 (R110.76) followed by Kenya at US$6.72, then Uganda at US$3.67, while Rwanda ranked fourth at US$0.679 with Burundi being the lowest at US$0.293. The survey, conducted in collaboration with Transparency International chapters in Burundi, Rwanda, Uganda and the Transparency forum in Tanzania,
further indicates that bribery costs in Tanzania per year consisted of about 18.6% of the value of goods transported. Lisa Karanja, director of Private Sector and Civil Society, from TradeMark East Africa (TMEA), which funded the study, says: “Regional integration is gaining pace but existence of non-tariff barriers continues to be a deterrent in the full implementation of the various protocols. TMEA commissioned this study with a view to enhance the advocacy for the elimination of non-tariff barriers. “We expect a comprehensive dialogue between state and non-state actors to address the key issue highlighted by this report. “A resolution of the identified issue will lead to a more competitive business environment that will result in increased trade and ultimately prosperity for East Africans.”
Free trade has a way to go as nontariff barriers push up cost of doing business in the region BUSINESSES IN EAST AFRICA will have to wait longer to reap the fruits of free trade, thanks to non-tariff barriers. According to a report by the East African Community (EAC) Secretariat, rather than doing away with non-tariff barriers (NTBs) by December 2012 in accordance with the EAC plans, some countries have even introduced fresh ones – about 10 – while 35 remain unresolved. Only 36 have been resolved. The Secretariat also found that differences over elimination of the barriers had deepened, denying the region larger markets, economies of scale and promotion of local, regional, and global trade — the benefits envisaged with free trade among the nations. This means businesses will have to continue incurring huge costs arising from the NTBs – mainly weighbridges, roadblocks, poor infrastructure, unnecessary delays at border posts and lack of harmonised import and export standards, procedures and documentation. The sad state of affairs is blamed on the absence of a legally binding framework that has left businesses at the mercy of individual countries. A draft law meant to punish countries that fail to implement agreed upon mechanisms to eliminate trade barriers was submitted to the regional parliament in November 2012. EAC secretary-general Dr Richard Sezibera says a legal framework has been developed and is awaiting comments from member states.
TWA | Jan/Feb 2013
NEWS DESK RICHARDS BAY TERMINAL
Equipment boost still tracking according to plan A R140 MILLION general bulk shiploader is the latest addition in Transnet Port Terminal’s R33 billion Market Demand Strategy investment programme. Custom-built to complement the terminal’s The red ship loader pictured in the Port of operational envelope, the loader was deRichards Bay after its signed in Austria and built in China; however, arrival on 16 January South African engineering company Sandvik has managed its entire procurement. Its capacity is a guaranteed 2 500 tph at a bulk density of 1.9 t/m3. The linear travelling loader will be suitable for all export commodities the terminal handles including coal, magnetite, chrome and chloride. Just over 70% of the terminal’s total commercial trade is export. The addition of equipment is aimed at the Market Demand Strategy’s promise of facilitating unconstrained growth, unlocking demand and creating world-class port operations through improved efficiencies. A skills transfer opportunity has also been created through Sandvik where Transnet Celebrating the arrival of the Port Terminal operators and the Richards Bay Terminal’s new technical team will be trained R140 million ship loader were for sustainable operations. The (from left): chief maintenance officer, Shane Narainsamy; project pre-assembled loader will be ofmanagers Alec Schemel and Kris floaded and installed upon arrival Naidoo; terminal manager, Victor to undergo commissioning. Mkhize and general manager: The machine is scheduled to be Capital Projects and Maintenance, Logan Naidoo fully operational by April 2013.
MCLI AGM Corridor update event THE MAPUTO CORRIDOR LOGISTICS Initiative is hosting its Corridor Update event on 21 February 2013 at the Kambaku Golf Club in Komatipoort, which overlooks the confluence of the Nkomati and Crocodile Rivers with breathtaking views of the Kruger National Park. Maputo Corridor Logistics Initiative (MCLI) members and corridor stakeholders across the logistics supply chain will attend the meeting, which takes place during a gala dinner in the evening. There will be a short programme of AGM proceedings and a report from the two MCLI chairmen. The Corridor Update will then focus on progress on the 24-hour one-stop border post at Lebombo/Ressano Garcia with the keynote address being shared by the South African Revenue Service and Alfandegas Moçambique. In addition, Transnet Freight Rail, Swaziland Railway and CFM will give an update on developments regarding the rail service to the Corridor and the
TWA | Jan/Feb 2013
ATNS hosts Benin minister of transport A BENIN GOVERNMENT DELEGATION led by its minister of Public Works and Transport, Lambert Koty, visited the Air Traffic and Navigation Services’ Aviation Training Academy in Bonaero Park, near the OR Tambo International Airport. “We are very impressed at the level of competency, knowledge and skill in this organisation. The same can also be said with regards to infrastructure and technology deployment. We should have been here some time ago” said Koty. The Air Traffic and Navigation Services (ATNS) board chairman, Mpho Mamashela, addressing the Benin delegation said: “Air transport is a major contributor to global economic prosperity. Aviation provides the only rapid worldwide transportation network, which makes it essential for global business and tourism. It plays a vital role in facilitating economic growth. “Aviation safety is important for international trade and economic development. Our work to promote safety through continuous training also strengthens the global economy, because the two are deeply intertwined. South Africa’s economic future is directly linked to reaching beyond our borders for new trade and investment opportunities. Our aim is to deepen ties with large, dynamic and high-growth markets around the continent.” Rushj Lehutso, ATNS executive: Commercial Services, added: “The global aviation supply chain’s link must be strong for the entire system to function. ATNS is proud to have initiatives in place, aimed at working closely with Benin’s aviation department to maintain and enhance the integrity of the global aviation system. Together we will improve the conditions for cross-border trade, economic growth and long-term prosperity for generations to come.”
new services into Maputo via the Goba line in Swaziland. TransAfrica Concessions, the N4 road concessionaire, will also provide insight into the developments and upgrades planned on the Johannesburg to Maputo route. The Maputo Port Development Company will also present an update on the port’s growth trajectory and its investment roll-out in line with its 2033 master plan. A bus tour to the Port of Maputo will take place on 22 February before returning to Johannesburg late that same evening. Before the gala evening on 21 February, a Golf Day has been planned with golfers taking to the field in a Four Ball Alliance (2 Scores to Count) competition. This presents a wonderful networking opportunity while playing a round of golf on one of the Lowveld’s beautiful golf courses. For non golfers a number of local excursions including game drives into the Kruger, a luxury day spa experience, aerial game viewing and the possibility of visiting a rhino and rare antelope breeding programme are being planned. For more information about the Corridor Update please contact admin@mcli. co.za or call +27 (0)13 755 6025.
NEWS DESK SOUTH AFRICA
Self-regulation working well for SA transport industry THE SELF-REGULATION SYSTEM, as stipulated in the Road Transport Management System (RTMS), is proving to be a very effective tool for South African truck and bus operators in managing fleets efficiently and cost-effectively, with many case studies to back up the success of the roll-out. “The RTMS, which has been in operation since 2003 and is finding growing support among fleet operators, continues to show outstanding results since implementation and supports the Department of Transport’s National Road Freight Strategy as the fourth pillar in the action plans,” comments the chairman of the RTMS national committee, Adrian van Tonder of Barloworld Logistics. “Currently there are 2 674 trucks and 395 buses (the Buscor fleet) from 68 company depots carrying the RTMS accreditation logo, with a quantum leap in participation having occurred in the past 24 months,” adds Van Tonder. RTMS is an industry-led, government supported, voluntary selfregulation scheme that encourages consignees and road transport operators to implement a management system – a set of standards – that demonstrates compliance with the Road Traffic Regulations. It also contributes to preserving the road infrastructure, improving road safety, ensuring driver health and wellness as well as improving productivity. Hino, one of South Africa’s leading truck manufacturers, is giving its full support to assisting with the roll-out of RTMS. Hino uses its nationwide dealer network as an important catalyst to spread the good news and benefits of using the system to its customers and then assisting them with the implementation. “We at Hino see the RTMS as a very important
initiative in creating responsible truck operators who show concern for the roads and environment while focusing strongly on fuel saving,” says Hino South Africa’s vice president, Dr Casper Kruger. “Our support for the RTMS has already extended to our dealers and we are sponsoring a series of successful and well-attended information-sharing sessions throughout the country to promote this programme. “We then encourage our dealers to keep up the momentum by following up with the transport operators who are not on the system to take up the challenge and assist them in developing a strategy to meet all the requirements,” adds Kruger. “The development of the RTMS flowed over from initiatives by the timber industry in KwaZulu-Natal at the beginning of the 21st century to combat overloading, which causes damage to roads, while also contributing to cutting the number of accidents involving trucks,” explains Van Tonder. “The KwaZulu-Natal project was known as LAP (the Load Accreditation Programme) and was also self-regulatory. This concept was expanded with the addition of driver health, compliance with road traffic regulations and all aspects of road safety to establish the basis for RTMS standards.” Driving forces in those early days included Paul Nordegen, Oliver Naidoo and Andrew Kriek, and they formed a steering committee in 2006 to give momentum to the initiative. There is now a more formalised RTMS national committee made up of representatives of a host of stakeholder organisations and associations that is now driving the project forward. Current chairman, Van Tonder, came aboard in 2009 and is extremely enthusiastic about this initiative.
