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FREIGHT & TRADING WEEKLY

For import / export decision-makers FRIDAY 21 July 2017 NO. 2255

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Special feature –Bulk Cargo

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Special feature – Logistics

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scenario we saw unfolding.”He said there had been

growing awareness of cyber risk over the past 12 to 18 months, confirmed in a recent transport survey by law firm Norton Rose Fulbright that found at least 80% of its respondents saw cyber crimes increasing.

“Nowadays the industry will readily say that this is an area that has their attention – but our experience is that this awareness mainly extends to words, and much less to effective deployment of actual resources,” said Jensen.

Determining the extent of the problem at hand, however, is impossible as there are no credible statistics against which to measure increases of cyber attacks in the maritime sector.

“These incidents have been a reality for several years, but often companies keep it secret if they are successfully hacked, and therefore the perception is

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The Petya cyber attack on global shipping major Maersk should not have come as a surprise. It’s a scenario that international cyber security experts f lagged three years ago as a high probability.

Speaking to FTW from his office in Denmark last week, Lars Jensen, CEO of Cyberkeel, said while it was not possible to predict that Maersk would have been the target, a cyber attack of this nature was one that CyberKeel, a consultancy aimed at protecting

shipping companies from being hacked, had been warning about.

“Consequently we have consistently recommended defence-in-depth, meaning that when – not if – a company got penetrated, then the virus would not spread through the

global network,” said Jensen. “Secondly we have consistently advised that companies should make sure they have a contingency plan, allowing them to quickly restore their business from a point where literally all their systems are gone – again the exact

Shipping line cyberattack flagged three years ago

To page 16

Opposition party, the Democratic Alliance (DA), has brought charges of corruption against former chief financial officer (CFO) of Transnet and current CFO of Eskom, Anoj Singh.

This as the ongoing #GuptaLeaks investigation by the AmaBhungane Centre for Investigative Journalism revealed on Monday that two more successful winners of Transnet tenders had paid tens of millions to Gupta family offshore fronts.

A chain of leaked emails revealed that Singh had taken

several Gupta-funded trips to Dubai during the period that Transnet had awarded several tenders which are now related to alleged kickbacks to the Gupta family.

Meanwhile, following the latest #GuptaLeaks revelations, Transnet spokesperson, Viwe Tlaleane, said: “The company is conducting its own internal enquiry and will investigate all allegations made. Where appropriate, it will enlist the services of independent experts, depending on the required expertise.”

Latest SOE high-flyer under fire

Anoj Singh (right), pictured with former CEO of Eskom, Brian Molefe.

2 | FRIDAY July 21 2017

DUTY CALLS

These statements have been edited because of space constraints. For the full versions go to ftwonline.co.za. Note: This is a non-comprehensive statement of the law. No liability can be accepted for errors and omissions.

Online

Riaan de Lange ([email protected])FREIGHT & TRADING WEEKLY

Publisher Anton Marsh

EditorialEditor Joy OrlekAssistant Editor Liesl VenterDeputy Editor Adele MackenzieEditorial Assistant Nicole JacobsPhotographer Shannon Van Zyl

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SEZ Regulation CommentOn 14 July the Trade and Industry Ministry published its draft Special Economic Zones (SEZ) Governance and Management Regulations, in terms of the Act 2014, on which comment is due by 13 August.

ICC’s new Open Markets IndexDespite repeated pledges to enable trade as a driver of growth and job creation, G20 economies are failing to demonstrate global leadership on trade openness according to the International Chamber of Commerce (ICC) Open Markets Index 2017 (OMI) published on 7 July.

The report – commissioned by the International Chamber of Commerce (ICC) – shows that G20 nations rank below the global standard in terms of openness to trade, with only Canada placing among the world’s top 20 open markets. Singapore, Luxembourg and Hong

Kong SAR head the 2017 rankings for the fourth successive edition of the report, far outstripping major economies such as the United States in terms of trade openness.

The Index scores 75 countries on a scale of one to six on four key factors: observed trade openness, trade policy, openness to foreign direct investment and trade-enabling infrastructure. In doing so, the index also monitors government follow-through on longstanding G20 commitments to boost global trade flows.

Scoring the G20 – room for improvementThe latest edition of the Index reveals that 18 of the G20 economies score only average or below average in terms of their overall openness to trade. The two lowest-scoring G20 economies are Brazil and Argentina.

Other findingsThe latest edition of the

index reveals that: (i) three economies ranked as ‘excellent’ in terms of overall openness (scoring above 5.0), specifically Hong Kong, Luxembourg and Singapore; and that (ii) the lowest ranking economies were Ethiopia, Venezuela and Sudan.

ICC is calling on the G20 to commit to a package of reforms to enable trade as a driver of growth, jobs and opportunity.

In addition to the index, ICC has published detailed profiles for the 75 economies featured, including South Africa.

WCO 2017 Session From 6 to 8 July WCO members met for the 129th/130th Sessions of the WCO Council to agree on the 2017 annual sessions. Discussions focused on a number of key issues: trade facilitation, including the WCO Mercator Programme to assist WCO members in implementing the Customs-related measures contained in the World

Trade Organisation (WTO) Trade Facilitation Agreement (TFA); security initiatives; combating illicit financial flows; and customs-tax-cooperation, in particular the challenges and opportunities from a Customs perspective.

