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CONFIDENTIAL. Lessons for Kenya’s Port Congestion . 25/26 th September 2008 . AGENDA. South Africa’s Experience in 2001. Lessons learnt in South Africa . Where are we now ?. Ports challenge in Kenya. THE TRANSNET STRUCTURE . There are many views on the definition of CONGESTION ….

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agenda
AGENDA
  • South Africa’s Experience in 2001
  • Lessons learnt in South Africa

Where are we now ?

  • Ports challenge in Kenya
there are many views on the definition of congestion
There are many views on the definition of CONGESTION …

Is it a back log in vessels waiting at outer anchorage for a berth ?

What is congestion?

Congestion is defined as the inherent lack of infrastructure, both on the landside and the waterside, that constrains the flow of freight

or

Is it poor operational performance of the port operator where vessels are not leaving on time ?

or

Is it the lack of capacity to match the demand which leads to stack congestion

Factors that influence congestion

or

  • Inadequate port infrastructure
  • Insufficient road and rail infrastructure
  • Poorly integrated supply chains
  • Low productivity levels, including low productivity

Is it the erratic calling of shipping lines to a port that causes bunching of vessels ?

background to what happened in the south african ports in 2001
Background to what happened in the South African Ports in 2001
  • 2001 :
      • Volume growth outstripped available capacity
      • Anti-privatization strikes
      • Compensation for delays by the Shipping lines– Pre & Post 2001
  • 2002 :
      • Imposition of the $100 surcharge in South Africa by the shipping lines
      • South African Chamber of Business (SACOB) facilitates meeting between shipping lines, cargo owners & Transnet
      • Ministers and Director Generals intervene
      • Establishment of Interim Advisory Board (Name later changed to South African Container Terminal advisory Board - SACTAB)
  • 2003 :
      • SACTAB began its work. . .
challenges we experienced in 2001 02
CHALLENGES WE EXPERIENCED IN 2001/02
  • Business performance
  • Low profitability
  • High gearing at a Transnet level
  • Capacity constraints handicapped growth
  • Investment
  • A history of underinvestment
  • No coordinated Transnet investment plan
  • People
  • The need to establish a performance culture
  • Uncertainty regarding concessioning of ports
  • Industry wide skills shortage
  • Efficiencies
  • Low productivity levels. DCT was operating at under 14 container moves an hour
  • Poor ETA compliance by shipping lines
  • Shipping lines imposed a US$100 surcharge

Source: Team analysis

what led to the congestion in south africa in 2001
What led to the Congestion in South Africa in 2001 ?
  • Primary
      • Arrival patterns (Capacity vs. Demand)
      • Equipment failure
      • Delays
      • Third party issues (Addressed in following slide)
  • Secondary
      • Not enough infrastructure
      • Lack of inadequate equipment e.g.. Straddle carriers & Cranes
      • Poor terminal design
problems we experienced with the different supply chain partners
Inaccurate ETA’s

Inaccurate discharge and load information

Late submission of stowage plans by lines

Changes in stowage plans

On geared cellular vessels ships cranes obstruct gantries from working productively in certain stow positions on vessel

Overbooking of vessel’s capacity results in cargo being short shipped and/or rolled over

Poor planning of tranships

On-berth repairs

Bunkering where it affects the operation

Not packing exports timorously to meet stack dates

Exporters book the same cargo with different lines. Lines therefore submit incorrect export volumes to terminals

Not getting import documentation through in time

Importing more cargo than can be handled by the importer, results in containers being left beyond the allowed 3 days

Unwillingness to work extended hours of production to have export cargo ready within stack times

Amending export documentation without informing the shipping line (changing POD, vessel, etc)

