understanding the issue of infrastructure servicing the logistics supply chain in relation to...

Understanding the Issue of Infrastructure Servicing the Logistics Supply Chain in Relation to Transport

Corridors

MAPUTO CORRIDOR

LOGISTICS INITIATIVE

THIS PRESENTATION

• The Continent’s Trade PictureThe Continent’s Trade Picture• The Tripartite Free Trade AreaThe Tripartite Free Trade Area• Infrastructure on the Maputo Infrastructure on the Maputo

CorridorCorridor

THE AFRICAN GLOBAL TRADE PICTURE

MCLI is based very much within the transport MCLI is based very much within the transport policies of SADC, AU and NEPAD and these are policies of SADC, AU and NEPAD and these are the policies that the UN Economic Commission the policies that the UN Economic Commission is promoting for Africa to increase African is promoting for Africa to increase African trade at a faster pace and for regional trade at a faster pace and for regional integration to take place.integration to take place.


Africa’s share of world trade is not significantAfrica’s share of world trade is not significant

WORLD TRADE IN EXPORTS – 2000-2010WORLD TRADE IN EXPORTS – 2000-2010

• Account for approx. 3.6 % of world exports Account for approx. 3.6 % of world exports with annual value of $418 billion, growing with annual value of $418 billion, growing 14.4% p.a.14.4% p.a.

WORLD TRADE IN IMPORTS – 2000-2010WORLD TRADE IN IMPORTS – 2000-2010

•Account for approx. 1.8 % of world imports Account for approx. 1.8 % of world imports with annual value of $174bn, growing 7.9 % with annual value of $174bn, growing 7.9 % p.a.p.a.

INTRA AFRICAN TRADE

INTRA AFRICAN EXPORTS - 2000 to 2010INTRA AFRICAN EXPORTS - 2000 to 2010

•Are 10.4% of total African exportsAre 10.4% of total African exports•Average of $30bn with annual growth rate of Average of $30bn with annual growth rate of 14.6 %14.6 %

INTRA AFRICAN IMPORTSINTRA AFRICAN IMPORTS •Are 14.2 % of total African importsAre 14.2 % of total African imports•$29bn with annual growth of 14.4 %$29bn with annual growth of 14.4 %

AFRICA’s SHARE OF WORLD TRADE 2000-2009


• Logistics costs in Africa are the highest in the Logistics costs in Africa are the highest in the worldworld

• Building infrastructure to link countries and Building infrastructure to link countries and removing trade barriers between countries removing trade barriers between countries will reduce costs will reduce costs

• Soft infrastructure is often lacking - a Soft infrastructure is often lacking - a significant barrier to tradesignificant barrier to trade

• Institutional and legal frameworks need to be Institutional and legal frameworks need to be in place to allow the development of regional in place to allow the development of regional projects projects

WEF Press ReleaseWEF Press Release


• The governments of the WORLD can no The governments of the WORLD can no longer provide the necessary infrastructure longer provide the necessary infrastructure unaided. There HAVE to be Public Private unaided. There HAVE to be Public Private Partnerships. Partnerships. Source: OECDSource: OECD

• World Bank determined African backlogs are World Bank determined African backlogs are 50% energy; 25% transport; 15% ICT; 10% 50% energy; 25% transport; 15% ICT; 10% water and sanitation. water and sanitation.

• Success in developing projects in Africa lies Success in developing projects in Africa lies in best harnessing the benefits of both public in best harnessing the benefits of both public and private sectors in developing its and private sectors in developing its resourcesresources

Peter Copley Pr EngPeter Copley Pr Eng


Costs of transport in Southern AfricaCosts of transport in Southern Africa

•Some are surprised to learn that transport Some are surprised to learn that transport costs in South Africa are approximately equal costs in South Africa are approximately equal to the World’s average transport coststo the World’s average transport costs

•But once crossing borders come into the But once crossing borders come into the question, costs go up by a factor of between 4 question, costs go up by a factor of between 4 and 8 and 8 (Source: Dr Gael Raballand’s doctoral thesis under the auspices of the (Source: Dr Gael Raballand’s doctoral thesis under the auspices of the

World Bank)World Bank)

•Why? Why? Because we don’t think as a region.Because we don’t think as a region.