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SUCCESSFUL BLACK EMPOWERMENT TRANSPORT COMPANY
Established in SA and expanding into Africa Ngululu Bulk Carriers has a rich history dating back to the 1980s. Since then, the company has grown to become the dominant transporter in the ferrochrome sector and an extremely successful BEE owned and operated company. It is a shining example of how historically disadvantaged persons moved from a minority shareholding to take control between 2003 and 2009.
TWA | Jan/Feb 2013 20 0 13
HRIS LUVHANI, CHAIRMAN of Ngululu Bulk Carriers, says prior to 2003 his investment company had no interest in expanding into the transport and logistics sector.
BEE partner wanted In the late 1990s, Lukas Potgieter, who founded the company in the 1980s, was under pressure from his mining clients to become more BEE compliant as per the mining charter. “Prior to our introduction, Potgieter had tried a few empowerment models, which were not successful, and he almost got his fingers burnt in the process of trying to find the right BEE partner. It was, however, through an acquaintance that I was introduced to him and his company, Lukas Potgieter Vervoer. “When I first met Potgieter in 2003, I told him that I did not know anything about the transport industry and could not buy a 26% stake in order for him to be compliant according to the mining BEE requirements and therefore appease his clients. However, I told him that I would be interested in taking an initial 10% investment stake in the company and if he was serious about having a true black empowerment partner actively involved in his business, as opposed to simple window dressing, then I would increase my investment.” Another condition Luvhani had when purchasing the 10% was that should he want to increase his stake in the company both parties had to agree how much he could increase his stake to. When Luvhani’s company purchased the first 10% stake it was therefore agreed that if Potgieter was genuine and wanted a proper empowerment partner Luvhani would then take a controlling stake in the company within five years. The deal was signed in December 2003 and was to take effect in April 2004. By the end of July 2004, both Luvhani
and the current CEO Freddy Sinthumule had literally fallen in love with the company and decided to increase their stake to 26%. By 2008, Luvhani wanted to take control of the company, allowing the owner to retire. In 2009, he purchased a further 25% enabling Ngululu group to take control. By the end of that year, a share buyback of Potgieter’s remaining 9% saw Ngululu increasing its stake to 56% of the issued shares in the company.
Name change It was at this time that Luvhani realised they had to look at changing the name of the company to reflect the owners, at the same time sending out a strong message to the market that there had indeed been a serious empowerment deal within Lukas Potgieter Vervoer. “Some of our major clients had been pushing for a name change. I am a sensitive man and knowing the dynamics of the industry I did not want to dent Potgieter’s image because he had spent many years building up and establishing a credible company. But one day after we had seen a client, Potgieter turned round and said that “some major clients are complaining about the company’s name and it is time to change the name to reposition the company in the prevailing dispensation”. Following Lukas Potgieter’s retirement in May 2009, the company was rebranded as Ngululu Bulk Carriers and rebranding of the assets was completed by the end of December in the same year.
Successful operations “I am extremely proud of where the company stands
By the end of July 2004, both Luvhani and the current CEO Freddy Sinthumule had literally fallen in love with the company and decided to increase their stake to 26% TWA | Jan/Feb 2013
stops. When drivers want to refuel they have to first contact us via an 086 number where we can ascertain if the particular vehicle being refuelled is scheduled for a refuelling or not. Through this system we have successfully been able to curb major fuel thefts from occurring.”
Diversifying and expanding
The team from Mercedes-Benz Commercial Vehicles Centurian with the management of Ngululu Bulk Carriers following the recent delivery of the last of 80 MercedesBenz trucks purchased in a deal worth R160 million
today as a black-
owned company employing about 650 people with 400 drivers. Our business dominates the Eastern limb of the Bushveld – the Mpumalanga area – with our operations going as far as Francistown in Botswana, Maputo in Mozambique, and Richards Bay and Durban.” Ngululu Bulk Carriers’ clients are bluechip companies and the company’s key operations involve transporting chrome ore, ferro-chrome, nickel and platinum concentrates, reductants as well as energy coal. “Key to the success of our operations is the high rate of return cargo our trucks bring back. We believe in being open and honest with our clients and when we quote we tell our clients how much it costs if the truck has a return cargo and the rate if the truck does not have a return cargo. When the client arranges a return cargo we then pass the full benefit on to them within the costing.” One of the key drivers of this business is tracking the vehicles carrying precious cargo over vast distances. “You need to know where the trucks are 24/7 because carrying platinum and nickel concentrate from the mines means they are targets of criminal elements.” Ngululu Group also has a controlling interest in a commercial tracking company – ITA Goup – based in Century City, Cape Town, which provides the monitoring services. Apart from tracking commercial vehicles across Southern Africa the company also monitors all fuelling stops undertaken by any of the trucks within the Ngululu Bulk Carriers stable. “People can be quite innovative when it comes to stealing fuel, which is a serious business and if not kept in check can ruin a company. To keep this in check, all our vehicles are refuelled at our depots or at predesignated truck
“I am extremely proud of where the company stands today as a blackowned company employing about 650 people with 400 drivers”
TWA | Jan/Feb 2013
“Where are we going? We intend both diversifying and expanding our transport business not only in South Africa but beyond our borders. “Countries up north are growing at a faster GDP pace than in South Africa and a lot of these are landlocked, which creates great opportunities for us. This is why we are expanding into the ports of Beira in Mozambique, Dar es Salaam in Tanzania and Mombasa in Kenya. The beauty about this East African link is that it is an economically growing region and, because of the political stability in those areas, there is no reason why a South African company should not expand into these regions. We are keenly looking at the Caprivi Corridor as well and have advanced plans to establish presence in Walvis Bay, Namibia. The target areas there are Angola, Zambia and the DRC. “Other expansion projects include providing technical support for transport and logistics to mines in Zimbabwe leveraging our vast expertise. We can both assist and prop up companies in Zimbabwe, Malawi and neighbouring states. So it is a win-win situation for everyone.” Ngululu Bulk Carriers is striving to have 50% of its income generated from outside South Africa’s borders by 2017. “We are establishing a strong pan-African presence and yes there are challenges, but I am a great believer that where there are challenges you will also find vast opportunities!”
Current operations Ngululu Bulk Carriers is a black-controlled company operating 262 tipper trucks, i.e, tractor and trailer combinations, with a turnover of just under one billion rand. The company has a robust truck replacement policy and trucks are replaced at either 600 000 km or every three years, whichever occurs first. Luvhani does not believe in keeping trucks in the maintenance bay. “Yes, new trucks are expensive but maintaining older trucks is even more expensive. This strategy will not change and because our trucks are properly maintained we do not suffer major breakdowns, to the satisfaction of our customers.” The fleet being operated comprises a mixture of UD, MAN and Mercedes-Benz heavy commercial vehicles. “We like to have a balance in our fleet and have found these three OEMS to have trucks best suited for our operations.” The company is currently the only operation in South Africa to have its entire fleet accredited with the Road Traffic Management System (RTMS) – evidence that it takes quality management seriously in its company. All maintenance of its fleets is handled by the OEMS onsite at its Steelpoort depot in Limpopo, which allows the company to concentrate on its core business of transporting various bulk commodities for its customers.
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TWA | Jan/Feb 2013
The road ahead in 2013 What can ﬂeet operators expect from some key heavy commercial vehicle manufacturers during 2013? Simon Foulds speaks to UD Trucks, Iveco, MAN and International Trucks to ﬁnd out.
veco’s sales & marketing manager, Christophe Longuet, says: “We are optimistic and foresee a growth in sales, especially within the Southern African countries. Iveco recently signed a joint venture agreement to manufacture the Eurocargo, Stralis and Trakker model range in South Africa.We will be adapting the trucks for the specific application required by the operators.” MAN’s deputy CEO, Bruce Dickson, adds: “2013 will be a tough year, but the South African heavy truck market has proved its mettle in recent recessionary conditions. Direct foreign investment both in South Africa and countries north of our borders, along with government spending on infrastructure development, continues to spur economic growth and a growing need for trucks. “MAN has the right products, services and people to deliver added value to our customers. By making enhanced customer proximity a strategic direction within the company, MAN has significantly differentiated itself from other heavy-duty truck suppliers in South Africa over the past three years. Next year will see MAN continue this programme of enhanced customer orientation to increase our market share.” John Barnett, dealer operations manager for International Trucks, is John Barnett, dealer operations also optimistic about the year ahead manager from International Trucks
“At International Trucks, there are exciting plans to grow our dealer network in Southern and subSaharan Africa.”