There is mis-declaration of weights for both imports and exports

Last minute requests for COD’s on imports

Last minute requests to change port of destination

Problems we experienced with the different supply chain partners

Shipping Line Issues

Importer / Exporter Issues

Freight Forwarder Issues

Road Haulier Issues

  • Not processing import documentation timorously including taking release of cargo from Lines / Customs documentation
  • Use of haulers with non-roadworthy trucks that break down continuously - resulting in late delivery /collection of cargo - both import and export
  • Submitting CTO’s at the last minute for processing and then handing in 100 CTO’s and wanting them back in 5 minutes
  • Errors made on CTO’s - incorrect data capture
  • Illegible writing on hand-written CTO’s
  • Use of incorrect reference numbers - not the reference given by the Shipping Line - Lines can solve this by carefully checking references before stamping CTO’s
  • Collecting containers that have not been discharged
  • Not accepting/packing cargo 24 hours a day 7-days a week creating peaks in traffic arrival at the terminal
  • Arriving at terminal without necessary documentation
  • Truckers using false number plates - registering one truck and then sending 3 trucks to the terminal with the same registration plates
  • Trucks not registered to collect import containers - coming to terminal to collect and then delaying things while their problem is sorted out
  • Truckers using non-roadworthy vehicles
  • Unauthorised parking in terminals and in Langeberg Road (Durban) causes congestion
  • Truckers abandon their vehicles while they attend to other business

Source: SACTAB Workshop. 2003

the media had a field day and impacted on the reputation of the sa ports system
The media had a field day and impacted on the reputation of the SA ports system

Sunday Tribune

17 Nov 2002

Business Report

15 Oct 2002

Mercury

29 October 2002

Mercury

13 Nov 2002

Star

13 Nov

2002

Business Day

18 Nov 2002

Mercury

16 Oct 2002

Mercury

14 Nov

2002

Mercury

4 Nov 2002

slide10

= Transnet operating divisions

Working with government, customers, Ports users and Transnet was the only recipe that would yield positive results

INTERIM ADVISORY BOARD

Co-chaired by Transnet

and the Shipping lines

SAAFF

(Road haulers)

Technical

Task

Team

TPT

TFR

CLOF

(Shipping Lines)

Shippers

Council

(Cargo Owners)

NPA

Landlord

& Marine

Services

Port

Operator

Rail

Operator

Shipping

Lines

Freight

Forwarders

Operations

Audit

Team

Cargo

owners

  • This team met every 2 weeks for 2 years
  • The board defined and set KPI’s of what we wanted to measure each supply chain partner
  • We had a media black out – Nobody spoke to the media except for the 2 chair persons
the advisory board used the analysis tool enabling blocks methodology
The advisory board used the Analysis Tool: Enabling Blocks Methodology

ORGANISATIONAL STRUCTURE

AND FACILITATION

COSMOS

FUNCTIONALITY

EQUIPMENT MAINTENANCE, STRUCTURE, DE-

PLOYMENT, PROCUREMENT AND CONTRACTS

EB 1

EB 2

EB 3

HOUSEKEEPING STRATEGY

AND DISCIPLINE

EB 4

TRAINING

OPERATIONAL STAFFING LEVELS, SHIFT

PATTERNS AND PROCEDURES

INCENTIVE

SCHEMES

EB 6

EB 7

EB 5

OPERATIONAL SUPPORT AND

FACILITATION

OPERATIONAL

STRATEGIES

Rail

INTERFACE

EB 10

EB 9

EB 8

OPERATIONAL

INFRASTRUCTURE

THIRD PARTY

EB 12

EB 11

EB

= enabling blocks

agenda12
AGENDA
  • South Africa’s Experience in 2001
  • Lessons learnt in South Africa

Where are we now ?

  • Ports challenge in Kenya
what was actually done in the south african ports between 2001 to 2007
Additional Capacity

Existing general cargo berth in Durban was converted to a container handling facility which is now a fully fledged container Terminal

Re-configured vessel calls to other ports in South Africa by using ports of PE & Cape Town

Operational Infrastructure

Purchased 6 cranes (3 Liebherr and 3 Impsa cranes) initially, and later placed an order for 24 cranes

Purchased over 225 straddle carriers over a 3 year period

Enhanced vessel change over from 4hours to under 2 hours by planning better with marine services

Increased rail capacity from 3 trains to 5 train from Gauteng to Durban

Systems enhancements

COSMOS re-configuration (Planning modules)

Introduced SAP Maintenance Module

People

65 Sri Lankan trainers were brought in to train & development our Operator skill levels through a best practice programme

Introduced a bonus system for operational staff

More open license pilots were introduced to cater for increased demand on larger vessel sizes

Build a cohesive team for a greater team spirit with intensive and continuous communication strategies

Organisational design

Reconfigured integrated organisational structure of DCT

Workshop structures were revised & shift patterns changed to meet customer demands

Commercial

Introduced Container Terminal Operations contract (CTOC) which guaranteed berthing on arrival

Reward and penalty clause embedded in the contract for higher productivity performances

