Cape Town Port: Engagement with Stakeholders

Meeting report

The Chairperson welcomed everyone in attendance. She explained that the Committee received a letter from the Municipality of Cape Town, highlighting complaints from various stakeholders about the inefficiencies at the Cape Town Port. The purpose of the meeting was to address the concerns that were raised.

Briefing by the Citrus Growers Association (CGA)

Mr Justin Chadwick, Chief Executive Officer (CEO): Citrus Growers Association, said that the citrus industry relies heavily on the Cape Town, Durban, Ngqura and Gqeberha Ports. Any challenges or inefficiencies in one of the ports, has an impact on the movement of supplies in all the other ports.

In 2021, Southern Africa produced over 163 million cartons of citrus fruit. The citrus season is 160 days long, during which a million cartons come in daily. The industry is concerned with inefficiencies at the Port due to the large magnitude of the supply chain. The citrus industry is also growing significantly, with a 9% increase in supply compared to the previous year. Long-term projections show that supplies will increase by 10 million cartons per annum, to just over 200 million cartons in five years. It is estimated that in  ten years’ time, supply will be over 250 million cartons per season.  CGA would like to work with the relevant stakeholders to plan ahead and ensure that the ports can operate efficiently and have the capacity for the increasing volume of produce.

Given the significant growth, a key focus area is gaining new markets, to ensure an increase in consumers for the growing supply. CGA has recently gained access to the Philippines market and is working to gain better access to the market in India, Vietnam, and wider access to Japan and the United States of America (USA). There is currently a revision of the lemon protocol with China. 

Mr Mitchell Brooke, Logistics Development Manager, Citrus Growers Association, said the CGA foresees challenges across the logistics chain, due to the infrastructure inefficiencies at the ports. There has been significant infrastructure investment in the Northern regions into the Eastern and Western Capes however logistic challenges limit the possibility of upfront investments. He elaborated on the citrus production export forecast in the next five years, which shows that the increase in supplies in the Western and Northern Cape regions will be about 1.5 to 2 million cartons per week. The existing infrastructure in these regions will be sufficient to handle the increase in capacity.  The biggest challenge for the citrus exports is the projected shortage in reefer containers. It is estimated that the citrus industry will use about 92 000 containers this year. In the next five years, it is estimated that 6 000 containers a year will need to be brought into SA just for the citrus season.

The logistic constraints at the Cape Town Container Terminal (CTCT) and Multi Purpose Terminal (MPT) include a backlog of equipment procurement & maintenance, frequent landside bottlenecks – such as delayed truck movement, and frequent delays in vessel operations due to wind and fog. The productivity levels of the CTCT have gone down and are not up to international standard. There is also the issue of vessels bypassing Cape Town, which compromises market access and the country’s competitive advantage. Most vessels are called into three or more of the port vessels at a time. If there is a breakdown in any one of the port terminals, it has a large impact on the vessels passing through the system. When the port does not work efficiently, vessels cannot pass by timeously. The speed at which vessels rotate and move through ports is an indicator of their efficiency in supplying produce to major export markets. Vessel delays compromise foreign market confidence in the efficiency of South Africa’s supplies. If market confidence is lost, countries can choose to obtain produce from another country. Compared to the last year, there has been an improvement in the movement of containers and vessels in Cape Town. However, there have been cases of vessels staying in the Port for an exceptionally long time due to delays. The MSE vessel, which transports fruit to the North American market, has faced several challenges since last year. This is due to delays at the Durban and Cape Town Ports, as a result of poorly performing equipment that breaks down frequently.  The condition of equipment at the CTCT and MPT is concerning, especially the mobile cranes that need to be replaced.

Lastly, Mr Brooke told Members that the Cool Eagle came to Cape Town last year. It is the largest refer vessel in the world and has the capacity to contain 1.2 million cartons of citrus. The South African market should aim to attract more of these vessels in the future.  

