south african port trends and current developments

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TRANSNET PORT TERMINALS - South African port trends and current developments in the industry Siya Mhlaluka GM: EC Operations 22 November 2013

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Expert insights on Port Trends were presented at the 11th international Intermodal Conference in Port Elizabeth, South Africa in November 2013. Presented by Siyabulela Mhlaluka, General Manager; Eastern Cape Region, for Transnet Port Terminals, this presentation offers critical insights into the Maritime Logistics industry.

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Page 1: South African Port Trends and Current Developments

TRANSNET PORT TERMINALS - South African port trends and current developments in the industry Siya Mhlaluka GM: EC Operations 22 November 2013

Page 2: South African Port Trends and Current Developments

PAGE PAGE

TRANSNET SOC LTD

TABLE OF CONTENTS

2

INTRA REGIONAL TRADE

INDUSTRY TRENDS

PORT DEVELOPMENT FRAMEWORK

TPT STRATEGIC RESPONSE

Page 3: South African Port Trends and Current Developments

PAGE PAGE

TRANSNET STATE OWNED COMPANY LTD - OPERATIONAL DIVISIONS

• 16 Cargo Terminals operating across 7 SA ports

• Revenue 7 bn

• Assets R12.3 bn

• 6 210 employees

Support

3

• 8 Commercial ports along 2 943km of coastline

• Revenue R8.4bn

• Assets R60.6 bn

• 3 420 employees

• 20 500 km of railway track

• 182 million tons of freight

• General freight & 2 heavy haul export lines

• Revenue 27.6 bn

• Assets R61.3 bn

• 26 850 employees

• Support TFR for rolling stock and TPT for lifting equipment maintenance

• Revenue 11.2 bn

• Assets R7.6 bn

• 12 570 employees

• 18 billion litres of petroleum products and gas through 3 000 km of pipelines, mainly to Gauteng

• Revenue 2.1 bn

• Assets R19.3 bn

• 630 employees

• R300 billion of capital investments over 7 years

• CSI in Education, Health, Sport, Arts & Agriculture

• Property Management

• Transnet Schools

Capital

Projects

Transnet

Foundation

Property

Schools

Transnet

Pipelines

(TPL)

Transnet

Engineering

(TE)

Transnet

Freight Rail

(TFR)

Transnet

Port

Terminals

(TPT)

Transnet

National

Ports

Authority

(TNPA)

Pipelines Rail Ports

3

Page 4: South African Port Trends and Current Developments

PAGE PAGE 4

TRANSNET PORT TERMINALS #1 Terminal Operator in Africa

Company 2011 Total Throughput

‘000 TEU

2011 Equity Throughput (‘000 TEU)

Equity TEU as % of Regional

Throughput

1 Transnet Port Terminals 4,403 4,403 18.07%

2 APM Terminals 7,640 4,236 17.39%

3 Bolloré Africa Logistics 3,348 1,671 6.86%

4 DP World 2,094 1,193 4.89%

5 Port Said CCHC 922 922 3.79%

6 Damietta CCHC 809 809 3.32%

7 CMA CGM/Terminal Link 1,218 661 2.71%

8 Cosco Pacific 3,247 649 2.67%

9 Hutchison Port Holdings 949 548 2.25%

10 Alexandria CHC 517 506 2.08%

Source: Drewry on Africa

Transnet’s hold on the top ranking for terminal owning/operating companies in Africa will make them an ideal partner.