Duty Calls’ Watch ListComment on the proposed reduction in the ‘general’ rate of Customs duty on digital smart cards, the reference to persons with disabilities, and the reduction in the period within which a vehicle may not be disposed of is due by 30 July.

Comment on the draft deferment rules to the Customs Duty Act, 2014, Part 2 of Chapter 3, by 31 July.

FRIDAY July 21 2017 | 3

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Large enough to count, small enough to care

Adele Mackenzie

With two more cases of avian flu confirmed on commercial chicken farms in Gauteng and Mpumalanga at time of writing, analysts are warning that an export ban by neighbouring countries could cost the poultry sector an estimated R100 million in lost export revenue.

This has dealt another crippling blow to an industry that is already struggling for survival in the wake of increased poultry imports from the United States and the European Union (EU) over the past two years, compounded by a devastating drought that resulted in massive increases in poultry feed which made local products even more uncompetitive.

And, if the poultry sector suffered, the grain industry – just recovering from the drought – was likely to be impacted too as it provided food for the birds, warned Dawie Maree, head of information and marketing for agriculture at FNB Business.

“The ban on South African chicken by neighbouring countries will have a negative impact as Zimbabwe, Namibia and Botswana account for a substantial number

of our broiler exports,” he commented.

Maree said that if the ban from neighbouring countries lasted longer than a few months, the industry could find itself shedding an estimated 2 500 more jobs, and see a dent of 0.13% in output and gross value added.

A report issued last week by RMB Global Markets Research suggested that about R4.1bn in gross value added per month would be lost in the poultry and egg sector “if preventative measures are not found”.

The report outlines some other worst case scenarios:• If production is halted for a

year, R49 billion in output will be lost

• 30 000 jobs and R1 billion in wages could be lost

• R100 million in export revenues at risk

• Demand for soybeans and yellow maize (as chicken feed) to fall by 2%.

A Department of Agriculture, Forestry and Fisheries (Daff) spokesperson confirmed that exports of raw meat, eggs and live birds from South Africa to some of its trade partners had been disrupted as South Africa had not been able to provide

certification of its Highly Pathogenic Asian Avian Infuenza-free status since June 22.

“However, the export of products which have been processed to ensure the destruction of the virus is continuing, unless the trade partner has raised

an objection,” said the spokesperson.

“The newly implemented Poultry Disease Management Agency system of registration of sellers and traders of live chickens is working well,” he added, noting that government was doing all it could to prevent further outbreaks.

Poultry ban could cost up to R100m in export revenues

If production is halted for a year, R49 billion in output will be lost.


SPECIAL FEATURE

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Botswana and Zambian transporters remain at loggerheads over fees and levies, with both sides complaining of an unfair business climate.

Cross-border movement between the two countries has been under pressure due to a huge discrepancy in the tolls, levies and fees paid by operators.

There have been growing complaints of fees being determined selectively depending on the country from which an operator originates.

In 2016 a haulier told FTW that where a South African truck was required to pay a $110 fee, a Botswana truck would pay around $540.

Another transporter, who also preferred to remain anonymous, said in November Zambia had announced a change in its tolls act that excluded Botswana and hauliers from that country had to pay

higher tolls than other SADC states.

“Botswana retaliated by issuing an

amendment of its Road Traffic and Road Transport (Permits) regulations in May this year. Under this amendment, tolls were increased and Zambian transporters were handed a hefty penalty. The result is that as a Zambian transporter our transit fees through Botswana have increased by 70%,” said the transporter.

Lucas Barreto, chairman of the Botswana Freight Forwarders’ Association, denied that the increased tolls were in retaliation for the Zambian increases, saying the regulation had been amended to bring it in line with the fees charged across SADC.

“Everyone was affected by this amendment and even Botswana transporters are paying increased fees,” he said.

Barreto said it was however imperative to find a solution

to the ongoing fee war between the two countries as it was negatively impacting the movement of cargo in southern Africa as a whole.

Another Zambian transporter contacted by FTW agreed, saying authorities from Zambia and Botswana were attempting to negotiate.

“The Truckers' Association of Zambia (TAZ) has also been working towards finding a solution and some progress has been made thanks to the ongoing efforts of TAZ into getting the parties to communicate.”

He and Barreto said the process however remained extremely slow which in itself was concerning.

“We have to harmonise the region to ensure the

smooth movement of freight,” said Barreto. “We need one procedure, one system and

one set of rules for southern Africa that is easy to understand and that is easy to comply with. Every country at present is different and the

systems are complex.”He said escalating fees

in different countries introduced with little or no notice further compounded the issue.

“It is extremely complicated. You will find that countries like South Africa, Zimbabwe and Zambia have tolls but Botswana does not and therefore it feels that it makes less revenue and so increases its road usage fees,” he said. “Or one country feels that it is being disadvantaged because its permits are not as expensive as others so introduces a new fee for this or that. These all impact negatively on shippers who ultimately pay the price.”– Liesl Venter

Zambia and Botswana in road fee argy bargy

70%The increase in transit fees for Zambian transporters

through Botswana.

We need one procedure, one system and one set of rules for southern Africa.– Lucas Barreto

“

LOGISTICS


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Liesl Venter

Bigger, better, faster and more efficient. This is the driving force behind the fast-

changing logistics environment where cutting edge technology is impacting how this industry operates daily.

