Ports & Ships Maritime News

Mar 23, 2010
Author: Terry Hutson

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  • First View – GLOBAL OJI

  • Upbeat forecast as Transnet announces 5-year corporate plan

  • TFR saga continues – two senior managers dismissed

  • Management reshuffle for K-Line

  • Luanda ban on used cars at port

  • Piracy – New aggressive EU offensive is having results

  • ITF asks for more action against piracy

  • Specialist on Incoterms and Customs practice to speak at Durban conference

  • International Lighthouse Association conference underway at Cape Town

  • Injured sailor airlifted from CSCL Sydney off Saldanha

  • Pics of the day – NORMAN CLOUGH and DAE SAN


    First View – GLOBAL OJI

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    The Japanese bulker and wood chip carrier GLOBAL OJI (51,264-dwt, built 1998) ín Cape Town harbour at B sheds earlier in March. Picture by Shane Swartz

    Upbeat forecast as Transnet announces 5-year corporate plan

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    Chris Wells

    Transnet last week (18 March) unveiled its five-year Corporate Plan, including the Quantum Leap productivity drive, which commits the state-owned enterprise to an ambitious growth agenda that is anchored on the R93 billion infrastructure investment plan and a series of operational efficiency drives that will improve customer service and ensure financial sustainability in future.

    At a media briefing held in Sandton, outside Johannesburg, Chris Wells, the company’s acting chief executive, also announced the targets of the company for the new financial year – which starts next month – and detailed Transnet’s agenda, including projections, for the next four years – a first for the company. Also, for the first time the company has agreed, in principle, all the key performance measures with its shareholder, the Department of Public Enterprises, and all its executives will have performance agreements aligned with shareholder expectations before the start of the financial year.

    These will be rolled out to all employees and communication sessions have been scheduled with all the employees country-wide.

    “At the heart of our Quantum Leap initiative lies our aspiration to harness volume growth opportunities; achieve substantial improvements in customer service; and, critically, to considerably improve our productivity and efficiencies across the company. Whilst some of our operations are world-class, such as the pipeline and iron-ore line (which last December achieved a weekly tempo of 1-million tons), others are well below these levels and, therefore, we have identified key measures and interventions that will drive our efficiency and productivity to world-class benchmark standards”, says Mr Wells.

    Other elements of the Quantum Leap drive include provision of appropriate capacity for growth, implementing effective cost controls and improvements in the company’s safety record and environmental compliance as well as improved asset utilization.

    On average, an improvement of 8.4 percent in efficiency and productivity levels has been built into the operational plans for the forthcoming financial year. These efficiencies relate to wagon and locomotive utilization, improvement in rail departures and arrivals and the reduction in shipping delays and improved terminal operations as measured by gross crane moves per hour. In most of these areas, the targeted efficiency improvements are in excess of 15 percent. An average volume growth of 10.3 percent - far in excess of the GDP growth – is also being targeted in the 2010/11 year. Volume growth opportunities will primarily be driven by increases in the general freight business of Transnet Freight Rail, mainly manganese, domestic coal and magnetite as well as export iron ore and coal. “A key objective is to alleviate the pressure on the road system and to bring back to rail the commodities and containers that are suitable for rail transport. Growing container volumes on rail is not an easy task as experience has shown worldwide, but we are committed to significantly grow the market share of long haul container volumes”.

    Mr Wells says: “The rationale behind the Quantum Leap thrust is an expression of our collective frustration with incremental improvements in service delivery and productivity over the years and an aspiration for significant improvements in customer service, operational efficiency and in the safety and environmental compliance in the medium term”.

    This operational improvement will be achieved on the back of strong financial performance – meaning robust cash flows and growth in profitability – and the R93 billion investment whilst maintaining a strong balance sheet as measured by gearing peaking at 47 percent, a cash interest cover of at least at 3.0 times and a return on assets rising by 33 percent from the existing 6 percent to 8 percent in the medium term. These metrics are key to Transnet retaining its investment-grade credit rating status.

