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Taiwan to Launch Start-up Carrier Starlux AirlinesStarlux Airlines, a Taiwanese start-up carrier, will commence with commercial operations from 23 January 2020. Currently, Starlux Airlines have been approved for 11 routes by the Civil Aeronautics Administration of Taiwan.

Amazon Entering the Logistics SectorIt was recently announced that the e-commerce giant, Amazon, has expanded its services to start conducting business in the logistics industry. The firm has already initiated the process of renting planes and have offered $10,000 to their current employees to leave the firm in order to create their own local delivery businesses.

African Air Transport Market Enhanced by SAATM Initiative The Single African Air Transport Market (SAATM) is an initiative that was launched in 2018 with the main purpose of developing air services and harmonising associated regulations in Africa. This will result in the stimulation of private capital flow in the air services industry.

PRASA Control Room Deemed IneffectiveThe Passenger Rail Agency of South Africa (PRASA) recently introduced a state-of-the-art nerve centre, known as the “war room”, which focuses on ending the problems of commuter train services. The reality, however, is that this has not been the case thus far as the centre is considered to be ineffective.

Truck Logistics Industry Threatening SA EconomyThe truck logistics industry currently contributes 11% to the SA gross domestic product (GDP) in the second quarter of 2019. Given this, it is clear that the ongoing truck- and xenophobic violence could have a significantly negative effect on SA’s economy.

The Underestimated SA Logistics Market It has recently been suggested that the SA logistics industry may be far more comprehensive than the R274 billion originally anticipated as warehousing, road freight and pipeline volumes are often not included under logistics.

Imperial Logistics Logistics group Imperial Logistics reported that revenue increased by 6% to R49.7 billion for the financial year ended 30 June 2019, while the group’s operating profit remained unchanged at R1.4 billion of free cash flow, following capital expenditure and maintenance.

Super GroupThe JSE-listed logistics and mobility group, Super Group, recently released their results for the financial year ended 30 June 2019. Revenue increased with 6.2% to R37.9 billion. Despite difficult economic climates and political uncertainties, the group posted strong results.

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SAA CRO Stepping DownThe Chief Restructuring Officer (CRO) of South African Airways (SAA) is stepping down. Peter Davies, the British airline turnaround expert, was appointed in this position less than two years ago. This follows the news that former CEO of SAA Vuyani Jarana resigned in June 2019 and the SAA Chair JB Magwaza resigned in July 2019.

PRASA Appoints First Permanent CFO in Five YearsAfter being without a permanent Chief Financial Officer (CFO) for five years, the Passenger Rail Agency of South Africa (PRASA) has appointed Japhtalina Lesibana Fosu as CFO effective from 2 September 2019.

SANRAL Status Upgraded from Negative to StableMoody’s Investors Service, which provides credit ratings and research covering debt instruments and securities, upgraded the South African National Roads Agency (SANRAL) from negative to stable in August 2019. The rating agency stated that its rating reflected governmental plans for additional financial support to SANRAL over the next three years.

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Positive Financial Performance Sets Super Group on Shopping SpreeOne month after announcing its satisfactory financial results, Super Group acquired three companies for a total estimated cost of R800 million in July 2019. Super Group acquired a 51% interest in GLS Supply Chain Equipment from Cape Town and a 65% interest in Lieben Logistics, amongst others.

DSV Acquires Global Leader PanalpinaThe Danish transport and logistics company, DSV, completed its acquisition of Panalpina in August 2019. The Enterprise Value of this transaction was estimated to be 5.1 billion Swiss francs.

Transnet and IFC Partnering to Move Natural Gas Developments ForwardTransnet SOC Ltd announced that it is entering into a cost-sharing agreement with IFC, a member of the World Bank Group, to conclude a feasibility study for the development of liquefied natural gas storage and repurposing Transnet pipelines for natural gas transmission to inland markets.

Isuzu Leading the Way with New Commercial Vehicles EnginesIsuzu Motors South Africa (IMSAF) has launched a prototype commercial vehicle in SA which tests the feasibility of dual-fuel and compressed natural gas engines. Once testing has been concluded and the engines deemed successful, more of these trucks will be used on SA roads.