Penalized poor customer behavior in CTOC to ensure compliance to ETA and planning information before vessel arrivals

What was actually done in the South African Ports between 2001 to 2007

Initiatives and programmes that were put into place during the period of congestion

lessons learnt in south africa
Lessons learnt in South Africa
  • Commitment to resolve issues without assigning blame to any particular supply chain partner, but work in the interest of the country
  • There must a common platform e.g.. an advisory board or a forum where all shipping lines, port operators, cargo owners etc that can debate and make decisions to help ease the situation. Ideally the forum should be co-chaired to maintain impartiality
  • To resolve the congestion you will have to work intimately with shipping lines, cargo owners, port, road and rail operators whom you still want to retain as customers
  • Involve Unions at an early stage
  • Agreeing a common set of KPI’s is an important milestone to measure all partners in the supply chain
  • There must be measurements taking place regularly by the advisory board/forum at least every 2 weeks and thereafter monthly once the system sees improvement
  • South Africa had the benefit of using other ports in the system (Cape Town & Port Elizabeth) which eased the problem in Durban Container terminal
  • Creating capacity ahead of demand is crucial to maintain a fluid port system
agenda15
AGENDA
  • South Africa’s Experience in 2001
  • Lessons learnt in South Africa

Where are we now ?

  • Ports challenge in Kenya
results from the effieciency improvements and colloborative work

186.4

  • Monthly volume at DCT increased from 102,000 TEU’s a month in 2001/02 to 180,000 TEU’s a month in 2007/08
  • Investment increased from R131m in 2001/02 to R1.9bn in 2007/08
RESULTS FROM THE EFFIECIENCY IMPROVEMENTS AND COLLOBORATIVE WORK
  • TPT capital investment prior to Transnet’s turnaround strategy
  • TPT capital investment since Transnet’s turnaround strategy introduced
  • 1 976
  • 1 740
  • 2001/02
  • 2002/03
  • 2003/04
  • 2004/05
  • 2005/06
  • 2006/07
  • 2007/08
  • DCT throughput prior to turnaround strategy
  • Monthly TEU’s (Jun 01-Dec 04), ‘000
  • DCT throughput after turnaround strategy
  • Monthly TEU’s (Jun 05-Dec 07), ‘000

Surcharge introduced

  • Jun 01
  • Dec 01
  • Jun 02
  • Dec 02
  • Jun 03
  • Dec 03
  • Jun 04
  • Dec 04
  • Jun 05
  • Dec 05
  • Jun 06
  • Dec 06
  • Jun 07
  • Dec 07

Source: Team analysis

tpt performance trend at dct

52

TPT PERFORMANCE TREND AT DCT

Average vessel productivity distribution

Percent

  • October 2002
  • March 2004
  • 81%
  • 72%
  • <12
  • 12-14
  • 14-16
  • 16-18
  • 18-20
  • >20
  • <12
  • 12-14
  • 14-16
  • 16-18
  • 18-20
  • >20
  • May 2008
  • 81% of vessels performed below 16-18 container moves per hour (CGH) in 2002
  • In May 2008, 80% of vessels performed above 16 container moves (CGH)
  • Average performance at DCT for 2007/08 was 22.5 container moves (CGH)
  • Target for 2008/09 is 25 container moves (CGH)
  • 80%
  • <12
  • 12-14
  • 14-16
  • 16-18
  • 18-20
  • >20

Source: Team analysis

breakdown of target times for vessel changeover

0.15

BREAKDOWN OF TARGET TIMES FOR VESSEL CHANGEOVER

Breakdown of vessel changeover duration for different target times

Hours

  • Stevedores
  • TPT

Target: 4 hrs

  • Vessel
  • TNPA

Finished unlashing to first crane move

  • 0:05

Stevedores boarding to finished unlashing

  • 0:50

Target: 3 hrs

Gangway ready to stevedores boarding

  • 0:10
  • 0:03
  • 0:15

Berth arrival to gangway ready

  • 0:40

Target: 2 hrs

  • 0:07

Marine operations (excl. no demand & no space at 109)

  • 0:13
  • 0:00
  • 1:25
  • 0:25
  • 0:05
  • 0:10
  • 1:10

Requested sailing time to berth departure

  • 0:15
  • 0:50

Finish lashing to requested sailing time

  • 0:40
  • 0:15
  • 0:15
  • 0:15
  • 0:00

Last crane move to finished lashing

  • 0:20
  • 0:17
  • 0:15

Source :Vulindela team

performance against plan significant operational efficiencies across operating divisions

