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The Role of Transnet Port Terminalsin Trade Facilitation

- Willie Coetsee22 February 2017

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Contents

Introduction

• Setting the Scene

TPT on Creating Capacity ahead of Demand

• MDS - Investment in Infrastructure and People

• Supply Chain Efficiency

• Reducing the Cost of Doing Business

TPT on Regional Integration

• Intra Regional Trade

• Transhipment and Logistics

• Benisa Maritime Project

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Introduction

• Setting the Scene

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South Africa’s Credit Ratings - Standard & Poor

Source: http://www.fin24.com/Economy/infographic-sps-credit-ratings-for-sa-since-94-20161124

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Current Reality: Economic

– South Africa’s GDP for 2016 averaged at 0,4%, far lower than the 1,3% recorded in 2015. The GDP forecasted for 2017 is 1,2% (SARB; 2016).

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SA GDP (annual % change)

The WTO indicated that a 1.7% increase in world merchandise trade volume Y-O-Y 2015 to 2016, marked the slowest pace of trade and output growth since the financial crisis of 2009.The forecast for 2017 has also been revised, with trade now expected to grow between 1.8% and 3.1%, down from 3.6% previously (WTO; 2016).

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Principal trading partners – exports

China: 11.8%USA: 8.3%Japan: 6.0%Germany: 5.7%India: 4.2%

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South Africa and BRICS- Southern Hub for World Shipping Routes

Source: http://www.searates.com/reference/portdistance/

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

Imports:• China: 14.4%• Germany: 10.1%• Saudi Arabia: 7.7%• USA: 7.4%• Japan: 4.6%• India: 4.5%

Exports:• China: 11.8%• USA: 8.3%• Japan: 6.0%• Germany: 5.7%• India: 4.2%

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Logistics Performance Index – SA rated #20 in the World

The logistics performance (LPI) is the weighted average of the country scores on the six key dimensions:

1) Efficiency of the clearance process (i.e., speed, simplicity and predictability of formalities) by border control agencies, including customs;

2) Quality of trade and transport related infrastructure (e.g., ports, railroads, roads, information technology);

3) Ease of arranging competitively priced shipments;

4) Competence and quality of logistics services (e.g., transport operators, customs brokers);

5) Ability to track and trace consignments;

6) Timeliness of shipments in reaching destination within the scheduled or expected delivery time.

http://lpi.worldbank.org/domestic/performance/2016/C/ZAF/C/DEU#chartarea

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Exploring the potential of the ocean economy through the marine transport and manufacturing (MTM) sector in support of government policy

Government policy focused on GDP and jobs growth to resolve inequality, unemployment and poverty…

…Cabinet requested that Operation Phakisa evaluate potential of the Oceans Economy

▪ National Development Plan: aims to eliminate poverty and reduce inequality by 2030 by, amongst other things, growing an inclusive economy

▪ New Growth Path: provides the framework for economic policy and the driver of South Africa’s jobs strategy

▪ Industrial Policy Action Plan: specific plans to grow the economy and create jobs through industrial policy

▪ Four labs determined by Cabinet as priorities for Operation Phakisa– Marine Transport and Manufacturing– Oil & Gas Exploration– Aquaculture– Marine Protection and Governance

▪ Our lab focused on accelerating the growth of the the Marine Transport and Manufacturing sector:– Marine transport: cargo handling, national

registry– Marine manufacturing: rig & ship repair, boat

building, offshore O&G services

OPERATION PHAKISAMaritime Transport & Manufacturing Lab Initiatives

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Transnet is striving to be:

Fit and focused in a volatile world

Trusted Innovative South African brand

Evolve or dieTogether we succeed

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TPT on Creating Capacity ahead of Demand

• Investment in Infrastructure and People

• Supply Chain Efficiency

• Reducing the Cost of Doing Business

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Industrialisation key to Africa's economic transformation18 January 2017

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1. Infrastructure Development- Creating capacity ahead of demand

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MDS – First Four YearsDurban Harbour Entrance Ngqura Phase 2 – 4 STS Cranes, 18 RTG’s

Richards Bay C & D West Cape Town 2 STS Cranes

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MDS – First Four YearsDCT 15 Straddles DCT Stack Rehabilitation

4 Liebherr Cranes Mid Life Refurbishment 2 New Rail Mounted Gantry Cranes for DCT

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MDS – First Four YearsStaff Facilities at Pier 1 Berth 107 Pier 1 Truck Staging Area