Kobo360 App Reshaping the Nigerian Haulage Market Nigeria has been introduced to an Uber-like app, known as Kobo360, specifically designed for trucks. The app provides technology which makes the process of moving goods around easier and much cheaper by connecting cargo and truck owners with the truck drivers and customers.

Ctrack Logistics Barometer Helpful Tool in the SA MarketGetting an accurate indication of the state of the SA economy in terms of the goods economy has been made possible by the latest innovation known as the Ctrack Logistics Barometer. This innovation is the product of economists.co.za and Ctrack, a vehicle tracking and telematics provider.

Continuous Engagement on Taxi Recapitalisation ProgrammeThe new Minister of Transport, Fikile Mbalula, is set on removing unroadworthy and illegal taxis from SA roads through a taxi recapitalisation programme which will scrap unsafe and illegal taxis and reimburse taxi owners for each vehicle surrendered.

Transformation in Aviation is a PriorityParliament’s Portfolio Committee on Transport has issued a call for a renewed focus on transformation in the transport industry, specifically in the aviation sector. It is of utmost importance for the committee that the highly technical aviation industry should reflect the demographics of the country in all facets.

Transnet’s Focus on Developing Female-Owned BusinessesThe Transnet National Ports Authority (TNPA) Mossel Bay is focusing on supplier-development for women-owned SMMEs in the local municipality, to educate SMMEs on opportunities within Transnet. The first workshop was held in August 2019 and was presented to 50 female-owned businesses.

AARTO Bill Signed Into LawIn August 2019, President Cyril Ramaphosa signed the Administrative Adjudication of Road Traffic Offences (AARTO) Bill into law, the first of many stringent road laws to be implemented. The commencement date for the implementation has not yet been announced and will come into effect as soon as it is published in the Government Gazette.

New Declaration Processing System Legislation Still PendingThe Declaration Processing System (DPS) has been identified as one of three main focus areas with the implementation of a New Customs Act Programme suggested by the South African Revenue Service (SARS) in November 2018. The release date will be announced as soon as SARS has ensured that the new declaration types have been finalised successfully.

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Starlux Airlines, a Taiwanese start-up carrier, will commence with commercial operations from 23 January 2020 and the airline will launch with three Airbus A321neos. The fleet is expected to grow, with 12 A350-1000s and five A350-900s currently on order, and deliveries planned from 2021 up to 2022.

Starlux Airline’s chairman, Chang Kuo-wei, has indicated that the destinations to which the airline will be traveling could include Malaysia’s Penang, or Vietnam’s Da Nang, Macau.

Currently, Starlux Airlines have been approved for 11 routes by the Civil Aeronautics Administration of Taiwan, with the aim of connecting Taiwan and North America, which will commence in 2024 at the earliest.

Both Starlux Airlines and their fellow Vietnamese carrier, Bamboo Airways, are moving towards ultimately having flights to the United States.

It was recently announced that the e-commerce giant, Amazon, has expanded its services to start conducting business in the logistics industry.

Amazon has become highly focused on the logistics sector as it plans to develop a delivery fleet of its own. They have already initiated the process of renting planes and have offered $10,000 to their current employees to leave the firm in order to create their own local delivery businesses.

Furthermore, Amazon plans to increase their air cargo division with 15 Boeing 737 air freighters and to grow the fleet to 70 by 2021.

Due to the company’s progress in the shipping sector, logistics firms such as FedEx and UPS, have started to make changes to their own strategies for the future.

FedEx, for example, has made a change to its current relationship with Amazon, with the delivery company terminating its ground delivery contract with Amazon.

UPS is also investigating how new technologies, including drones and autonomous vehicles, can be used to modernise its delivery services.

The Single African Air Transport Market (SAATM) is an initiative that was launched in 2018, with the main purpose of developing air services and harmonising associated regulations across Africa. This will result in the stimulation of private capital flow in the air services industry.

The SAATM initiative is one of the key projects included in the African Union’s Agenda 2063, focusing on boosting economic growth and development in Africa in order to assist with the transformation of the African content.

