FREIGHT & TRADING WEEKLY

For import / export decision-makers FRIDAY 9 February 2018 NO. 2281

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Liesl Venter

The resignation last week of chief officer: customs and excise, Jed Michaletos, has sent shock waves through the industry.

Teboho Mokoena, who until recently held the position of chief officer: human capital and development, has replaced him.  

Sicelo Mkosi, SA Revenue Service (Sars) acting spokesperson, however assured industry there was no reason to be concerned.

“There is a very strong customs leadership structure in place that will continue to provide guidance and support as the new chief officer finds his feet in his new role. However, it must be added that the new chief officer has extensive experience in various strategic leadership roles and we have full confidence that he will

Customs allays concerns as new head takes the reinsadd great value to the division, bringing fresh perspectives and a steadying influence.

“We would like to thank Jed for the good work he has done during his tenure at Sars, including the professional manner in which he conducted himself at all times,” he said.

Several industry sources described the departure of Michaletos as the best kept in Sars as rumours of the pending resignation only surfaced a day or so before the official announcement was made – confirming in fact that he had resigned in December last year.

“He was only in the position

for two years, but in that time he built a relationship with industry and had an open-door policy,” a customs expert told FTW. “How much his leaving customs is going to impact on industry is uncertain. Also, in light of the numerous changes expected within the customs sector in coming months, the apprehension is understandable.”

No reasons were given for his resignation but several sources told FTW he had made the decision after being recalled from leave to return to work in December. The rumour mill has it that this was the

first leave he had taken since becoming the chief officer. This, however, could not be verified.

According to freight forwarder Mike Walwyn, industry worked well with Michaletos and news of his resignation was not good, but not surprising considering everything currently happening within Sars.

Most senior customs specialists agreed. “I am not at all surprised about Michaletos’s sudden resignation,” said one, who preferred to remain anonymous. “It was surely just a

matter of time before he would go. Sars is under pressure and crashing fast.”

Several clearing agents told FTW this pressure was clearly evident within customs operations at present with more and more delays being experienced.

“Delays are the norm these days despite improved technology to fast-track the checking of cargo,” said a source. “Increased costs due to customs delays is nothing new.”

Another specialist said considering customs stops

To page 8

As part of a campaign to address heavy vehicle accidents, Minister of Labour Mildred Oliphant last week announced that government would cap the permissible working hours for truck drivers to 45 per week (nine hours a day).

According to the Interdisciplinary Accident Research Centre (IARC),

most long-haul drivers work more than 70 hours per week. This has led to complaints within the industry of driver fatigue – and recent research by the centre revealed that 41% of accidents were fatigue related.

According to Oliphant, truck drivers can work overtime and may agree

to work six-day weeks (but no more than nine hours per day), depending on the agreement they have with their employer.

Effective from February 1, wholesale and retail truck drivers received a minimum wage increase of 5.1-6.6% – depending on the region in which they operate.

Drivers’ working hours capped

Minister of Labour, Mildred Oliphant.

FREIGHT & TRADING WEEKLY

Publisher Anton Marsh

EditorialEditor Joy OrlekAssistant Editor Liesl VenterJHB correspondent Adele MackenzieJournalist Nicole JacobsPhotographer Shannon Van Zyl

CorrespondentsAfrica/ Port Elizabeth Ed Richardson Tel: (041) 582 3750Swaziland James Hall

jhall@realnet.co.sz

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2 | FRIDAY February 9 2018

DUTY CALLS Riaan de Lange (dutycalls@nowmedia.co.za)

FTW4038SD

Audit Bureau of Circulationsof South Africa

transparency you can see

WCO tariff classifications releasedThe World Customs Organisation (WCO) on 1 February released their classification rulings; amendments to the explanatory notes; and amendments to the compendium of classification opinions (decisions) which were taken at the 60th session of the Harmonised System (HS) committee held from 27 September to 6 October 2017 in Brussels, Belgium.

The decisions include 21 new classification opinions and 18 sets of amendments to the HS explanatory notes, as well as 45 classification rulings.

These decisions deal with, among others, blanched green shell mussels; quinoa, normally used for human consumption, which has undergone the removal of the saponin layer after harvest; silica fume; a cover made of plastics and specifically

designed for smartphones; footwear made of plastics known as “sandals for adults made of plastics” and “sandals for children made of plastics”; a laminar air flow clean bench; an electronic interactive whiteboard, size 78 inches, consisting of a touch-sensitive, dry-erase surface with multi-touch functionality, which accepts touch input from a pen or a finger; an insulated gate bipolar transistor (IGBT) module; books and sound reproducing apparatus, also called “Future Book Set”; a thin-film solar module; an integrated circuit (IC) checking instrument; and a stand up paddle (SUP) board.