Staff Facilities at Pier 1 2 New STS Cranes for DCT East Quay

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Arrival at Port Limits1

Pilot Onboard (Cross breakwater)2

Tie Last Line

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Untie Last Line (Pilot on-board)

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Pilot Drop (Steaming out)

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Terminal Operation center/planning

GateYard1St Move (Operations begin)

Last Move (Ship Operations finished)

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Previous Port

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Truck StagingTruck Turnaround

Timeliness: Port Terminal Performance- Productivity

http://www.portsregulator.org/images/documents/SA-port-benchmarking-report-2015-16.pdf

- Berth on Arrival

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Agility- The Ultimate Port Call

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Achieving Efficiencies at Port Terminals through Lean Six Sigma

2014 - 2019

TPT Operational Efficiency Strategy for the next 5 to 10 years

Lean Six Sigma culture embedment

• At all levels enhance culture of:

• Continuous improvement.• Process Optimization.• Customer Centricity.• Create innovative culture.• Reducing process variation

and introduce standardization and stability.

• Lean thinking and eliminating waste.

• Design for six sigma and• Goal alignment.• Use of best in class Tools

and methodologies.

Mission Directed Work Teams

(MDWT) programme roll out

• People focus to re-enforce and build a culture of performance dialog and goal alignment to deliver:• Quality• Speed• Cost• Safety• Mini business

Ownership culture• Leadership development

Partnering with strategic shipping lines and

alignment on stowage strategies and execution.

• Focus on Vessel Port stay reduction & productivity improvement• Arrival to departure

value chain optimization.

• Vessel Turnaround Time.• SWH / ATS rate

improvement• Leverage dual

loading/twin lift capability.

• Stowage quality improvement.

• Customer satisfaction

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• Transnet prides itself on a culture of innovation. • The development of the SpotLight App by Transnet Port Terminals (TPT) is a

recent innovation that is receiving interest and positive feedback from key maritime and transport stakeholders such as the South African Association of Ship Operators and agents (SAASOA) and members of the Harbour Carriers Association.

• The SpotLight Application is proof that Transnet aims to consistently improve our customer experience and excel in the customer value creation.

• An in-depth demonstration and interactive workshop about TPT’s SpotLight App was hosted at the Durban Container Terminal to educate the supply chain about how to quickly and easily track and trace vessels, containers and trucks within TPT’s respective container terminal operations through the download and use of the app.

• Transnet Port Terminals has a critical role in the logistics chain facilitating cargo between South Africa and the rest of the world. With escalating pressures on global supply chain logistics, container terminals around the world need to operate at peak performance to stay competitive and maintain profitability. TPT says it has identified that technology is an area where they can evolve and adopt digital innovations that will add real value to TPT’s customers and stakeholders.

• In 2017 we are looking to promote the use of our SpotLight App to all customers and stakeholders because we really believe the convenience of this portal will not only add value to the customer, but it will also assist us in improving relations with our customers and clients.

Digital

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• The SpotLight App, which is available for free on the Google Playstore for Android phones and Apple iTunes for iPhones, was developed internally by TPT over a period of three years and as a result has a number of useful tools for the industry to tap into.

• The mobile app allows for better planning and awareness of weather conditions that may affect TPT terminals by providing updates on the weather and wind speeds in all major cities. Push notifications have been built into the app to also further assist users with any relevant announcements – such as congestion or delays that are loaded and received instantly via the application. Additionally, a feature called Register Me, is the first step to enable users to receive personalised messages that are set to enhance the customer experience.

• This app is an exciting first step to realising the desired goal of Intelligent Ports in Durban and other major port cities. Transnet still has some way to go before our major ports in South Africa are regarded as Intelligent Ports but our SpotLight App is an important and exciting part of this journey. There are many benefits for stakeholders dealing in containers to enjoy when using this app that includes tracking, planning and the overall streamlining of operations – plus the peace of mind that there is no risk of containers being stolen. The information provided through the application is the information that transporters have access to now which is real-time.

• The SpotLight App is a further advancement of the TPT IT Strategy that includes the successful Navis upgrade and the rollout of the GCOS system within the Bulk, Break Bulk and Automotive Terminals. Future development of the SpotLight App will include Track and Trace information from GCOS.