(See presentation attached for further details)

Discussion

Mr A Van der Westhuizen (DA) asked if there are risks of produce contamination, in addition to the logistic risks regarding containers. Has the issue of block spots been addressed? 

Mr Chadwick replied that there is little chance of contamination occurring within the containers, due to the extensive inspections that take place before loading produce in the containers. There are no citrus black spots in the Western and Northern Cape. It is still an issue in other areas though, especially in the European Union (EU). The frequency of citrus black spots has decreased significantly overtime and majority of the produce is compliant with EU requirements. Scientists have confirmed that citrus black spots are not passed on from the citrus itself, but from organisms like leaves. The CGA has requested Government to lodge a dispute with the World Trade Organisation (WTO) on the matter.

Currently, the biggest pest and contamination issue is False Coddling Moth (FCM). However, the citrus industry has implemented an FCM Managing System (FMS) that has resulted in the number of cases decreasing over the years. Another contamination threat is citrus/Asian greening, currently in the North. CGA is monitoring this and has an Asian Greening Action Committee with the Department of Agriculture, to prepare an action plan.

The Chairperson asked what the average amount of cartons that are exported daily during citrus season is.  What is the average amount of cartons exported when there are delays? Are the 6 000 containers that will be required per year an additional amount or a total amount per year?  Which markets have CGA tried to gain access to but has struggled to reach due to port inefficiencies? Which weeks in the year are the most important for the citrus industry’s export activities? How quickly would the CGA like the vessels to move? What is an ideal transport timeframe? What outcomes does the CGA need from the Committee, to ensure exports occur as efficiently as possible?

Mr Chadwick explained that the key months are mid-May to mid-August. This is being extended outwards due to the growth of late mandarins.

Mr Brooke replied that 6 000 additional containers will be required per annum, over the years. 82 000 containers were used last year, and a projected 90 000 containers will be needed this year. The vessel movement in the Europe service saw significant delays early this year. It took an excess of 30 days for a container packed in Durban to leave Cape Town (CT), and a further 16-18 days to enter the European market. In total, it took 46 days for fruit to go from Durban to the European market, when it should have taken 19-20 days. Most containers can maintain the quality of citrus produce however some citrus varieties cannot afford to have such a delay. There should at least be a 25% increase in productivity levels across the terminals. The current average gross crane moves per hour (GMPh) that is below 20 is insufficient and should at least be 25 GMPh. South Africa has achieved higher and needs to go back to doing this.

Mr Glen Steyn, Business Economist, Western Cape Department of Economic Development and Tourism (DEDT), pointed out that there is more cargo globally, which exceeds the number of vessels available. This has resulted in shipping lines charging higher rates and going to more preferable routes. The South African market can only compete in such an environment if it improves its efficiency.  

Ms Nqobile Ndlovu, Transnet Acting Executive Manager, Cape Town Terminal, asked if the CGA can map out the entire logistics chain, from the farms, to packaging to trucks to arriving at the ports and ultimately onto the vessels. She proposed having alignment meetings to better understand and service the value chain. Does the CGA require the ports to change the operating times to 24 hours?

Mr Brooke explained that when the produce is ready, it is harvested and collected from farms and transported to pack houses. Thereafter, it is checked for sizing requirements, pests and contamination and then packed into cartons. The cartons are then transported to ports on trucks, and then loaded onto the containers. The containers are then transported to the container terminals for exports and can wait there for about 5-6 days. Ideally, the dwell time of the containers should be less than five days. Lastly, the containers are then loaded onto the vessels and shipped to the various markets.  

Mr Sibuthe Mdala, Transnet Executive Manager: Rail Operations, asked if any value is created when bringing containers a few hours before vessels set sail? If there is, what is the value? What would the impact on the industry be if containers are brought in earlier?

