The general cargo heavylift vessel INDUSTRIAL ROYAL (10,536-dwt, built 2005) makes an arrival in the port of Durban. The ship, which is equipped with two x 250ton cranes, is owned by Hammonia Reederei of Hamburg, Germany but is under charter to Intermarine, a specialist in the movement of heavylift breakbulk cargo via a fleet of around 30 chartered multipurpose ships. This picture is by Keith Betts
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TRANSNET POSTS STRONG ANNUAL PERFORMANCE
Despite a challenging environment, Transnet has continued to stand out among the South African state-owned enterprises with another good performance while maintaining a record level of capital expenditure.
In doing so, Transnet has posted an EBITDA (earnings before interest, taxes, depreciation and amortisation) growth well in excess of GDP growth.
Revenue up 1,7% to R62.2 billion
Operating costs contained at R35.9 billion
EBITDA grew by 2.6% to R26.3 billion, 4.3 times GDP growth of 0.6%
Capital investment at R29.6 billion, bringing the spend during the MDS period to R124 billion
Capital programme revised upwards to R340 billion-R380 billion over the next 10 years
Cash generated from operations increased by 1.7% to R27.7 billion
Gearing at 43.1% and cash interest cover at 3.1 times
Group operational efficiency increased by 15.9%
Maintained an investment grade credit rating, confirming the company's standalone credit profile
B-BBEE spend of R43.5 billion or 100,6% of total measured procurement spend for the year, per DTI codes.
Transnet unveiled yesterday a positive set of results for the year ended 31 March 2016. This was despite a tough economic environment characterised by weak economic activity which undermined growth in volumes across most commodities and freight businesses.
Revenue for the year increased by 1.7% to R62.2 billion underpinned by a 4.2% increase in rail containers and automotive volumes to 14.9 million tonnes (mt), from 14.3mt in the previous year, while petroleum volumes increased by 1.4% to 17.4 billion litres. This, syas Transnet, is testament to the strides that the company is making in gaining market share and moving rail-friendly cargo off the country's roads.
Revenue from cross-border activities increased from R1.5 billion to R2.8 billion as the company's plans to expand into the rest of the African continent gather momentum.
However, the uncertain economic environment, combined with depressed commodity prices resulted in customers downscaling operations, which led to a 5.5% decrease in total rail volumes to 214.2mt, from 226.6mt in the previous year.
Coal export volumes......
......decreased by 5.5% to 72,1mt (2015:76.3mt), while iron ore export volumes fell 3% to 58mt compared to the previous year (2015: 59.7mt). Manganese volumes were flat at 9.6mt.
Encouragingly, Group operational efficiency increased by 15.9%. Both on-time departures and on-time arrivals in the general freight business improved significantly compared to the previous year. This is as a result of continuous en-route monitoring of the mainline trains.
Transnet Port Terminals, the port operations division, recorded a substantial increase in efficiency levels across its terminals as efforts to turn vessels around faster began to pay off. The Ngqura Container Terminal showed the most significant progress, with average moves per ship working hour (SWH) advancing from 48 to 66 moves. Durban Container Terminal's Pier 1 improved from 48 to 53 moves, Pier 2 recorded an increase from 58 to 63 moves, while Cape Town Container Terminal improved from 49 to 53 moves.
To mitigate the impact of slow growth, the company implemented various cost-containment measures, including stringent management of overtime, reducing the engagement of consultants and imposing a limit on discretionary costs. Operating costs went up by a modest 1%, well below inflation, to R35.9 billion (2015: R35.6 billion) despite an increase in personnel and electricity costs. The cost-containment drive yielded R6.6 billion savings against planned costs.
As a result, Transnet's key measure of profitability, earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 2.6% to R26.3 billion compared with R25.6 billion in the previous year, well in excess of GDP growth of 0.6% and a sector specific contraction of 0.1%.
Depreciation, derecognition and armotisation of assets increased by 39.5% to R15.3 billion from R11 billion due to the heavy capital investment programme as well as depreciation on revalued rail, port and pipeline assets. Accordingly, profit from operations after depreciation and amortisation decreased by 25% to R11 billion.