    The operational improvement will also be supported by addressing Transnet’s human capital requirements. Transnet plans to increase the technical skills in the organization substantially over the period through focused training and bursaries in specialist fields.

    “We will, as in the past, need the support and commitment of our employees in achieving the challenging targets and we are determined to maintaining our positive and constructive relationship with our recognized labour unions”.

    Internally, the company has reshaped its work methods to drive the focus on executing the Quantum Leap goals. For example, the company’s operations committee’s sole mandate has been revised to focus solely on customer service delivery and productivity and efficiency improvements.

    At the same briefing, Mr Wells also gave an upbeat forecast of financial and operational performance for the year ending 31 March 2010. “The business has emerged stronger from the recession of the past year and despite the loss of revenue resulting from the petroleum tariff reduction which negatively impacted the revenue by R1 billion; and we are ahead of our budgets across the board save for the export coal business which is receiving high-level management attention.

    “The financial performance of the company has been helped by aggressive cost containment measures implemented during the course of the year in response to the recession. This assisted us not to reduce personnel during 2009 and we were able to provide the security of employment to our workforce,” says Mr Wells.

    The company, which has invested R74 billion in the last five years on replacement and expansion projects, has increased its five-year capital expenditure programme from R80 billion to R93 billion mainly to accommodate new projects to support the planned volume growth.

    The company has concluded its funding programme for the 2009/10 year successfully well ahead of time and, in keeping with the Board-approved funding strategy, it has already begun pre-funding activities for the 2010/11 year in order to mitigate liquidity risk in the debt capital markets.

    The highlight of the funding strategy, which raised R17.9 billion in the current year from banks, development finance institutions, export credit agencies and tapping bonds which are part of the R30 billion domestic medium-term note programme, has been the successful establishment of the USD2 billion global medium-term note (GMTN) programme last month. Transnet is planning to tap the London-listed GMTN facility, which allows the company to issue euro and dollar bonds in the US and European debt capital markets, in the next financial year.

    Amongst the key innovations announced last week, Mr Wells says the company hopes that the contract to acquire 100 locomotives from GE will result in a R335 million investment spinoff for Transnet Rail Engineering together with significant transfer of skills to TRE and a further R300 million for other South African suppliers. The tender is the first major one to be issued with an obligation to encourage localization of supply and bolster skills transfer as part of the government’s Competitive Supplier Development Programme (CSDP). The GE contract follows the conclusion of the execution of the contract to refurbish 50 “like new” locomotives where all engineering was carried out by TRE.

    Transnet, which is leading the implementation of CSDP plans, intends to extend this initiative beyond locomotives to other major equipment purchases.

    In due course, Transnet will announce a series of bold plans to collaborate with the private sector to address the demand for investment in capacity beyond that which can be financed by Transnet without compromising the company’s financial strength.

    Each year Transnet spends some R200 million on social investments. Mr Wells announced that Transnet had doubled to R170 million the amount Transnet Foundation, the company’s CSI vehicle, plans to spend on social investments in the communities around its operations in the coming year. The bulk of this investment, some R80 million, is to be spent on the second Phelophepa health train. The second train, which is modelled on the first one which provides dental, eye and psychiatric care to 45,000 needy South Africans each year, is to be commissioned next year.

    Looking ahead, Mr Wells identified the uncertainty around the application of economic regulation, notably the methodology of funding new infrastructure, as a key challenge for Transnet. For example, regulatory uncertainty has prevented the company from structuring an optimal funding solution for its fuel and gas pipeline division, Transnet Pipelines.

    The board is satisfied that despite a number of acting positions, the executive team is functioning effectively, and the company is progressing well towards achieving its targets for the current year.

    TFR saga continues – two senior managers dismissed

    Transnet announced last week the dismissal of two senior managers in charge of security at Transnet Freight Rail (TFR). Their dismissal follows a disciplinary process which found them guilty of dishonesty and misconduct as well as certain other charges in relation to their duties as TFR employees.