TWA | Jan/Feb 2013
stating: “The extra heavy commercial vehicle sector should remain buoyant for 2013 and increased volumes could be expected when the government’s proposed infrastructure project is introduced. At International Trucks, there are exciting plans to grow our dealer network in Southern and sub-Saharan Africa.” Rory Schulz, gen-
“The major focus remains on fuel consumption and it is perhaps too early to mention what will be introduced in 2014 onwards. We are, however, striving to be class leading. ” Rory Schulz, general manager: corporate planning & marketing, UD Trucks Southern Africa eral manager: corporate planning & marketing at UD Trucks Southern Africa, mentions: “We believe the market will stabilise in the latter half of 2013, but the first six months could be tough. However, we anticipate volumes to be similar to 2012.”
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Carbon footprint Dickson says: “The deployment of trucks that limit carbon dioxide emissions has become imperative for fleet operators servicing multinational supply chains. While corporations are currently driving ‘green’ compliance among their logistics service providers, it is just a matter of time before carbon taxes become a reality for truck fleet operators in Africa. “As such, leading fleet operators now consider ‘reduced carbon footprint’ as a key criterion when purchasing a new truck. The route to achieving this is to supply extremely fuel efficient vehicles. Diesel and carbon dioxChristophe Longuet, Iveco’s ide have a directly proportional relationship sales & marketing manager – the less diesel burned by the truck, the lower its carbon footprint.” Schulz concurs: “Carbon footprint is often confused with emission standards; in reality it relates directly to fuel consumption. For every litre of diesel used, 2 664 kg of carbon is produced. Thus the key remains in lowering fuel consumption and looking towards alternative technology or hybrids to improve the situation. The major focus remains on fuel consumption and it is perhaps too early to mention what will be introduced in 2014 onwards. We are, however, striving to be class leading.” Longuet concludes: “It is very important for our country to have a greener carbon footprint. We are testing several Euro5 emission trucks with different fleet operators with positive results. We find, however, that only a selected few fleet operators have a greener carbon footprint as a requirement when purchasing trucks. This is mainly because of the condition of our current fuel in the country. We are all moving in the right direction and by 2014 I am optimistic more fleet operators will start changing their fleets in order to ensure they have an improved carbon footprint.”
“We are optimistic and foresee a growth in sales, especially within the Southern African countries.”
New products UD Trucks Southern Africa will not be launching new models in 2013, but in early 2014 it will launch a new concept vehicle range for Southern Africa. At International Trucks, there are continuous product improvements on various models to enhance the suitability of the vehicles for operations in Southern and sub-Saharan Africa. In 2013, MAN Truck & Bus SA will launch its MAN TGS EfficientLine range of long-haul truck-tractors. The range is based on the proven MAN TGS WW, which has established a solid reputation in the long-haul market for its fuel efficiency, excellent power-to-weight ratio and reliability. The comfort and safety features, along with smart technologies to further reduce fuel consumption, make the TGS EfficientLine the ideal long-haul truck for African operators. Iveco will introduce the Daily 55S15W 4x4 in single and crew cab to its medium range in January, with Euro 3 engine technology that is well-suited for the South African market. The Daily 4x4 is equipped with front and rear diff locks as standard that make it capable to take on any road or obstacle. In the extra-heavy commercial market, Iveco will launch the new Stralis Hi-Way, which has just been awarded the 2013 International Truck of the year trophy. The Stralis Hi-Way will be introduced in the second semester of 2013 and will be the company’s flagship model, equipped with the Cursor13 Euro 3 engine capable of between 480 and 560 hp. The cab design has been reviewed to improve the aerodynamics and keep a modern and appealing look. The interior has been completely redesigned to ensure maximum driver comfort and ergonomics. The overall safety features, like Adaptive cruise control, DAS (driver attention support), Bi-Xenon headlights and drivetime running lights; ESP and Hill holder will be standard. Iveco will also introduce a facelift for the Eurocargo.
TWA | Jan/Feb 2013
Optimistic about 2013
for both truck & bus MAN Truck & Bus is not only happy with how 2012 fared, but is also optimistic about the future. At the end of 2012 it was announced that Bruce Dickenson and Ray Karshagen had been appointed as joint CEOs. By Simon Foulds
HE CHAIRMAN, MARCUS GEYER, says he is going to step back and hand over the day-to-day responsibilities to Dickenson and Karshagen as the company aligns its sales with its Middle East operations. Following the announcement, Dickenson says it is a great honour and privilege to be appointed joint CEO with his esteemed colleague, who is known as ‘Mr Bus’ in the South African market place. “Though we are happy with how 2012 fared, it was nevertheless a tough year. But being a positive individual I saw opportunities and we continued our strategy of breaking into new fleets.”
New markets “Over the past 18 months, we have been on a drive to break into new markets where competitor fleets were
TWA | Jan/Feb 2013
being operated and we are pleased that our strategy is paying dividends. As a result, we have built a really strong foundation from which to capitalise on as we continue our growth.” During this time, MAN made inroads into SAB and SAPPI, where it dominated the market in the wood sector and delivered 74 vehicles to Unitrans across its various divisions. Other companies using MAN trucks include Afrox, PEG Logistics and Fairlands Dairy. “We are very excited about 2013 and I believe it is going to be another good year for the company. Though we predict that the overall market will be flat, we still believe we will have a good year. This is because we have the product and our next step is to continuously improve on our service level to continue satisfying our customers.”
“We have now taken the initiative where we have placed a number of bodies on our trucks, which when sold can simply be driven off the floor and start operations immediately. We have a stock holding of 50 such trucks and we basically sell them off the shelf. In our particular market, this is crucial especially when a client requires a truck right away and does not have the time to wait for a body to be designed. It is a very exciting project for us and we believe it will pay dividends for the company.”
Exports Up Time Principle One concept that MAN has been implementing is its Up Time Principle, which is similar to that at a passenger car dealership where after the vehicle is serviced the owners receive their invoice. “It has not always been this easy in the trucking sector, but since we implemented this system we have made tremendous progress that when a truck leaves our workshops it takes the invoice for the work done as opposed to receiving it at a later stage.” The company has also aligned itself with Ipsos. “What is very exciting about this whole concept is that we are not only measuring the standards of the KPI for customer satisfaction, but we are also on our brand and company values along with our customer promises programme.”
“Another new concept being introduced by MAN Truck & Bus is its ‘MAN Trucks To Go’, which, states Dickenson, is a very exciting project for the company”
Geyer, adds that the company is also going to be focusing on its export business into East Africa. “We have a competent partner in Kenya catering for this sector and we have built a plant in Bruce Dickson, MAN’s deputy CEO the country capable of assembling the knock down units imported into the region. We sent employees to the region to assist our Kenyan partner to establish and grow the business in East Africa. At the same time, the company has also expanded its network in Mozambique, Zimbabwe, Zambia and Botswana.” “We are heading in the right direction as we have the right elements in place ensuring we grow MAN’s presence not only in South Africa but into our neighbouring countries and up through East Africa,” he concludes.
Telematics In February 2013 the company will be launching its first phase of fleet telematics specific to the MAN brand. “We made a concerted effort of not delivering a generic concept and spent considerable time with key customers to understand their needs. We envisage the full implementation of this system in the third quarter of this year. It is a very exciting project for the company.”
Trucks To Go Another new concept being introduced by MAN Truck & Bus is its ‘MAN Trucks To Go’, which, states Dickenson, is a very exciting project for the company. It is based around the company’s heavy commercial vehicle category where trucks with predesigned bodies are placed on the floor. Typically, the salesperson would secure an order for a chassis and then the customer would buy the particular body he required and would then approach the body manufacturers and order accordingly or place an order for the body with MAN Truck & Bus, which would then send the chassis across to the body builder.
MAN Truck & Bus 2012 figures ● Truck sales in 2012 were 1 900 units compared to 1 912 in 2011 ● Bus sales in 2012 were 500 units compared to 459 in 2011 ● Used vehicle sales were 600 in 2012 compared to 551 in 2011 ● Parts sales also increased in 2012, where 760 570 parts were sold compared to 703 289 in 2011.
TWA | Jan/Feb 2013
Delivering optimum performance
Most cargo is transported by road throughout Africa. Having a state-of-the-art truck is rather meaningless if the trailer being towed with the load is not as efficient or aerodynamic as the horse. Simon Foulds speaks to key players in the industry.