Addressing a business breakfast hosted by the Chartered Institute of Logistics and Transport South Africa (Ciltsa) in Cape Town recently, Martin Bailey and Gary Benatar of Industrial Logistic Systems (ILS) said technology was impacting the operating environment continuously – and while South Africa tended to lag behind international trends the country was fast catching up.

“There are massive changes happening as our supply chains are far more demanding and as technology increases efficiency and productivity,” said Bailey.

Sharing some of the trends in the warehousing environment in particular he said increasing labour costs and unreliability seemed to be the driving force behind all the change – not only

locally but around the world.“But customer demand has

also changed and competition between companies has become more fierce to keep up with the ‘on demand’ trend,” he said. “Keeping up with this has increased the pressure to operate differently. The focus is on efficiency and productivity and that requires systems and operations that are faster and more accurate. This in turn has called for warehouses that are bigger and better.”

He said automation was undoubtedly the most significant trend the world over.

According to Benatar the increased reliance on technology and automation will ultimately be the driving force in productivity which in turn will improve cost efficiencies.

“Fully automated

warehouses were already being built in the 80s,” said Benatar, indicating that automation was only going to increase in the future. “One has to build warehouses and set up operations now, however, that are flexible to keep up with the fast-changing pace of technology and the increased demands on the supply chain.”

He said planning strategically for change was imperative and now more than ever was the time to think proactively about logistics.

“Take the mobile phone industry in South Africa at present. A cellphone company moves in a busy month like December anything from 130 000 to 150 000 phones a day. Each one of these phones is also unique, so one is not talking logistics for 150 000 of the

same stock keeping unit. No warehouse, no distribution centre would be able to accomplish this without automation,” said Bailey.

At the same time

considering that one pallet of iPhones is valued at around R21 million, operations have to be far more secure and attentive to risk than previously.

Automation ratchets up productivity, addresses risk

Martin Bailey (right) and Gary Benatar ... Planning strategically for change is imperative. Photo: Liesl Venter

LOGISTICS


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Adele Mackenzie

Moving its warehousing operations in-house three

years ago has resulted in significant benefits for Suzuki South

Africa. Improved stock management and zero stock losses have resulted in a “significant” cut in its logistics costs and enhanced customer service in terms of delivery turnaround time.

Berto van der Lith, Suzuki SA divisional manager: finance, administration and logistics, told FTW that Suzuki embraced the Japanese philosophy of Kaizen – which means continuous improvement – and was always on the look-out for innovative ways of optimising costs and efficiencies.

He explained that the company had employed two industrial engineers to optimise the 2 500-sqm warehouse, which houses spare parts and accessories for the Suzuki motorcycles and vehicles as well as marine outboard motors for distribution nationally and into neighbouring countries.

“Another automotive distributor moved out of the space we now occupy in Johannesburg because it needed a much larger warehouse. We have been able to work well with the space we have by introducing a few simple organisational changes,” Van Der Lith said.

Wilton Dladla, logistics and warehouse manager, is one of those industrial engineers appointed in 2014. He explained that some of these changes included storing like for like parts together to ensure the fast-moving items were placed at the front of the warehouse for

easy picking and packing.“We have had great

success with the operational changes because we ensured we got the buy-in from staff,” he said, pointing out that

all the warehouse processes and systems had been designed to support the global Suzuki stock management system.

“Because we have much greater control over

the in-and outf low of our stock, which helps us to do far better stock planning, we can also keep a much leaner stock complement,” Dladla added.

Suzuki reaps rewards from warehouse optimisation

We have had great success with the operational changes because we ensured we got the buy-in from staff.– Wilton Dladla

“

Africa needs to improve its intermodal capacity if it wants to become globally competitive.

That’s the view of Richard Vallihu, chief executive of Transnet National Ports Authority, who believes that if Africa is to achieve its goal of trading seamlessly with its neighbours, effective transport intermodalism will enable cross-border countries to operate individually and regionally.

He said delivering intermodal capabilities was at the heart of Transnet’s delivery aspirations.

“We are investing heavily in the expansion of our freight system not only from a South African perspective but for the continent as a whole. We have to collaborate and intensify engagements to achieve inclusive growth. Developing transport corridors and African markets is the ultimate focus.”– Liesl Venter

Developingtransport corridors

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Warehouse system cuts lead times, improves accuracy

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Improved stock availability and visibility are two of the biggest benefits Food Lover’s Market grocery division has seen since the implementation of ADOR4 Warehouse Management Software (WMS) courtesy of Forte Supply Chain Consulting.

Keeping consumers happy is not easy. In a world where few are willing to wait, retailers are under pressure to

deliver goods faster and more efficiently than ever before.

Amidst growing consumer demand, supply chains are being pushed to the absolute limit to ensure they can operate not only faster and more reliably, but also more cost effectively.

Doing this without the right systems is nearly impossible, says Renko Bergh from Forte Supply Chain Consulting. The company has recently been and still is involved in the successful implementation and optimisation of ADOR4 WMS at Food Lover’s Market – and it’s seen some big results.

“The company does have an existing enterprise resource planning (ERP) system but the flow of goods was not optimised from the distribution centre (DC) to the various stores and back,” he says. “The client required an improved stock management and stock visibility model that would bring integration and optimisation to the warehouse, ultimately allowing for better stock prediction, management and flow.”