Mr Brooke said that the supply of last-minute containers to terminals can add value for products like table grapes, which have a lower shelf-life than citrus products. However, this is detrimental to productivity as it disrupts the stacking integrity of containers. Terminals plan the stacking order of containers for the efficient operation of ships. There needs to a cut-off point for last minute containers in order to sufficiently plan. Disruptions to planning compromises vessel movement and supply. The relevant industries need to engage on this matter and reach a reasonable balance and compromise.

Ms M Maseko (DA) asked how often do Transnet and the CGA engage with each other to establish their respective needs in advance. Does Transnet have a platform that makes it easier for industries to communicate service needs ahead of time?

Mr Chadwick replied that there has been good communication with Transnet, consisting of daily port operational meetings and engagement at the Chief Executive level as well.

Mr Brooke said that during the citrus season, there is a forum with the Western Cape industry and Transnet to discuss projections and operational challenges in the citrus season. During the season, the citrus integration meeting occurs every Wednesday, where Transnet’s terminal managers and the citrus export facilities discuss what will happen with exports and how the terminals can accommodate this. He added that direct communication, like Whatsapp groups, have been highly effective and would like to see more simplistic solutions like this being rolled out across commodities.

Ms Vazi said that Transnet is in the process of developing a multiple systems platform called ‘Covid Connect’, which identifies visibility in the supply chains. It enables all relevant participants in the supply chain to share information, and help Transnet improve its planning.

Briefing by Transnet National Ports Authority
Ms Wandisa Vazi, Transnet Managing Executive: Cape Terminals, highlighted that improving the efficiency of the ports requires the involvement of more stakeholders in the value chain, in order to balance the increase in shipping containers with improving productivity. Transnet Port Terminals (TPT) is struggling to find a balance between exporting more containers or increasing productivity. There needs to be coordinated planning between the shipping lines, harbour carriers, depots, the Perishable Produce Export Certification Agency (PPECB), CGA and Transnet. All members of the value chain need to establish performance objectives as team South Africa, in order to maximise productivity. During each season, all members need to be clear on the Key Performance Indicators (KPIs). Shipping lines have been bypassing South African terminals because other terminals are more profitable. As a result, the vessels aim to spend as little time as possible in South Africa. The aim is to make sure key ports are not bypassed. Productivity will not improve when shipping containers arrive while the vessel is working. Loading containers onto the vessel up until last minute will not maximize the Gross Crane Hours (GCH). There needs to be a balance of efficiently loading and dispatching for improved productivity. A gemba walk at the container terminals has been arranged for the near future, to look into and address such challenges.

The Western Cape Terminals were severely impacted by COVID-19 last year. There was a significant decrease in vessels moving out. To ensure it does not go through this again, TPT is working on a three-berth operation system to better manage another wave of COVID.   

Ms Vazi presented the Cape Town Container Terminal (CTCT) operational overview. All ship to shore cranes are operational. However, not all the available Rubber Tyred Gantries (RTGs), internal movement vehicles, trailers, empty container handlers and straddle carriers are operational. A refurbishment program for equipment is underway. CTCT has capacity for 1.4 million Twenty-foot Equivalent Unit (TEU) containers, which is sufficient for both the citrus and table grapes season peaks. CTCT is handling 32% more citrus produce than what was projected. Recently, the terminal has achieved a 35-minute truck turnaround time. On good weather days, there is no truck congestion and CTCT plans to implement a truck booking system in September.

She highlighted CTCT’s operational turnaround plans which include, increasing productivity from 18 to 25 GCH, reducing export container dwell time, reducing the average truck turnaround time from 45 to 38 mins, and maintaining a three-berth operation. She elaborated on CTCT’s short, medium and long-term plans, and also explained the terminal’s operational efficiency improvements. Some of the KPIs being targeted for improvement are the truck turnaround time and berthing delays. She shared the CTCT’s decongestion initiatives, which consists of frequent joint stakeholder engagements, increased rail utilisation, the establishment of a multi-party truck congestion working team, improvements to container terminal efficiencies and back of port optimisation by increasing the operating hours to include night working. The expansion of the CTCT consists of 2 phases. Phase 1 and 2A have been completed resulting in an increased terminal capacity of 1 million TEU per annum (p.a.).  Phase 2B, which is in progress, aims to reconfigure the stacking areas, develop an auto-gate, and maintain capacity of 1.4 million TEU.