If you are interested in obtaining copies of the WCO decisions, simply send us an email with the article’s title in the subject line.

Clear float glass Sunset ReviewOn 2 February the International Trade

Administration Commission of South Africa (Itac) published its final determination in respect of the sunset review of the anti-dumping duties on clear float glass originating in or imported from Indonesia.

The sunset review investigation was initiated on 21 July 2017, with initiation letters sent to interested parties on 24 July 2017, on which response was due by 30 August 2017. On 28 July 2017 a letter was received from the directorate general of foreign trade in Indonesia requesting an extension of the period to submit a response to the initiation. The extension was granted until 14 September 2017.

Letters were received from two exporters, namely PT Asahimas Flat Glass Tbk (AFG) and PT Matahari Silverindo Jaya (PT Matahari), stating that they would not be participating in the sunset review. A letter was received from

the ministry of investment, trade and industry, Republic of Botswana, on 24 August 2017, stating that it would not be affected by the expiry or continuation of the anti-dumping duties. Itac received no properly documented responses from any interested party.

As a consequence, Itac recommended to the trade and industry minister that the anti-dumping duties on clear float glass, originating in or imported from Indonesia, be maintained.

The trade and industry minister subsequently approved the recommendation by Itac, the reasoning for which is detailed in its report no 572.

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.

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FRIDAY February 9 2018 | 3

Ed Richardson

South Africa is not a logical, nor is it yet, a really viable location to produce cars without government support, warns VWSA chairman and managing director, Thomas Schaefer.

Speaking at the launch of the new Polo and Polo Vivo in Port Elizabeth recently, he said that the VW group would in all likelihood not have decided to invest R6.1 billion in the South African plant had the decision been made in 2017.

“In essence, one of the most important issues for us as vehicle manufacturers is a stable and attractive government automotive policy.

“This is where the South African government needs to be complimented, firstly for the introduction of the MIDP, which worked and provided a stable base for the successor programme, called the APDP, which again can be called a success.

“I am sure that the next phase will

continue in the same vein and allow for continued automotive investment.

“Basic economic fundamentals and an investor-friendly legislative

framework within a reasonably stable economic environment are also essential.

“Let me say that had the investment decision been due in 2017, it is unlikely that it would have been approved.

“Fortunately, we are long-term planners and are pleased to see some positive

developments occurring in the country and the economy which should improve business sentiment and bring investor confidence back.

“We also believe in the long-term future of South Africa and

Africa, and that both destinies are connected, hence the formation of the sub-Saharan region,” he said.

VW SA is responsible for a newly created sub-Saharan

region within the VW group globally.

In addition to the Uitenhage plant

there are manufacturing facilities in Nigeria,

Kenya and Rwanda.

VW warns about future investment

The first of eight refurbished state warehouses in the country has been completed and is open for business.

The Cape Town state warehouse was officially opened by South African Revenue Service commissioner Tom Moyane on International Customs Day last week.

The state warehouse refurbishment programme was initiated in 2014 and implemented at eight prioritised sites. The refurbishment of facilities at Beitbridge, Musina, Groblers Bridge, Lebombo, OR Tambo International Airport, Durban and Karsene is ongoing.

The main purpose of the warehouse is to secure the duty and VAT due on undeclared,

abandoned or seized goods. Declared goods detained provisionally for the correct tariff classification or without a permit are also stored in state warehouses as are confiscated illicit and counterfeit goods.

Improvements to the warehouse include the introduction of tighter security processes and a new in-house upgraded information management system that will be able to track all goods coming in and out of the facility.

According to group executive for customs, Vonani Ntlhabyane, the new warehouses will enable customs to deal decisively with illegal and counterfeit goods that contribute to the illicit economy and loss of revenue to the state.– Liesl Venter

Refurbished state warehouse open for business

Had the investment decision been due in 2017, it is unlikely that it would have been approved– Thomas Schaefer

“

4 | FRIDAY February 9 2018

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Risks around the transportation of high value cargo have changed – with criminals targeting data instead of drivers – which makes it more important than ever to ensure shippers work with trusted partners.

This was the advice from Clifford Blackburn, CEO of 4PL logistics company TSI Central Station, who told FTW that three decades ago the truck driver was the biggest risk around high value logistics where the crime would usually occur when the truck was in transit.

“These days, it is sensitive information that poses the biggest risk, with hackers accessing data and being able to alert criminals about high-value goods and the transport route before the truck even picks up the cargo,” he said, adding that limiting the number of information leaks should be a key component of a risk management strategy.