This initiative is being driven to decrease the use of and need for bilateral air service agreements amongst individual countries. This will also include safety- and security standards for carriers operating in Africa.

The initiative will also result in additional routes being created, which will make Africa a more connected continent with shorter travel times, and ultimately lower travel fares.

Furthermore, if the SAATM is fully implemented in all 54 African countries, it will hold significant economic benefits, including intra-Africa trade, economic growth in the aviation sector, increased tourist numbers, and job creation.

Taiwan to Launch Start-up Carrier Starlux Airlines

Amazon Entering the Logistics Sector

African Air Transport Market Enhanced by SAATM Initiative

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The truck logistics industry currently contributes about 11% to the SA Gross Domestic Product (GDP) in the second quarter of 2019. Given this, it is clear that the ongoing truck- and xenophobic violence could have a significantly negative effect on SA’s economy.

The increasing costs associated with the violence could have a significant influence in the future. There are serious implications for the industry as a single vehicle costs about R2 million, a three-hour delay on the N3 highway results in a long-distance driver losing about R540,000 per truck.

Furthermore, the burning of one truck on the N3 highway also affects the movement of 6,000 other individuals.

According to Economist Mike Schussler, the transportation of goods between SA and neighbouring countries, as well as the southern Democratic Republic of Congo, is one of the most crucial sectors of the SA economy.

It has recently been suggested that the SA logistics industry may be far more comprehensive than the R274 billion originally anticipated.

In 2018, the total turnover for the logistics industry for enterprises in mining, retail and manufacturing was estimated at about R274 billion.

However, according to Ctrack, warehousing, road freight and pipeline volumes are often not included under logistics. With major retailers that transport and store goods, such as Shoprite and Pick ‘n Pay, the volumes transported are typically categorised under retail.

These retailers also consider transportation to be a cost centre and if they make any savings it is categorised as retail savings.

Likewise, if a steel manufacturer delivers steel, the added value of the transport is measured under manufacturing.

As a result, SA’s entire logistics sector is considered to be far more extensive than the estimated amount of R274 billion, and it is probably closer to R480 billion, according to Ctrack.

PRASA Control Room Deemed Ineffective

Truck Logistics Industry Threatening SA Economy

The Underestimated SA Logistics Market

The Passenger Rail Agency of South Africa (PRASA) recently introduced a state-of-the-art nerve centre, known as the “war room”.

The “war room” was launched in August 2019 and it focuses on ending the problems of commuter train services.

According to the Minister of Transport, Fikile Mbalula, the launching of the “war room” is set to be a ‘game-changer’ in the train services market.

The reality, however, is that this has not been the case thus far as the war room is deemed to be ineffective and has not had any impact on train services, according to the United Nation Transport Union (UNTU).

This statement is based on the fact that none of the train drivers belonging to the UNTU currently have a telephone number for the “war room”, which means that they have no way of contacting it or reporting problems on specific routes.

It is, therefore, business as usual for these individuals and they continue to witness criminals stripping the remaining infrastructure, despite the establishment of the “war room”.

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Logistics group Imperial Logistics reported that revenue increased by 6% to R49.7 billion for the financial year ended 30 June 2019, while the group’s operating profit remained unchanged at R1.4 billion of free cash flow, following capital expenditure and maintenance.

The group also observed a 7% decline in headline earnings per share (HEPS).

According to group CEO, Mohammed Akoojee, the group is aiming to expand into air and sea transportation in 2020 which will include picking up products in Asia to expand its supply chain.

The group has made many “tough calls” in order to remain financially viable. These included over R2 billion of impairments and once-off restructuring costs.

The group’s positivity for financial growth and expansion in 2020 factors in their higher than 90% contract renewal rate, and an ‘encouraging pipeline’ of new opportunities.

The JSE-listed logistics and mobility group, Super Group, recently released their results for the financial year ended 30 June 2019. Revenue increased by 6.2% to R37.9 billion.

Despite difficult economic climates and political uncertainties, the group posted strong results. The group CEO, Peter Mountford, stated that their operations in the sub-Saharan African businesses delivered robust performances.