Ms Andiswa Dlanga, Transnet Managing Executive: Saldanha Terminals, presented an overview of the Cape Town MPT. She pointed out that majority of the citrus produce is handled in the container terminal, and only 1% in the MPT. The MPT serves as a mitigation measure for the CTCT during windy conditions. She shared the MPT’s operational improvement initiatives, which include process optimisation; equipment, procurement and maintenance; and equipping businesses. The immediate focus areas are improving the flow of containers, the availability & reliability of equipment, maintenance planning and rehabilitating the H-berth Quayside wall and H-berth shed. Most of the equipment at the MPT has reached or gone beyond its design life. She elaborated on the CT MPT equipment investment needs and the options to resolve each need. She also shared the plans to support reefer season peak and plans for refurbishment and fleet renewal.

Mr Louis Erland, Operations Manager: Transnet Freight Rail (TFR) Operations Manager, presented on the Belcon Terminal Infrastructure, which has a capacity of 96 000 TEU p.a. This can be increased to 201 600 TEU pa if the terminal operates on a 24-hour basis, instead of the current opening hours of 06:00 – 22:30. He highlighted the Belcon and CTCT road’s rail initiatives and the key challenges at Belcon pertaining to reefer, rail and train slot capacity, as well as equipment. Lastly, he elaborated on the key focus areas which include, growing the market to increase container line traffic, increasing reefer capacity, moving to airbrake trains – which are faster and safer, and prioritising collaborative supply chain planning.

Ms Mpumi Dweba, Transnet Port Manager: Cape Town Port, presented on the Port of Cape Town (PoCT) Tugs, the weather challenges at the port, and the current and planned progress in addressing truck congestion. The port requires a minimum of three tugs to be available in order for vessels to be serviced given the challenges with wind. The port aims to have a minimum of four tugs in case of an emergency with one of the tugs. She shared an update on the weather challenges and pointed out that nothing could be done about the heavy wind conditions, besides working the Council for Scientific and Industrial Research (CSIR) to forecast and communicate weather conditions. For longwave conditions, Transnet is in the process of procuring a Shore Tension System from overseas-based service providers in order to mitigate the surging of vessels. A mitigation measure against the high swells is the use of helicopter services to ferry pilots’ onboard vessels. Transnet is also looking at strategies for issues with fog. Lastly, she shared the detailed designed plan and progress on the truck staging area.

(See presentation)

Briefing by the Department of Economic Development and Tourism (DEDAT)

The Minister of the Economic Development and Tourism in the Western Cape, Mr David Maynier, said he was more optimistic about the PoCT after visiting it yesterday with the President, the Minister of Public Enterprise, Minister of Transport, Transnet’s Chief Executive Officer and other officials. The Department is working closely with the port management to drive port efficiency. He acknowledged that the port is currently inefficient and expensive, however, there has been significant improvement compared to the previous year. The visit revealed that despite the challenges, mitigation efforts to improve port efficiency have been put in place.

The announcement to corporatise the Transnet National Ports Authority (TNPA) will lead to more revenue being invested into infrastructure and maintenance in the long-run, and ultimately attract more private-sector investment into National ports. The Department is committed to working with all stakeholders to improve port efficiencies.  

