Africa PORTS & SHIPS maritime news 25-26 October 2020
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TODAY’S BULLETIN OF MARITIME NEWS
These news reports are updated on an ongoing basis. Check back regularly for the latest news as it develops – where necessary refresh your page at www.africaports.co.za
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- WHARF TALK: Durban Port Bulletin News
- WHARF TALK: Durban Volume & Vessel Call Performance
- WHARF TALK: Transnet Annual Report 2019-2020 (1)
- WHARF TALK: Transnet Annual Report 2019-2020 (2)
- WHARF TALK: Transnet Annual Report 2019-2020 (3)
- WHARF TALK: Transnet Annual Report 2019-2020 (4)
- WHARF TALK: Transnet Annual Report 2019-2020 (5)
- IMO addresses challenges faced by seafarers
- IMO fails to implement its own greenhouse reduction plan
EARLIER NEWS CAN BE FOUND AT NEWS CATEGORIES…….
The Sunday masthead is of Durban’s Island View Terminal, on Monday it will be Durban’s Maydon Wharf
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Marie S Picture: Keith Betts
The oil and chemical products tanker MARIE S (IMO 9702223) is seen here approaching the Durban port entrance channel, with the harbour pilot boat already alongside in anticipation of the pilot leaving the vessel once safely in the channel and facing the open sea. Marie S is a US-owned and managed ship, registered to Sterling Ocean Tanker of Wilton CT. Built in 2016 the 49,999-dwt Marie S is 183 metres in length and 32m wide, and has a 12m draught. Picture: Keith Betts
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WHARF TALK: Durban Port Bulletin News
Moshe Motlohi, Transnet national Ports Authority General Manager reports:
As the countries COVID – 19 recovery rate increases to 90.4%, the Department of Health urges people to remain safe and adhere to the regulations as the country is still under lockdown level one.
The Port of Durban saw this week being dominated by the pollution story that resulted from an act of criminality on the crude oil pipeline in the Bellair area on Monday, 19 October 2020. The pipeline was operational when the tampering incident was detected and saw Transnet activate its emergency response plan and team, whose focus was on limiting the extent of the spillage and recovering product.
We thank our sister division – Transnet Pipelines, environmental activists, the city and the provincial government’s swift intervention in managing what potentially could have had an even worse environmental impact.
Also in the past week, the Maydon Wharf Decongestion work stream has been composed and is scheduled to have the first meeting on Monday, 26 October 2020 which will include Maydon Wharf Precinct users.
We further had the privilege of briefing the KZN Premier, eThekwini Executive Mayor, MEC for Transport in KZN, Minister of Public Enterprise, Transnet SOC Ltd Chairman and the President of the Republic of South Africa about the progress being made and areas that need improvement.
The key focus for the coming week is to have the first work stream meeting with the Maydon Wharf Precinct users. I remain optimistic about the discussions and interventions that will be tabled in this engagement.
Lastly, the Port of Durban remains strict in ensuring that visitors and employees are safe and have the necessary equipment to keep them protected during this pandemic. We urge employees to be their brother’s keepers and to keep a safe social distance.
source: TNPA, Durban
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WHARF TALK: Durban Volume & Vessel Call Performance
Containers: Above budget
Marginal improvement in volumes for the reporting week can be attributed to the positive performance of import and transshipment cargo. Imports were above budget by 3% due to an increased demand for goods from China for the year-end peak season. Transshipment cargo has consistently performed well and was above budget by 64%.
Automotive : Below budget
Imports have not improved since the previous reporting handling 233 units less in week 30 at a mere 1276 units. Even with movements to alert level 2 and 1 and with decreased interest rates, sales of new vehicles have still registered lower levels in comparison with the same period last year. Exports also registered lower throughput in this week versus the past reporting at a total of 3353 units. We will see this pattern possibly continuing into the 1st quarter of 2021 or even further on based on how COVID-19 is managed going forward.
Dry Bulk: Above budget
Manganese ore exports topped the list in terms of throughput for the week registering a total of 153 591 tons loaded for the period with just more than 101 000 tons of chrome ore handled. In terms of agriculture throughput, wheat imports also performed extremely well as a total of 102 888 tons was landed. Fertiliser, sugar and maize performed marginally well in the week.