......and in line with its ground-breaking infrastructure investment programme under the Market Demand Strategy (MDS), the company sustained its commitment to the modernisation and renewal of the country's transport and logistics infrastructure, spending R29.6 billion during the year. This took the total spend since the launch of the MDS to an unprecedented R124 billion. The global economic slowdown has resulted in key customers deferring their expansion programmes. Transnet is committed to investing in an optimised capital portfolio that is responsive to validated demand.
The company plans to invest R340 billion-R380 billion over the next 10 years. This is likely to take the MDS spend to a record half a trillion rand of investment.
The company's most recent locomotive acquisition programme which resulted in the purchase of 1,319 new locomotives for the General Freight and Coal businesses, remains on track. By year-end, Transnet had spent R8,8 billion on the programme, taking overall spend to R26,3 billion thus far. In addition, 95 Class 20 electric locomotives, 100 Class 21 electric locomotives and 60 Class 43 diesel locomotives were delivered and accepted into operations.
Other capital investment highlights include:
R2,3 billion spent on 2,100 wagons that have been delivered to Freight Rail
R1.3 billion invested in the New Multi-Product Pipeline
R4 billion invested mainly on the maintenance and acquisition of cranes, dredgers, tugs and straddle carriers
R256 million has been invested in the coal line expansion for upgrading yards, lines and electrical equipment.
Transnet's capital investment programme is supported by a Board-approved funding strategy. Despite persistent adverse market conditions, Transnet remained an attractive investment destination during the year.
As a result, the company raised R40.9 billion, without government guarantees, through various sources, including:
R8.3 billion from development finance institutions
R8.5 billion of commercial paper and call loans
R19.1 billion of domestic bank and club loans, and
R4,6 billion of domestic bond issues.
Transnet raises money ......
......in the debt capital markets on the strength of its financial position, and has maintained an investment grade credit rating, confirming its solid stand-alone credit profile.
The company continues to maintain solid financial metrics even as it executes its R340 billion-R380 billion rolling 10-year infrastructure investment programme in a subdued economic environment.
Gearing was at 43.1%, well within the self-imposed ceiling of 50%, giving the company sufficient headroom to raise more debt in the capital markets. Another key consideration for funders, cash interest cover, met the threshold of 3.1 times. These levels are well above the triggers in loan covenants.
More importantly, Transnet had its credit ratings affirmed by international ratings agencies Moody's and Standard and Poor's, confirming the company's solid financial standing and attractiveness of its portfolio of projects.
The company has made significant progress in improving the safety of its employees. The disabling injury frequency rate (DIFR) -- an internationally accepted standard of measuring safety in operations was at 0.69. This is the fifth consecutive year that the company has recorded a DIFR ratio below 0.75. The global benchmark for an entity such as Transnet is a DIFR of below 1.
Transnet uses the capital investment programme to accelerate its commitment to advancing South Africa's developmental objectives which include various aspects of Broad-Based Black Economic Empowerment, transformation, enterprise and supplier development -- especially the localisation and industrialisation of key industries in which it operates -- job creation, promotion of small business and skills development.
Transnet's total recognised broad-based black economic empowerment (B-BBEE) spend, as per the Department of Trade and Industry codes was an impressive R43.5 billion or 100.6% of total measured procurement spend of R43.2 billion.
The company spent 3.6% of its labour cost on training and plans to spend R7.6 billion on training over the MDS period. In addition, the company invested more than R248 million in sustainable community development programmes across South Africa.
Transnet's focus on energy efficiency resulted in a drop in electricity and fuel consumption by 7.5% and 6.5% respectively, while carbon emissions decreased by 7.9%.
The company has demonstrated resilience in both its financial and operational performance and says that it will continue to seek new opportunities, specifically in the general freight business, whilst executing its capital programme.
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PANAMA CANAL OPENS NEW EXTENSIONS
The multi-billion dollar extensions to enable the Panama Canal to handle larger than Panamax size ships was officially opened at the weekend, before 25,000 excited and cheering visitors. The expanded canal has the potential of transforming the Central American country, provided profits and other expenses are managed carefully and correctly.