HE TRAILER IS an important piece of equipment and is probably underestimated by the general public. Fleet operators on the other hand know the importance of having the correct trailer behind the horse ensuring the load being delivered reaches the destination undamaged and on time. Paulo Ribeiro, financial manager at Paramount Trailers, offers advice for operators transporting freight through Africa. “As with most things, the importance lies in the planning process and understanding what tools will be most appropriate for the conditions. We have to know where the trailer will be operating so as to ensure that the product manufactured will be able to handle the conditions. A trailer that will be used in Africa is built differently to a trailer solely operating in South Africa. Trailers into Africa are usually more robust with additional strengthening being
“As with most things, the importance lies in the planning process and understanding what tools will be most appropriate for the conditions”
TWA | Jan/Feb 2013
incorporated into the trailer chassis. Furthermore, the majority of trailers operating in Africa have a diesel tank so that they can carry additional diesel for longer trips. Another noticeable difference is that ABS brakes are not a requirement for trailers operating in Africa but are are a requirement in South Africa. Constant maintenance and repairs of the trailers will go a long way in ensuring the lifespan of the trailer is extended.” Rynhardt Steenkamp, marketing manager at Afrit Trailers, also says that the key to ensuring the efficiency of your trailer is driver education. “This is critical because once a product is operated and maintained correctly, maximum utilisation should almost be guaranteed. We have found that there is a perception in the industry that only trucks need to be serviced and not trailers. This is not the case, and in order to obtain the desired efficiency both truck and trailer need to be serviced at the same intervals.” In ensuring trailers continuously evolve so as to remain efficient to operate, manufacturers are regularly modifying their products to incorporate the latest trends so fleet owners can continue enjoying the benefits of an efficient trailer. Some of the trends being incorporated into the design of
the trailers range from disc braked axles and electronic suspensions to roll stability, customised bodies for fuel efficiency, lighter trailers, improved safety features and greater flexibility, enabling different types of loads to be transported. The bottom line, according to the trailer manufacturers, is that clients want a trailer that burns less fuel but carries greater loads. â€œOne of the trends we currently find in the market is that our customers are looking for customised products,â€? states Steenkamp. â€œFuel efficiency is also important and customers believe that the more the fuel efficiency the better the trailers are for the environment due to less carbon dioxide emissions.â€? WABCO Automotiveâ€™s Enoch Silcock expands: â€œDiscbraked axles and EBS braked systems with electronic suspensions and roll stability are some of the latest trends we are introducing to our trailers. Especially requested on the upper market are higher value trailers for fuel tankers and refrigeration units. The reason for this is because safety is seen as a high priority and the operators tend to value the long-term safety and operational efficiencies that come from using the latest in brake technology.â€? Ribeiro states: â€œBecause transporting freight into Africa is both time consuming and expensive, our clients are looking for ways to arrange loads for both the away and return trips. Therefore, trailer designs are being looked at to create flexibility around a trailer so it is able to transport more than one
type of product or goods for both journeys, making it more profitable for operators.â€? Travis Piek, technical manager at Serco, says because of the competitiveness of the transport industry, operators are pushing the manufacturers for lighter, more fuel efficient â€“ aerodynamic â€“ solutions. â€œThis has a twofold effect on the transporter, because they want to be able to carry a bigger load yet be able to burn less fuel thereby increasing their overall profit margin. This is the challenge for trailer manufacturers.â€?
â€œBecause transporting freight into Africa is both time consuming and expensive, our clients are looking for ways to arrange loads for both the away and return tripsâ€?
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Ensuring efficient reliable transport solutions Scania continually delivers outstanding service to its customers. MD Steve Wager speaks to Simon Foulds.
URING THE SECOND QUARTER of 2012, Steve Wager took over the helm of Scania South Africa as MD and during his first seven months at the company, he began introducing a new method of managing and operating the business in a more streamlined manner. He also spent time visiting customers as well as understanding Scania’s strengths within the South African market.
Structural change “From the beginning of January, one of the positive changes being implemented within the company is a structural change where we have reorganised our retail operations into five distinct regions and appointed a regional director to manage and steer each region. Their task will be to bring the operations together in each region and work in a more cross functional way so that all the areas of business come together effectively. “This will create even greater team work ensuring the five regions – Gauteng, Western and Northern Cape, Free State, KwaZulu-Natal and Eastern Cape – will service our clients even more efficiently. The intention is to get our people to work more closely together in finding customer solutions, giving quicker response times
The R460 gives drivers the optimum range of cabs for long distance haulage and other transport duties with few stops. Spacious, comfortable and powerful, these top-of-the-line trucks are meant to take on the most demanding jobs and the most challenging routes
TWA | Jan/Feb 2013
to customers as well as shorten the decisionmaking process. We are creating more responsibility within the regions in order to serve the customers more efficiently.” efficiently ” The solely owned operations in Namibia, Botswana and Tanzania remain unchanged along with the independent dealers in Malawi, Zimbabwe and Zambia.
Matrix The new operational restructure is based on a similar matrix structure operating throughout Scania globally and, according to Wager, it is a proven method and brings the South African operations in line with operations around the world. “The regional directors report directly to me but still retain their functional roles, so they wear two hats within the matrix structure. This will bring us not only closer to our customers in understanding how their businesses are operated, but also in understanding our customer’s customer as well. This is very important because if we can understand their needs and demands better it will shorten the decisionmaking process, therefore making us both more efficient and customer focused.”
Mining In addition to this, during the first quarter of 2013 Scania is opening its mining and off-road department. This department will also operate in a cross-functional manner so that the company will have experts who understand the mining industry and, apart from selling vehicles into this sector, will also be responsible for selling a whole solution to a customer. Scania is introducing an 8x4 heavy-duty tipper onto the South African market. According to Scania, the vehicle will compete extremely favourable on the market. “This particular model is faster than our competitors’ and, though its payload might be bit less, it is far more economical,” adds Wager.The move into the mining sector in South Africa started earlier in 2012 and is part of a global strategy to tap into this market. “The mining sector is not a new avenue for us as we have been servicing vehicles that operate in that industry, but what is new for us is selling Scania trucks designed and targeted at the mining industry for specific use on a mine. “It is a new opportunity for us as we define a niche product offering we know is suited to the mining landscape and we believe it is a winning concept as each vehicle will be modified to the customer’s specifications.”
to my heart because when I was based in the UK I was responsible for Scania’s truck rental operations. At the time, I was responsible for 1 400 vehicles in the fleet covering the UK market. “Following our pilot project, the sector is growing rapidly and at the moment demand is outstripping our supply. It has really taken off among our clients because all they have to do when collecting a vehicle is put fuel in the tank and their own driver behind the wheel. Everything else is catered for by Scania, including insurance, vehicle tax, road fund licence and maintenance.” Scania appointed a manager to grow this division on 1 November 2012 and the company is satisfied with how the concept has been accepted among its operators. At this stage, it is only operating in Gauteng, but will expand the division across the rest of the country in due course. “The greatest risk in truck rental is what they call the utilisation risk – when there is a downturn in the economy no one hires trucks.”
Simosakhe Ngema, Scania production system co-ordinator for RPC MDZ
Scania used sector “We have also established a used truck operation and these two activities will work closely together. I am also a big fan of used trucks as this aspect was also a very successful operation in the UK when I was based there. It is a product offering we can give to our customers whether it is for a start-up operation or for operators who want to supplement their fleet. “Operators can lower capital costs by purchasing a used truck through an OEM, We should be developing this sector more over the next 12 months.”
New product offerings Apart from the heavy-duty mining tipper, Scania has also introduced two new vehicles aimed at the fleet operator: the G460 and the P410. “The G460 has been well received in the market and has been introduced in a number of fleets with pleasing results. The P410 is being launched into the South African marketplace as from January 2013.” Both vehicles share the same driveline, gearbox and cruise system, but the G460 is a higher specified vehicle and has a bigger cab compared to the P410.
“The G460 has been well received onto the market place and has been introduced in a number of fleets with pleasing results. The P410 is being launched into the South African market place as from January 2013” Scania rental Following a successful pilot project, the company is launching the Scania Truck Rental division. “It basically gives operators the chance to rent a vehicle from 24 hours to a year on a short-term hire basis. Not only does it offer operators great flexibility, it also caters for them during peak periods as well as when they have either had a vehicle written off in an accident or are waiting for new vehicles to roll off the production line. This is a concept that has worked very successfully in Europe, particularly in the UK. It is a concept close
The road ahead “Scania is well-positioned within the marketplace and it is our intention to carry on growing steadily as we keep on improving our products and services. I am optimistic about the road ahead and Scania’s future growth not only in South Africa but also through sub-Saharan Africa.”
TWA | Jan/Feb 2013
MOVING LIGHT LOADS
SA manufacturers remain buoyant What does 2013 have in store for the light commercial sector? Simon Foulds speaks to the manufacturers about the year ahead in the sector, about new vehicles and models, and how important is it for operators to consider a vehicle’s carbon dioxide emissions when making the purchase decision.
T TIME OF GOING TO PRESS, the total sales of light commercial vehicle between January and November 2012 was 145 040 (an increase of 8 565 vehicles for the same period in 2011).