Peter Copley Pr EngPeter Copley Pr Eng

THE REST OF THE WORLD vs AFRICA

THE TRIPARTITE FREE TRADE AREA

The Tripartite Free Trade Area The Tripartite Free Trade Area

•Will be an integrated market of 26 Will be an integrated market of 26 member statesmember states•Will have a combined population of Will have a combined population of nearly 600 million people nearly 600 million people •Will have a total GDP of approximately Will have a total GDP of approximately US$1.0 trillion (more than half of US$1.0 trillion (more than half of the output of Africa’s economies)the output of Africa’s economies)

TRIPARTITE FREE TRADE AREA BY 2014

To reduce and To reduce and eventually eventually eliminate tariffs eliminate tariffs imposed on goods imposed on goods originating and originating and traded in the traded in the region. region.

The Primary The Primary Goal?Goal?

THE TRADE FIGURES

• January to December 2012 - total trade January to December 2012 - total trade between SA and Mozambique totalled between SA and Mozambique totalled R29,7 billionR29,7 billion

• Main import commodities – fuel, fruit, Main import commodities – fuel, fruit, steel tubes and pipessteel tubes and pipes

• Main export commodities – coal, Main export commodities – coal, ferrochrome, magnetite, sugar, steel, ferrochrome, magnetite, sugar, steel, maize maize

THE REGIONAL INTEGRATION IMPERATIVE

WHY IS REGIONAL INTEGRATION IMPORTANT?WHY IS REGIONAL INTEGRATION IMPORTANT?

•Contributes to political stability Contributes to political stability •Encourages good regional governance initiativesEncourages good regional governance initiatives•Reduces the risk of conflictReduces the risk of conflict•BUT! It requires strong commitment to the BUT! It requires strong commitment to the implementation of agreementsimplementation of agreements

TW Oshikoya TW Oshikoya 20102010

How are transport corridors important for How are transport corridors important for the mining sector on the corridorthe mining sector on the corridor•Transport Corridors provide industry with global Transport Corridors provide industry with global access to markets. access to markets. •The MAPUTO CORRIDOR is a true transportation The MAPUTO CORRIDOR is a true transportation corridor linking South Africa, Swaziland and corridor linking South Africa, Swaziland and southern Mozambique by 3 key elements:southern Mozambique by 3 key elements:• RoadRoad• RailRail• Ports & TerminalsPorts & Terminals

•The Maputo Corridor opens up South African The Maputo Corridor opens up South African industries to access export markets to Africa and industries to access export markets to Africa and the Far Eastthe Far EastIMPORTANCE OF TRANSPORT CORRIDORS FOR THE

MINES

DEVELOPMENTS IN THE MINING SECTOR

What are the new developments for the What are the new developments for the mining sector on the corridor?mining sector on the corridor?

•SwaziLink Coal Line SwaziLink Coal Line •Upgrading of the Port of MaputoUpgrading of the Port of Maputo•Upgrading of the Matola Coal TerminalUpgrading of the Matola Coal Terminal•Feasibility studies being considered by TFR to Feasibility studies being considered by TFR to enhance Maputo Link Corridor Operationenhance Maputo Link Corridor Operation•N4/EN4 route upgrades to assist with the N4/EN4 route upgrades to assist with the increase of heavy freight vehicles on the increase of heavy freight vehicles on the corridorcorridor

•SwaziLink Coal Line SwaziLink Coal Line •Upgrading of the Port of MaputoUpgrading of the Port of Maputo•Upgrading of the Matola Coal TerminalUpgrading of the Matola Coal Terminal•Feasibility studies being considered by TFR to Feasibility studies being considered by TFR to enhance Maputo Link Corridor Operationenhance Maputo Link Corridor Operation•N4/EN4 route upgrades to assist with the N4/EN4 route upgrades to assist with the increase of heavy freight vehicles on the increase of heavy freight vehicles on the corridorcorridor

THE MAPUTO CORRIDOR

Road – Road – 581kms 581kms

Rail – Rail – 590kms590kms

Re-established proven transportation route for regional Re-established proven transportation route for regional trade and to international markets for SA, Zimbabwe, trade and to international markets for SA, Zimbabwe,

Swaziland, Botswana Swaziland, Botswana through Mozambique.through Mozambique.