According to him, this means choosing logistics partners with a proven track record and a solid risk profile. “Technology, if used correctly, is also a very strategic tool in mitigating risk and protecting high value cargo.”

Blackburn explained that technology had advanced to the point where the right track and trace system could zoom in on an individual product as part of a larger shipment and track it from end to end.

“Technology has become more accessible and easier to use

and can quickly identify weak links in a high-value cargo supply chain. This means the previous ‘black holes’ can now be fully transparent,” he said.

Blackburn added that technology could also be leveraged to further

protect sensitive/high-risk data and ensure it did not fall into the wrong hands.

– Adele Mackenzie

Technology, if used correctly, is a very strategic tool in mitigating risk and protecting high value cargo.– Clifford Blackburn

“

FTW3425SD

Data is the new target

Improperly secured cargo increases the risks of cargo damage – which can lead to major losses for high value cargo. For this reason Cargo Lash has introduced vapour barriers which can be incorporated into the packaging design to mitigate risks.

Managing director of the specialist cargo securing company, Pooven Moodaliar, told FTW that Cargo Lash recommended using a moisture vapour barrier bag that contained activated dessicants and could be fastened with heat-sealed seams.

“A vacuum is placed inside the barrier bag before sealing which reduces the volume of air and also eliminates lingering moisture.” He said that as an extra precaution Cargo Lash could, on request, enclose a humidity indicator that could test for moisture

exposure upon opening of the packaging

Moodaliar added that products made of ferrous and non-ferrous metals would rust if not properly protected. “We recommend using VCI (vapour corrosion inhibitors), sophisticated film barrier products

designed to prevent rust. VCI packaging can be found in many forms including barrier bags and wrapping papers that are heat sealable, stretchable, water resistant, recyclable

and non-toxic (nitrate-free),” he said.

“We offer products that are certified by globally recognised international organisations, thereby ensuring that we offer new and improved systems that have been tested by the necessary global regulatory bodies.”– Adele Mackenzie

Vapour barrier bags mitigate risk

We recommend using a moisture vapour barrier bag that contains activated desiccants and can be fastened with heat-sealed seams.– Pooven Moodaliar

“

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In an increasingly porous security environment, judicious use of effective container seals is a

no-brainer.But it’s as much about the

seal as how it’s used in the supply chain, says Aluvin managing director Kevin Norwitz.

“While radio frequency is the way of the future, it’s taken a long time

to get off the ground because of the costs involved.

“The technology is there and it works, but because of the extent of the supply chain – with a container moving from Durban to Singapore, for example, the scope of the project is big and therefore the costs are big and that’s what has scared people off. The barrier to entry of getting it commercialised has been the cost.”

Most people are still using more traditional plastic seals, metal seals, bolts and barrier seals –and they work, says Norwitz.

“But in the logistics field it depends on the

application. Every seal serves a different

purpose and comes at a

different cost. If you’re moving a container full of electronic goods or high-end clothing you can’t take chances, you need to use high quality bolt seals or cable seals which are ISO certified – and those are high security products.”

And while a seal can be cut, it’s designed in such a way that once cut it can’t be put together again. “So the seal is one part of the solution – the other is using it in a properly controlled system. Each seal has a unique number and this needs to be monitored

and checked either manually or using bar codes or radio frequency.

“It’s about using a high quality seal and then using it

in a system that has checks and balances from A to Z.”

The challenge, says Norwitz, is to give the customer value. “If you’re sealing a container filled with goods worth millions of rands you can’t afford to

play games with the seal.“There’s no off-the-shelf

solution. The system is managed and run by the user

but we give advice on how that system should be designed and how it should work.”

And it’s not rocket science. “You need to make sure you buy the right seal in the first place, make sure you’re looking after the seals and that they’re locked away so that people aren’t manipulating numbers.

“Each seal has a name to identify where it comes from as well as a number – and the number is how you track and trace the seal. Critically important is to check whether the number is correct and to check that the seal is intact and hasn’t been tampered with.

“From our point of view it’s important to stay at the cutting edge of new products which we do through our network of international partners.”

Radio frequency seals the way of the future

It’s about using a high quality seal and then using it in a system that has checks and balances from A to Z.– Kevin Norwitz

“

6 | FRIDAY February 9 2018

Joy Orlek

The recent launch of the first purpose-built abnormal load weighbridge at the Port of Richards Bay has ushered in a new era of efficiency in the weighing and measuring of abnormal load combinations for permit application verification.