2013 forecast Mlungisi Nonkonyana, Isuzu brand manager, says: “The motor industry has shown good growth in 2012 and remains on target to achieve 10% growth for the year. Due to ongoing economic pressure, the forecast for 2013 remains flat at 2012 levels.” Toyota media spokesperson Clynton Yon adds: “Competition will intensify but we are confident that Toyota can hold its own with the light commercial segment. Of course the vagaries of the current economic climate have to be taken into account; however, corporate business will remain buoyant as fleets need to be replenished.” GWM chairman, Tony Pinfold, states: “Like everyone in the industry, we are cautiously optimistic – the current economic situation, labour unrest, etc., is of concern. These uncertainties influence buying decisions and we are watching this carefully.”
“The vagaries of the current economic climate have to be taken into account; however, corporate business will remain buoyant as fleets need to be replenished”
Efficiency Isuzu has developed and released low rolling resistance tyres as standard and optional fitment to specific models. The company has also created a reduction of internal friction in engines, transmission and axles by using low viscosity synthetic oils. Changes to the turbo, charge air cooler, intake system and EGR system on diesel models have resulted in improved fuel economy. Toyota has no immediate changes to the line-up in 2013, although more efficient engine technology will filter down to commercial vehicles as such engines become available. Evidence of this can be seen in the new 2.5 Variable Nozzle Turbo diesel engine (from the Fortuner) now doing service in the latest Hilux Raider Double Cab variants.” Regarding the Mitsubishi Colt range, even the entry level single cab comes standard with ABS/EBD and dual airbags for driver and passenger safety.
New vehicles Isuzu is launching its sixth generation pickup during the first quarter, which will be locally manufactured. Toyota is not launching any new models, but is continuing with its current range, though there will be running changes and some specification upgrades that will be made known closer to the release-to-dealer dates. GWM plans to further expand its range with a base diesel single cab and double cab.
Carbon footprint Nonkonyana of Isuzu says: “Carbon footprint and fuel economy will remain an important consideration for all fleet operators and is definitely a key factor for them when making the purchase decision.” Toyota’s Yon adds: “Economy will always be a key factor but it goes beyond fuel consumption. Overall cost of ownership
TWA | Jan/Feb 2013
LIGHT COMMERCIAL and resale values also plays a part and has contributed to Toyota’s supremacy on the sales front.” GWM’s Pinfold adds:“We are very conscious of this but the main problem is the quality of fuels available in South Africa; we don’t have the best quality fuel to facilitate low emission levels.”
Inner- and intercity deliveries According to Nonkonyana, Isuzu offers a balance of economy and reliability and is famous for its legendary ride comfort together with rugged toughness and superior off-road ability combined with exceptional quality standards and great heritage. Mitsubishi believes its range of fuel efficient pickups has proven reliability and is comfortable, safe and offers a high ride height. For GWM, it is the good value proposition that the company will continue to offer. It believes its load capacity is an advantage over competitors, as is the cabin space, and the smaller engine makes its vehicles far more fuel efficient. The push on larger engines is not a value proposition for the company.
Why operate your range According to Nonkonyana: “Isuzu is the best all-round commercial vehicles offering a balance of economy and reliability supported by a wide dealer network footprint in South Africa and sub-Saharan Africa. According to the 2011 Competitive
Customer Enthusiasm results (IPSOS, formerly Synovate), Isuzu is the top light commercial vehicle brand in South Africa. Toyota’s Yon states that it is because of its legendary reliability, largest dealership network in Southern Africa, parts availability and affordability (best in the latest Kinsey Report) as well as the best performer in the latest Ipsos report (formerly Synovate) that make Toyota the brand of choice. Mitsubishi national marketing manager, Braam Faul, adds: “The Mitsubishi Colt out sold Hilux in the early 2000s. Now that we have included a single cab in the pickup line, customers can buy their full range of light commercial vehicles from us again.” GWM’s Pinfold concludes: “We can offer good value for money plus an excellent dealer footprint of 78 dealerships throughout the country, which, with our parts supply, is equivalent to the best in the industry.”
“Economy will always be a key factor but it goes beyond fuel consumption”
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SUPPLY CHAIN FORESIGHT
Optimising transport routing and scheduling “Every company that has a warehouse problem also has a transport problem,” David Lubinsky, MD for OPSI Systems, tells Simon Foulds. Foulds
OW DO OPERATORS get the best value out of their fleet? According to Lubinsky, it is all about having the correct systems in place to aid a company’s processes, ensuring a company gets the best utilisation out of a vehicle. Though there are a number of different levers of transport optimisation available to the industry, Lubinsky highlights eight he believes should be considered by both warehouse managers and fleet operators.
Optimising within a route Here operators have to determine the best route for deliveries to take so they can get an optimal performance from both the driver and truck, thereby improving efficiency. “It could be a simple matter of rescheduling the route and taking out as many right turns as possible along the route,” he says. Lubinsky adds: “But it is more complex than that, however; by planning the best possible route and optimising the sequence of deliveries, taking stop starts and traffic congestion times into account, fleet operators can save up to 10% on fuel, tyre and maintenance bills.”
“Having the right fleet immediately gives operators a huge cost saving”
Multi-vehicle optimisation – routing and scheduling Using this lever, operators take the orders and the trucks at their disposal and then decide which orders go out on
TWA | Jan/Feb 2013
which trucks and the specific route these orders take. “This has clear benefits for operators who implement the system properly. Firstly, operators have to ensure all product, routing and vehicle information is captured correctly through the transport management software, including the capacity each vehicle can carry. “Key to this system operating efficiently is having the correct stock being transported at each point along the map routes, so the relative loading bay information is also important when implementing the system. “It can be hard to set up but once operational the big benefit is companies know up front what products are going on a respective route and this system also improves warehouse efficiencies at the same time.”
Correct fleet selection “Having the right fleet immediately gives operators a huge cost saving. Fleet operators need to look at the products being delivered and ascertain through the company’s route scheduling tools the cost of each type of vehicle operating along the routes. In essence, you create a ghost fleet and through your operating calculations determine the best type of vehicles for the job. This information then assists the
operator in choosing the best vehicle for the fleet. “It is advisable to run the same exercise through the chosen vehicles to ensure operating calculations before making that big investment, which if done incorrectly will increase operating costs and affect the overall bottom line.”
Activity smoothing over the period When making deliveries to numerous customers on a weekly basis, how do operators balance and ensure the deliveries are done while optimising fleet operations in such a way that it does not upset clients? “It is difficult to find the right patterns, but not impossible, especially when considering an operator might have an uneven workload. So it is important to balance the volume delivered and the number of stops. “What needs to be done is to capture the profile of each delivery and then allocate the correct amount of goods needed to be delivered to the client ensuring they always have stock on hand – especially within the FMCG market. Through this method and by reducing vehicle peak travel time by at least 20%, operators can achieve a huge saving on their overall operating costs. The more operators can push down their peak time travel, the better it is for their overall operating costs and ultimately the company’s bottom line.”
Master route optimisation An operator with multiple vehicles can predetermine routes because it usually has vehicles visiting the same customers frequently as is the case with many FMCG deliveries. In other words, determine which customers are on a specific route and keep following the same route all the time, therefore optimising the regular routes in terms of efficient deliveries. “Through this lever we were able to save the five million kilometres travel time for one of our FMCG clients in one year.”
Minimising depot queues This particular lever entails ensuring scheduling loading bays efficiently so when the scheduled trucks arrive the relevant
loading bay slot is allocated and ready to receive the vehicle. “For this system to operate efficiently it is critical that the system allocating the slots and the process your hauliers use to manage trucks respect the allocations. “We did a study for a large FMCG company where the slots for the loading bays created a big bottleneck in the whole process. This proves how important it is to view loading bays at warehouses as an important process and resource that needs to have an operational plan similar to that implemented for operating the trucks.”
Sharing fleets between depots
“The more operators can push down their peak time travel the better it is for overall operating costs”
This is ideal for a company with numerous factories or depots that share its fleet as opposed to individual fleets at each operation within the company. “By combining a fleet, a company saves in terms of operating costs; it can be difficult to implement from scratch but if a company gets it right it pays tremendous dividends.”
Optimising back hauls and inbound logistics A problem for some companies is that after making a delivery the trucks have empty loads when they return, which inevitably costs the company money. But, according to David, fleet operators can negotiate with their clients and customers to improve their inbound logistics by using their empty legs for their client’s outbound logistics. “For some of our clients we have managed to negotiate better rates for them for their raw materials by getting them to transport the raw product to their premises on the return trip after delivering finished products to customers. This way you cut on operating costs and optimise the use of your vehicles at the same time. You do, however, need to have a good system list in operation because you are now monitoring your fleet for both outbound and inbound deliveries. Initially, there might be a disruption in the overall process, but once the kinks to your system have been ironed out the company will definitely benefit in the long term.”
