As the last vestiges of daylight light up the western horison and the lights of the city beckon, Grimaldi Lines RoRo car carrier GRANDE NIGERIA (56,738-gt, built 2003) arrives in the Brazilian port of Santos. Picture by R Smera.
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SAMSA’S DRIVE TO BUILD A NATIONAL SHIP REGISTER
Article by Terry Hutson
Increasing attention is being given to the matter of South Africa having few or no ships on its national register, and suggestions have already been made that this is somehow costing the country a lot of money.
This talk, which has reached the hallowed halls of parliament, is allied to a fresh call for cabotage to be introduced in South African maritime law, which opens a whole debate in itself. Cabotage is a word not much used outside of shipping and transport generally, where it has significant importance. The word apparently comes from the French word caboter and means to sail along the coast, although there is a suggestion that it has origins that lie in the Spanish word cabo meaning cape.
Both explanations are appropriate because cabotage applies to the coastal trade and the word’s origins certainly lie with the sea and it is with the sea that cabotage has its international connotations. It should be said though that the word is also used within the confines of land and aviation transport. But in general usage cabotage means the exclusive right of a country to exercise the control of shipping (or other forms of transport) within its own borders.
In the United States, where it is strictly applied, cabotage is better known as the Jones Act, under which only US-flagged ships, built in the US and crewed with US seafarers, may trade between US ports. Foreign ships may arrive from a foreign port crewed by non-American seafarers but may not then load cargo destined for another US port.
In other words the Jones Act, or cabotage confines the movement of cargo between American ports to American ships and American crew. Even the ships used for the movement of cargo between US ports have to be US-built. This rule applies also to the carrying of passengers and has had a decided effect on the cruise ship industry, in particular where cruising to Alaska is concerned with foreign cruise ships that began their cruise in an American port invariably ending their cruise in Vancouver, Canada, thus avoiding any conflict with the Jones Act.
The Act was introduced in the US in 1920 and has been duplicated in a number of other countries across the world. In South America Brazil applies cabotage along similar lines and it can certainly be argued that this has assisted that country in strengthening its maritime industry.
In some African countries – Mozambique is one and Nigeria is another, cabotage is in place but hasn’t always been strictly applied. In South Africa we don’t have cabotage, and those in favour on introducing it here will point to this and suggest that this is why South Africa doesn’t have a strong coastal service. There is now a determined movement to bring about the introduction of cabotage into our maritime law, as a means of transforming the local maritime industry.
Commander Tsietsi Mokhele, SAMSA chief executive
In parliament recently the head of the South African Maritime Safety Authority (SAMSA), Commander Tsietsi Mokhele, reported that in addition to not practicing cabotage, South Africa had no ships on its register. He linked the lack of a local register to South Africa having paid an estimated R45 billion in maritime transport costs to foreign owners and operators during the past year.
Mokhele related how South Africa, as a member of BRICS was the odd man out in maritime terms. Brazil had a fleet of 172 merchant ships flying the Brazilian flag, Russia had 1891 ships flagged under the Russian registry, while India had 534 ships and China 2044. South Africa, he said didn’t have a single commercial ship flying the South African flag.
This wasn’t just about bragging rights. According to Mokhele this left South Africa exposed and vulnerable, having to rely on foreign shipping companies. In the past year 264 million tonnes of cargo was carried by ship to or from our ports and over 12 000 ships called at our ports. “We are 100% dependant on foreign shipping to get our goods to market,” Mokhele told parliament’s transport portfolio.
He said that all South Africa’s BRICS partners were regional maritime powers, having vast maritime interests and capabilities in sea trade, commerce and naval influence. He said that 98 percent of South Africa’s import and export trade was by sea, yet the country held little influence over its shipments.
This was because South Africa exporters traditionally used ‘Free on Board’ (FOB) as the Incoterm under which the export cargo was shipped, which meant that the point of sale became the port from which it was shipped. As a result it was usually the buyer that selected the shipping line rather than the seller, which would have been the case if the transaction had been conducted using the CIF (cost, insurance and freight) Incoterm for the international transaction. With CIF the seller normally gets to decide on which shipping line to use, which insurance etc.