The manner in which the extensions have been built or close to budget, with no huge overruns, promises much for the future.
In the meantime, neopanamax sized ships and LNG tankers are now able to transit the canal, bringing new opportunities and also new challenges to ports along the eastern US and South American seaboards. The next few years promise much of interest to port watchers.
Mention of watching, here are two short YouTube video clips concerning the Panama Canal for you to watch.
Ship transiting the Panama Canal shortly before the official opening of the extensions [3:59].
EarthCam time lapse view (below) showing the construction phase of the extended Panama Canal locks [2:28]. source: EarthCam / YouTube
News continues below MERCY SHIPS ANNOUNCES PARTNERSHIP WITH MOBILITY AT SEA
A Mobility at Sea vehicle on the wharf with P&O's Azura Mercy Ships' Africa Mercy and an element of the vast African artisanal fishing fleet
Mercy Ships has been selected as the official charity partner of Mobility at Sea; the company which provides everyday living aids to enhance the experience of being on a cruise and to help make it more accessible to those with mobility problems. This well-aligned partnership will help to support Mercy Ships' mission and awareness of the charity's efforts.
Mercy Ships is an international charity which operates the world's largest civilian hospital ship, AFRICA MERCY, providing free healthcare services to those living in developing countries, particularly in Africa, where the services of professional medical staff are most needed. Africa Mercy has recently been in the waters of Madagascar, one of the world's poorest countries with only two physicians and three hospital beds available for every 10,000 of the population. The ship is currently in Durban where it is understood she will remain until August before leaving for either east or west Africa.
"We are extremely proud to support Mercy Ships in the incredible work they undertake," said Dave Budgen, Director of Mobility at Sea. "Mobility at Sea chose to work with Mercy Ships as the charity's mission to help those in need is well-aligned with our own. We hope this partnership will raise extra funds to help support the fantastic initiatives and work Mercy Ships carries out whilst also increasing awareness within the industry of Mercy Ships' efforts."
Judy Polkinhorn, Executive Director of Mercy Ships UK, added: "Mobility at Sea offer a much needed, life-enhancing service to people who might not otherwise be able to explore and enjoy life fully. With such a similar underlying ethos, Mercy Ships is extremely pleased to have been selected as the company's charity partner.
"The awareness and funds raised through this partnership will help to transform the lives of so many in need of life changing health care. Corporate partnerships such as this will help us in our efforts to deliver the gift of hope and healing for those who lack the medical care they need."
About Mercy Ships
Mercy Ships uses hospital ships to deliver free, world-class health care services, capacity building and sustainable development to those without access in the developing world. Founded in 1978, Mercy Ships has worked in more than 70 countries providing services valued at more than US$1 billion, impacting more than 2.42 million direct beneficiaries.
Professionals including surgeons, dentists, nurses, health care trainers, teachers, cooks, seamen, engineers, and agriculturalists donate their time and skills to the effort. Mercy Ships seeks to transform individuals and serve nations one at a time. For more information readers are invited to take a look at: www.mercyships.org.uk
About Mobility at Sea
Mobility at Sea provides everyday living aids and mobility products to enhance the cruise, delivered direct to passenger cabins on all major cruise lines mainly working from the port of Southampton. Products can vary from simple walking frames and raised toilet seats to profiling nursing beds and hoisting equipment.
Mobility at Sea will assess individual needs and provide equipment that meets all the requirements by the ships thus enabling the passenger confidence to cruise with comfort. See also www.mobilityatsea.co.uk
News continues below MAKING INROADS WITH BAYHEAD ROADS
Transnet Port Terminals (TPT) says that it takes pride in operating port terminals that are considered to be world-class in terms of infrastructure and service. In the Port of Durban the Durban Container Terminal's (DCT) road at Pier 2 is the main arterial supply for the North, South and East quays and other departments in DCT which handle approximately 3,000 laden trucks and other vehicles in the terminal daily.
The Bayhead and Langeberg Roads leading to DCT and Bayhead Road leading further to the Island View Cutler Complex are frequently in the news for reasons relating to congestion, with long queues of container vehicles and petroleum product and other heavy trucks becoming frequently gridlocked.