• All of these projects and innovations are part of TPT’s digitisation strategy, which forms part of Transnet’s Market Demand Strategy (MDS).

Digital

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2013• Initial Transnet Mobile App was launched in 2013• Basic view functionality pulling information from

SharePoint• It was the first maritime track and trace app in our

industry

2014 / 2015

• Mobile App was relaunched as Transnet SpotLight• Track and Trace functionality used Navis information to

display• Vessel & Truck visit queries have been included

Digital

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2016

• Announcements pertaining to Terminal / Operational status have been launched

• Push Notification: Should anything change on the app, a notification will be sent to the user to view Announcements

• Weather: Terminal weather stations will be displayed in the next release

• Register Me: Transnet customers will be able to register on the app, this will enable our customers receiving “personal messages” with regards to the status of their vessels, containers, etc.

2017:

• Extend functionality to include Bulk & Breakbulk

• Private messages to our customers with information pertaining their cargo

Digital

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Adding Value

Source: Adapted from Callaghan (2013)

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3. Reducing the Cost of Doing Business- TPT Terminal Handling Cost Vs. Global Comparators

The above graph clearly illustrates Transnet Port Terminal’s (TPT) commitment to keeping terminal handling costs competitive to global comparators. TPT is 58% ($123) lower than the global average when compared to ports such as Hamburg ($ 249) and Rotterdam ($ 227).

Terminal handling charges:“Container from ship to stack and then onto transporter (rail or truck) inclusive of three (3) days storage. This also applies from land to ship.”

Source - https://ecom.hamburgsud.com/ecom/en/ecommerce_portal/tariffs_and_surcharges/thc_calc/ep_thc_calculator.xhtml Research 19 July 2016

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10 Years of Exponential Growth

Pier 1 Average Moves per Ship Working Hour for 2016/17 = 45

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Introduction

TPT on Regional Integration

• Intra Regional Trade

• Transhipment and Logistics

• Benisa Maritime Project

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• Trade within Africa is on the rise, reaching 18% of the region’s total exports in 2014 compared with 10% in 1995.

• Almost 29% of SA’s trade export cargo is sold in other African countries.

• Pres. Zuma’s plans for radical economic transformation includes the integration of SA’s strategies and policies across existing regional communities.

Intra-regional trade: exports and imports

Source: WTO’s International Trade Statistics 2015

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Efficient Clearance Processes- Transport time along the North–South Corridor 14 to 21 Days

Source: TradeMark Southern Africa, North South Corridor Pilot Aid for Transport Programme: Surface Transport. Johannesburg: TradeMark Southern Africa, 2012, p. 17

• Lowering transport & logistics costs are key to enhancing competitiveness but difficult to effect because of division.

• Reducing transport prices faced by exporters & importers, especially when trying to address the challenge of distance.

• Some estimates suggest that a 10% reduction on transport costs can lead to an 8% increase in trade.

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Regional Integration Initiatives

Initiative: Coastal & Short -Sea Shipping• Initiate a coastal shipping service for efficient movement of cargo through

the South African Port System• TPT is keen to partner with a vessel operator to offer short sea shipping

services in order to promote regional trade

Initiative: Transhipment & Logistics Management• Develop and Implement the NCT transhipment strategy• Develop cargo freight station at the Coega IDZ to leverage customization of

transhipment cargo• Develop a regional cargo clearing facility

Initiative: Regional Integration• TPT, through Transnet International Holdings, continues to pursue

opportunities in line with its offerings in South Africa• These range from terminal operation, technical advise and support, and

system installation.

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Continental Expansion

Benin-South Africa (Benisa) Maritime Project

• Over and above what TPT is doing in South Africa, we are also involved in supporting government’s drive on growing trade on the continent.

• TPT is pursuing a international expansion strategy under the banner of Transnet International Holdings.

• The Port of Cotonou is located on the West coast of Africa in the Republic of Benin.

• The port has the potential to become a major trade hub in the West African region, facilitating trade of captive cargo locally and hinterland cargo to Northern Benin, Niger, Nigeria and Burkina Faso.

• Through Transnet’s Africa Desk, TPT signed a 5-year Technical and Co-operation agreement with SOBEMAP to provide technical advice and support in order to improve operational efficiency of its existing container terminal in the Port of Cotonou.

• The project comprises of three themed areas of delivery, namely mobilization, stabilization and optimization of the SOBEMAP operation.

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Thank You

Siyabonga