Operating in a fiercely competitive environment, Food Lover’s Market opted to use Forte Warehouse Solutions as the third-party project manager for ADOR4 with regard to the implementation of the WMS as they act as the bridge between the client’s expectation and the software development house.

“Also, having worked on a variety of

projects, they have experience – a very particular skills and knowledge set that proved very valuable in the ultimate success of this entire project. It allowed us to focus on the business side while they made sure it was all executed properly,” says Garth Dante, project manager IT and supply chain at Food Lover’s Market.

According to Bergh, several challenges were identified at the start of the project which kicked off in 2015. “First and foremost was the hardware and infrastructure that needed to be addressed. It is essential that a DC can cater for the functionality of the equipment ADOR4 functions on,” he says.

“At the same time, one must not lose sight of the fact that such implementations bring about big changes for any organisation and its employees. Therefore, managing that process is integral to the success of it all. We had to make sure that everyone across the warehouse understood the plan and process and that change management took place from a user level. This all had to be done without impacting the trade environment at all – meaning there was no shutdown of one system and then an introduction of the new one. It had to be done without interruption of operations.”

With ADOR4 providing the development experience, a lot of background work took place as well. Thorough user acceptance testing and dry runs were done before the first grocery DC was moved onto the WMS in July

last year.“Food Lover’s Market runs a combination of

departments in each DC and the requirement was that all the divisions would operate ADOR4 to cater for the specific requirements within each department.

“The system had to be adjusted for such scenarios as well as the various critical requirements within each department,” explains Bergh. “Most of the success was in the adaptability of ADOR4 and how extremely relevant and workable the system is at ground level.”

The benefits have been incredible. Store lead times are down by up to 50% and picking accuracy has increased by 45%.

“Staff are trained, assessed and retrained as and when required,” says Bergh.

These successes, says Dante, are thanks to proper preparation.

“Thanks to the process knowledge and the dedicated teams, we were able to develop and test the software several times before implementation – leading to fewer bugs and a more effective process all round.” He says the advantages of the new system have resulted in increased productivity, which has positive financial results.

At present two of Food Lover’s Market’s distribution centres – Cape Town and Durban – are live and operating on ADOR4 while it is currently in the process of being implemented in Johannesburg, with several other cities and possibly countries set to follow.


GR

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ITE

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MSC Logistics (Pty) LtdA subsidiary of Mediterranean Shipping Company

MSC House - 3rd Floor, 54 Dr Langalibalele Dube Street (Winder Street), Durban, 4001P.O. Box 10614, Marine Parade, 4056, South Africa

Tel: (031) 360-7811, Fax: (031) 332-9291, E-mail: [email protected]

LOGISTICS

Adele Mackenzie

Local manufacturers planning their market strategies often overlook the

“vital role” logistics plays in ensuring competitiveness, according to Andre Snyders, sector research analyst at Standard Bank.

Speaking to FTW on the side lines of the Manufacturing Indaba held in Johannesburg earlier this month, he reiterated an earlier comment by ex-Minister of Trade and Industry, Alec Erwin, that producers needed a strong logistics strategy to ensure their ongoing survival in an increasingly globally competitive marketplace.

“It’s all very well to manage production costs and offer

a product that is in high demand, but how do they get their products to the port for global exports or into Africa for regional exports?” he queried.

Snyders pointed out that banks, or other institutions, that offered financing for manufacturing developments often took producers’ logistics strategies into account as well.

Erwin, now director of specialist consulting firm Ubu, pointed out that South

Africa was facing imminent de-industrialisation on the back of ongoing challenges such as the high cost of

labour, cheaper imports and a lack of policy support from government.

“But, while these certainly need addressing, efficient and cost-effective logistics can go a long way in redressing some of the imbalances,” he said.

Solly Letsoalo, managing director of Aveng Manufacturing – which supplies product and services

to the mining, construction, water, power and rail sectors – agreed with the sentiments, highlighting that manufacturers should locate their factories in areas where they could have an advantage.

“If you supply goods to the mines, ensure you set up in a key mining area or have your factory near a mining logistics corridor. If you export goods overseas, set up a factory near a port. This could significantly cut logistics costs and thus the overall costs of getting a product to market.”

Letsoalo added that logistics strategies needed to be flexible and diverse, allowing producers to adapt to market needs – whether for a fast delivery time for an urgent project or a more cost-effective, but slower, delivery.

Manufacturers often overlook vital role of logistics

If you supply goods to the mines, ensure you set up in a key mining area or have your factory near a mining logistics corridor.– Solly Letsoalo

“In the logistics industry a dearth of skills is only part of the problem

More critical, says CEO of training provider Metrominds, Juliette Fourie, is the huge gap between any tertiary qualification and the world of work.

“A study undertaken by the Aberdeen Group (2013) indicated that only 10% of researched organisations said that their new, inexperienced job-entrants were ready to contribute and perform from their joining time,” Fourie told FTW.

“Researching and analysing this ourselves, we discovered that new entrants lacked critical thinking, industry experience, general business acumen and personal leadership ability.”

All of which can be addressed in a simulated environment, according to Fourie.