THE MAPUTO CORRIDOR

THE SADC TRANSPORT CORRIDORS

THE STRATEGIC LOCATION OF PORT MAPUTO

• Maputo is a key node in providing access Maputo is a key node in providing access to regional commoditiesto regional commodities

• Key markets are India and ChinaKey markets are India and China• Port Maputo Compliments South African Port Maputo Compliments South African

Ports in accommodating regional demand Ports in accommodating regional demand in a multi-purpose portin a multi-purpose port

INFRASTRUCTURE ON THE MAPUTO CORRIDOR

ROAD INFRASTRUCTURE:ROAD INFRASTRUCTURE:

• N4/EN4 Toll Road Concession - N4/EN4 Toll Road Concession - Build-Build-Operate-Transfer agreementOperate-Transfer agreement

• TRAC is the first cross-border PPP in TRAC is the first cross-border PPP in AfricaAfrica

• R4billion invested since 2000 with the R4billion invested since 2000 with the constructing and maintenance of the constructing and maintenance of the roadsroads

• A further R1.5billion will be invested in A further R1.5billion will be invested in the next few yearsthe next few years


ROAD INFRASTRUCTURE:ROAD INFRASTRUCTURE:

• Heavy vehicle traffic is growing at an Heavy vehicle traffic is growing at an average of between 7-10% per annumaverage of between 7-10% per annum

• Traffic between Matola and Maputo Traffic between Matola and Maputo has increased way ahead of original has increased way ahead of original projection – on a peak day Maputo projection – on a peak day Maputo Plaza averages 50-55 thousand Plaza averages 50-55 thousand vehicles per dayvehicles per day

WHY THE ANOMALY


RAIL INFRASTRUCTURE:RAIL INFRASTRUCTURE:

• $200M invested by CFM in rehabilitation $200M invested by CFM in rehabilitation of the lines, bridges, rolling stock and of the lines, bridges, rolling stock and locomotives since 2008.locomotives since 2008.

• We currently have 48 trains per week on We currently have 48 trains per week on the RG Linethe RG Line

• Current Rail Traffic on RG Line is Current Rail Traffic on RG Line is 4.5MTPA4.5MTPA

• Projected Rail Traffic on RG Line is Projected Rail Traffic on RG Line is >50MTPA>50MTPA

• The lack of rail capacity is still one of the The lack of rail capacity is still one of the constraining factors on our corridorconstraining factors on our corridor


RAIL INFRASTRUCTURE:RAIL INFRASTRUCTURE:

• R17billion to be invested by TFR and R17billion to be invested by TFR and SwaziRail for the 146km “SwaziLink” SwaziRail for the 146km “SwaziLink” railway line to Maputo.railway line to Maputo.

• This line will create an additional This line will create an additional 15MTPA to the Waterberg and Eskom 15MTPA to the Waterberg and Eskom Road to Rail Migration ProgrammeRoad to Rail Migration Programme


BORDER POST:BORDER POST:

•Heads of State agreement on the 24 hour one Heads of State agreement on the 24 hour one stop border post in 2007stop border post in 2007•Still not implemented despite the massive Still not implemented despite the massive trajectory of growthtrajectory of growth

A NEW 24 HOUR ONE STOP BORDER POST IS A NEW 24 HOUR ONE STOP BORDER POST IS ESSENTIAL ON THIS CORRIDORESSENTIAL ON THIS CORRIDOR

http://en.wikipedia.org/wiki/File:Flag_of_Mozambique.svg

http://en.wikipedia.org/wiki/File:Flag_of_South_Africa.svg

• 12 hour operation12 hour operation• Severe CongestionSevere Congestion• Substantial delaysSubstantial delays• InefficienciesInefficiencies• Added logistics Added logistics

costscosts

LEBOMBO/RESSANO GARCIA LEBOMBO/RESSANO GARCIA BORDER POSTBORDER POST

LEBOMBO BORDER POST DECEMBER 2005LEBOMBO BORDER POST DECEMBER 2005LEBOMBO BORDER POST DECEMBER 2005LEBOMBO BORDER POST DECEMBER 2005