The company’s operating profit increased by 7% year-on-year in the reported period, totalling at R2.6 billion. Super Group further reported an increase of 12.5% in earnings per share (EPS), while headline earnings per share (HEPS) increased by 12.5% as well.

On the whole, the group’s performance was positive across the industrial, technology, Digistics, and vehicle rental supply businesses that operate as the Supply Chain Africa segment.

Furthermore, the Fleet Africa business, along with the SG Fleet business, Dealerships South Africa business, and Dealerships UK business, performed well despite pressure from political uncertainties caused by the Brexit deals, and ongoing challenges.

Imperial Logistics Super Group

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The Chief Restructuring Officer (CRO) of South African Airways (SAA) is stepping down. Peter Davies, the British airline turnaround expert, was appointed in this position less than two years ago and will remain as advisor to the board.

This follows the news that former CEO of SAA Vuyani Jarana resigned in June 2019, as well as the SAA Chair JB Magwaza’s resignation in July 2019.

The reappointment of a CRO is stipulated by lenders and is currently also a condition of the Treasury for its bailout as a state-owned enterprise. A R3.5 billion bailout for SAA is pending from the Treasury once the Special Appropriation Bill has been processed and signed into law.

These funds are expected to go towards repaying short-term bridging finance raised by the airline since January 2019 in order to fund its operations.

Furthermore, it is currently expected that SAA will be partially sold to a partner airline once it has recovered from its financial situation. In addition to the bailout amount, the airline requires an additional R4 billion to cover operational costs for 2019/2020.

Moody’s Investors Service, which provides credit ratings and research covering debt instruments and securities, upgraded the South African National Roads Agency (SANRAL) from negative to stable in August 2019.

The rating agency stated that its rating reflected governmental plans for additional financial support to SANRAL over the next three years. Moody’s rating also reflected the ongoing opposition against e-toll from South African road users.

In addition to these factors, SANRAL’s rating was negatively influenced by very high debt levels, high capital expenditure requirements, and liquidity pressure related to low cash collections.

According to Moody’s, the rating awarded to SANRAL could improve if an alternative funding model is introduced. This funding model should emphasise collection and enforcement strategies to aid structural improvements for SANRAL’s cash flow. However, the rating could also be downgraded should there be no changes in the level of governmental support to SANRAL.

SAA CRO Stepping Down

PRASA Appoints First Permanent CFO in Five Years

SANRAL Status Upgraded from Negative to Stable

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After being without a permanent Chief Financial Officer (CFO) for five years, the Passenger Rail Agency of South Africa (PRASA) has appointed Japhtalina Lesibana Fosu as CFO, effective from 2 September 2019.

This appointment was made as part of PRASA’s recruitment of group executives in an effort to stabilise the entity. The state-owned entity’s financial state has been unstable for the last few years, and PRASA has not received a clean financial audit since 2014.

Fosu is a qualified Chartered Accountant with over 19 years’ executive experience in the private and public sectors. Fosu has also received a clean audit award from the Auditor-General South Africa for two consecutive years on behalf of the Limpopo Road Accident Fund.

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One month after announcing its satisfactory financial results, Super Group acquired three companies for a total estimated cost of R800 million, in July 2019.

Super Group acquired a 51% interest in GLS Supply Chain Equipment from Cape Town and a 65% interest in Lieben Logistics. These transactions were valued at R93.3 million and R498.8 million, respectively. The group also acquired an 80% interest in Trans-Logo Tech for R184.3 million.

The group’s CFO, Colin Brown, stated that they are seeking further opportunities despite tough trading conditions in many of the group’s markets. He added that companies shutting down or going into liquidation in the supply chain solutions market created opportunities for Super Group to grow its market share.

The group’s CEO, Peter Mountford, also said that Super Group invested R2.1 billion in net additions and acquisitions to ensure the future growth of the group, following poor performance by the group’s SG Fleet business and its Supply Chain Europe business in Germany.

The Danish transport and logistics company, DSV, completed its acquisition of Panalpina in August 2019. The Enterprise Value of this transaction was estimated to be 5.1 billion Swiss francs.