620,204

PERFORMANCE AGAINST PLAN: SIGNIFICANT OPERATIONAL EFFICIENCIES ACROSS OPERATING DIVISIONS

2003/04

2005/06

2007/08

Growth in key commodities

Key Performance Indicators

Rail

Total freight (billion vol.km)

Net ton km per wagon (GFB)

106

9.9%

105

105

105

103

681,684

100

620,204

2002/03

03/04

04/05

05/06

06/07

2007/08

2003/04

2007/08

Ports

Containers (Thousand TEUs)

Container moves per crane hour – ContainerTerminals

3,717

Currently 25

3,400

3,010

2,864

2,528

2003/04

04/05

05/06

06/07

2007/08

Durban

Cape Town

Port Elizabeth

Pipe-lines

Refined (million Ml/km)

Percent capacity utilization

3.4

3.1

2.8

2.8

2.5

Refined

Crude

Gas

2003/04

04/05

05/06

06/07

2007/08

corridor approach is essential for serving south africa s customers
CORRIDOR APPROACH IS ESSENTIAL FOR SERVING SOUTH AFRICA’S CUSTOMERS

Benefits from corridor approach

NOC

  • Transnet as a network business needs to operate in an integrated manner throughout the logistics corridor
  • Provide a common transformation and long-term planning backbone
  • Maximise growth opportunities across all operating divisions (rail, port, pipeline)
  • Capture operational and functional synergies across operating divisions through integrated solutions
  • Improve efficiency and effectiveness of logistics supply chain
  • Providing an end-to-end logistics service to customers
  • Provide optimal capital base for network infrastructure evolution
  • Focus on key commodities and aligning capital investment to high-growth potential corridors

Procure-ment

Mainten-ance

Functions

Yards

Projects

Sentrarand

Yard

Kaserne

Depot

Corridors

Newcastle

Example

Port

Danskraal

Durban

DCT

Beit Bridge

Messina

Louis Trichardt

Soekmekaar

Ellisras

Thabazimbi

Pietersburg

Drummondlea

Vaalwater

Chroomvallei

Phalaborwa

Zebediela

Hoedspruit

Naboomspruit

Middelwit

Nylstroom

Steelpoort

Northam

Graskop

Marble Hall

Roossenekal

Rustenburg

Plaston

Cullinan

Komatipoort

Witbank

Belfast

Mafikeng

Pretoria

Rayton

Ogies

Machadodorp

Krugersdorp

Lichtenburg

Baberton

O/fontein

Welgedag

Sentrarand

Welverdiend

Coligny

J’burg

Hawerklip

Breyten

B/plaas

Vermaas

Bethal

Lothair

Potchestroom

Ottosdal

Orkney

Klerksdorp

Wolwehoek

Standerton

Hotazel

Schweizer-Reneke

Vierfontein

Makwassie

Pudimoe

Charlestown

Ancona

Newcastle

Vrede

Westleigh

Erts

Golela

Utrecht

Kroonstad

Hlobane

Warden

Sishen

Manganore

Naroegas

Warrenton

Vryheid

Arlington

Whites

Nakop

Glen H

Palingpan

Postmasburg

Glencoe

Harrismith

Virginia

Upington

Bultfontein

Bethlehem

Theunisen

Ladysmith

Kimberley

Marquard

Kakamas

Winburg

Bergville

Empangeni

Nkwalini

Douglas

Eshowe

Bloemfontein

Kranskop

Richards Bay

Moorleigh

Ladybrand

Sannaspos

Koffiefontein

Greytown

Maseru

Belmont

Prieska

Howick

Stanger

Hilton

Network

Copperton

Underberg

Richmond

Donnybrook

Mid Ilovo

Springfontein

Durban

Mandonela

Matatiele

Bethulie

Franklin

Kelso

De Aar

Aliwal North

Kokstad

Harding

Simuma

Sakrivier

Port Shepstone

Bitterfontein

Dreunberg

Barkley East

Jamestown

Noupoort

Maclear

Kootjieskolk

Calvinia

Rosmead

Schoombee

Hutchinson

Hofmeyer

Umtata

Queenstown

Tarkastad

Qamata

Beaufort West

Seymour

Klawer

Somerset East

Amabele

Cookhouse

Blaney

Klipplaat

Porterville

Fort

Beaufort

Saldanha

East London

Prins Alfred

Hamlet

Touwsrivier

Kirkwood

Ladysmith

Atlantis

Calitzdorp

Alexandria

Worcester

Uitenhage

Oudtshoorn

Patensie

Port Alfred

George

Avontuur

Franschhoek

Port Elizabeth

Riversdale

Cape Town

Stellenbosch

Knysna

Mosselbaai

Protem

Simonstad

Strand

Bredasdorp

significant investment across all divisions to replace assets and create capacity