Break bulk: Below budget
This sector was under budget in this reporting week, as only very low volumes of steel and project cargo were handled.
Liquid Bulk: Below budget
Refined petroleum was the main contributor for the negative variance by achieving 26% below budget, this was due to low export volumes handled as result of emerging economies not fully opened from lockdown. Crude oil and chemicals achieved 22% and 18% respectively.
source: TNPA, Durban
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WHARF TALK Transnet Annual Report 2019-2020 (1)
Solid results despite challenges
Transnet has delivered solid results in the year ending 31 March 2020, despite a challenging operational environment.
Performance highlights
* Revenue increased by 1,3% to R75.1 billion
* Operating costs increased by 1,9% to R41,1 billion, R4,7 billion below planned costs
* EBITDA increased by 0,7% to R34,0 billion
* Net profit for the year decreased by 34,9% to R3,9 billion
* Cash generated from operations increased by 2,1% to R35, 9 billion
* Capital investment of R18,6 billion represents a 3,5% increase from the prior year
* DIFR performance of 0,73, the tenth consecutive year that this ratio is below 0,75 (the
global benchmark is 1,0)
* Gearing of 47,6% and cash interest cover at 2,9 times, both within loan covenant
requirements
Revenue and volume performance
Transnet reported an increase of 1,3% to R75,1 billion in revenue, supported by the weighted
average tariff increase of 2,9%. The revenue increase was offset by a decline of 1,3% in rail
freight volumes to 212,4 million tons, and a volume decrease of 2,4% in port container throughput to 4,4 million twenty-foot equivalent units (TEUs)), compared to the prior year.
The decline in rail freight volumes was mainly due to deteriorating economic conditions and low demand in many market segments, particularly in the construction and manufacturing industries.
Rail volumes were further affected by poor operational performance because of power supply challenges and poor rail network conditions on certain key corridors due to maintenance backlogs, increased security incidents and adverse weather patterns.
The container throughput performance was impacted by operational challenges owing to ageing equipment in a number of port terminals across the port network as well as inclement weather.
Transnet Port Terminals (TPT) has invested R2,5 billion in the period under review for the
acquisition and maintenance of port equipment. It is anticipated that that the deployment of the new port equipment will result in operational improvements.
Transnet’s net operating costs increased by 1,9% to R41,1 billion, with personnel and energy
costs increasing by 1,7% and 4,8% respectively. Numerous cost-optimisation initiatives
implemented throughout the company aided cost-containment, resulting in a R4,7 billion saving against planned costs.
These initiatives included rationalising overtime, reducing professional and consulting fees; rolling out programmes to measure the execution of condition-assessment versus time-based maintenance; and limiting discretionary costs relating to travel, printing, stationery and telecommunications.
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WHARF TALK: Transnet Annual Report 2019-2020 (2)
Financial position and funding perspective
As at 31 March 2020, the company’s cash-generated from operations increased by 2,1% to R35,9 billion. A well-defined funding strategy enabled Transnet to raise funding of R10,4 billion (excluding the impact of lease liabilities and deferred interest) through the issuance of bonds and commercial paper (under the Domestic Medium-Term Note (DMTN) programme), and the execution of bilateral loans without the provision of Government guarantees. The funding needs until the end of calendar year 2021 are largely catered for.
Transnet’s gearing ratio increased to 47,6%, but is still within Transnet’s target range of less than 50% and within the triggers in loan covenants. Transnet recorded R4,3 billion in total cash and cash equivalents at the end of the financial year and a cash interest cover of 2,9 times which is within loan covenant requirements.
Capital investment
Capital investment for 2019/20 increased by 3,5% to R18,6 billion. A total of R3,6 billion was spent on capacity expansion, while R15,0 billion was spent to maintain capacity. Transnet Freight Rail and Transnet Engineering continued their build programme, with a total of 400 wagons manufactured and delivered, representing an investment of R528 million for the financial year.