‘Fit for purpose’ programmes improve companies’ talent pools


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PEOPLE YOU CAN DEPEND ONThe Leading Operators in Africa

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FPT offers a comprehensive range of logistics solutions, 24 hours a day, 7 days a week. These services include specialised reefer,

container, bulk and breakbulk services, cold storage, general warehousing, road and rail transport, container handling and storage,

stevedoring and information visibility – all to give you peace of mind.

This is our business.

“Our Workplace Simulator is a recent addition to our portfolio and is designed to achieve higher performing and more productive job entrants into the market, creating skilled and qualified talent for the industry in a range of disciplines – from forwarding and customs to sales, finance and supply chain. The simulated environment provides the benefit of constant, consistent and immediate feedback, preventing errors or mistakes in the future.

“The logistic simulation has been academically researched and we have almost completed our second successful group of students. It includes multiple scenarios that reflect the reality in the workplace – from dealings with clients and following the generic process of trade to completion of documents and operating in warehousing and distribution facilities. In fact it encompasses all the activities that new

entrants into the freight forwarding and logistics industry would be doing.”

It’s key to mitigating errors, says Fourie who believes that the importance of getting it right first time is underscored by the outcome if anything goes wrong and things land up in the

International Court of Arbitration® which leads the resolution of international trade disputes.

Metro Minds offers an end-to-end training solution that covers the many disciplines in the logistics industry. “This ranges from identifying the skills gaps to executing fit for purpose

programmes to improve companies’ talent pools,” says Fourie.

“We are extremely passionate about education and have therefore restructured our business to be a BEE Level 2 contributor so that most of our profits are allocated to an Education and Empowering Trust to benefit a larger society.”

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LOGISTICS

Logistics simulation is key to mitigating errors.– Juliette Fourie“

‘Fit for purpose’ programmes improve companies’ talent pools


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LOGISTICS

Adele Mackenzie

Inadequate focus on export logistics has been identified as a significant barrier to

export growth. Currently,

southern Africa’s logistics infrastructure is heavily geared towards imports and there is not enough focus on streamlining the entire supply chain to ensure exported goods get to the market quickly, in the view of Andre Snyders, sector research analyst at

Standard Bank, who pointed out that logistics for exports was often more complex as it involved a number of additional steps.

“With increased global and regional competition in the marketplace, speed to market is essential. But the infrastructural and logistical challenges – delays at border posts, frequent stops by transport authorities, badly damaged

roads, amongst others – can seriously hamper that,” he said.

Furthermore, manufacturers – especially the small, medium and micro enterprise (SMME) sector – do not always understand logistics supply chain complexities. “A lack of information when designing market strategies is a major constraint,” Snyders pointed out.

Chris Beyers, co-CEO of The South African Capital Equipment Export Council (SACEEC), agreed, noting his organisation was currently re-examining regional value chains in the sectors it served and benchmarking them against global standards.

“For example, we’ve identified a need to reclaim and develop new market share for Gauteng-based original

equipment manufacturers (OEMs) into the Africa market, predominantly the Southern African Development Community (SADC) countries, and realise we need to have a stronger presence closer to our export target markets,” he said.

According to Beyers, this strategy will kick off with a marketing, sales and after-sales service and repair hub for South African companies within the Zambian Copperbelt.

“Good infrastructure also encourages investment from overseas, with international companies carefully assessing whether an inefficient infrastructure will damage their bottom line,” he commented.

‘Export-related logistics challenges need urgent attention’

With increased global and regional competition in the marketplace, speed to market is essential.– Andre Snyders

“As the seafreight routes to Asia – one of South Africa’s biggest global trade partners – remain constrained in terms of available space and as freight rates continue to rise, non-vessel operating common carriers’ (NVOCCs) guaranteed less than container load (LCL) space is becoming more attractive to shippers.

“We must remain agile to ensure that as a service provider we are geared to assist in all areas of the market – and one of our main challenges is to tailor our service offerings to help specific clients optimise their own services to their clients,” said Nicholas von Flemming, CFR Freight key accounts sales and servicing consultant.

As part of this, he said

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it was important for a consolidator to ensure it continued to offer its clients the full range of export services, despite space, rate and other constraints.

“Equally, the viability of smaller direct trades in the face of renewed full container load (FCL) aggression by carriers needs constant revisiting,” Von Flemming pointed out.

He told FTW that a neutral NVOCC could play a key role in helping to keep clients’ costs down. “We continually develop a series of strategies in this regard which we communicate to our

customers,” said Von Flemming, highlighting that LCL was geared for underflow and overf low loads which were a natural consequence of intra-regional trade.

“It is therefore critical that we, as an NVOCC, continue to

invest in as many direct sailings to replicate the

FCL offering the consignee demands,” he said.

“As we are considered an extension of their

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– Adele Mackenzie


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Logistics operators will need to come up with creative ways to

remain competitive in an increasingly expensive local market, says Easyclear general manager Michael Henning.

And they’ll need to leverage technology to take advantage of the opportunities for growth.

“Challenges facing agents in southern Africa have not changed much – infrastructure, the high cost of logistics and a shortage of skilled staff,” says Henning.

“Government has pledged millions to address ailing infrastructure – but given the current economic crunch it is becoming more difficult to keep up with this commitment and it may fall to the private sector to fill the gap where government falls short. The

volatility of the currency and high fuel prices also add considerably to the high cost of logistics in South Africa.”

In terms of the skills shortage, it’s not a local phenomenon, says Henning.