Mr Steyn presented on the Western Cape Government’s (WCG) journey of collaboration with Transnet and other agencies in improving the efficiency of the PoCT logistics chain. Fruit exports peaked in 2019, resulting in rapid growth in agricultural production in the WC, bringing export channels into focus. There were concerns from transporters on the capacity of the PoCT to handle this growth. Congestion occurred in the container terminal, primarily caused by the lack of institutional integration and optimisation of the logistics chain, the disequilibrium between the supply and demand of the port services, and lastly, a problematic traffic flow.  In response to this, Minister Maynier hosted a workshop in December 2019, in which a Task Team was established, to reduce congestion in CTCT. He elaborated on the progress made with the first priorities of the task team and shared the new priorities emanating from the 2020 stakeholder workshop. Amongst others, the new priorities include strategy alignment among the major agencies; implementing the truck booking system and integration at the Belcon terminal; advancing skills development; and monitoring best practice performance indicators measurement across the logistics chain.

Mr Steyn highlighted some of the challenges with the ports, such as the growing volume of fruit export and the required changes in terminal services that are large and unaffordable by Transnet. There is also an issue of unaligned agency strategies and businesses are concerned with the mass departure of senior management in CTCT.  

Lastly, Mr Steyn highlighted the way forward to improve efficiency. The Department is working to accelerate collaboration for improved cargo flows, by engaging with initiatives like Operation Vulindlela, and providing leadership in the port log chain for the advancement of economic growth, job creation, investment and lower business costs. 

(See presentation for further details)

Discussion

Mr Van der Westhuizen asked what equipment, that is specifically designed to withstand strong-wind conditions, can the PoCT be equipped with. To what extent is the flow of cargo problematic, and what has already been put in place to address this?

Ms Vazi said that Transnet is looking for equipment better suited to the weather conditions in Cape Town however, this would necessitate replacing all the equipment. Transnet aims to achieve this in the long-run, and it would also require discussions on labour and capacitating employees to work with the new technology. The new RTGs have an anti-sway system which can operate at an additional 10 kms per hour than the current equipment. Wind and weather forecasts are communicated ahead of time; however, industry agencies prefer waiting at the site until the wind goes down. Transnet is in the process of launching a system called Cargo Connect, which will connect everyone in the logistics value chain for better planning.

Ms Dweba pointed out that the Port of Rotterdam installed wind deflectors which were unsustainable and eventually removed. There are various engineering tools that have been utilised globally to combat wind however, they are not economically feasible.

Mr Steyn reassured Members that the WCG is looking into proactively dealing with weather challenges and even pre-empting weather disruptions.

Discussion

Ms N Nkondlo (ANC) said she is satisfied with the efforts being made to address the man-made congestion at terminals. She asked for clarity on what the trade-offs are between increasing the shipping containers. What are the possible hindrances to operating for 24 hours, instead of the current industry operation hours? She asked Transnet to expand on the pressures and demands being made on it and what can be done to alleviate the pressure. When does Transnet believe the outstanding operational improvements will be achieved? What percentage of the port has to deal with the fruit grower market? How is Transnet engaging with other commodity suppliers in other industries?

Ms Vazi replied that CGA and TPT have started with weekly forums and pre-season planning forums. Transnet is planning on expanding this to include other industries, in addition to the citrus industry. Vessels are allocated a window for how long they can be at a port. Globally, while the vessels are working in the ports, additional containers are not allowed to be brought in because it will impact productivity. However, in South Africa, additional containers are allowed to be brought in with the rationale to export greater quantities. This negatively affects productivity, and there needs to be a balance between wanting to export more containers versus exporting a certain number of containers more efficiently. Shipping lines are also competing for greater volumes and so the lines request to stay at the terminals for longer, resulting in vessel delays. The main hindrance towards depots operating 24 hours is the cost component. Depots run at a specific rate that can be expensive, in order to remain profitable. In addition to the citrus industry, Transnet has opened forums with the motor industry, and has implemented fast moving consumer goods (FMCG) that include several industries. Transnet is aiming to open the rail line between the Eastern Cape and Western Cape in January, before the table grapes peak season.

Ms Dlanga replied that the MPT’s container capacity is 90 000 TEUs p.a. The 1% is mainly for the citrus industry however, the MPT also handles containers loaded with other commodities. The MPT’s container service work compliments that of the CTCT, allowing for vessel transfers to the MPT.