    The pair, who have not been named, were initially suspended and later charged with misconduct in connection with their role in manipulating a tender process that led to the awarding of security services at TFR. The contract in question was awarded to a company associated with Communications Minister Siphiwe Nyanda and is connected to the suspension and disciplinary action against TFR chief executive Siyabonga Gama, who stands accused of exceeding his authority in the awarding of a R18.9 million security tender to General Nyanda Security Advisory Services (GNS).

    General Nyanda, now the Communications Minister in President Zuma’s government, is the former chief of the South African Defence Force and is one of several ministers to have spoken out against the non-appointment of Gama as chief executive of Transnet.

    According to Transnet the tender that led to the dismissal of the two managers was awarded in a confined process, meaning that it was basically awarded to GNS without other companies being invited to bid. Other governance processes were not followed.

    Last year it was revealed that GNS had been paid R55 million by Transnet in a contract awarded by Gama.

    Transnet said last week it remains committed to uphold the highest standards of corporate ethics and governance. “Employees are expected to comply with all company policies and procedures and act in accordance with the company’s values which, amongst others, demand that they act with integrity and in a manner that inspires trust and honesty. Apart from guidance by their consciences, all employees are bound by a compulsory code of ethics. Non-compliance with these basic requirements will not be tolerated and employees will be called to account,” Transnet said in its statement.

    It added that all suppliers and business associates are given a fair and equitable opportunity to do business with Transnet and that the company would act against governance breaches that bring its good name into disrepute.

    In a recent High Court hearing Gama claimed that Wells had conspired against him to prevent him from being appointed Transnet CEO. The court dismissed these charges.

    Management reshuffle for K-Line

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    Two K-Line car carriers in port

    Japanese shipping company K-Line (Kawasaki Kisen Kaisha) says it has undergone a management reshuffle of its executive team, with effect 1 April.

    Former president and CEO Hiroyuki Maekawa becomes the company’s new executive chairman. Former vice-president Kenichi Kuroya moves up as president and CEO.

    Managing executive officer Keisuke Yoshida becomes senior executive officer and executive officer Shigeo Itaya becomes managing executive officer.

    In a change of representative directors, Takashi Saeki will resign from this responsibility on 31 March with Keisuke Yoshida assuming that responsibility on 1 April 2010.

    In an executive officer appointment former general manager of the Coal & Iron Ore Carrier Group, Atsuo Asano is appointed executive officer.

    Luanda ban on used cars at port

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    The Angolan crude oil tanker NGOL LUCALA (64,000-dwt, built 1986) being refloated in the Dakarnave floating dock in Dakar, Senegal. Picture by Ken Thompson

    Angola’s Ministry of Transport has decreed that as from 1 April the discharge of used cars at the port of Luanda in Angola will not be allowed.

    The only discharge of cars allowed at the port will be those in containers, the ministry has decided.

    All other ports in Angola may however continue discharging used cars.

    The ruling is understood to be a measure of reducing congestion at the port.

    Piracy – New aggressive EU offensive is having results

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    Pirates attempt to escape EU forces by jumping in the sea and swimming away. Picture EU NAVFOR

    The recent offensive by international naval forces operating off the coast of Somalia is having marked success, according to reports which indicate the more aggressive approach by naval forces has placed the pirates on the back foot.

    The approach initiated by the European Union naval forces, known as EU NAVFOR, was initially encouraged by Spain, whose fishing vessels have frequently been the victims of pirate attacks. Spain encouraged a more aggressive approach including the pursuit of pirate mother boats and their destruction, which has become possible as the EU forces received more aircraft, ships and other military assets in the region.

    EU NAVFOR forces have already attacked 12 pirate groups, with half on the open ocean and the other half close inshore, which suggests the approach is to prevent pirates from reaching the international shipping lanes.