Page 5: South African Port Trends and Current Developments

PAGE PAGE

TRANSNET SOC LTD

TABLE OF CONTENTS

5

INTRA REGIONAL TRADE

INDUSTRY TRENDS

PORT DEVELOPMENT FRAMEWORK

TPT STRATEGIC RESPONSE

TRANSNET SOC LTD

INTRA REGIONAL TRADE

INDUSTRY TRENDS

PORT DEVELOPMENT FRAMEWORK

Page 6: South African Port Trends and Current Developments

PAGE

55 AFRICAN COUNTRIES , 38 COUNTRIES WITH PORTS

delivering freight reliably Algiers (Algeria)

Cape Town (SA)

East London (SA) Ngqura (SA)

Port Elizabeth (SA)

6

Lagos (Nigeria)

Abidjan

(Côte d'Ivoire) Tema, Takoradi (Ghana)

Cotonou (Benin)

Douala

(Cameroon)

Walvis Bay (Namibia)

Libreville

(Gabon)

Pointe Noire

Matadi (Congo)

Lobito

(Angola)

Luanda

(Angola)

Maputo

(Mozambique)

Richards Bay (SA)

Durban (SA)

Dar es Salaam

(Tanzania)

Tanga

(Tanzania)

Mombasa

(Kenya)

Nacala

(Mozambique) Beira

(Mozambique)

Toamasina (Madagascar)

Port Louis (Mauritius)

Page 7: South African Port Trends and Current Developments

PAGE

SADC CHALLENGES

The SADC region is regarded as the next growth frontier due to its extensive minerals wealth, growth in consumer populations and relatively good infrastructure, road in particular:-

• Key challenges hinders its growth and trade remain strained;

• Poor infrastructure, low density across transport networks, inefficient border processes and fragmented regulatory environments continue to dog it;

• Much of rail and port infrastructure was built for resource extraction rather than to facilitate trade;

• Landlocked countries within the region require efficient transport links to and from the sea in order to enjoy competitive prices for landed goods and exports to global markets;

• Most ports within the region currently operate near capacity and experience delays due to poor integration with other transport modes and slow clearance processes; and

• The SADC region must attain the goal of becoming a seamless, cost-effective, fully integrated and internationally competitive region with appropriate and substantial investments in road, rail and ports to secure the future of the region.

Page 8: South African Port Trends and Current Developments

PAGE

KEY INTERVENTIONS REQUIRED

Ports to improve Inter-Regional Trade

Development of SADC ports that connect to the world regions – growing maritime trade

Development of ports that are efficient transhipment hubs connected to rail

Terminal and Warehousing facilities

Distribution centres for product to reach markets in the region

Lowering inventory costs

Working together to satisfy

customers to reduce the cost

of doing business to improve

regional competitiveness

RESPONSE TO CHALLENGES

Page 9: South African Port Trends and Current Developments

PAGE PAGE

TRANSNET SOC LTD

TABLE OF CONTENTS

9

INTRA REGIONAL TRADE

INDUSTRY TRENDS

PORT DEVELOPMENT FRAMEWORK

TPT STRATEGIC RESPONSE

TRANSNET SOC LTD

INTRA REGIONAL TRADE

INDUSTRY TRENDS

PORT DEVELOPMENT FRAMEWORK

Page 10: South African Port Trends and Current Developments

PAGE PAGE 10

10 Transnet Long-term Planning Framework 2012

Global context

• SA’s distance from international markets results in high maritime transport costs

• SA well placed to service Southern African and most BRICS shipping trade routes

• Opportunity to position SA as global transshipment hub focusing on selected trade routes

Regional context

• SA well positioned to serve African east and west coasts by sea

• SA’s rail network provides strategic and common-gauge connectivity to neighbouring SADC countries

• Regional partnerships will stimulate and sustain regional growth

National context

• Gauteng industrial and mining area remains regional production and consumption hub despite distance from nearest ports

• Transnet’s key role is to assist in economic growth through providing appropriate, cost-effective and efficient port, rail and pipeline infrastructure and operations

• Continued emphasis on alignment with New Growth Path, management of Carbon footprint, private-sector participation, and job creation

GEOGRAPHICAL CONTEXT Challenge & Opportunities

Page 11: South African Port Trends and Current Developments

PAGE PAGE 11

Globalisation

Increased international freight flows a fundamental component of recent changes in global, regional and local economic transport systems