The roads in the Bayhead area have been in existence for more than 35 years and several repairs have been completed due to the constant heavy' traffic. At one stage Bayhead Road was widened to four lanes to match increasing traffic volumes. But with Langeberg Road, over the years bad weather has also exacerbated the decline of the condition of the road to the extent that it can no longer be maintained normally.
"The poor condition of the road is not only a poor reflection on TPT's position as a leader in our industry but it has also impacted on the general wear and tear of equipment thereby also increasing maintenance expenses at DCT," says TPT's GM: KZN Operations Containers, Brenda Magqwaka.
"In November 2015 we began to address this issue by rolling out Phase 1 of our two part project to provide the terminal users with a suitably superior and safely constructed road," she said. "I am delighted to report that despite recent underground service risks which we had identified as being problematic that we are at 47% completion of the overall Road Rehabilitation Project with minimal impact to operations and truck turnaround times."
Phase 1 of the Road Rehabilitation Project entailed the reconstruction of the current in-bound lanes with traffic being diverted onto the current out-bound lanes. Out-bound traffic has in the interim been diverted onto the temporary out-bound lanes created during the preparatory phase. Challenges faced during this stage included identifying and securing the underground services, which was acknowledged as a potential risk ahead of the project commencing. However, the issues were resolved efficiently with additional sleeves being added for extra services in the event the need arises in the future. The completion date for Phase 1 is set for Quarter 3 of this year with the overall project completion date predicted for Quarter 2 in 2017.
"We understand the importance of investing in our infrastructure to create greater value for our customers by ultimately delivering better service and turnaround times. Our Key Accounts Managers are in constant communication with our clients and stakeholders to update them on the progress being made. We are grateful for their patience and support with the completion of this much-needed road rehabilitation project," Magqwaka said.
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IMF CALLS FOR AUDIT OF MOZAMBIQUE PUBLIC COMPANIES
Resting away on the hard at Maputo, some of the Ematum-purchased fleet of patrol craft
The International Monetary Fund (IMF) has made a recommendation to the Mozambican government that an independent international audit be conducted on state companies Empresa Mocambicana do Atum (Ematum, -- patrol boats and fishing trawlers), Proindicus and Mozambique Asset Management (MAM), according to a statement issued in Washington.
Ematum (US$850 million), Proindicus (US$622 million) and MAM (US$535 million) are the three state companies that between 2013 and 2014 took on loans totalling over US$2 billion with State backing.
The only loan that had been disclosed was Ematum's and the then President of Mozambique, Armando Guebuza and French President, Francois Hollande, met in Cherbourg to sign a contract with a local shipbuilder to supply fishing and marine surveillance vessels.
An IMF mission visited Maputo from 16 to 24 June to assess Mozambique's economic situation following on from the non-disclosure of State guarantees on loans to three public companies. These companies have since been unable to honour their financial commitments and the IMF plans to suggest the corrective measures needed to prevent further economic deterioration.
Meanwhile, former president Armando Guebuza said glibly on Saturday that Mozambique could depend on the response of the authorities to the debt crisis caused by hidden loans taken on in the period when he was head of government.
"Our officials are addressing the situation and we can await their conclusions with confidence," Guebuza told reporters on the sidelines of Mozambique's independence celebrations.
According to the former head of state, who was directly involved with the Ematum purchase, the country's economic problems stem from the difficult international environment and natural disasters.
The IMF advocated last week that Mozambique should adopt an urgent and decisive package of measures to prevent further deterioration of the economy and warned that the country was in danger of debt distress.
"The [IMF technical] mission and the [Mozambican] authorities agreed that the context calls for an urgent and decisive package of policy measures to avoid a further deterioration in economic performance," an IMF statement read.
In particular, the IMF called for substantial fiscal and monetary tightening, as well as exchange rate flexibility, which it said were needed to restore macroeconomic sustainability, reduce pressures on inflation and the balance of payments and help alleviate pressures on the foreign exchange market while restoring balance between supply and demand on the foreign exchange market.
The IMF's media statement notes that Mozambique has achieved a high level of risk of debt distress, with its public debt reaching 86 percent of gross domestic product at the end of 2015 as a result of US$1.4 billion in loans contracted by the Mozambican government between 2013 and 2014 and not disclosed to parliament or international financial organisations.