    In one such incident last week, the German Navy frigate FGS EMDEM (F210) responded to an attack on a Spanish fishing vessel, ALBATUN 2. The warship’s helicopter which was sent on patrol found one whaler being used as the pirate’s mother ship and two attack skiffs, with 12 people on board.

    When the suspected pirates noticed the presence of the helicopter, they tried to escape, and it took warning shots to stop them fleeing, reports EU NAVFOR. “They then jumped overboard and swam to their mother ship. More warning shots were required to stop the whaler that tried to escape as well. As a result of this action, two attack skiffs were destroyed and grappling hooks were seized.”

    Two days later the EMDEN’s helicopter discovered a new pirate attack group, or PAG as they are dubbed, consisting of one mother ship (whaler) and two skiffs in tow about 250 nautical miles from Somali coast. Initially, the mother ship refused to stop and to follow the instructions given by the helicopter. Warning shots were necessary to stop them and finally a boarding team was sent onboard the PAG. The boarding team destroyed several weapons, grappling hooks and ladders and afterwards the two skiffs were destroyed as well.

    Meanwhile the US government has followed the lead of local warnings that ships sailing off the coast of Yemen are at risk of al-Qaeda attacks similar to that on the US destroyer USS COLE in 2000, that killed 17 US sailors. As per the local warnings the US has identified the strategic Bab al-Mandab Strait between Yemen and Djibouti as the area of greatest risk.

    “Although it is unclear how they would proceed, it may be similar in nature to the attacks against the USS Cole in October 2000 and the M/V Limburg in October 2002 where a small to mid-size boat laden with explosives was detonated,” the US Office of Naval Intelligence said.

    See the PORTS & SHIPS report dated 15 March 2010 Warning of al-Qaeda attempts on shipping in Red Sea HERE

    ITF asks for more action against piracy

    Union representatives meeting in Berlin have voted to launch a new campaign aimed at persuading all governments to commit the resources necessary to end the increasing problem of Somalia-based piracy, the International Transport Federation (ITF) reports.

    Seafarers’ delegates at ITF meetings in Germany authorised the Federation to build a campaign that is hoped to deliver half a million signatures to governments by World Maritime Day, 23 September 2010. The campaign will call on them to close the circle on protection of ships, and for those states now ducking their responsibilities to stand up and follow the example of those which are actively involved in combating the threat.

    The petition will call on nations to:

  • Dedicate significant resources and work to find real solutions to the growing piracy problem

  • Take immediate steps to secure the release and safe return of kidnapped seafarers to their families

  • Work within the international community to secure a stable and peaceful future for Somalia and its people

  • Speaking from Berlin, ITF Maritime Coordinator Steve Cotton said: “This decision has empowered us to build a worldwide campaign to put pressure on all governments to close the gap in their anti-piracy efforts. At the end of last year we warned that a point had been reached where the affected area had become too dangerous to enter, except in exceptional circumstances. We also highlighted the scandalous negligence of countries making billions from ships they are doing nothing to protect. There has been no improvement since then.”

    He continued: “The reality is that seafarers are risking their lives transporting the world’s goods through areas that are daily growing more dangerous. That situation is not going to change without dramatic efforts to address the problems of Somalia and its people and grasp the nettle of confronting and prosecuting piracy.”

    The ITF says is gravely concerned by attempts to prevent the payment of ransoms and considers that it is the duty of shipowners and flag states to take all necessary measures to swiftly reunite seafarers with their families when they are held hostage. The ITF also stated that it is unforgiveable that the major flag of convenience states have done little more to fight piracy than sign pieces of paper. They have taken no other concrete action, nor have they used their flag state jurisdiction to enable the prosecution of any pirates.

    “The ITF will now work on an e-petition website and a cross-industry international campaign intended to deliver a powerful message to governments on World Maritime Day.”