“More and more international freight forwarders are finding it difficult to find staff with the skills needed for a modern logistics operation. This can be addressed through skills development and training, as well as upskilling existing resources.”

Technology however is

at the heart of the radical change in the logistics landscape.

“Drone technology and autonomous vehicles are exciting technology that is being tested on the

continent and overseas. The digitisation of warehouses also has some far-reaching implications for southern Africa.

“Easyclear provides solutions that can be tailored to suit

clients’ specific needs and integrated with third party software solutions to provide seamless integration of relevant data

for a comprehensive view of the supply chain at your fingertips,” says Henning.

The company will be piloting a web-based version of its software with several clients in the next few months and plans to roll it out to its entire client base in a phased approach. “The new product will allow clients to access the software from

anywhere in the world from any device with an internet connection,

essentially placing your business right

at your fingertips 24/7, 365.”

Freight bureau to pilot web-based software solution

The new product will allow clients to access the software from anywhere in the world from any device with an internet connection.– Michael Henning

“


LOGISTICS

Blockchain technology is fast emerging as one of the most transformative trends – and one that could redefine and reshape many of the existing systems and processes within the logistics industry, according to Kamogelo Mmutlana, CEO of Barloworld Logistics.

Mmutlana explained that the blockchain was essentially a distributed ledger that existed in multiple nodes on a network, rather than in a single, centralised location. “This distributed ledger is shared through peer-to-peer networks on computers and devices throughout the world.

“This means that the need for a third party to act as an intermediary, such as a financial institution, is no longer required,” he said, pointing out that by integrating

this technology, the blockchain could enable a strong and secure exchange for shared

logistics, coordinating a vast array of activities in a highly efficient way.

Such activities can include sharing unutilised space in a shipping container or warehouse,

or optimising truck fleets. Added to this, stakeholders can eliminate supply chain opaqueness by having a record of all logistics transactions in blocks. It can, for example, provide insights around drivers, routes and on-the-move goods and services.

Furthermore,

blockchain technology can yield important benefits with regard to B2B transactions – such as cross-border payroll processing and smart contracts. “Also, costly delays and losses due to missing paperwork will be avoided,” said Mmutlana.

He cautioned that when it came to the actual

implementation of this technology, stakeholders needed to ensure that the necessary levels of trust and

understanding were in

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We have recorded some growth over the past year.– Mark Naidoo“

This means that the need for a third party to act as an intermediary is no longer required.– Kamogelo Mmutlana

“Six years since its launch, CMV Logistics is set to grow its footprint in Africa.

“Currently we focus on road haulage to Malawi, but can assist with cargo to other SADC regions,” CMV Logistics’ Mark Naidoo told FTW.

According to Naidoo, the company has three to five vehicles leaving Johannesburg for Malawi every week. “Our transit time for the route is five to seven days from date of despatch.”

With the staff ’s 40 years of combined experience in the industry, its service portfolio goes far beyond the numbers on a rate schedule, says Naidoo.

“No matter how large or small a freight shipment is, we can manage the entire logistics process – creating

tailor-made, f lexible and cost-effective solutions for our clients wanting to outsource their clearing and forwarding needs.

“Helping to address individual needs – like up-to-date shipping information and other distribution services – we have an independent

transport unit that takes care of inland transfer of goods and containers for our customers.”

The company handles and distributes full loads

and groupage cargo – both containerised and breakbulk – and its prime focus is the export market.

“We have recorded some growth over the past year,” says Naidoo, “but the financial markets are down which means there has been less buying power for SA exports.”

Focusing on road haulage to Malawi

Blockchain technology could change the face of logistics

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In a fiercely competitive market where margins are constantly under pressure, delivering the optimal mix of price and service is a challenge.

“Something will need to give in the market,” says airfreight general manager of neutral consolidator CFR Freight, Stephen Bishop, “and that starts with operators

not constantly undercutting each other in order to offer the lowest price.”

But while price is a key element, it’s only part of the equation, says Bishop. “It’s more about meeting customer expectations at every level.

“On imports, for example, capacity remains a

challenge – but with the assistance of our

partners within our AirCargoGroup network, we have several hard block agreements on our major import routes to cater for this.”

For the future, investment in IT is high on the agenda.

“We still operate in a

largely antiquated industry where there is an over-reliance on paperwork, with multiple manual

capturing of information – test weights on shipments, tracking of cargo, posting and release of cargo etc. At CFR Freight, we have

invested heavily in IT development with a view to integrating more with clients and service providers.”

Ultimately, consolidation of cargo is based on the simple principle of providing the best mix of price and cost. “Through investment in IT and quality staff, and increasing our buying power we’re confident that we will get better at this simple principle every day.”

IT investment facilitates integration with clients

While price is a key element, it’s only part of the equation.– Stephen Bishop“ A specialised

software package offers a true data base which means information is captured once only.– ANTHEA VAN BREEMEN

“Specialised software systems developed for logistics service providers can save time and money and ensure more accurate information, says Macro 2000’s Anthea van Breemen.

A number of the smaller, independent logistics suppliers still work on manual systems – drowning them in reams of paper and complicated spread sheets, says Van Breemen. “A specialised software package offers a true data base, which means information is captured once only and cannot be changed except by using the processes set up in the software package which means every transaction is tracked and stored and can be presented in any number of reports and enquiries

that the customer requires.”For example, she says,

most logistics companies will require a depot or warehouse at some point in the chain. “The goods need to be tracked, by customer and waybill, at these warehouses

for an accurate and seamless delivery. One small human error could derail the seamless delivery and cause major delays,” Van Breemen says.