Other infrastructure investment highlights for the financial year include:
* R3,0 billion invested in rail infrastructure
* R6,8 billion invested to maintain the condition of rolling stock
* R501 million invested in the wagon fleet renewal and modernisation programme
* R788 million for the construction of the new tippler in Saldanha and all the related bulk
electric power supply
* R489 million invested in the manganese project mainly for the acquisition of land from
Coega Developmental Corporation
* R303 million invested towards the upgrade of yards, lines and electrical equipment under
the coal line investment programmes
* R187 million invested in the roads, port entrance and other services for the Tank farm in
the Port of Ngqura
* Approximately R2,5 billion invested in the acquisition and maintenance of port equipment
and infrastructure, including cranes, helicopters, tugs, dredgers and straddle carries; and
* A R333 million investment in the pipeline networks.
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WHARF TALK: Transnet Annual Report 2019-2020 (3)
Group Executive Leadership
The 2019/20 financial year saw a number of leadership changes at Transnet. The organisation is starting to stabilise following key leadership appointments, driven by the Board of Directors and the Shareholder Minister.
These appointees bring an impressive and diverse range of skills, coupled with a wealth of experience and knowledge to help steer Transnet’s business operations.
Regulatory context and collaboration with law enforcement agencies
Transnet as a State-Owned Company (SOC) is governed by the Companies Act, the standard regulations that underpin governance and compliance for all South African businesses, as well as a distinctive set of regulations – unique to SOC – foremost being the Public Finance Management Act, 1999 (PFMA) of South Africa.
At its core, the PFMA drives fair and equitable dealings between South African public institutions and their stakeholders, which manifests as a broad directive for transparency, accountability and sound financial management.
Transnet has intensified its collaboration with law enforcement agencies and relevant regulators to expedite and bring to a close its review and set aside applications in respect of transactions emanating from State Capture, these include the 1 064 locomotive transaction. In addition, certain property transactions have also been referred to the Special Investigations Unit (SIU) for further investigation.
In pursuit of an ethical culture, measures to ensure effective consequence management, recovery of losses and credible procurement and transaction platforms are being introduced. A total of 408 members of the senior leadership team and the board underwent a lifestyle audit. We had 96% compliance, and 31,8% staff have material concerns that are currently under investigation.
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WHARF TALK: Transnet Annual Report 2019-2020 (4)
Irregular expenditure
In the 2019/20 financial year, Transnet incurred irregular expenditure of R9,965 billion. The legacy of non-compliant procurement events continues to have a lingering effect on the business.
In particular, past procurement practices that were not in accordance with the Preferential Procurement Framework, dating back as far as the 2011/12 financial year, resulted in a significant increase in reported irregular expenditure. In prior years there was exemption to certain clauses of the PPPFA on all Schedule 2 and Schedule 3B enterprises. The cumulative irregular expenditure including the 2019/20 year amounts to R114,3 billion, confirming the challenges facing the company to arrest the PFMA non-compliance.
Efforts to improve PFMA compliance resulted in 4% of the total Irregular expenditure of R9,965 billion arising from contracts entered into in the current financial year, a significant improvement.
The process to identify and accurately report all irregular expenditure is largely manual in nature and continues to result in reporting inaccuracies. The resultant concern relating to the completeness of the reported irregular expenditure has resulted in the external auditors issuing a qualified opinion for the 2019/20 year.
It is important to emphasise that the financial statements are compliant with the International Financial Reporting Standards (IFRS). The qualification has mainly been as a result of noncompliance with the PFMA in the supply chain management processes and Transnet internal processes. The qualification has no bearing on the financial strength and sustainability of Transnet, as depicted in the annual financial statements.
Immediate steps taken
The responsible stewardship of public funds, full compliance with the PFMA and other legislative instruments, as well as holding management accountable for the implementation of effective internal controls and managing fraud and compliance risks are a key focus area of the new executive leadership.
In order to clear up all outstanding matters raised by the auditors relating to completeness and accuracy of information, our governance structures, integrated assurance and lines of defence are being strengthened.
Immediate corrective actions to address the quantum of irregular expenditure entail the review of previous remedial plans to close gaps and address the backlog in its implementation, as well as identifying sustainable solutions to address present and historic challenges.
This includes the complete overhaul of Transnet’s procurement and finance functions.
The procurement function – responsible for the bulk of the irregular expenditure incurred – has been separated from finance, and is led by the Chief Procurement Officer, reporting to the Chief Strategy and Planning Officer. This has the advantage of ensuring better alignment between planning and procurement, improving efficiency in infrastructure delivery, amongst others.