    Editor’s Comment: Other than Kenya and the Seychelles, no African country (South Africa included) has taken any steps to become involved in solving or combating the scourge of piracy off the north-east African coast.

    Specialist on Incoterms and Customs practice to speak at Durban conference

    A conference of importance to all those dealing with Customs and Excise practice is taking place in Durban on Friday, 26 March at the Elangeni Hotel. A similar conference being held in Johannesburg the day before has already been fully subscribed but the Durban function still has places remaining.

    Every 10 years Incoterms, which drive all international trade, are updated and world trade is now due for another update.

    Of particular interest therefore, is that Professor Jan Ramberg, an international expert and author on Incoterms, will give the keynote lecture summarising the new Incoterms and what effect they are likely to have on world trade. A panel of international and local experts and specialists will deliver other papers including topics such as the Rotterdam Rules, an overview and examination of all new global trade impacts and legislation, emerging issues on global compliance driven by the role of Customs in the 21st Century, and the introduction and impact of the proposed new SA Customs Act and Modernisation Impact of the legislation.

    For further details of the conference, and to book contact harrin@telkomsa.net or go online HERE

    International Lighthouse Association conference underway at Cape Town

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    Umhlanga Lighthouse, KZN, with Durban’s Bluff in the background. Picture by Terry Hutson

    South Africa is hosting this week’s International Association of Marine Aids to Navigation and Lighthouse Authorities (IALA) conference at the Cape Town International Convention Centre from 21 – 27 March 2010.

    It is the first time in the 52-year old history of IALA that this conference is being held on African soil. Some 400 delegates and 100 accompanying persons representing more than 50 countries are attending the conference.

    The conference theme is: Aids to Navigation: A global approach. All waters, all risks, all solutions. The main focus of the conference will be on informing the IALA membership on new techniques for the improvement of current service delivery, as well as the impact that new emerging technologies, such as Enhanced Navigation (e-Navigation) would have on the way Competent Authorities provides an aids to navigation service in the longer term.

    Host of the conference is Transnet National Ports Authority, which is a founder member of IALA. Among those attending are delegates from 11 African countries. In addition to South Africa, only Algeria, Benin Cameroon, Equatorial Guinea, the Ivory Coast, Kenya, Mozambique, Senegal, Sierra Leone, Sudan, Tanzania and Tunisia are IALA members from the African continent.

    An industrial members’ exhibition is being held alongside the conference. A record number of 35 international and local exhibitors are promoting their equipment and products.

    The conference and exhibition is being held at the Grand Westin Arabella Quays Hotel in Cape Town.

    Injured sailor airlifted from CSCL Sydney off Saldanha

    A Sri Lankan seafarer with a fractured leg was evacuated by helicopter from the CSCL SYDNEY while the ship was 80 nautical miles off Saldanha Bay on Saturday.

    The National Sea Rescue Institute (NSRI) reports that it was not immediately known how the man, aged about 30 years, injured himslef. The NSRI said an Air Force Oryx helicopter from 22 Squadron at Air Force Base Ysterplaat went to the ship carrying a NSRI swimmer and a Metro paramedic. On arrival both were winch hoisted on board the fully laden container ship and after stabilising the patient, all three were lifted back on board the hovering aircraft.

    The patient was further treated on board the helicopter en route to the hospital in Cape Town where the man is now receiving treatment.

    Pics of the day – NORMAN CLOUGH and DAE SAN

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    The offshore support vessel NORMAND CLOUGH (8337-gt, built 2008) arrived in Cape Town at the weekend for a bunker call and to exchange crew. The specialist vessel was previously named REM CLOUGH and was deployed off Australia. Picture by Aad Noorland

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    One of a diminishing number of SD14 freighters, the North Korean-owned and operated DAE SAN (9,182-gt, built 1979) called at Durban recently. Picture by Trevor Jones

    Don’t forget to send us your news and press releases for inclusion in the News Bulletins. Shipping related pictures submitted by readers are always welcome – please email to info@ports.co.za

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