The objective is to drastically reduce the standing time for abnormal loads departing the port under exemption permit regulations.

In the past (and presently the case for all but Richards Bay), transporters contracted independent consultants with portable weigh mats when weighing of their combinations was required. “This process requires advance notice

and is costly to transporters given the time to mobilise equipment and personnel – typically from afar. As a result, it has only been logistically possible to weigh “superloads” (greater than 125 tons gross combination mass) lest the weighing exercise caused congestion of abnormal loads at the point of origin – typically the ports,” MGI Weighbridges managing director Philip Warren told FTW.

In the Port of Richards Bay the abnormal vehicle (A/V) weighing process has been re-invented through the installation of a permanently sited, purpose-designed, abnormal load weighbridge.

This facility has streamlined the weighing process,

drastically reducing the time required to produce a weighbridge ticket/certificate, according to Warren.

Furthermore exemption permits printed on behalf of the Department of Transport (KZN) as ‘e-permits’ can now be done at the weighbridge. “This further reduces standing time for transporters who may depart as soon as they are in possession of their e-permits,” said Warren.

In terms of charges, there’s a sliding fee scale based on weight, starting from R675

per weighing and rising to R24 000 for ‘superloads’ up to 400 tons, with scale-economies available for multiple/identical weighing exercises.

“The weighbridge ticket/certificate is both valid for the application

of A/V exemption permits as well as consignee/consignor legislation compliance.”

In Warren’s view, the facility is a ‘win-win’ for all stakeholders – not only the transporters.

“In Africa we still have vast sections of road and bridge infrastructure that were constructed to standards that can be more than 50 years old. It is therefore imperative that we safeguard this infrastructure for everyone’s economic benefit. The weighbridges will play a vital part not only in helping streamline the weighing and permitting process, but equally in assisting authorities to maintain and promote the safe and correct travel of abnormal loads over road and bridge infrastructure.”

RB weighbridge slashes standing time for abnormal loads

The objective is to drastically reduce the standing time for abnormal loads departing the port under exemption permit regulations.– Philip Warren

“

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The agricultural sector – which contributes just under R270 billion annually to South Africa’s gross domestic product and which is already under pressure from the ongoing drought – could be hard hit by the recent introduction of a minimum wage increase.

This is according to Jahni de Villiers, labour and development head at AgriSA, following the announcement by the Department of Labour (DoL) of a 5.6% increase in the minimum wage for farm and forestry workers. The increase kicks in on March 1 and is valid until February 28, 2019. 

She pointed out that the agricultural sector had shed 109 000 jobs so far in the last quarter of the 2017/2018 financial year and was 71 000 jobs down from the same quarter in 2016/2107.

“Various factors contributed to this decline, one of which is the drought affecting labour-intensive fruit farms in the Western Cape. Fruit-growing organisation Hortgro estimates that a further 45 000 jobs could be lost directly due to the drought,” De Villiers said. It was a “fair assumption” that the

introduction of an increased minimum wage could lead to further job losses and, ultimately, a decline in production which would affect exports, she added.

The National Minimum Wage Commission acknowledged in its final research findings published in 2016 that 200 000 jobs had been lost due to the first implementation of a minimum wage in 2013, and that employment levels had never returned to the levels they had been before the minimum wage.

De Villiers pointed out that agriculture was considered a low-threshold sector, where even small changes could have a significant impact on employment levels. “One of the reasons is small profit margins in farming operations, which means that fixed-cost pressures have a significant and immediate impact on the cash flow of a farm,” she explained.

Chief director of labour relations at the DoL, Tembinkosi Mkalipi, said the department had not received any complaints on the inflation increase, adding however that employment rates would have to be monitored to determine whether the minimum wage had a negative effect on the sector after its implementation.

“Farmers that are of the view that they cannot afford the minimum wage can apply for exemption,” Mkalipi said.

Chief economist at AgriSA, Hamlet Hlomendlini, acknowledged the

importance of paying farm workers a “fair wage” but said it needed to be approached carefully, with the “bigger picture” in mind.

“It is important for government to make the development of agriculture a national priority,” he commented. – Adele Mackenzie

Minimum wage increase threatens battered agri sector

LAST WEEK’S TOP STORIES ON

Fixed-cost pressures have a significant and immediate impact on the cash flow of a farm.– Jahni de Villiers

“

Sars outlines next stepsThe introduction of new customs legislation through the New Customs Acts Programme (or NCAP) will be a pivotal point for South Africa, according to Tom Moyane, South African Revenue Service (Sars) commissioner.

