Transcript Title

CONFIDENTIAL
Lessons for Kenya’s Port Congestion
25/26th September 2008
AGENDA
South Africa’s Experience in 2001
Lessons learnt in South Africa
Where are we now ?
Ports challenge in Kenya
1
THE TRANSNET STRUCTURE
2
There are many views on the definition of CONGESTION …
What is congestion?
Is it a back log in vessels
waiting at outer
anchorage for a berth ?
Congestion is defined as the inherent lack of
or
waterside, that constrains the flow of freight
infrastructure, both on the landside and the
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
or
Is it the erratic calling of
shipping lines to a port
that causes bunching of
vessels ?
Factors that influence congestion
• Inadequate port infrastructure
• Insufficient road and rail infrastructure
• Poorly integrated supply chains
• Low productivity levels, including low productivity
3
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. . .
4
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
• Low productivity levels. DCT was operating at
Efficiencies
Source: Team analysis
under 14 container moves an hour
• Poor ETA compliance by shipping lines
• Shipping lines imposed a US$100 surcharge
5
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
6
Problems we experienced with the different supply chain partners
Shipping Line Issues
•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
Freight Forwarder 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
Importer / Exporter Issues
•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
Road Haulier Issues
•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
before stamping CTO’s
• Collecting containers that have not been discharged
Source: SACTAB Workshop. 2003
7
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
8
Working with government, customers, Ports users and Transnet was
the only recipe that would yield positive results
Co-chaired by Transnet
and the Shipping lines
INTERIM ADVISORY BOARD
TPT
Port
Operator
TFR
Rail
Operator
CLOF
(Shipping Lines)
Shipping
Lines
Shippers
Council
NPA
(Cargo Owners)
Cargo
owners
Landlord
& Marine
Services
SAAFF
(Road haulers)
Freight
Forwarders
Technical
Task
Team
Operations
Audit
Team
• 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
= Transnet operating divisions
9
The advisory board used the Analysis Tool: Enabling Blocks Methodology
EB 1
ORGANISATIONAL STRUCTURE
AND FACILITATION
EB 2
COSMOS
FUNCTIONALITY
EQUIPMENT MAINTENANCE, STRUCTURE, DEPLOYMENT, PROCUREMENT AND CONTRACTS
EB 3
OPERATIONAL STAFFING LEVELS, SHIFT
PATTERNS AND PROCEDURES
EB 5
EB 8
OPERATIONAL
STRATEGIES
EB 11
EB
= enabling blocks
EB 4
HOUSEKEEPING STRATEGY
AND DISCIPLINE
EB 6
INCENTIVE
SCHEMES
EB 7
TRAINING
EB 9
Rail
INTERFACE
EB 10
OPERATIONAL SUPPORT AND
FACILITATION
THIRD PARTY
EB 12
OPERATIONAL
INFRASTRUCTURE
10
AGENDA
South Africa’s Experience in 2001
Lessons learnt in South Africa
Where are we now ?
Ports challenge in Kenya
11
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
• 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
12
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
13
AGENDA
South Africa’s Experience in 2001
Lessons learnt in South Africa
Where are we now ?
Ports challenge in Kenya
14
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
Investment increased
from R131m in 2001/02
to R1.9bn in 2007/08
492
380
2002/03
2003/04
131
2001/02
584
2004/05
DCT throughput prior to turnaround strategy
Monthly TEU’s (Jun 01-Dec 04), ‘000
102.6
Surcharge
introduce
d
88.3
122.1 119.2
109.3 113.6
133.6
1 740
1 976
776
2005/06
2006/07
2007/08
DCT throughput after turnaround strategy
Monthly TEU’s (Jun 05-Dec 07), ‘000
145.5
Jun 01 Dec 01 Jun 02 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04
135.3
147.9 155.9
186.4
173.7 176.3
Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07
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
Source: Team analysis
15
TPT PERFORMANCE TREND AT DCT
Average vessel productivity distribution
Percent
October 2002
March 2004
81
%
27
23
72
%
33
31
14
<12
12-14
14-16
16-18
22
20
5
18-20
0
>20
5
3
<12
12-14
14-16
16-18
18-20
17
>20
May 2008
• 81% of vessels performed below 16-18
container moves per hour (CGH) in 2002
80
%
52
• 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)
Source: Team analysis
10
10
12-14
14-16
14
14
16-18
18-20
0
<12
>20
16
BREAKDOWN OF TARGET TIMES FOR VESSEL CHANGEOVER
Breakdown of vessel changeover duration for different target times
Hours
Target: 4 hrs
Finished unlashing to first crane
move
0:05
Stevedores boarding to finished
unlashing
0:50
Gangway ready to stevedores
boarding
Berth arrival to gangway ready
0:10
0:15
TPT
Stevedores
TNPA
Vessel
Target: 3 hrs
0:03
0:40
Marine operations (excl. no
demand & no space at 109)
1:25
0:07
0:13
1:10
Requested sailing time to berth
departure
0:15
Finish lashing to requested
sailing time
0:40
Last crane move to finished
lashing
Target: 2 hrs
0:00
0:25
0:05
0:10
0:50
0:20
0:15
0:15
0:15
0:17
0:15
0:00
Source :Vulindela team
17
PERFORMANCE AGAINST PLAN: SIGNIFICANT
OPERATIONAL EFFICIENCIES ACROSS
OPERATING DIVISIONS
Rail
Growth in key commodities
Key Performance Indicators
Total freight (billion vol.km)
Net ton km per wagon (GFB)
100
103
2002/03 03/04
105
105
04/05
05/06
105
106
2,528
2003/04
2,864
3,010
04/05
05/06
3,400
06/07
Refined (million Ml/km)
Pipelines
2.5
2003/04
2.8
2.8
04/05
05/06
3.1
06/07
3,717
2007/08
3.4
2007/08
2005/06
2007/08
9.9%
681,684
620,204
06/07 2007/08
Containers (Thousand TEUs)
Ports
2003/04
2003/04
2007/08
Container moves per crane hour – Container