“[Using FOB] our trade ends at the [South African] port,” Mokhele said.”From the port all the way to market is deemed as a risk taken by the other economies. And this is where we’re losing out as a country.”
With these two separate issues being raised in the same report to parliament it would be easy to think them connected, whereas there is no linkage between cabotage and the predominant use of FOB by South African exporters. The latter has become something of a traditional way of doing business that has developed over many years and South African exporters will have to be weaned out of it with reason being applied, instead of beating the loyalty drum.
To make CIF an effective tool in South Africa and to retain some, if not all, of the R45 billion referred to, South Africa would have to own locally flagged ships that ply their trade with the Asia, Europe and North America, where South Africa does most of its international trading. These ships would have to compete in an extremely competitive market where, in 2012, few container lines are making any profits.
International trade is tough and there is no guarantee that simply having a number of merchant ships flying the South African flag and with a local port of registry painted on the stern, that South Africa exports will be shipped on those ships. Exporters (or importers in other countries if FOB remains in use) will make a decision on which shipping line to use based purely on economic factors, such as reliability of service and rates.
It has been said that many South African companies have an aversion to becoming involved in the transportation of their goods to other countries, preferring to leave this to the buyer. This aversion is said to be a legacy of apartheid and the isolation brought about by sanctions, and it leaves a significant challenge to any campaign to ‘South Africanise’ our shipping industry.
Professor Trevor Jones of the University of KwaZulu-Natal expressed something of this in a paper in 2004 when he said South Africa “remains a nation of mines, manufacturers and farmers, not a nation of shippers, ship operators or ship owners.”
Cabotage would certainly benefit a coastal shipping industry, but here in South Africa the coastal trade remains small. For much of the 20th Century the shipping of cargo along the South African coast had to fight an unequal battle with rail transport, in which rail was provided with unfair protectionist advantages designed to enforce the use of rail, from which coastal shipping has never fully recovered.
Prior to that we had a fairly busy and fruitful coastal service, with a number of local lines specialising in this trade. Durban alone had a number of well established shipping companies – African Coasters, Smith Coasters, Durban Lines, Point Shipping, all of which included coastal shipping among their services. Each was successfully incorporated into what became Unicorn Lines in the 1960s.
Rennie’s coaster IFAFA, registered in Durban and a regular on the South African coastal service in the 1960’s and ‘70s, the ship having been the former CONGELLA II of Durban Lines with whom she was also registered under the SA flag. Picture by Trevor Jones.
Today we are left with just one shipping line providing regular coastal shipping services – Ocean Africa Container Line which evolved out of Unicorn and is owned jointly by the AP Moller-Maersk Group and the Durban-based Grindrod Group. Whether there is sufficient demand for another line, fully-owned and flagged locally, is questionable. Whether Ocean Africa Container Line would be keen to have its eight or so chartered ships registered locally is equally doubtful, given the unfavourable tax regime that currently exists.
In March 2009 Commander Mokhele issued a statement which said that South Africa requires at least 300 ships on a local register to secure its shipping lifelines and to build skills capacity for the maritime sector.
Ocean Africa’s coastal container ship DORIA which traded on the South African coast for a number of years. The ship is registered in Hamburg under the German flag and was on charter to the South African shipping line. Picture by Terry Hutson
In a message read on his behalf at a pilot graduation ceremony held in Durban in November that year he repeated this saying that the introduction of a tonnage tax, which was expected in 2010, as well as a revised maritime transport policy and the South African Registration Act would be the time to begin building a South African Register.
He said that having 300 ships flying the South African flag would create a significant number of jobs at sea. Sixty of these ships could be reflagged by the end of the 2010/11 financial year with the introduction of new legislation, he claimed.
As it happens, the new legislation hasn’t been introduced and this ambitious target was not met. South Africa still has no commercial ships on its register.