As all transaction conditions were met, DSV now has complete control of Panalpina and a new previously announced board came into effect.

The acquired company, Panalpina, was regarded as a global leader in supply chain solutions with a global staff complement of approximately 14,500 people in 70 countries. Its acquisition by DSV created one of the largest transport and logistics companies in the world with a workforce of 60,000 employees in 90 countries.

Following the completion of the transaction, the registered name of the new company will change to DSV Panalpina A/S, while all subsidiaries and operational processes will be united under the DSV name and brand.

The brand is planning a holistic integration period of two to three years, with operational integration to be completed within the next two years.

Transnet SOC Ltd recently announced that it is entering into a cost-sharing agreement with IFC, a member of the World Bank Group, to conclude a feasibility study for the development of liquefied natural gas (LNG) storage and repurposing Transnet pipelines for natural gas transmission to inland markets.

IFC has committed US$2 million as part of the cost-sharing agreement with Transnet. The Richards Bay Natural Gas Network (NGN) project will deliver liquified natural gas to new markets in the Eastern Cape and Western Cape provinces.

Transnet has a mandate to provide freight logistics infrastructure for economic growth and, to this end, it is leveraging its ports, pipelines, and rail assets to promote private investment in gas infrastructure for SA.

The infrastructure development will, however, be conducted by a private investor through a competitive process in which Transnet will also partake.

Positive Financial Performance Sets Super Group on Shopping Spree

DSV Acquires Global Leader Panalpina

Transnet and IFC Partnering to Move Natural Gas Developments Forward

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Isuzu Motors SA (IMSAF) has launched a prototype commercial vehicle in SA which tests the feasibility of dual-fuel and compressed natural gas engines. The engines are being tested in various Isuzu fleet vehicles.

These vehicles form part of the Isuzu N-Series trucks, with the NPR300 version being fitted with a system known as a Stop-Start fuel-saving system, which has been converted to run on Compressed Natural Gas (CNG). This is more environmentally friendly whilst also reducing operating costs. Additionally, CNG-fuelled engines’ power and torque outputs are similar to its diesel-fuelled counterparts.

The company’s dual-fuel-truck runs on a mixture of CNG and diesel in a standard diesel engine. This system’s benefits include switching between diesel and CNG, with very little effect on power or torque, a lowered carbon footprint, and a reduction of engine noise.

Once testing has been concluded and the engines deemed successful, more of these trucks will be used on SA roads, promoting a greener motoring landscape.

Nigeria has been introduced to an Uber-like app specifically designed for trucks by Kobo360, a freight logistic start-up company based in Lagos.

The app provides technology that makes the process of moving goods around easier and much cheaper by connecting cargo and truck owners with truck drivers and customers in Nigeria, Kenya, Togo, and Ghana.

Additionally, Kobo360 allows logistics managers to schedule and monitor trips from their offices, as the app provides real-time tracking.

Currently, more than 90% of cargo in Nigeria is transported by road, with Nigeria currently losing approximately US$19 billion annually due to security issues at ports, illegal charges, and traffic jams.

Kobo360 will be adding 25,000 drivers to the platform in the coming months, with the prospects of expanding their footprint to 10 additional countries.

The Kobo360 platform enables drivers to do more trips in a month, haulage being cheaper, and the trips have a 92% on-time delivery record.

Getting an accurate indication of the state of the SA economy in terms of the goods economy, has been made possible by the latest innovation, known as the Ctrack Logistics Barometer.

This innovation is the product of economists.co.za and Ctrack, a vehicle tracking and telematics provider.

The barometer enables a better understanding of businesses and the media with regards to the SA logistics industry, thereby assisting businesses in the sector with better strategic decision-making.

The tool adds value in terms of its ability to reflect the state of the transport industry in an informed manner, while also reflecting the economic growth cycles in SA.

With the barometer measuring six main subsectors, including rail, road, air, sea, pipelines, and warehousing all in either volume or real terms, it enables the tool to reflect real changes in the industry.

The barometer may become more valuable in the transport industry, as 50% of the SA economy is made up of goods which include logistics services relating to the transport, storage, and distribution of these goods.