Macro 2000, a South Africa-based software package that offers

a growth path from entry level to controlling a full LCL depot, offers all these capabilities – including for data entry.

“Macro 2000 has grown organically since inception and each new customer has input into the package." – Adele Mackenzie

Software system grows 'organically'


Adele Mackenzie

Ongoing declines in manufacturing output – coupled with a slump in the ABSA Purchasing Managers’ Index – have reignited de-industrialisation concerns, prompting the Democratic Alliance (DA) to request hearings into the state of the manufacturing industry.

Last week, data from Statistics South Africa revealed that manufacturing was down 0.8% year-on-year (y/y) between May 2016 and May 2017 and down 0.3% from April 2017 to May 2017. This was a continuation of a decline in manufacturing from last month’s y/y figures of 4.9% between April 2016 and April 2017.

“By these figures, we now know manufacturing is in a recession with no clear way out from the government,” said DA shadow minister of trade and industry, Dean Macpherson. He has written to the chairperson of the portfolio committee on trade and industry, Joan Fubbs, to request

that hearings into the “manufacturing crisis” are prioritised.

He said the DA believed that trade and industry minister Rob Davies needed to be more proactive in addressing the situation.

Macpherson’s concern was echoed by the chairperson of the Manufacturing Circle, Andre de Ruyter, who told FTW that without a virtuous cycle of investor and consumer confidence, supported by stable policies, South Africa would continue to deindustrialise.

He pointed to studies that had shown the “serious consequences” of de-industrialisation, highlighting that it reduced economic growth potential. “History teaches that a strong economy begins with a viable manufacturing base,” De Ruyter said.

According to him, government has been supportive but he questioned whether the efforts were sufficiently well coordinated, noting that with so many government departments focused on providing assistance, help

was often very fragmented.Policy interventions could

include the deployment of regulatory levers deployed to support manufacturing, rather than simply relying on Competition Commission enquiries, as well as a manufacturing competitiveness enhancement programme across all sectors of industry.

“Furthermore, there is still a generally slow response to competition from imports and often intervention in this regard comes far too late,” De Ruyter added.

Speaking at the Manufacturing Indaba in Johannesburg earlier this month, Davies acknowledged the “major challenges” faced by industrialists in South Africa, pointing out that “deep industrialisation” depended on the country targeting larger export markets.

He said that while there had been no actual withdrawals by foreign investors, investor confidence had taken a knock and many were placing further investments on hold.

Davies added that government was “aware” that it needed to build investor confidence and create stronger policy certainty.

Stanlib chief economist Kevin

Lings pointed out that manufacturing activity in the country was still below levels reported before the global financial crisis in 2008.

The sector has had an annual growth of -0.3% over the past 12 months, and was still in recession, with manufacturing production expected to decline 1% in 2017.

History teaches that a strong economy begins with a viable manufacturing base.–ANDRE DE RUYTER

“

Manufacturing ‘crisis’ needs state intervention

The Petroleum Agency of SA (Pasa) is set to make recommendations to the minister of energy on the granting of exploration licences for shale gas in the Karoo, according to the agency’s manager, David van der Spuy.

Van der Spuy said contrary to popular belief no shale gas exploration licences had as yet been issued in the country.

“The issuing of licences is under evaluation. We have reviewed feedback from the public consultation process with all stakeholders and the various scientific reports on shale gas as well as the comments and responses that have been made by the public, interest groups and industry,” he said. “We have taken into account the concerns raised about fracking in the Karoo and are now in the process of finalising it all to brief the minister. Our hope is to get

this to the minister by no later than the third quarter this year.”

He said a moratorium on the granting of new shale gas exploration rights remained in place and permits granted previously did not permit hydraulic fracturing – or fracking.

Fracking in the Karoo has been a contentious issue. Environmental groups have raised doubt about the process and its real economic impact – particularly when initial estimates of 379 trillion cubic feet of gas in 2015 were said to be unfounded and that it was more likely to be only about a tenth of that at around 36 trillion cubic feet.

“We have since looked at the data in more depth and revised our estimate of the country’s potential shale gas and believe it could be as much as 201 trillion cubic feet.”– Liesl Venter

Karoo fracking licences imminent

LAST WEEK’S TOP STORIES

Infectious bird flu jumps provincial bordersThe highly infectious strain of avian influenza (bird flu), H5N8, has been confirmed in two further locations according to spokesperson for the Department of Agriculture, Forestry and Fisheries (Daff), Bomikazi Molapo.

Tripartite Free Trade Area agreement to create new export opportunitiesSouth Africa has become the 19th country to sign the Tripartite Free Trade Area (TFTA) agreement.

Security measures at Ortia to see major overhaulSecurity at OR Tambo International Airport (Ortia) will see a complete overhaul soon according to Police Minister, Fikile Mbalula.

Billions invested in brewery plantsSouth African Breweries (SAB), the country’s largest brewer, has announced that it is investing R2.8 billion in expansion at two of its breweries – Alrode in the south of Johannesburg and Rosslyn outside of Pretoria.