Work the system “There are a lot of levers that companies can implement, but these are eight that I have come up with and each one of these is a way of pushing down on your distribution costs. Each one of these levers introduced by companies would have a definite percentage cost saving on your fleet optimisation. And some of these would be applicable and others not. Key here is considering what a company can do to minimise costs, especially with the price of fuel continuously rising. What are you doing to minimise your total distribution costs?
TWA | Jan/Feb 2013
Tracking into the future The importance of knowing exactly where your trucks and trailers are is more imperative nowadays than it has ever been in the past, not only in South Africa but also as the ﬂeet leaves the country’s borders.
HERE ARE NUMEROUS tracking solutions available for fleet owners and Transport World Africa speaks to Mix Telematics; Intelligent Transportation Systems South Africa and Self Track to find out how operators can track the movements of their valuable cargo 24 hours a day.
“Operating a multimillion rand fleet as well as transporting goods worth millions is made all the more easy due to the latest tracking solutions”
“With rising fuel prices, the ongoing need to lower carbon emissions and driver safety, all being of high importance, time is of the essence for transport operators to make use of the fleet management technology available to them today,” says Gert Pretorius, MD of MiX Telematics (Africa – Fleet Solutions). Eddie Kartun, director at Intelligent Transportation Systems South Africa, states: “Many transporters are moving away from the standard vehicle tracking products and moving ahead with a more holistic and consolidated approach to managing their fleets and drivers. Transporters and fleet
TWA | Jan/Feb 2013
operators need much more than just basic systems and are focusing their efforts on a total solution now.” Adds Pieter Coetzee, MD at Selftrack: “For our clients, GPS live tracking combined with driver behaviour data is a critical element.”
Operating a multimillion rand fleet as well as transporting goods worth millions is made all the more easy due to the latest tracking solutions, but what makes one solution better than the next? Kartun says: “I believe we have the best products on the market place and this is backed up with our unmatched service and installation capabilities as we literally deliver to our clients what we say we can deliver: service – anywhere, anytime and anyplace.” Coetzee adds that their clients enjoy an increase in productivity, efficiency and client service, along with a decrease in vehicle abuse, fuel use and maintenance costs. “With effective fleet management technology installed, transport operators are able to have direct control over aspects like driver behaviour as well as vehicle movement and utilisation,” states Pretorius. “Having direct control over aspects like driver behaviour as well as vehicle movement and utilisation means operators can look forward to significant reductions in fuel and maintenance costs, while also lowering their accident rates.” In addition to saving an average of 10% on fuel costs, MiX Telematics’ fleet customers report significant improvements in vehicle utilisation and driver behaviour. For example: “A long-term trial with Sylter Verkehrsgesellschaft (SVG) from Germany revealed a net saving of €2 200 (R25 293) per year per vehicle, while another customer of ours, RATP London United, achieved a 17% reduction in its accident rate and a 10% improvement in fuel efficiency following the implementation of a customised risk reduction programme,” expands Pretorius.
Monitoring Pretorius says trailer tracking has the potential to become one of the fastest growing sectors in the local telematics market, with South African fleet managers anxious for solutions that will allow them to both manage and track their trailers as well as their associated high-value or high-risk loads. “For the first time, fleet managers can have full control of their trailers’ locations and activities, whether they’re stationary or on the move. By knowing the location of one’s trailers at all times, fleet utilisation – and hence efficiency – can be improved dramatically and instances of lost trailers reduced irrespective of whether they are coupled with or detached from the horse or truck tractor. “Until now, fleet managers have had to rely on information derived from their truck tractors to manage their trailers. “This has made the separation between a truck tractor and its trailer both unsafe and inconvenient – especially when highrisk or high-value loads are involved.” According to Coetzee: “Provided the SIM card used in the systems can access the local GPRS cellular network of the country where the truck is driving through, then the vehicle can be monitored by Selftrack throughout Africa.” Intelligent Transportation Systems South Africa is largely dependent on communications coverage within the borders of South Africa but also has products that can go cross border and monitor assets on the continent.
“Until now, fleet managers had to rely on information derived from their truck tractors to manage their trailers”
“Being at the coal face and having dealt with numerous unusual requests over the years allows us to understand our clients’ requests and needs, and therefore we can custom fit the right technological solution for our broad range of clientele.” Pretorius voncludes: “MiX Telematics embraces a consultative approach, working closely with partners and customers to ensure the implementation of solutions that are worldclass and locally relevant.” The company’s products and services are tried and tested, strengthened by a heritage that dates back to 1996.
The best operating solution “The advantage of our products is that it is self-managed, affordable and easy to use,” explains Coetzee According to Kartun: “The company has over 30 years’ experience in this very intricate and demanding market. We also select the best solutions for our client’s unique needs and deliver a great service.
TW TWA WA W A | Jan/Feb Ja n/Fe Ja Jan /Feb b 2013 20 0 13 13
Unlocking the great potential in Africa By Glen Tancott
The maritime sector in Africa has great potential, yet there are many obstacles standing in the way of future growth and investment opportunities, which need to be managed and overcome.
UKKIE ADEWUYI, senior manager of the Risk Advisory division at Deloitte, outlines what should be done to ensure the continent becomes a strong economic force.
Piracy African leaders may have the political will to fight piracy, but this needs to be clearly demonstrated and entrenched through intensified continental collaboration. African countries should formalise and implement a continental maritime strategy for combating piracy, illegal sea trafficking and other ills currently facing the coastal areas. To achieve this, there needs to be maximum cooperation between African leaders. The African Union (AU) can play a major role in the current piracy battle collaborating with the European Union and the United Nations, both of which have been involved in fighting piracy. Though the AU is currently driving the agenda to have an Integrated Maritime Strategy for the continent, an initiative that is long overdue, it has set a target of 2050 as the deadline for ensuring that African coasts are secured. The question is, what happens in the interim? Without a common vision and will by African leaders to see and drive this as a collective battle, the efforts and resolutions of the AU may continue to be undermined.
â€œThe continent cannot continue to rely on Western and Eastern powers for skills and development in the long termâ€?
Port operations With 90% of goods arriving via sea, there are a number of issues that need to be resolved including port efficiency, dwell time, handing costs, control procedures and management of container traffic. The ports have become congested, which sees cargo clearance taking longer than it should and customs processing taking twice as long as it does on
TWA | Jan/Feb 2013
other continents. African ports need to be expanded, with additional terminals to handle the increasing maritime traffic and accommodate the increased size and volume of the new generation container vessels. Another possible solution is the construction of additional ports. Adding more shipping routes to the coastal areas would also help in relieving current port capacity constraints. Technology is the biggest factor that can assist ports throughout Africa become more efficient. The increasing use of technology by port authorities in Kenya and Ghana is paying dividend through more efficient flow of cargo. However, a lot more still needs to be done across the continent to ensure technology is rolled out and utilised effectively to reduce processing times.
Infrastructure and intra-regional trade The logistical infrastructure is lagging behind, with roads, airports and railway systems in need of upgrades and refurbishments. According to the World Bank, Africa requires US$93 billion (R823 billion) per year over a period of 10 years to close the infrastructure gap and it currently only has access to US$43 billion per year. The length of time it will take to improve infrastructure in Africa depends on the will and efforts demonstrated by African leaders. The world is ready to invest in Africa and assist the continent to overcome this problem, but leaders need to create an enabling business and regulatory environment that will assure investors that their businesses can be conducted in a transparent, honest and efficient manner. Africa needs to form sustainable partnerships with foreign investors and create a framework that ensures it can either bring back African skills or develop new ones to ensure that in the long run, Africans can also do things for themselves. The continent cannot continue to rely on Western and Eastern powers for skills and development in the long term.
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REGIONAL FOCUS CORRIDOR
DURBAN-FREE STATE-GAUTENG CORRIDOR
Improving logistics between
The Durban-Free State-Gauteng Corridor has been highlighted by government as one of its ﬁve massive infrastructural projects planned to boost the economy. Not surprising, considering it is one of the busiest routes in the country and ferries approximately 30 million tonnes of road freight per annum.