Trade and Investment assistant director resigns following criminal chargesThe assistant director of Trade and Investment at the Department of Economic Development, Londeka Ntjoboko, has resigned following corruption charges.

Dangerous goods seminar – all you need to knowThe handling, packaging and transport of dangerous goods – from an air, sea and road perspective – will come under the spotlight at a business breakfast to be hosted by FTW, in conjunction with the Johannesburg Chamber of

Commerce & Industry, on March 7 at JCCI House in Milpark.

Zimbabwe to establish ports authorityLand-locked (or land-linked) Zimbabwe is to establish a ports authority, finance minister Patrick Chinamasa  announced in his 2018 budget speech.

Over R6m in undeclared currency intercepted at OrtiaSouth African Revenue Service (Sars) Customs officials intercepted and prevented R6.7 million in undeclared currency from exiting SA borders at OR Tambo International Airport (Ortia) last week.

Durban cargo volumes flying highInternational cargo volumes at Durban’s King Shaka International Airport increased by a whopping 137% in quarter 3 of 2017, according to Mlibo Bantwini, executive, Dube Cargo Terminal. 

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Liesl Venter

Water usage by the agricultural sector will be curbed significantly in coming months as the Western Cape moves into overdrive to avoid taps running dry.

Briefing the media in Cape Town recently, the city’s director for water and sanitation, Peter Flower, said water releases from dams to the agricultural sector would now be curtailed.

“By January 1 agriculture had already used 40 million kl out of its total allocation of 60 million kl. It is imperative that agriculture use is restricted to its allocated amount,” he said. “This requires urgent

attention on the part of the national department of water and sanitation to enforce restrictions by managing, reducing and cutting releases from the dams.”

Assuming another low rainfall year occurred and restrictions were not adhered to, Cape Town would run out of water, said Flower.

A complex system of dams supplies most of the water to the agricultural and urban

sectors in the region. About a third of the water is used by agriculture.

Flower said current systems were not

sustainable.“Planning

to diversify from the dam system started years back and

alternatives such as using

ground water, water re-use and

desalination plants have all been on the table. Several feasibility studies have been conducted.”

Flower said the water usage

plans were conducted on a one in 50 year level of assurance. “This means that during droughts with a severity of 1:50 years or more, restrictions need to be imposed to reduce demand. The current drought is much more severe than a 1 in 50 drought event.”

The next augmentation scheme for Cape Town (augmentation of the Voelvly Dam) was only on the cards for 2023 but was now being accelerated by the national water department due to the unprecedented multi-year drought. It would only go on line around 2021 though.

He said if the agricultural and urban sectors all adhered to restrictions a catastrophe

could be avoided. “We have anticipated that

we can avoid switching off the taps by capping agricultural demand and putting extensive pressure on residents not to use more than 50 litres of water per day.”

But, said Flower, it was essential to understand that neither the city nor the provincial and national authorities had the means to build their way out of a drought. “We can build as much infrastructure as possible to augment the water supply, but it will never be enough on its own. We have to have the dams, and rainfall will always be our main supply of water.”

Cape agri-sector faces further rationing

were expected to dramatically increase as Sars set out to increase its revenue this year, to him it made no difference who was in charge.

“There is real lack of skill and capacity within the organisation and the political shenanigans have not helped the situation,” he said.

Walwyn said Michaletos’s resignation could have a negative impact on industry due to his good working relationship with forwarders and ongoing efforts to assist industry as much as possible.

Commenting on the appointment of Mokoena, a

source said: “One would hope this was a decision based on his competencies, rather than for political reasons. Understandably industry is concerned as most of us don’t know his background or his

knowledge of customs

“We also have to build this relationship from scratch.”

Many of the industry sources contacted by FTW said they were surprised at the appointment as several very senior and competent

officials within customs had been seemingly overlooked.

“There are several names – and had they been appointed that would have settled

industry, yet it seems they were not even in the running for this position,” said one.

According to Walwyn it is, however, still early days. “I don’t know much about the new appointment, except that he doesn’t appear to come from an operational environment, so I’m not sure what knowledge he has of the nitty gritty of customs.”• Editor’s note: The appointment of Jed Michaletos was a breath of fresh air for FTW and the industry – and his passion to make a difference was evident from the outset. Having worked in the public sector, specifically with revenue authorities in Africa, he understood the issues and challenges from a stakeholder perspective and was clearly eager to make a difference. At FTW we valued his openness and accessibility which we hope will be carried forward by his successor.

Customs allays concernsFrom page 1

Jed had a good working relationship with forwarders and an ongoing commitment to assist industry as much as possible.– Mike Walwyn

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