This is the same government and officials that ex-President Guebuza says the people should trust to sort out the financial distress they have brought about.
The IMF emphasises that Mozambique faces difficult economic challenges, with economic growth in 2016 expected to fall to 4.5 percent, against 6.6 percent in 2015, almost 3.3 percentage points below historical levels, and at substantial risk of projections falling further. sources: Macauhub, Lusa, P&S
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WEIGHIN IN ON SOLAS IN SOUTH AFRICA
Dr Darren Frazer, one of the authors of the following report
As the 1 July deadline looms for the implementation of the International Maritime Organisation (IMO) amendments to the Safety of Lives at Sea Agreement (SOLAS), questions have been raised whether a number of countries including South Africa are ready, writes Dr Darren Fraser and Mark Fearick.
Gross container weight is a critical variable for all players within the container logistics supply chain. The mis-declaration of container weights globally have resulted in vessel casualties, ship's crew/stevedores being placed at risk and damage to port handling equipment such as shore cranes and lifting gear. The International Maritime Organisation (IMO) adopted amendments to the Safety of Life at Sea (SOLAS) convention (chapter VI, part A, regulation 2), in November 2014 in order to address the problem of container weight mis-delaration.
Recognising the shore based influence on maritime safety, the IMO SOLAS amendment requires that the verification of container weights be determined by the shipper and communicated to the master and port terminal before any export containers are loaded on board a vessel. This requirement effectively makes container weight verification a condition for vessel loading and will become legally binding on Saturday this week, 1 July 2016.
The reason why accurate weighing of cargo is so important can be demonstrated with this common scenario. A depot packing cargo into containers needs to be certain that the mass of the cargo does not exceed the permissible loading capacity of the container walls and the container roof as laid down in ISO 1496 and the Container Safety Convention (CSC). The transporter taking custody of the said container also needs assurance of the container weight in order to avoid overloading a truck beyond the carrying capacity of the truck and trailer. The final receiving party of an export container (the port terminal) similarly needs the accurate weight provided in order to correctly stack the container in the terminal facility in preparation for vessel loading. Finally, container weight is critical to the carrier. Container vessel stowage is central to ensuring that the stability of a vessel is not compromised, and accurate container weights are imperative for this.
Reaction to SOLAS across the globe
Internationally various authorities are taking different views regarding the implementation of SOLAS. The US Coastguard (SAMSA's equivalent) has said it will not police the new amendments saying it is a commercial agreement between shipper and line. In Hong Kong the Marine Department will allow a 5% tolerance and will be responsible for the verification of the weighbridges. In the UK, the port of Southampton is weighing the boxes for a small fee.
The South African Maritime Safety Authority (SAMSA) has been designated the competent body of state mandated to enforce the SOLAS amendments in South Africa. There has been global concern, in the last six months, regarding industry readiness for SOLAS compliance. Reactions ranging from denial, criticism and acceptance have been expressed by industry groups. Concerns have also been raised over the timing of providing the verified gross mass (VGM) to port terminals and carriers, the availability and accuracy of weighing/measuring equipment and the practical implications of accrediting third parties to approve shippers providing the VGM under the IMO guideline's method two.
Transnet supports the spirit and intention of the SOLAS amendments and has adopted an inclusive approach having hosted and participated in a number of stakeholder engagements held across the country since October 2015. Transnet Port Terminals has even gone so far as committing to go live with SOLAS on 27 June 2016 with an updated Navis 2.6 version to accommodate the SOLAS requirements. The pre-advice date is being implemented to allow for a cutover period whereby export containers running into the terminal in preparation for vessel loading at or after 1 July 2016 (when VGM enforcement comes into effect) will be compliant.