Export ‘map’ identifies large pool of untapped potential in SAThere is currently US$ 34.4 billion worth of untapped export potential in South Africa, according to the International Trade Centre’s (ITC) export potential map.

Western Cape trade promotion agency secures R150m in agricultural investmentWestern Cape trade promotion agency Wesgro has announced that its Agri-business Investment Unit (AIU) has secured committed investments into the Western Cape amounting to R150 million over the last four months.

South Africa, Angola and the Democratic Republic of Congo (DRC) will increase their cooperation on industrialisation and infrastructure development as a way of boosting inter-regional trade under the Tripartite Mechanism.

This follows the Extra Ordinary Meeting of the Council of Ministers of the Tripartite Mechanism last week during which the

Angolan minister of external relations, Georges Rebelo Pinto Chikoti, SA’s Minister of International Relations and Cooperation Maite Nkoana-Mashabane, and Leonard She Okitundu Lundula, minister of foreign affairs and regional Integration of the DRC, reviewed their cooperation under the Mechanism which was signed by the respective governments four years ago (2013).

Infrastructure collaboration

Maite Nkoana-Mashabane (far right) with her Angolan and DRC counterparts, Georges Chikoti (centre) and Leonard Okitundu (left).


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MEDITERRANEAN SHIPPING COMPANY SA THE DEPENDABLE INDEPENDENT GENEVA SWITZERLAND

Shipping line cyberattackFrom page 1

These incidents have been a reality for several years, but often companies keep it secret if they are successfully hacked.– Lars Jensen

“A small modification on a truck will allow it to run on both diesel and gas intermittently.– Nick Mitchell

“

Liesl Venter

Gas could hold the key to South Africa’s ever-increasing transport logistics costs.

This is according to Nick Mitchell, COO of Renergen, an integrated alternative and renewable energy business that owns the country’s first and only onshore gas production licence.

Mitchell told FTW they believed gas could be a game changer and was already proving to be an efficient solution in the bus industry.

“There is no reason why gas cannot transform the trucking industry as well,” he said.

With the majority of South Africa’s cargo on road, fuel costs remain the biggest contributor to the country’s high logistics costs.

According to Mitchell gas offers an opportunity to reduce this cost.

“We have walked the road many still fear to tread,” he told delegates at an oil and gas conference in Cape Town last week.

He said the company was set for huge expansion, having

just secured a R218-million loan from the Industrial Development Corporation (IDC) – and lobbying the truck market to switch to gas was high on the agenda.

Thirteen gas wells make up Tetra4 which is situated near

the town of Welkom in the Free State. The plant has been operational since 2016 and with its new loan in hand is set for major expansion. A new 107km underground pipeline will be funded with the loan.

Construction is expected to start before the end of the year.

Mitchell said this pipeline would join all the existing wells, taking the gas to a central processing facility from where it would be distributed to market.

“Currently a gas-operated fleet has to be home based as there is no infrastructure countrywide to refuel on gas. You would need bespoke gas filling stations for vehicles using only gas,” said Mitchell.

Whilst discussions around delivering gas as fuel across South Africa are still in their early stages, Mitchell said a duel fuel model was also possible. “A small modification on a truck will allow it to run on both diesel and gas intermittently. If the gas is finished it just switches over to diesel.”

Mitchell said being a producer of low-cost gas that was of exceptionally high standard had saved customers operating off Tetra 4 gas significantly on the cost of fuel.

Could gas hold the key to reduced logistics costs?

Logistics companies with a keen interest in the oil and gas sector are advised to keep an eye on the Ibhubesi gas project along the West Coast – one of South Africa’s most advanced projects in the sector to date.

Situated 80km off the Northern Cape coast, this project will see a 400km gas pipeline installed for the town of Atlantis near Cape Town

for the supply of gas to the Ankerlig power station.

Dave van der Spuy, manager of the Petroleum Agency SA, said with over half a trillion cubic feet (Tcf) of proven gas reserves at a 2P level, the current IGP gas reserves could potentially provide electricity to a city of 1 million people for about ten years, making it a significant source of clean energy in the

country and a project that held major opportunity for players in the oil and gas sector.

“Currently the conversion of turbines for gas is under way,” said Van der Spuy. “Eleven wells have been drilled thus far, comprising seven gas discoveries, which is an encouragingly high success rate.”– Liesl Venter

Ibhubesi project holds logistics potential

that the risk is lower than what it is in reality,” he told FTW. “Most companies see no upside to being open about it. Saying you got successfully attacked can lead to customers perceiving you as more risky than the other shipping lines, and hence moving cargo to your competitors. The argument is a fallacy, as the other ones are equally unsafe, but it is just not visible to you. Perception is everything. Other companies have indeed been hit with varying degrees of severity.”

Jensen said despite an increase in awareness by shipping companies – and even the massive shock of the Maersk incident – the reality was that the industry at large was simply not equipped or prepared to deal with these types of attacks.

“They need to significantly increase their efforts and ensure that equipment onshore and offshore is properly updated and maintained. They need to ensure that their large and complex global networks are

properly configured to prevent the rampant spread once they get infected,” he said – and this will require significant resources to fight this particular scourge alone.

“The industry is rapidly embracing digitisation and automation – and this literally means that when the computer systems go down there is not much you can do. A quick look at APM terminals also shows that the terminals that took the longest time to get up were also the ones that had the highest degree of automation.”

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