•Freight bypass road opened 11 June 2010Freight bypass road opened 11 June 2010

•Pedestrian facility opened March 2013Pedestrian facility opened March 2013

•With the new infrastructure that has been With the new infrastructure that has been pumped into the border post we no longer have pumped into the border post we no longer have cargo, passengers and pedestrians moving cargo, passengers and pedestrians moving through the same little border postthrough the same little border post

http://en.wikipedia.org/wiki/File:Flag_of_Mozambique.svg

http://en.wikipedia.org/wiki/File:Flag_of_South_Africa.svg

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•Between 400 and 600 bulk trucks per day Between 400 and 600 bulk trucks per day through LRGthrough LRG

•Clearing time between 4 and 8 mins due to Clearing time between 4 and 8 mins due to improved EDI and SeW efficienciesimproved EDI and SeW efficiencies

•Some C&F agents have it down to between 2 and Some C&F agents have it down to between 2 and 3 mins3 mins

•With the new systems at the border post we With the new systems at the border post we have been experiencing a bit of delays and have been experiencing a bit of delays and congestion from time to time, but this problem congestion from time to time, but this problem leans more toward a new system and people leans more toward a new system and people having to get used to the new system and new having to get used to the new system and new forms.forms.



•Compliance an extremely important issue when Compliance an extremely important issue when it comes to electronic systems and I think our it comes to electronic systems and I think our cargo owners and movers are still trying to get cargo owners and movers are still trying to get into that flow.into that flow.

•Time and motion study by one MCLI member 5½ Time and motion study by one MCLI member 5½ hours from RG to port, offload and back to RGhours from RG to port, offload and back to RG

Lebombo/Ressano Garcia Border Lebombo/Ressano Garcia Border PostPost

1998– 29 000 tons through border post - 1998– 29 000 tons through border post - 2007 – 2.25million tons 2007 – 2.25million tons

In the 2 years between 2005 and 2007In the 2 years between 2005 and 2007•43% increase in passengers43% increase in passengers•73% increase in cars and busses 73% increase in cars and busses •65% increase in the total number of vehicles that crossed 65% increase in the total number of vehicles that crossed the borderthe border•1,1 million passengers in Dec 2007 alone1,1 million passengers in Dec 2007 alone•Design capacity maximum 8000 per dayDesign capacity maximum 8000 per day

FREIGHT BYPASS ROAD OPENED 11 JUNE 2010FREIGHT BYPASS ROAD OPENED 11 JUNE 2010

PORT MAPUTO

THE MAPUTO CORRIDOR

THE PORT MASTER PLAN

• $300 million invested in Port Maputo since 2002$300 million invested in Port Maputo since 2002

• Port Master plan envisages a further capital Port Master plan envisages a further capital investment in the port of USD $1,2 billion in the next investment in the port of USD $1,2 billion in the next 20 years20 years

• Concession extended to 2033 with an option to Concession extended to 2033 with an option to extend for a further 10 years to 2043extend for a further 10 years to 2043

• Increased throughput from current 17 Million tons to Increased throughput from current 17 Million tons to 48 million tons48 million tons

• Ongoing Channel dredging programme to Ongoing Channel dredging programme to accommodate Panamax and post Panamax vesselsaccommodate Panamax and post Panamax vessels

• $300 million invested in Port Maputo since 2002$300 million invested in Port Maputo since 2002

• Port Master plan envisages a further capital Port Master plan envisages a further capital investment in the port of USD $1,2 billion in the next investment in the port of USD $1,2 billion in the next 20 years20 years

• Concession extended to 2033 with an option to Concession extended to 2033 with an option to extend for a further 10 years to 2043extend for a further 10 years to 2043

• Increased throughput from current 17 Million tons to Increased throughput from current 17 Million tons to 48 million tons48 million tons

• Ongoing Channel dredging programme to Ongoing Channel dredging programme to accommodate Panamax and post Panamax vesselsaccommodate Panamax and post Panamax vessels