The bottom line for SOLAS in SA
A number of articles focus on the SOLAS amendments itself without considering the other legislation regulating the verification and communication of container weights and to understand how the international SOLAS amendment contradicts or compliments local legislation. South Africa has legislative provisions for weight declaration under the Merchant Shipping (Carriage of Cargoes) Regulations, 2004. Section 5 (c) stipulates that: '5(3) In preparing cargo units for carriage by ships, the shipper or the forwarder, as the case maybe, must ensure that the gross mass of the units is in accordance with the gross mass declared in the shipping documents.' The 'Shipper' as defined in terms of this regulation means any person who, whether as principal or as agent for another, consigns goods for carriage by sea. This regulation, in effect since 2004 already addresses the issue of cargo weight and the necessity of having accurate weight in accordance with shipping documents.
Other published concerns from container industry players regarding the SOLAS amendment have focused on measuring instruments (weighing equipment) as well as the accreditation process and the requirements for SAMSA accreditation associated with VGM determination under method 2. Irrespective of the method determination of the VGM, measuring equipment in South Africa is subject to regulations in terms of the Legal Metrology Act, 2014.
The new Legal Metrology Act was assented to on 19 May 2014 and operation under the Act commenced on 1 August 2014. Legal metrology in short involves administrative and technical procedures to ensure control of the credibility of measurements related to trade, health, safety and environment. Weight measurement of containers carrying cargo, specifically containers in this case is subject to the requirements of the Act. The Act is enforced by the National Regulator for Compulsory Specifications (NRCS) who among other functions, type approve weighing equipment thereby ensuring acceptable standards of accuracy and repeatability are capable of being maintained.
The IMO guideline circular 1475 and SAMSA Marine Notice 25 of 2016 both aimed at 'providing a common approach to the implementation and enforcement of SOLAS' in effect reinforce already existing South African legal requirements pertaining to weight declaration and weighing equipment. Merchant Shipping (Carriage of Cargoes) Regulations have, since 2004, had a requirement for accurate gross mass and the Legal Metrology Act has stringent requirements with respect to weighing equipment.
The difficulty however has hinged on enforcement of these regulations, coupled with almost institutionalised weight determination methods from different industries. Representatives from the fruit industry, for example, have indicated that a fruit carton weight is based on average generic weights which would be used to mathematically determine the total container weight. This is determined by using the number of cartons and pallets packed together with the tare of the container. This method, whilst practical is absolutely inaccurate and exposes the shipper to the risks associated with mis-declared cargo weight.
The amendment to SOLAS chapter VI, part A, regulation 2 whilst vehemently resisted by some and embraced by others in industry has certainly done much to reinforce existing cargo weight declaration and measurement equipment legislation in South Africa. It has also aided industry by effectively integrating two completely different but complementary South African laws under one regulatory framework effectively aiding maritime safety. The challenge for South Africa, however, is the ability of regulators and players in the container logistics chain to monitor and enforce it.
About the Authors
Dr Darren Fraser is Senior Manager Strategy and Mark Fearick an admitted attorney and Divisional Manager: Compliance at TPT
Ports & Ships publishes regularly updated SHIP MOVEMENT reports including ETAs for ports extending from West Africa to South Africa to East Africa and including Port Louis in Mauritius.
In the case of South Africa's container ports of Durban, Ngqura, Ports Elizabeth and Cape Town links to container Stack Dates are also available.
You can access this information, including the list of ports covered, by going HERE remember to use your BACKSPACE to return to this page.
News continues below CRUISE NEWS AND NAVAL ACTIVITIES
QM2 in Cape Town. Picture by Ian Shiffman
We publish news about the cruise industry here in the general news section, but this is also available in a dedicated Cruise News section. This section will include various stories and news not covered in the general news so if you have an interest in this sector don't forget to check regularly on our CRUISE NEWS page.
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PIC OF THE DAY : JOLLY PERLA
Ignazio Messina Line's RoRo cargo container ship JOLLY PERLA (50,720-gt, built 2012) has been a regular caller at Durban since making her maiden voyage to Durban in 2012, at the terminus of the line's Italy-South Africa via the African east coast service. Messina Line operates with a fleet of eight of the largest RoRo container ships ever built, each with a length of 239 metres and a width of 37.5m. The ships have a container capacity of 3,000 TEU and a top speed of 21.5 knots. Messina also operates a number of lo-lo vessels and other RoRo's on charter. This picture is by Trevor Jones
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