On another occasion the commander said the disparity between the number of unemployed South Africans and the low numbers of seafarers could be curbed if more people were encouraged to take up opportunities in the maritime industry.
“The [SAMSA] centre [for the Seafarer] has a three year plan to produce between 1000 and 1600 new seafarers each year. We are currently working on putting the necessary resources such as lecturers and the right technology in place to ensure that we meet this highly practicable target,” he said, referring to SAMSA’s Centre for the Seafarer which was launched in Durban last year.
Elsewhere he has indicated that the SAMSA cadet programme planned to have 480 cadets at sea by the end of 2012.
It wasn’t his fault that the promised legislation didn’t provide the necessary impetus to fulfil his claims.
Unfortunately the matter has now become politicised and these ambitious targets are not being met. On the other hand that R45 billion must be appearing as a tasty morsel for emerging BEE groups, so don’t expect any of it to go away too quickly, if at all.
This article first appeared in The Mercury Network of Wednesday 30 May 2012.
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SHIPWATCH: NEWS FROM THE WORLD OF SHIPS AND SHIPPING
Crew arrested after ship is attached in Durban Harbour
A Sri Lankan crew off the troubled general cargo ship LANKA MAHAPOLA (8082-gt, built 1983) has been arrested after they were accused of stealing scrap metal from the ship to buy food and other necessities.
The Lanka Mahapola had been drifting off the coast for more nearly three weeks without power or electricity, as engine room crew struggled to get the ship’s engine working. Finally the cargo ship was able to enter port at Durban on 17 May where it was promptly attached by judicial order obtained from the Durban High Court.
Meanwhile the crew of Sri Lankans, who claim they have not been paid three months worth of wages which they say totals over R700,000 (US$85,000) and who are destitute, took scrap metal from the ship to sell. Resulting from this action the ship’s master contacted the South African Police Services and had the 13 men arrested for theft.
The seafarers were taken to Westville Prison pending a bail hearing. They are being assisted by the Durban law firm of Mundell & Mundell instructed by the International Transport Workers Federation (ITF) agent in Durban, Sprite Zungu.
The sailors say they had the captain’s permission to sell the scrap, for which they raised R800 ($100) but the master has denied he gave them permission.
The registered owner of the Lanka Mahapola is listed as Ceylon Shipping Corporation of 27 Bristol Street, Colombo, Sri Lanka and the ship is managed by Triple S Shipping of Gothami Rd, Colombo.
Meanwhile the vessel, which has been described as being in a poor condition, has been berthed at Berth 100 near Pier 1 inside Durban Harbour.
Ship undergoes name-change in port
The 46,801-dwt crude oil tanker PACIFIC JADE (built 1994) underwent a change of name while in the Port of Durban and has been renamed WABA. The ship is flagged under the Liberian Register and is listed as being owned by Corithians Shipping Ltd of Singapore.
Following her visit to Durban and name change Waba has departed for Nigeria.
ClassNK reaches milestone with 200 million ton gross record
Classification society ClassNK has officially announced that on 28 May 2012 its register had surged past the 200 million gross ton mark.
This milestone was announced by ClassNK Chairman and President Noboru Ueda at a party celebrating the 50th anniversary of the establishment of the London office, which was attended by many of the leaders of the maritime community, including IMO Secretary General Koji Sekimizu and IMIF Chairman Jim Davis CBE.
ClassNK is the world’s first class society to have more than 200 million gross tons on its register.
In his speech during the party, Noboru Ueda acknowledged the role of the greater maritime industry and expressed his thanks to ClassNK’s clients and partners around the world. “This achievement highlights the incredible growth of the world maritime industry over the past decade, as well as the undeniable importance of the shipping and shipbuilding industries to the continued growth and development of the global economy, and we could not have achieved this historic milestone without the deep trust and continuing support of the global maritime community,” he said.
“Fifty years ago, ClassNK opened our very first office outside of Japan here in London, and this year we will celebrate the opening of our 100th office outside of Japan. Our unprecedented achievement of having 200 million gross tons under class is a testament to our growing presence around the globe, and we will strive to provide even better service to our clients and partners around the world in the years to come.”