Isuzu Leading the Way with New Commercial Vehicles Engine

Kobo360 App Reshaping the Nigerian Haulage Market

Ctrack Logistics Barometer Helpful Tool in the SA Market

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The new Minister of Transport, Fikile Mbalula, is set on removing unroadworthy and illegal taxis from SA roads through a taxi recapitalisation programme, which will scrap unsafe and illegal taxis and reimburse taxi owners for each vehicle surrendered.

While the taxi recapitalisation programme received initial pushback from the South African National Taxi Council (SANTACO), stating that the reimbursement amount was not enough, Mbalula assured the taxi industry that he will meet with them to address concerns regarding the programme.

Despite mounting concerns from the industry, Mbalula unveiled the new phase of the programme and vowed its implementation going forward. Mbalula stated that: “The recapitalisation programme is not going to stop. We want it to continue because the taxi industry is part of our key stakeholders”.

Mbalula’s plan for continuous engagement with the concerned stakeholders is aimed at creating understanding of the concerns from all parties.

Parliament’s Portfolio Committee on Transport has issued a call for a renewed focus on transformation in the transport industry – specifically in the aviation sector – following a week-long oversight visit to Johannesburg in August 2019.

It is of utmost importance for the committee that the highly technical aviation industry should reflect the demographics of the country in all facets, especially when it comes to the representation of women.

Committee Chairperson, Mosebenzi Zwane, stated that acknowledging the lack of transformation is not enough. He went on to say that transformation must be reported on constantly, with achievable targets.

While the committee expressed its satisfaction with the transformation progress in Air Traffic and Navigation Services (ATNS), Zwane stated that “entities need to work hard on transformation targets”.

Transformation in this sector should therefore be all-inclusive and embrace all elements of aviation, including management, procurement of goods, and human capital.

The Transnet National Ports Authority (TNPA) Mossel Bay is focusing on supplier development for women-owned SMMEs in the local municipality, to educate SMMEs on opportunities within Transnet.

The first workshop was held in August 2019 and was presented to 50 female-owned businesses in response to the challenges faced by women in starting their own businesses in the Western Cape region.

Included in this workshop were several other organised bodies, such as the Mossel Bay Business Chamber, SARS, SEDA, FNB, and the Department of Labour, amongst others.

The workshop unpacked the Transnet Skills Development Programme, sharing information on how women can best equip their businesses to work better with Transnet and work better in their own capacities. It was also stated that the upliftment of female-owned businesses is considered a critical tool to achieve the National Development Plan’s set targets for 2030.

Continuous Engagement on Taxi Recapitalisation Programme

Transformation in Aviation is a Priority

Transnet’s Focus on Developing Female-Owned Businesses

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AARTO Bill Signed Into Law New Declaration Processing System Legislation Still Pending

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In August 2019, President Cyril Ramaphosa signed the Administrative Adjudication of Road Traffic Offences (AARTO) Bill into law, the first of many stringent road laws to be implemented.

The commencement date for the implementation has not yet been announced and will come into effect as soon as it is published in the Government Gazette.

Drivers will lose between one and six points per traffic offence, and once a driver reaches 12 demerit points their licence will be suspended. However, when a driver’s license has been suspended three times it will result

in the cancellation of the licence.

The enforcement of fines will also take on a different approach, with fines becoming invoices and drivers not being able to oppose it anymore.

This Bill has evoked strong opinions regarding its validity and executability, with various organisations opposing the implementation of the AARTO Bill in SA.

The Declaration Processing System (DPS) has been identified as one of three main focus areas with the implementation of a New Customs Act Programme suggested by the South African Revenue Service (SARS) in November 2018.

The revised DPS will be focused on the SARS system where they process import and export declarations with amendments being made to the Customs and Excise Act, 1964, in order to support the implementation of the new suggested DPS.

The changes to be made to the DPS will align with the revised Kyoto Convention

which will assist with the reduction of large volumes of amendment clearances submitted (Vouchers of Correction).

The release date of the DPS and implementation of changes have been postponed from middle 2019 until SARS has ensured that the new declaration types have been finalised successfully.