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MCLI Operational Work Group & One Stop Border Post Meeting 4 th & 5 th February 2010

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MCLI Operational Work Group & One Stop Border Post Meeting 4 th & 5 th February 2010 “A Citrus Perspective”. Agenda. Brief Overview Shipping Constraints Operational Constraints Cost Constraints Coordination Initiative. Agenda. Brief Overview

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Presentation Transcript
slide1

MCLI Operational Work Group & One Stop Border Post Meeting

4th & 5th February 2010

“A Citrus Perspective”

slide2

Agenda

  • Brief Overview
  • Shipping Constraints
  • Operational Constraints
  • Cost Constraints
  • Coordination Initiative
slide3

Agenda

  • Brief Overview
    • Geographical position of Maputo in relation to citrus production
    • Citrus export volume trends
slide5

50% Growth Expected

Growth rate curve

Capacity threshold curve

Source: PPECB & CRI

slide9

Brief Overview

    • Summary
    • Maputo is geographically positioned to the northern citrus regions to add better value
    • Maputo port has the potential to increase volume throughput substantially
    • Maputo essential infrastructure not only to reduce the cost of the supply chain, but also to ensure that the Durban port is not over utilized causing logistics instability
    • Infrastructural capacity development and adaption to containerized exports is lagging
    • Citrus growth expectations necessitates volume growth through Maputo
    • Migration toward containerized shipping is pulling the fruit to Durban
    • There is potential to pull Europe / Med / Russia / Middle East market fruit to Maputo
    • Middle East and Far East markets should be prioritized for container lines
slide10

Agenda

  • Shipping Constraints
    • Named day shipping schedules (7 – 10 days) to Europe / Med via Reefer Ship
    • Europe volume diversion to Durban constraining vessel commitments from Maputo
    • Other key markets Middle East / Russia not on fixed calls
    • No direct container shipping option to key citrus markets? (Europe / Med / Middle East / Far East)
    • Durban port offers direct shipping opportunity to all citrus markets – this offers flexibility to divert cargo to alternative markets should the need arise
slide11

Agenda

  • Operational Constraints
  • Market Consolidation
    • Because all markets can be accesses from Durban, Durban provides a consolidation hub
    • All growers fruit for various markets can be consolidated to ship to specific market requirements
    • Packhouses have limited floor capacity to hold fruit and accumulate for one specific market
    • Transportation
    • Trucks are loaded with mixed markets and this restricts the use of Maputo
    • Limited return haulage increases the cost of transportation
    • Cross border delays may also be a contributing factor to the cost of transportation to Maputo
    • Rail
    • Packhouse rail accessibility limited
    • Rail that is used is considered inefficient due to delays
    • Rail is costly
    • Rail is considered strategically critical to the citrus industry
    • Imperative that rail constraints are overcome (TFR / CFM concession?)
slide12

Operational Constraints

  • Rail
    • What is the problem?
    • Accessibility and Delays
    • What is the solution?
    • Integrate Road and Rail Transportation
    • How do we do this?
    • Create rail hubs on the main lines
    • Road trucks shuttle fruit between packhouse and rail hub
    • Citrus train shuttles from rail hub to port cold store
    • There are two options?
    • Road truck to a warehouse at the rail hub and transfer to rail (Pallet Friendly Container)
    • Use adapted Pallet Friendly Containers and transfer from rail to road
      • Road truck transports the container from siding to packhouse
      • Load and truck back to the rail siding and transfer back to rail
slide13

Consideration for rail hubs / rail sidings

  • Will work anywhere where a high volume of citrus is grown and 30 rail wagons (600 pallets) can be accumulated within 24hrs
slide14

Container is railed to a siding and the container is sent to be stuffed at a packhouse and brought back

Container is transferred from road to rail

The future of citrus transportation

Feasible to accumulate at least 30 containers or wagons

Container is railed to a port cold store or container terminal in the case of Reefer containers

slide15

Can be loaded from the side

  • CX type Pallet Friendly Ambient Container
  • Can be loaded and offloaded from the side
  • This will allow for efficiency at packhouse and port cold store
  • These containers can load 10 high cube pallets / 20 per wagon
  • We need to develop a 40ft CX container to load 24 high cube pallets
slide17

Agenda

  • Cost Constraints

Cost Comparison

Transportation

Handling

Shipping

Maputo Current Cost Condition

Transportation

Handling

Shipping

Maputo Required Cost Condition

Transportation

Handling

Shipping

Durban Current Cost Condition

slide19

Cost Constraints

  • Transportation
    • Transportation cost to Maputo advantageous for Onderberg, Karino, Nelspruit
    • Transportation cost for other key regions is considerably less to Durban
    • How do we overcome this?
  • Handling
    • A container can be packed at a price of R160 – R170 per pallet in Durban
    • Maputo handling cost is flexible but still high – Storage costs?
  • Shipping
    • VSA Europe / Med service $12.00 surcharge from Maputo should be made redundant
    • Why? Because as the previous slides have shown Durban & Maputo are the VSA’s main ports
    • Container shipping through Maputo is higher than Durban
    • Transportation excluded
slide20

Agenda

  • Coordination Initiative
  • Principle
    • The short term solution for Maputo is to ship a higher volume of citrus to Europe markets
    • Why? Europe is the only viable and regular shipping option from Maputo at present
    • How do we achieve this?
    • We need to ensure that we create an attractive export cost that is lower than shipping from Durban
    • And how do we achieve this?
    • We need to make sure that the transportation, handling and shipping cost is optimized
    • Transportation and Handling
    • We need suggestions and feedback from the road transport industry
    • Cost of rail should be re-strategized
    • Maputo transportation cost reduction is critical
slide21

Coordination Initiative

    • Shipping
    • In order to reduce the cost of shipping we need to load full and complete vessels to Europe out of Maputo
    • 1 Full ship (4,500 pallets) a week from week 20 – week 38
    • A competitive transportation, handling and shipping rate could be achieved
    • Shipping Coordination
    • The CGA is proposing through Growers, Exporters, Packhouses and Agents to coordinate sufficient weekly volume to achieve this objective
    • Monitor vessel Booked vs. Stock situation
    • Weekly telecon between coordination group to ascertain volume
    • To get started we need commitment from participating Growers, Exporters, Agents and
    • Shipping Lines
slide22

Maputo Key Strategic Success Criteria

  • Efficient and cost effective transportation
    • Be it by Road or be it by Rail
  • Sufficient and adaptable storage and handling infrastructure
    • Be it at the port or be it inland
    • Sufficient for anticipated volume growth
    • Geared for rail, steri and containers
  • Shipping access to key citrus markets
    • Be it by Containers or be it by Reefer Ships
    • Cost effective and regular shipping service to key citrus markets
  • Shipping Coordination
    • Maputo citrus volume coordination group
    • Ensuring sufficient supply to vessels with minimal loading delays
    • Aiming to reduce the cost of shipping
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