Founded in 1899, the growth of ClassNK’s register has steadily accelerated over the years. ClassNK broke the 100 million gross ton mark in 1997, before becoming the world’s largest classification society in 1999. Just 10 years later, ClassNK became the first class society to exceed 150 million gross tons on its register in 2007. As of 31 May 2012, the ClassNK register accounts for 7,847 ships totalling 200,804,781 gross tons. As ClassNK’s register surpassed more than 190 million gross tons at the end of September 2011, some 10 million gross tons have joined the Tokyo-based class society’s register in just the past eight months.
“Roughly 20% of the world’s commercial tonnage relies on ClassNK and our services, and we are committed to exceeding the expectations of the maritime industry. We will continue to dedicate ourselves to serving the industry as a whole, and providing the very best classification services, technical support and timely advice possible,” Noboru Ueda said.
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CRUISE NEWS – ROYAL CARIBBEAN SENDS TWO CRUISE SHIPS TO CHINA
Voyager of the Seas
Another sign of the changing world economic order – Royal Caribbean Cruises has announced that it will deploy two cruise ships to sail in China’s waters to look after the expanding Chinese cruise market.
The company announced recently that the 3,114-passenger VOYAGER OF THE SEAS was on her way and would dock in Singapore en route to Shanghai, while the Voyager’s sister ship MARINER OF THE SEAS will join her sailing out of Chinese ports from next year.
Both ships will focus on the carrying of Chinese passengers on cruises to Japan, South Korea and Southeast Asia.
“2012 is for our company the year of China,” Adam Goldstein, president of Royal Caribbean International brand, said at a news conference. Company chairman Richards D Fain said that Royal Caribbean would take the unusual step of committing a second ship to a new market even before the first ship had arrived, because of the significance of the Chinese market to Royal Caribbean’s plans.
“We see Asia in general and China in particular as a major strategic objective for our company. China has proven to be a very special market.” – source cnbc.com
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SOUTH AFRICA TO BECOME LOCOMOTIVE BUILDER – BRIAN MOLEFE
The first in a series of 100 new class 43 diesel-electric locomotives of TFR, seen at Balgowan in KZN. The first 10 of this class were built in the United States and imported into South Africa, with the balance of 90 being built locally under licence. Picture by Charles Baker/Wikipedia Commons
Cape Town – South Africa is on track to become a manufacturer of locomotives for the rest of Africa, Transnet chief executive Brian Molefe said this week.
Briefing the Portfolio Committee on Economic Development on the parastatal’s R300 billion market demand strategy, Molefe said the R4 billion that Transnet planned to spend over the next seven years on research and development in rail and ports equipment would help develop a locally driven manufacturing industry.
He said the parastatal has targeted to purchase 62% of their goods and services required for its new infrastructure projects, locally.
Already 62% of the content of the 141 locomotives bought from General Electric has been spent on local content, he said, adding that South Africa already manufactured and exported wheel parts for locomotives.
Transnet employees had recently undergone training in the US, said Molefe.
Over the next seven years, Transnet would acquire 1 317 locomotives and would manufacture 25 000 wagons in South Africa, to be used to ship cars and minerals, said Siyabonga Gama, chief executive of Transnet Freight Rail.
Detailing Transnet’s market demand strategy, Molefe said the parastatal had invested R118 billion in infrastructure in the last seven years, but would almost triple this to R300 billion in the next seven years.
The parastatal will also expand the tonnage of iron ore and coal for export transported, from 53 tons to 83 tons and 59 million tons to 74 million tons, respectively, while moving the number of containers handled from 4.3 million to 7.6 million.
Molefe said last year Transnet invested R24.6 billion, as part of the R300 billion programme, and would this year invest R31.2 billion, with investments peaking at R56.3 billion in 2016/17.
A total of R4.2 billion will be spent on small business promotion over the next seven years and the parastatal was working with suppliers to meet the government’s transformation and empowerment objectives, he said.