Evidence of recession in small reduction in freight tonnage handled

Some evidence of recovery from the debilitating effects of the past few difficult years (from an economic and trade point of view

Trade Patterns

2007: Industrial and Commercial Bank of China buys 20% stake in Standard Bank (US$5,4 billion) - China’s largest-ever foreign investment

2009: China-South Africa trade reaches $17,9 billion - China becomes South Africa’s largest trading partner

2010: India-South Africa trade reaches US$11,1 billion - increases to US$15 billion by 2015

2014: 26 African countries create a US$1 trillion Southern/Eastern/Central African free trade area

Road/Rail

Road/rail tonnage split almost static

Only profitable rail infrastructure being investing in - large components, notably rural branch lines, not used and becoming increasingly dilapidated

Worldwide trend toward road reversing as rail becomes more competitive as a sustainable transportation mode

Single wagon business being replaced by hub-to-hub

Intermodal solutions becoming increasingly important (especially in manufacturing sector)

Ports

Worldwide trend towards greater specialisation, centralisation, economies of scale, larger vessels and larger parcel sizes

Current upward trend in average size of container-carriers (40 000 DWT) and bulkers (65 000 DWT)

Growing international over-ocean trade to 11 billion tones pa by 2020 at 3% pa year-on-year growth rate

International shipbuilding peaked in 2010 at 96 million tons (previous peak in 1975 at 36 million tons)

Sustainability

Supply-chains used to develop and sustain competitive advantage

Increasing pressure to transform logistics to meet “greening” the requirements

Impact of logistics on climate change more topical because of realisation of immediacy and magnitude of global warming

INDUSTRY TRENDS

Page 12: South African Port Trends and Current Developments

PAGE PAGE

TRENDS IN THE SHIPPING INDUSTRY - 10 New 18,000 TEU ships ordered by Maersk

12 Source: Nick Souza Photography Marine Traffic

Page 13: South African Port Trends and Current Developments

PAGE PAGE

If all the 20 Foot Equivalent Unit (TEU) sized Containers from the world's largest container ship, the Emma Maersk were to be put on one train, the train would be more than 70 km long.

VESSEL SIZES

Generation Years

Produced Capacity

(TEUs) Length

(m) Draft (m)

1st Early Containership 1956-1970 <1000 137-200 9

Fully Cellular 1970-1980 1000-2499 200-225 10

2nd - Panamax 1980-1985 2500-3499 250-290 11-12

Panamax Max 1985-1987 3500-4499 275-294 12.5-13

3rd Post-Panamax 1988-1999 4500-5999 295-320 13-14

Post Panamax Plus 2000-2003 6000-6999 320-340 14-14.5

4th New Panamax 2003-2007 7000-12999 340-350 14.5-15.2

5th Post New Panamax 2006-2012 13000-15999 350-400 15.5

Tripple E 2013 + 18000 TEU’s 400-440 16

Source: Geography of Transport Systems 13

Page 14: South African Port Trends and Current Developments

PAGE

SOUTHERN HUB FOR WORLD SHIPPING ROUTES

The position of South Africa’s ports system enables it to access to South-South trade, Far East trade, Europe & USA, East & West Africa regional trade

14

Shortest Trade Route between Shangai and Santos is via South Africa 11,270nm = 22 days @ 21 knots

via Panama Canal13,130nm = 26 days + transit fee

via Suez Canal 13,590nm = 27 days + transit fee

Page 15: South African Port Trends and Current Developments

PAGE 15

GREATER COLLABORATION (RATHER THAN COMPETITION) NEEDED BETWEEN AFRICAN PORTS

Monrovia (Liberia)

Lome (Togo)

Port Louis (Mauritius)

Toamasina (Madagascar)

Walvis Bay (Namibia)

Cape Town (SA)

Dar es Salaam

(Tanzania)

Tanga

(Tanzania)

Mombasa

(Kenya)

Nacala

(Mozambique) Beira

(Mozambique)