Terminals
Currently 25
25.6
22.6
22.0
18.2
15.8
14.7
Durban
Cape Town
Percent capacity utilization
95.7 104.9
70.0 76.7
Refined
Crude
Port Elizabeth
51.4
68.4
Gas
18
CORRIDOR APPROACH IS ESSENTIAL FOR SERVING
SOUTH AFRICA’S CUSTOMERS
Benefits from corridor approach
NOC
Maintenance
Functions
Yards
Projects
Sentrarand
Kaserne
Example
• Transnet as a network business needs to operate in an
integrated manner throughout the logistics corridor
Procurement
• Provide a common transformation and long-term planning
backbone
• Maximise growth opportunities across all operating divisions
(rail, port, pipeline)
Yard
Depot
Newcastle
Corridors
Port
Danskraal
Durban
• Capture operational and functional synergies across operating
divisions through integrated solutions
• Improve efficiency and effectiveness of logistics supply chain
DCT
B
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t
B
r
i
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L g
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u Soekmekaar
i
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P
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Chroomvallei
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Zebediela
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Wolwehoek
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Pudimoe
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Newcastle
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d
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Warden
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o
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Bethlehem
n
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i
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Ladysmith
Kimberley
Winburg
a Marquard
Bergville
g
d
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Greytown
Maseru
Belmont
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Underberg
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Richmond
Donnybrook
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Mid Ilovo
Springfontein
Durban
k
Mandonela
Matatiele
Bethulie
Franklin
Kelso
De Aar
Aliwal North
Kokstad
Harding Simuma
Port Shepstone
Dreunberg
Barkley East
• Providing an end-to-end logistics service to customers
Komatipoort
Mafikeng
Welverdiend
Coligny
Vermaas
Hotazel
Naroegas
N
a
k
o
p
Upington
E
r
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S
s
i
Palingpan s Postmasburg
h
e
n
Kakamas
Douglas
Prieska
Copperton
Sakrivier
Bitterfontein
Jamestown
Noupoort
Kootjieskolk
Calvinia
Hutchinson
Rosmead
Schoombee
Hofmeyer
Maclear
Umtata
Queenstown
Qamata
Tarkastad
Beaufort West
Saldanha
Seymour
K
l
a
w
e
r
Klipplaat
Porterville
Prins Alfred
Hamlet
Atlantis
Cape Town
Simonstad
Touwsrivier
Ladysmith
C
Worcester
a
Franschhoek
l
Riversdale
i
Stellenbosch
t
z
Protem
Strand
d
Bredasdorp
o
r
p
Somerset East
Cookhouse
Amabele
Fort
Beaufort
Blaney
East London
Kirkwood
Oudtshoorn
George
Avontuur
Uitenhage
Patensie
Alexandria
Port Elizabeth
Mosselbaai
Knysna
Port Alfred
• Provide optimal capital base for network infrastructure evolution
Empangeni
Richards Bay
Network
• Focus on key commodities and aligning capital investment to
high-growth potential corridors
19
SIGNIFICANT INVESTMENT ACROSS ALL
DIVISIONS TO REPLACE ASSETS AND
CREATE CAPACITY
Key projects
Investment
Transnet historic
consolidated Capex (excl. SAA)
R bn
Ports
• Cape Town container expansion
• Port of Ngqura construction
• Ngqura container terminal
development including rail link
• Durban entrance channel widening
NPA
16
TPT
16
12
2007
Pipelines
• New multi-product pipeline
12
Specialist
Units
• Business intelligence and building
upgrades
2
=
80
10
38
Total investment
2009-2013
Growth strategy
2008
• Coal export /iron ore line expansion TFR
• Acquisition of 405 locomotives for
GFB, iron ore and the coal line
TRE
• Maintenance/upgrade of rolling stock
and infrastructure
Rail
20092013
2006
5
2005
4
2004
4
2003
4
2002
3
2001
2
2
80
Investing
4 times
more than
3 years
ago
20
AGENDA
South Africa’s Experience in 2001
Lessons learnt in South Africa
Where are we now ?
Ports challenge in Kenya
21
The Kenya Ports Challenge
• 22% increase in container traffic from 479355 teus (2006) to
585367 teus (2007)
3 year container volume for Kenya
– There has been no injection of terminal capacity
• Automatation of the cargo handling system
+16%
+22%
– 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
Container traffic
In TEU’s
436 671
479 355
2005
2006
585 367
– 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
2007
Source : Containerization yearbook, 2008
– 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
22
Vessels expected between 23rd Sept 2008 – 4th Oct 2008
Container exchange volumes
0
200
400
600
800
260
ARNIS
970
900
845
DESPINA P
210
FLORA DELMAS
550
225
190
PROVIDENCE
490
HELVETIA
820
381
KOTA ANGGUN
620
MSC SIERRA
MSC NORMANDIE
0
688
- 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
800
180
170
500
H&H WAVE
TERRA LUMINA
570
730
789
790
930
SAFMARINE BANDAMA
MSC HIMALAYA
120
300
SAFMARINE EUROPE
MSC EMILIA S
MOL ULTIMATE
1 200
860
650
TRAVE TRADER
SAFMARINE CONCORDE
1 000
240
250
900
325
490
SAFMARINE BIA
840
LISSY SCHULTE
850
1 050
1 100
1 200
1 140
= 5335 containers to be discharged
and loaded on the 4 October 2008
Discharge
Load
Source : Business daily, Wednesday 24, 2008, page 17
23
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
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
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
24