Its reorganisation has commenced, and aims to address the shortcomings and challenges that led to PFMA non-compliance. This will allow for more accurate demand forecasting, and also ensure that Transnet’s sizeable procurement is delivered at the lowest cost, while stimulating economic growth – particularly amongst small and medium enterprises.
A review of the finance structure is underway. This function must undergo a thorough transformation if we are to ensure the financial health of the organisation. As a start, the appointment of a loss control function – reporting to the Group CFO – has been finalised, with the appointee starting on 1 November 2020.
The function will specifically deal with PFMA compliance, reporting as well as improving Transnet’s internal control environment. In addition, the loss control function will collect information on root causes that led to PFMA transgressions, employee(s) responsible for the irregular expenditure, losses suffered, and any breakdown in internal controls. It is from this base that we will be able to rebuild Transnet’s finance function into a modern unit.
In previous years Transnet’s internal audit function was fully outsourced. The organisation has now moved to implement a hybrid model, as part of strengthening the levels of assurance. In addition, from the financial year 2020/21, Transnet will be audited by the Auditor-General of South Africa, a move welcomed by the Company.
We are confident that the measures being taken across all governance structures will substantially improve compliance in general, and in particular with the PFMA.
We envisage that this process of reviewing and strengthening our governance and assurance structures will take us a while.
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WHARF TALK: Transnet Annual Report 2019-2020 (5)
Corporate Social Investment
Transnet’s global flagship Phelophepa benefitted 105,565 patients through the clinics on the trains, while 357,323 individuals received services through targeted community outreach health
campaigns.
Safety performance
Transnet’s leadership has heightened its oversight of safe operational performance through increased operational site-visits and safety awareness campaigns. It is regrettable that six employees were fatally injured during the 2019/2020 financial year. Unfortunately, 109 members of the public lost their lives in and around Transnet’s operations during the year.
These deaths were largely the result of railway crossing accidents, and we continue to look for ways to minimise incidents of this nature.
Outlook
The Company has performed below its potential in recent years, which has constrained its financial position. This is, amongst others, as a result of insufficient maintenance of ageing infrastructure and sluggish domestic and global economic growth.
The global economy is expected to remain subdued, with the impact of the Covid-19 pandemic resulting in slowing demand.
Economic forecasts indicate that the local economy will shrink by between 8.2% to 11.5% in the 2020 year, while the International Monetary Fund (IMF) forecasts that the global economy will shrink by at least 4.5% in the same period .
Transnet faces significant challenges going forward, however, with a new strategic outlook, and a renewed emphasis on the wellbeing of People, Safety, Customer Service, Asset Utilisation, and Cost Control, the company is well positioned to become an agile and trustworthy freight transport and logistics partner to all our customers and stakeholders, and thereby contribute to the restoration of the South African economy.
Annual Results source: Transnet
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IMO ADDRESSES CHALLENGES FACED BY SEACFARERS
Regional webinars launched: An African dimension
On 23 October IMO reported that it had held the first in a series of regional webinars for Member States on the challenges faced by seafarers during the ongoing COVID-19 pandemic.
This event on 21 October was aimed at Eastern and Southern Africa and covered pressing issues including: crew change, repatriation, medical care, emotional and mental health support.
The objective of the series is to identify best practices with a view to alleviating the current crisis affecting seafarers and the shipping industry.
We still hear of the some 400,000 seafarers stranded on ships after contracts have been extended or have expired, with similar numbers waiting to join ships.
In his opening remarks at the event, IMO Secretary-General Kitack Lim set the tone for the event, saying: “We all need to work together. Action is needed – now! We all depend on seafarers. They should not be the collateral victims in this pandemic. Seafarers deliver for us – and now we need to deliver for them.”
These remarks were delivered on the Secretary-General’s behalf by Heike Deggim, Director, IMO Maritime Safety Division.
Nine speakers and 85 participants took part in the event from across maritime administrations, governments, control agencies, the industry, seafarers’ charities and UN partners.
Further information about the webinar, including a list of speakers and video recordings of the webinar, can be found by CLICKING HERE
The next webinar in the series, for Asia and the Pacific region, will be held on 4-5 November.