ROADMAP TO DELIVER THE PORT MASTER PLAN


Matola Coal Terminal:Matola Coal Terminal:

•Current TCM Terminal Capacity is 6MT/annumCurrent TCM Terminal Capacity is 6MT/annum

Phase 3.5 ExpansionPhase 3.5 Expansion

•Increase annual terminal capacity to 7.3MTIncrease annual terminal capacity to 7.3MT• Capacity for 5.2MT/annum for coalCapacity for 5.2MT/annum for coal• Capacity for 2.1MT/annum for magnetiteCapacity for 2.1MT/annum for magnetite

•Phase 3.5 due for completion in September 2013Phase 3.5 due for completion in September 2013



Phase 4 ExpansionPhase 4 Expansion

•TCM Phase 4 TCM Phase 4 Coal export terminal to be Coal export terminal to be constructed adjacent and in isolation to existing constructed adjacent and in isolation to existing terminalterminal

•Phase 4A requirements:Phase 4A requirements:• Terminal throughput of 10MTPA with five Terminal throughput of 10MTPA with five

grades of Coalgrades of Coal• Additional berth for Panamax vesselsAdditional berth for Panamax vessels• Channel dredge to accommodate fully laden Channel dredge to accommodate fully laden

Panamax vesselsPanamax vessels



Phase 4 ExpansionPhase 4 Expansion

•Phase 4B requirements:Phase 4B requirements:

• Terminal reaches capacity of 20MTPA with Terminal reaches capacity of 20MTPA with ten grades of coalten grades of coal

• Additional berth for Panamax vesselsAdditional berth for Panamax vessels• Existing TCM will be converted to Magnetite Existing TCM will be converted to Magnetite

and Iron Ore terminal with a capacity of 10 and Iron Ore terminal with a capacity of 10 to 12MTPAto 12MTPA

THE MAPUTO CORRIDOR

Corridors need Corridors need √ √ good infrastructure, good infrastructure, √ √ good systems and procedures, good systems and procedures, √ √ good informationgood information√ √ institutional mechanism to be the institutional mechanism to be the facilitator and interfacefacilitator and interface√ √ cooperation between the public and cooperation between the public and private sector to ensure sustainable private sector to ensure sustainable success.success.

THE MAPUTO CORRIDOR TICKS ALL THESE THE MAPUTO CORRIDOR TICKS ALL THESE BOXES BOXES

THE LONG TERM VISION IS CRUCIAL

A LONG TERM VISION AND STRATEGYA LONG TERM VISION AND STRATEGY

A shift in the mind set of politicians who tend to A shift in the mind set of politicians who tend to favour sovereign issues over regional priorities favour sovereign issues over regional priorities and who tend to plan according to election and who tend to plan according to election cycles. This is out of alignment with the long-cycles. This is out of alignment with the long-term view required to drive a slow process such term view required to drive a slow process such as regional integration and to develop crucial as regional integration and to develop crucial infrastructure that often requires planning to be infrastructure that often requires planning to be done on a 10- to 20-year scale. done on a 10- to 20-year scale.

WEF Press ReleaseWEF Press Release

MAPUTO CORRIDOR

In Conclusion:In Conclusion:

•Efficient corridors can have a significant Efficient corridors can have a significant impact on the competitiveness of local impact on the competitiveness of local business and regional economiesbusiness and regional economies•Can provide a measure of predictability, Can provide a measure of predictability, reliability and efficiency crucial to trade and reliability and efficiency crucial to trade and logistics supply chains, logistics supply chains, •Key to providing access to markets. Key to providing access to markets. •Ports need to look at the bigger picture, and Ports need to look at the bigger picture, and see themselves as integral to the supply see themselves as integral to the supply chain and not just the beginning or end chain and not just the beginning or end resultsresults

THANK YOU

+27 13 755 +27 13 755 60256025

+27 76 514 +27 76 514 02870287

[email protected]@mcli.co.zawww.mcli.co.zawww.mcli.co.za

understanding the issue of infrastructure servicing the logistics supply chain in relation to...

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