Maputo

(Mozambique)

Richards Bay (SA)

Durban (SA)

East London (SA) Ngqura (SA)

Libreville

(Gabon)

Pointe Noire

Matadi (Congo)

Source: Team analysis

Port Elizabeth (SA)

Lobito

(Angola)

Luanda

(Angola)

Dakar (Senegal)

Algiers (Algeria)

Port Said

(Egypt)

Lagos (Nigeria)

Abidjan

(Côte d'Ivoire) Tema, Takoradi (Ghana)

Cotonou (Benin)

Douala

(Cameroon)

15

Page 16: South African Port Trends and Current Developments

PAGE PAGE

TRANSNET SOC LTD

TABLE OF CONTENTS

16

INTRA REGIONAL TRADE

INDUSTRY TRENDS

PORT DEVELOPMENT FRAMEWORK

TPT STRATEGIC RESPONSE

TRANSNET SOC LTD

INTRA REGIONAL TRADE

INDUSTRY TRENDS

PORT DEVELOPMENT FRAMEWORK

Page 17: South African Port Trends and Current Developments

PAGE

Saldanha Bay

TRANSNET PORT TERMINALS

Cape Town Port Elizabeth

Ngqura

East London

Durban

Richards Bay

CONTAINER TERMINAL

DRY BULK TERMINAL

MULTI PURPOSE TERMINAL

AUTOMOTIVE TERMINAL

An integrated system of complementary regional ports and rail corridors

17

Page 18: South African Port Trends and Current Developments

PAGE

PORT OF DURBAN : AT A GLANCE

Page 19: South African Port Trends and Current Developments

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DURBAN CONTAINER TERMINALS : EQUIPMENT & INFRASTRUCTURE UPGRADE

19 19

Page 20: South African Port Trends and Current Developments

PAGE

DURBAN MPT TERMINALS – POINT RORO

20

Page 21: South African Port Trends and Current Developments

PAGE PAGE

DURBAN MPT TERMINALS – POINT RORO DURBAN MPT TERMINALS – MAYDON WHARF, AGRI

Page 22: South African Port Trends and Current Developments

PAGE PAGE

Port of Durban

Isipingo

Sapref Refinery

Old Durban Airport

Toyota Factory

N2 Freeway

Mondi

Umlazi

22

PORT OF NGQURA DURBAN MPT TERMINALS – POINT RORO FUTURE EXPANSION PLANS FOR DURBAN - Ex Durban International Airport (DIA) Site

Page 23: South African Port Trends and Current Developments

PAGE PAGE

Port of Durban

Container Terminals

New Dig-Out Port

Automotive Terminal

Liquid Bulk Terminal

Breakwater and Entrance Channel

23

PORT OF NGQURA DURBAN MPT TERMINALS – POINT RORO FUTURE PLANS FOR DURBAN - Artist’s View of the new Dig-Out Port at ex-DIA Site

Page 24: South African Port Trends and Current Developments

PAGE 24

RICHARDS BAY DURBAN MPT TERMINALS – POINT RORO RICHARDS BAY TERMINALS

Page 25: South African Port Trends and Current Developments

PAGE

RICHARDS BAY DRY BULK TERMINALS : EXPANSION

25

Page 26: South African Port Trends and Current Developments

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PORT OF EAST LONDON : AUTOMOTIVE BACKBONE

26

Page 27: South African Port Trends and Current Developments

PAGE PAGE

PORT ELIZABETH

27

DURBAN MPT TERMINALS – POINT RORO PORT ELIZABETH : UPGRADE AND EXPANSION

Page 28: South African Port Trends and Current Developments

PAGE PAGE

PORT OF NGQURA

28

DURBAN MPT TERMINALS – POINT RORO PORT OF NGQURA : CONTAINER TERMINAL EXPANSION

Page 29: South African Port Trends and Current Developments

PAGE PAGE

MDS - PORT EXPANSION PLANS Port of Ngqura

AFTER: 2010

Ngqura Container

Terminal

BEFORE:

Coega River mouth

Nov-2002

Futuristic

Expansion Options

current: 2013

Ngqura Container

Terminal

NGQURA CONTAINER TERMINAL - EVOLUTION OVER 10 YEARS

Page 30: South African Port Trends and Current Developments

PAGE PAGE

PORT OF CAPE TOWN : EXPANSION PROJECT

30

Page 31: South African Port Trends and Current Developments

PAGE PAGE

PORT OF SALDHANA : EXPANSION OPPORTUNITIES

31

Page 32: South African Port Trends and Current Developments

PAGE PAGE

TRANSNET SOC LTD

TABLE OF CONTENTS

32

INTRA REGIONAL TRADE

INDUSTRY TRENDS

PORT DEVELOPMENT FRAMEWORK

TPT STRATEGIC RESPONSE

TRANSNET SOC LTD

INTRA REGIONAL TRADE

INDUSTRY TRENDS

PORT DEVELOPMENT FRAMEWORK

Page 33: South African Port Trends and Current Developments

PAGE 33

Integration into the Supply

Chain

Global Operations

TPT NEW STRATEGIC DIRECTION

Local

Operations

Defending and

growing the

Home Turf

Innovative

Value Adding

Services

Expanding the

Horizon

Page 34: South African Port Trends and Current Developments

PAGE 34

TPT’s AFRICA STRATEGY IS RESPONSE TO : “THE AU HAS IDENTIFIED 14 CORRIDORS FOR DEVELOPMENT”

1 Kenitra-Casablanca Corridor

2 Greater Cairo Region

3 The Dakar-Touba corridor (Touba-Mbackѐ)

4 The Greater Ibadan-Lagos-Accra (GILA) urban corridor

5 The great Haoussa-Yoruba-Anshanti city triangle (GHAYA-CT)

6 The Emerging Luanda-N’Djamena corridor

7 The Kampala-Entebbe corridor

8 Nairobi metropolitan region

9 Walvis Bay corridor

10 North South corridor (Cape Town-Johannesburg-Harare-Lusaka-Dar es Salaam)

11 The Maputo-Gauteng development corridor

12 Durban development corridor

13 Beira corridor

14 Maputo-Limpopo corridor

Source:E&Y Report – Time for Africa

3

4

2

13

10

12

11 14

9

6

5

7

8 6

6

34

Page 35: South African Port Trends and Current Developments

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GROWTH DRIVEN BY GDP Southern Africa Economic Outlook Source: World Bank Report

Country 2013 2014 2015

Angola 8.2 7.8 7.01

Botswana 5.6 5.5 4.3

DRC 8.2 9.4 20.7

Lesotho 3.9 3.5 3.5

Madagascar 3 4 3.9

Malawi 5.5 6.1 6.5

Mauritius 3.8 4.2 4.7

Mozambique 8.5 8 8

Namibia 4.2 4.3 4.3

South Africa 2.8 3.5 3.4

Tanzania 6.9 7 7.04

Zambia 7.5 7.8 7.7

Zimbabwe 5 5.7 5.4

= Rapid growth areas

TPT AFRICA STRATEGY

Page 36: South African Port Trends and Current Developments

PAGE

Railway , Ports & Terminal Infrastructure require deliberate intervention

Political Stability and

Will

Skills Development

Sustainable Economic

Growth

Infrastructure

Development

Funding Framework

(Local and international

ventures)

Southern African

countries working

together for regional

growth and

development

Policy & Legislation

ENABLING ENVIRONMENT REGIONAL INTEGRATION

Page 37: South African Port Trends and Current Developments

Our President was quite clear on this when he said in 2011:

"Regional and continental infrastructure development is of fundamental importance to the

realisation of Africa IS economic growth and development imperatives. As regional leaders, we

carry a particular responsibility to serve as champions in driving industrial and infrastructure

development both at the regional and continental levels."