Readers may wish to follow IMO on TWITTER
For updates see also FACEBOOK
and INSTAGRAM
Edited by Paul Ridgway
London
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IMO FAILS TO IMPLEMENT ITS OWN GREENHOUSE GAS REDUCTION PLAN
Hopes for bold action to reduce the global shipping sector’s huge greenhouse gas emissions were dashed this week when a ‘business as usual’ draft text was approved.
In pursuing this outcome, many countries have actively worked to undermine the Initial Strategy goals of the International Maritime Organization (IMO), and have knowingly broken their Paris Agreement commitment to pursue a 1.5/2ºC compatible emissions reduction.
The impact of the decision at last week’s IMO Intersessional working Group on Reducing Greenhouse Gas Emissions from Ships will not cap, let alone reduce, shipping emissions this decade.
The draft text will now be forwarded to the IMO’s Marine Environment Protection Committee (MEPC), scheduled for 16-20 November, where Parties are expected to adopt the recommendations from the working group.
“We urge all countries to reconsider their support for the J/5 decision ahead of MEPC75 this November 16-20, and reject it, unless it can be fundamentally strengthened,” said John Maggs, president of the Clean Shipping Coalition, which has observer status at the talks.
Faig Abbasov, shipping programme director at Transport & Environment (T&E), said that governments have ridden roughshod over the Paris Agreement by agreeing a measure that will see ship emissions grow for decades to come.
“The UN maritime agency again showed the world it can only deliver cosmetic changes. EU countries should work through the European Green Deal to fill the gap left by the IMO,” Abbasov said.
The J/5 proposal waters down the already weak compromise proposal that the meeting started with on Monday in three important ways:
No carbon intensity target, and a weakened Energy Efficiency of Existing Ships Index (EEXI):
* The proposal still contains no carbon intensity target, and somehow, reduces the stringency of the required EEXI for many ship types. (The EEXI requires ships to reduce their engine power to make them more efficient.) This means the proposal would, at best, now curb GHG by only 0.65% to 1.3% by 2030 compared to business as usual pathway without IMO regulation. Business-as-usual pathway is +15% above the industry’s 2008 baseline.
Loopholes:
* Non-compliant ships will be able to continue underperforming for three consecutive years before they even have to file a plan to make improvements, and can easily game underperformance indefinitely by ensuring one compliant year every three years.
No actual enforcement:
* All clauses that would create consequences for non-compliance – such as increased EEXI stringency or ultimately revoking a ship’s statement of compliance – have been removed.
The weaknesses of the “J/5” text violate the initial IMO GHG Strategy in three key ways. It will fail to reduce emissions before 2023, will not peak emissions as soon as possible, and will not set ship CO2 emissions on a pathway consistent with the Paris Agreement goals.
“We cannot tell the public that progress is being made when their representatives come to IMO just to thwart CO2 regulation on the industry to protect short-term profits, rather than protecting their own citizens from the escalating impacts of the climate crisis,” said T&E’s Abbasov.
The UNFCCC, in good faith, asked the IMO in 1997 to address the issue of GHG emission from the global shipping sector, Abbasov said. “Let down by the IMO, the Paris Agreement also mandated countries to address shipping at the national and regional levels as part of their economy-wide national climate plans. All states must now look at this option in a more favourable light.”
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GENERAL NEWS REPORTS – UPDATED THROUGH THE DAY
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EXPECTED SHIP ARRIVALS and SHIPS IN PORT
Port Louis – Indian Ocean gateway port
Ports & Ships publishes regularly updated SHIP MOVEMENT reports including ETAs for ports extending from West Africa to South Africa to East Africa and including Port Louis in Mauritius.
In the case of South Africa’s container ports of Durban, Ngqura, Ports Elizabeth and Cape Town links to container Stack Dates are also available.
You can access this information, including the list of ports covered, by going HERE remember to use your BACKSPACE to return to this page.
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CRUISE NEWS AND NAVAL ACTIVITIES
QM2 in Cape Town. Picture by Ian Shiffman
We publish news about the cruise industry here in the general news section.
Naval News
Similarly you can read our regular Naval News reports and stories here in the general news section.
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THOUGHT FOR THE WEEK
Friendship is always a sweet responsibility; never an opportunity
– Kahlil Gibran
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