2

SIGNIFICANT INVESTMENT ACROSS ALL DIVISIONS TO REPLACE ASSETS AND CREATE CAPACITY

Transnet historic

consolidated Capex (excl. SAA)

Key projects

Investment

R bn

2009-

2013

Growth strategy

  • Cape Town container expansion
  • Port of Ngqura construction
  • Ngqura container terminal development including rail link
  • Durban entrance channel widening

16

NPA

Ports

2008

10

TPT

2007

Investing 4 times more than 3 years ago

2006

38

  • Coal export /iron ore line expansion
  • Acquisition of 405 locomotives for GFB, iron ore and the coal line
  • Maintenance/upgrade of rolling stock and infrastructure

TFR

Rail

2005

2

TRE

2004

Pipelines

12

  • New multi-product pipeline

2003

2002

Specialist

Units

2

  • Business intelligence and building upgrades

2001

80

Total investment =2009-2013

agenda22
AGENDA
  • South Africa’s Experience in 2001
  • Lessons learnt in South Africa

Where are we now ?

  • Ports challenge in Kenya
the kenya ports challenge

456 000

The Kenya Ports Challenge
  • 22% increase in container traffic from 479355 teus (2006) to 585367 teus (2007)
      • There has been no injection of terminal capacity
  • Automatation of the cargo handling system
      • Users resisting due to redundancy or potential retrenchment
    • Dwell time is high as shippers not collecting their cargo in time
    • Rail service needs improvement
      • Considering increasing of speed of loco’s
      • Investing in new gauge rail lines
    • Lack of space within the Port area
      • Plans to acquire new land from the industrial commercial & development corporation have failed
      • Dwell time might be high
    • All the above will lead to vessels delays which will cause an increase in freight costs for the end user

3 year container volume for Kenya

+16%

+22%

585 367

479 355

Container traffic

In TEU’s

436 671

2005

2006

2007

Source : Containerization yearbook, 2008

vessels expected between 23 rd sept 2008 4 th oct 2008

850

Vessels expected between 23rd Sept 2008 – 4th Oct 2008

Container exchange volumes

0

200

400

600

800

1 000

1 200

ARNIS

TRAVE TRADER

DESPINA P

FLORA DELMAS

PROVIDENCE

HELVETIA

KOTA ANGGUN

  • Dwell time of boxes in stack
  • Collecting of cleared cargo
  • Moving containers to ICD’s/Bonded warehouse
  • Bulk runs at night and off peak periods

MSC SIERRA

MSC NORMANDIE

SAFMARINE CONCORDE

H&H WAVE

TERRA LUMINA

SAFMARINE BANDAMA

1 050

MSC HIMALAYA

1 100

SAFMARINE EUROPE

MSC EMILIA S

MOL ULTIMATE

= 5335 containers to be discharged

and loaded on the 4 October 2008

SAFMARINE BIA

1 200

LISSY SCHULTE

1 140

Discharge

Load

Source : Business daily, Wednesday 24, 2008, page 17

some recommendations

Establish a forum or an advisory board where issues can be discussed with all supply chain partners

    • Create an agreed set of KPI’s
    • Measure bi-weekly all the agreed KPI’s
    • Use an independent operations audit team if necessary

1

  • Choose the high impact problems to be resolved first
    • Agree with port users on the problem to be resolved and that there will be pain during this time (reducing the dwell time of cargo in the port)
    • Bring in additional experienced resources to help if necessary
    • Collaboration with other ports in the region whilst KPA fixes the problem

2

  • Communication internally and externally
    • Keep customers and port users informed and involve them to be a part of the solution
    • Assign one talking head as the ports reputation can be at stake – Consider a media black-out period
    • Keep government and customers informed of progress

3

Some recommendations
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