About 99,000 jobs are expected to be created in current financial year, peaking at 136,000 in the 2016/17 year, and totalling about 588,000 jobs over the next seven years.
The majority of jobs will be created in KwaZulu-Natal, backed by developments in the Port of Durban (the biggest port in Africa), where R38.5 billion will be spent and Richards Bay (the biggest coal terminal in Africa and the Middle East) where R49.9 billion will be spent.
A total of R3.9 billion will be invested in expanding the container capacity at the Cape Town harbour, while the Ngqura Container Terminal at the Port of Ngqura, near Port Elizabeth, will also be expanded, by adding two container berths.
Transnet’s other major programmes include increasing rail capacity to meet market demand, increasing the export of coal, iron ore and manganese and the completion of a new multi-product pipeline.
Molefe said about 58% of the R300 billion infrastructure spend would got towards new infrastructure and new rail and locomotives, while among Transnet’s divisions, general freight and freight rail would get over half of investments or R151 billion.
The investments in rail and freight include, updating a line from Sishen to Port Elizabeth as part of the R25.9 billion to be spent on a South Corridor linking the Eastern Cape to the rest of the country.
The line is necessary for South Africa to increase manganese production, particularly as the country has 80% of manganese reserves but only 20% of market share.
The rail line from Sishen to the Port of Ngqura, near Port Elizabeth, would be routed from Sishen to Kimberley, where the existing Cape Town-Johannesburg line would link it to De Aar, where it would then route to Port of Ngqura, via Cradock and Alicedale.
The 232km stretch of line between Kimberly and De Aar would be doubled*.
A further R28.6 billion will be spent updating the railway line between Sishen and Saldanha, while a proposed 146km new line between Lothair via Nerston to Sidvokodvo would help link Gauteng to Richards Bay through Swaziland.
Existing rail networks in the Waterberg region – which contained 40% of the country’s coal reserves – would also be upgraded.
Molefe said the new 555km-long, 24-inch thick, multi-product pipeline, which will replace the existing Durban to Johannesburg Pipeline, was on track to be completed by the end of next year.
The new pipeline will increase nearly double capacity from 4.4 billion litres to 8.4 billion litres.
The trunk line between Durban and Jameson Park was commissioned in January, and 348 million litres of diesel had been transport through the pipeline between January and March. Three 16-inch pipelines in the northern network were commissioned last year and up to March this year, 1.2 billion litres of product had been transported through the pipeline.
Molefe said other countries were already approaching South Africa to learn from the mistakes Transnet had made in rolling out the pipeline.
These mistakes include the cost of the pipeline more than doubling, environmental hitches when frogs were found in swamps and mountain rocks, which meant engineers had to expand the circumference of the pipe.
Molefe said 70% of capital investment would be funded from operating cashflows, with the remainder to be raised on the domestic market.
This would mean it would have to borrow R14.1 billion this year -- which would peak at R20.5 billion -- it would need to borrow in 2015/16, before cashflow turns positive in 2018/19 and returned R7.1 billion.
Molefe said one of the biggest risks going forward for Transnet’s infrastructure programme, was the financial situation in Europe, which could affect borrowing from capital markets. – BuaNews
* Less than 20 years ago the line between Kimberley and De Aar was already doubled, at a time when it was dubbed ‘The Steel Kyalami’ on account of the high speeds attained by powerful steam locomotives that made this stretch a must-visit attraction for steam enthusiasts from across the world. In its wisdom or as an act of crass stupidity, Transnet Spoornet (the former name for TFR) accountants decided the double track was not required and could be reduced to single track in order to cut costs. We shall say no more!
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PICS OF THE WEEK – MAURITIUS PRIDE
The passenger and general cargo ship MAURITIUS PRIDE (5,234-gt, built 1990) operates out of Port Louis in Mauritius, sailing to the other Mascarene islands of Reunion and Rodrigues and also to Madagascar. The ship which is owned and operated by Mauritius Shipping was built by the Husumer Werft in Germany. She is seen arriving in Durban on 25 May for her regular maintenance and survey. Pictures by Trevor Jones
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