URING HIS BUDGET SPEECH at the beginning of 2012, the then minister of transport Sibusiso Ndebele said the revitalisation of this transport corridor forms part of government’s 2050 vision and is the backbone of South Africa’s freight transportation network, vital in facilitating economic growth for the country and the Southern African region. Its major objective, according to Ndebele, is to deal with infrastructure and operational planning, an investment as well as demand forecasting over a 50-year horizon. Research by the government into the total feasibility of the revitalisation of the Durban-Free State-Gauteng Corridor estimates the Port Developmental precinct to cost R100 billion, with an estimated half a trillion rand projected for the entire corridor. The project developmental components are the Port of Durban, the Durban-Gauteng road corridor, the Durban-Gauteng rail corridor (including high-speed rail), logistics hubs and terminals within the corridor, as well as supportive local area land-use plans. It
Freight carried by roads will grow by between 200 and 250% over the next 20 years 32
TWA | Jan/Feb 2013
is envisioned that once these elements are in place and operational, it will reduce the cost of doing business, ensuring the country’s economy remains competitive in global markets. It is estimated that freight carried by roads will grow by between 200 and 250% over the next 20 years. Transnet is of the opinion that too much freight travels by road instead of rail and that this needs to be reversed. Hence, the parastatal is earmarking R200 billion (two thirds of its capex budget) on ensuring the rail corridor between Durban and Johannesburg is able to accommodate the movement of freight by rail while able to accommodate additional cargo to both the Johannesburg dry port and City Deep areas. Mboniso Sigonyela, spokesperson for Transnet, says: “This corridor is the busiest freight corridor in the country and the focus of the programme is on improving efficiency and effectiveness of freight operations along the corridor, ensuring that capacity is provided ahead of demand. It is our intention to achieve these objectives in a manner that
REGIONAL FOCUS CORRIDOR
Durban and Gauteng optimises socio-economic development along the corridor.”
Corridor revitalisation Other aspects of the proposed revitalisation programme include creating a dry port at Cato Ridge where container and bulk cargo can be railed from the port to reduce road traffic congestion in both the port and CBD. Work has been done at the port to open an additional road exit, but the long-term solution is establishing this dry port, which would be situated on the outskirts of the metro and is adjacent to the N3 and Cato Ridge shunting yards for trans-shipment. There is also the plan for the new Durban dug-out port on the old airport site and a planned freight hub at Harrismith. The port is also investing in additional container handling equipment to improve the efficiency of the container terminal and is converting old bulk berths that are no longer efficiently utilised to handle additional container traffic. This follows in the wake of the harbour having been widened so larger vessels can dock with ease. Sigonyela states: “There are a number of levers that we have. Firstly, infrastructure development will create additional capacity, which will reduce congestion and thus improve reliability. Secondly, we are developing performance metrics for the corridor, which will tell us how the corridor is performing overall. Thirdly, we are building structures and forums for the various infrastructure providers, regulatory agencies and policy departments, and other sector stakeholders to collaborate and ensure an integrated approach to developments on the corridor.” André Pottas, corporate finance advisory leader at Deloitte in Durban, says: “It is no surprise that the government is starting to place an emphasis on the revitalisation of this transport corridor. It is long overdue and it is a longterm project that is going to take years to complete. The timing is crucial especially if you look at the potential threat or competition that
the Durban port is going to face over the next 20 years. It is thus vital for Durban that the port and the logistics link to Gauteng are as efficient as possible.” The N4 has opened the Johannesburg to Maputo road link and it is envisaged the rail upgrades along this route will follow. The Trans-Kalahari rail link through Botswana to Walvis Bay is back on the agenda and could remove the need for Europe- and US-bound shipping to round the Cape. A lot of commodities are currently brought down to Durban from Zambia and the Democratic Republic of the Congo by road, and the port developments in Tanzania André Pottas, corporate finance advisory leader, and Northern Mozambique Deloitte, Durban, will offer cost-effective alternatives over time. Pottas adds: “The shift from road to rail will reduce the cost of doing business and carbon emissions, and provide significant productivity and operational efficiency improvements. Also, the Trade Port is set to be Southern
“It is no surprise that the government is starting to place emphasis on the revitalisation of this transport corridor”
TWA | Jan/Feb 2013
REGIONAL FOCUS CORRIDOR
More than five million tonnes of freight can be easily targeted for modal shift to rail
Africa’s premier logistics platform, given that the Port of Durban provides connectivity to 53 international destinations and access to local distribution networks. This project is intended to connect the major economic centres of Gauteng and Durban/ Pinetown and, at the same time, connect these centres with improved export capacity through our sea ports.”
Harrismith hub According to the Free State MEC for Economic Development, Tourism and Environmental Affairs, Mamiki Qabathe, the province is ready to use its strategic position to boost its profile in the logistics sector. The Free State government is investing in the concept of corridor development and believes the Durban-Free StateGauteng Corridor is intended to promote not only better transport of goods between the end points, but will also boost economic development in the towns and rural areas along the way. Harrismith, situated at the intersection of the N3 and N5 highways is ideally positioned to be turned into a logistical hub. This is especially pertinent considering the road between Johannesburg and Durban is the busiest long-haul freight transport corridor in the country and the Harrismith Highway Junction is the Southern Hemisphere’s biggest truck stop. It is intended to create an inland port at Harrismith that can handle cargo
TWA | Jan/Feb 2013
containers and, at the same time, be able to shift cargo from road to rail. It is envisaged this will both reduce road congestion and costs. It is also estimated that the volume of cargo passing through Harrismith will increase by 25% per annum over the next seven years and, ultimately, the provincial government would like to see the Harrismith Logistical Hub comprising multimodal capabilities: air, road and rail.
Freight handling Dr Jan Havenga, director: Centre for Supply Chain Management, Department of Logistics at Stellenbosch University, says: “If you look at the amount of freight moving on road and rail on the Durban-Gauteng Corridor annually it equates to approximately 56 million tonnes of freight, of which 85% is moved on road. About 45% of all tonnes on this corridor is for imports and exports, and is therefore an important corridor for international trade by sea. “We estimate that more than five million tonnes of freight can be easily targeted for modal shift to rail, saving the country approximately R350 million on the freight bill and reducing the amount of trucks on this route by 400. The target can be increased in the medium term by a further 18 million tonnes, which would save another R1.2 billion and take a further 1 400 trucks off this route.” He adds that the greatest impediment to modal shift, historically, is a lack of investment in rail and the drag
REGIONAL FOCUS CORRIDOR
on rail costs caused by the maintenance of low-density lines. “These issues are receiving attention and a turnaround in rail performance is already noticeable. Transnet has embarked on a progressive investment programme and investment in new rolling stock, motive power and line upgrades is showing results. Rail’s short-term plans are, however, to concentrate on bulk mining products and fixing the coal supply chain. Many successes in this regard have been noticed. The next phase should see the development of intermodal solutions for palletised cargo, which should see significant inroads on the Natal and Cape corridors alleviating congestion markedly and decreasing the investment pressure on roads. The intermodal solution will require logistics hubs close to Durban and Gauteng, and the formation of these hubs around railheads will be an important feature over the next two decades.” The Durban Chamber of Commerce and Industry CEO, Andrew Layman, states: “One has to see this as a longterm project built up with many phases. It will include more efficiency and a great deal more capacity in terms of rail freight. In essence, the N3 is under undue pressure, largely because it has to accommodate cars and trucks. The ultimate vision would be for a dedicated truck road route from the port to Gauteng via the Free State.
Sigonyela says: “We have a two-pronged approach: first we aim to reduce road congestion by moving a lot more cargo into and out of the port by rail; and second, we will improve the road network to enable more efficient and predictable road operations. “This is an ongoing programme and not a once-off initiative. Traffic volumes are forecast to grow and logistics operations models continue to evolve, which means that the infrastructure and nature of services provided must similarly evolve. Hence, a key focus is to create structures for collaboration and Andrew Layman, CEO, Durban Chamber of integrated planning on an Commerce and Industry ongoing basis. “Increasing rail market share is a key component of the programme. Rail has been growing market share on this corridor and our objective is to accelerate this trend.”
“One has to see this as a long-term project built up with many phases”
TWA | Jan/Feb 2013
THE ROLE OF RAIL
In intra-Africa trade By Allen Jorgenson, media and research officer for the RailRoad Association of South Africa
Cross-border general freight rail traffic in the Southern African region has declined signiﬁcantly in the past 20 years. At the same time, long-haul road haulage has increased dramatically, in spite of border post congestion and road infrastructure deterioration.
HY HAS THIS come about and can the trend be reversed? The rail network in Southern Africa has a common gauge and general standards, which should allow seamless operations. But what is hindering this ideal? The rail network is an important element in the transport infrastructure of the region and the contribution it can make will be of vital importance to the people of Africa.
Railway infrastructure and traffic The arterial 1 065 mm gauge rail network in Southern Africa consists of over 33 600 route kilometres of interconnected lines. The longest two are between Cape Town and Dar es Salaam, a distance of 5 200 km, running through four countries. Cape Town to Lobito is about 5 800 km, running through six countries. Taken in total, some 80 000 km of railways operate in 30 African countries and about half
“Lack of effective tracking systems and inadequate customer communications, arising from poorly coordinated cross-border matters, often relegates rail services to second place when compared to road” 36
TWA | Jan/Feb 2013
have international connections. Of the total, nine states in the south, occupying just 37% of the African land space, have some 60% of total route km of track.