Ms Dweba added that Transnet would like South African ports to be competitive, which requires collaboration across the board. Stakeholders need to reach a compromise on the matter of last-minute containers and transform how things are done.

Ms Maseko asked what the plans for servicing are. Is human capital one of the challenges in the Western Cape terminals? If so, how is Transnet planning on addressing this?

Ms Vazi said Cape Town Terminal is fully capacitated and there are currently no vacancies. However, port terminal operations require skills that are limited. Employees also need to be trained for 4-6 months to be able to use the equipment efficiently. Transnet is planning to build a skills pool that can be accessed during challenging times. For instance, in European countries, dockworkers do not work during the week but are trained and paid a stipend so that when the dockworkers are needed, they can be utilised. 

The Chairperson said an intervention is needed as the PoCT is one of the worst performing ports, amongst the ports that are in line with international standards. She requested Transnet to send the Committee monthly progress reports on its short-term, quarterly reports on its medium-term, and bi-annual reports on its long-term turnover operational plans. The reports should include costing. She requested that in the coming year, Transnet should attach the cost of maintaining and replacing the equipment investment needs presented on slide six.  

The Chairperson requested the CGA to tell the Committee by 23 July, which of its concerns have been addressed and to what extent. It should also send a list of port improvements required, specifically for the citrus industry, to address capacity and peak season needs. These needs should also be raised in the relevant forums.

She asked the DEDT how long it takes to integrate the data, for each industry, in its predictive model. 
What are the top commodities that need to be integrated in the model? How much time is required to integrate the next industry, in addition to the table grapes industry and would three months be enough time? What does the new support team need? She requested monthly progress reports on tackling the DEDT task team priorities.  Both Transnet and the DEDT need to put the KPIs next to the areas of focus and outline how these tasks are aligned to the KPIs. DEDT needs to provide a timeline for when it will achieve its strategic alignment objectives. Who is present in the communication forums? Transnet, the CGA and DEDT need to sit with the various stakeholders to agree on the use of night hours.

Mr Vazi said Transnet is engaging with the World Bank, to better address the challenges highlighted in its study regarding Transnet’s operations. It should be noted that the study was conducted in 2020, when Transnet was operating at a third of its capacity. In 3 months, it will be conducting another study on Transnet.

Mr Steyn explained that there are 12 pareto packhouses in the WC, and so having direct contact with 12 of the major packhouses results in access to 87% of the packhouses. DEDT aims to ensure it engages with the larger agencies for the predictive model, to gain more cover. He noted the Chairperson’s request and said the DEDT would respond accordingly.

Mr Chadwick asked if it is likely that the CTCT will go back to the 2019 berthing delays of 11. He asked the DEDT if all cargo owners can bring in information ahead of time, for better planning.

Ms Vazi replied that 11 is possible and can be achieved soon.

Mr Werner van Rooyen, Operational Manager: Fresh Produce Exporters’ Forum (FPEPF), said that fresh produce should be looked at holistically. The CTCT especially needs to also consider table grapes.

Ms Vazi agreed that the table grapes need to be considered and pointed out that the gemba walk on 2 July 2021 is in preparation for the table grapes season. Planning normally starts six months ahead of the season.

Mr Brooke said the CTCT has limited abilities to expand infrastructure, in order to accommodate an increase in capacity upscaling productivity is the most important way of achieving greater capacity. Transnet should make the final decision on managing the vessels and allocation of windows. It should make the final decision on vessels delaying at the terminals. He added that Transnet and other agencies need to unpack the critical issues that were found at the PoCT last year by Ms Vazi. Stakeholders need to identify what has been done to address the immediate structural issues and what still needs to be done before the table grape season peak in September.
 
Ms Vazi said Transnet can share the findings from last year in the weekly forums.

Closing remarks

The Chairperson, in closing, thanked everyone in attendance.

The meeting was adjourned.