Rail – the downside Unfortunately, there are still serious gaps in the rail network that urgently need to be completed to more effectively deal with road competition and African development requirements. Lack of effective tracking systems and inadequate customer communications, arising from poorly coordinated cross-border matters, often relegates rail services to second place when compared to road. There are too many empty rail wagon workings (no return-leg backhaul), which increase operating costs while road transport brokers strive successfully to obtain returnloads – essential for economic operations and setting of competitive rates. In terms of infrastructure, rail operators, whether government or private, must maintain and renew their track and this makes them less competitive when compared to road, since operators only pay a fraction of the cost of infrastructure provision, in spite of current charges for road use by kilometre driven in some countries.
Road competition reality One-stop-shop border crossing facilities speed road transport operations while local agents deal with documentation
matters in conjunction with transport companies and customers. Smaller truck loads (averaging 32 t) can be conveniently redirected when required and on short notice, compared to individual rail consignments such as containers riding on block trains. Rail traffic is generally cleared pre-customs so there should be no delay in crossing borders. However, making full train loads can delay dispatch of traffic from point of origin, while road operations can begin before customs clearance has been obtained and this can be completed while the goods are in transit. Nevertheless, road loads are often delayed at borders since the required documentation would not have been received. Road transport has become so much the norm for international traffic that many companies are convinced that this is the transport mode of the future, while rail has become outdated. With road, communication between customer and transporter is usually carried out on a more personal basis, whereas with rail a high turnover of marketing staff makes it difficult to build relationships. Road transport is highly visible while most rail operations take place out of the public view. This creates the impression that rail is of little consequence. The high number of road accidents and health considerations regarding Aids is, however, casting a negative perception on road transport. Road degradation and highway congestion – particularly at border crossing points is prompting governments to upgrade these facilities but at public expense.
Where to now? Both road and rail transport technology have made significant advances in recent years. This includes operating equipment efficiency and reliability. Rail has an inherent advantage over road since it can move more traffic, while consuming less fuel per tonne per kilometre than road. In terms of the environment, rail has many advantages, particularly when the source of energy is electricity. Considering transport cost externalities rail has great advantages. Unfortunately, this advantage can be reduced when rail distances are appreciably greater than road. For example, for traffic between the Zambian copperbelt and Durban the rail and road distances are similar, but for traffic from Johannesburg to Windhoek, the rail distance is 50% greater that road by the Trans-Kalahari Highway. Road is considered to be more time effective than rail but again, this depends on specific routes. For traffic between Cape Town and Johannesburg, rail can achieve point-topoint timings of 14 hours, while road requires at least 28 hours, even with double-manning of heavy vehicles. Road can provide door-to-door services for general traffic but rail requires double-handling with road pick-up and delivery in most cases but over short distances. Greater use of underutilised private sidings should be considered. Combined road and rail transport systems for long-haul traffic will contribute
to a reduction in highway infrastructure damage and accidents, often resulting in loss of life.
The way forward The use of intermodal systems and in particular containerised traffic will lead to greater cargo security and reduced costs. The establishment of ‘hub’ distribution centres will lead to many economies. The inland container terminals established in Botswana, Malawi and Zimbabwe have already proven their benefits and more such facilities should be opened. Private sector input can lead to greater benefits of efficiency and spread the investment load, which will make it possible for government to concentrate on social development matters. Sophisticated IT-based cargo tracking systems such as ACIS and RSIS provide valuable data for operators and customers. Their further development and use should be promoted across borders.
“Rail has an inherent advantage over road since it can move more traffic, while consuming less fuel per tonne per kilometre than road”
Rail development alternatives The World Bank and other international organisations proposed that privatisation could be a solution. Unfortunately, various governments set unrealistic financial targets and performance goals, expecting the private sector to redress the under-investment of the past. It is thought that rail infrastructure ownership should be retained by the state, but that operations should be freed of government domination or interference, as is the case with road transport. SADC and COMESA must work closely with the private sector to promote the interests of regional growth and development, which will be underpinned by reducing the cost of transport and logistics. African countries should support the activities of the South African Rail Association (SARA) and the RailRoad Association of South Africa, because these associations can provide specialised services in the interests of transport and regional development.
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TRANSNET BRANCH LINES
Critical in stimulating economy and moving freight The reopening of the Orkney-Vierfontein branch line cluster by Transnet Freight Rail will improve access to markets as well as increase overall freight volumes.
ERVING THE AGRICULTURE industry and general freight, it will reduce the distance between Klerksdorp and East London by 16%, between Durban and Klerksdorp by 20%, and between Bothaville and Randfontein by 56%. The Vierfontein-Orkney portion of the branch line clusters was identified as a key intervention and response to strategic national, regional, provincial and Transnet’s customers’ objectives. The reopening of this line is one of a number of branch line projects being undertaken to provide ‘responsive infrastructure’ as part of the National Growth Path. Construction on this particular 15.3 km line began in April 2012, opening in December and was undertaken by Transnet Freight Rail (TRF) network. In alignment with Transnet’s Market Demand Strategy
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(MDS), the revitalisation of this line will stimulate economic activity in the region through the creation of this ‘bridge’ linking the North West and Free State to the Eastern Cape, Gauteng and KwaZulu-Natal.
From road to rail Encouraging rail friendly cargo to move from road to rail, TFR is striving to increase existing volumes and reclaim additional volumes across most of its business units in and out of these regions. TFR CEO, Siyabonga Gama, says: “We are very excited about this achievement of constructing the line with our own resources, within budget and on time. “This line will contribute to increasing traffic on the routes taking maize from North West to mills in KwaZulu-Natal and the ports of Durban and East London, as well as maize from the western Free State to mills in Randfontein. At the same time, fuel will also again be able to be distributed by rail. The line will also create an alternative access to Durban when the line between Klerksdorp and Vereeniging becomes unavailable, supporting the manganese flow and iron ore to Newcastle and Durban.” TFR’s branch line department is tasked with the revitalisation of branch lines as these play a critical role in the movement of freight as primary feeders to the broader and core network. During 2012, TFR moved 70 000 t of maize out of the Klerksdorp and Coligny area to Durban for the export market. It is envisaged that with the opening of this line the tonnage transported could be as high as 150 000 t per annum.
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Branch lines known as secondary networks are lines that connect two or more points of economic activity to either a primary rail or secondary rail network. There are 33 branch lines across South Africa, some active and some closed.
Significance of rail Transnet group chief executive, Brian Molefe, says: “The significance of rail and its rich history in South Africa cannot be underestimated. Even today, rail is still practical, efficient and, in most cases, still the most economical way to transport bulk loads. He adds that with the opening of OrkneyVierfontein branch line TFR is ensuring it is a critical cog within the country’s economic reactivation and rejuvenation. “With the success of this project there should be no doubt about TFR’s commitment to lay a strong foundation in ensuring that state assets are used to the benefit of all South Africans. “As rail regains the prominence it deserves, we will see a reduction in air pollution especially carbon dioxide emissions – paying handsome environmental dividends. TFR operates along approximately 20 953 km of rail network of which 1 500 km comprises heavy haul lines for export coal and export iron ore. Included in the network is 3 928 km of branch lines. South Africa’s rail service is connected with the railways of the Southern African Development Community (SADC), enabling trade with the rest of Africa. Rail’s strategic advantage lies in the movement of heavy haul, bulk commodities over long distances where flow densities provide economies of scale and thereby lower unit cost. Agricultural products such as grain and timber are conveyed mostly on the branch lines. Freight Rail will continue to implement plans for growth of commodities on these lines.
The MDS is responsible for a number of key projects, and is assigned to drive and deliver on the SIP known as the Gauteng-Free State-KwaZuluNatal corridor development
TWA | Jan/Feb 2013
Market demand strategy Transnet is implementing its MDS, which is its response to providing infrastructure ahead of demand, to reduce the cost of doing business in South Africa and contributing to the objectives of the country’s developmental and transformation agenda. It is envisaged the MDS will stimulate major activities in the country’s economy by significantly increasing freight volumes and driving a considerable modal shift from road-to-rail. The importance of the Transnet role is evident in the Presidential Infrastructure C o o r d i n a t i n g Committee and the focused roll-out among the state-owned companies in the strategic infrastructure projects (SIPS). Although the MDS drives a number of key projects, it is assigned to drive and deliver on the SIP known as the Gauteng Free State-KwaZulu-Natal corridor development. The branch line revitalisation is important for Transnet, and branch line teams are engaging stakeholders to develop additional business and economic activity that is sustainable over the long term. The deputy minister for Public Enterprises, Bulelani Gratitude Magwanishe, says the opening of the OrkneyVierfontein branch line is important for South Africa and the New Growth Path directs that SOCs should play a catalytic role in reviving the growth of the economy. “In supporting the objectives of the developmental state, the MDS is Transnet’s response to providing infrastructure ahead of demand to reduce the cost of doing business and will significantly increase freight volumes. The revitalisation of branch lines is seen as an intention to unlock economic potential on both a regional and national level.” “It is important that we consider the situation of the currently closed lines and Transnet has the responsibility to both develop and protect these lines.”
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