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Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
Container Strategy, benchmarking and viability  Ngqura Container Terminal
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Container Strategy, benchmarking and viability Ngqura Container Terminal

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Terminal Operation

Terminal Operation

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  • 1. Transnet Port Terminals DPE Site visit to Ngqura Container Terminal - Container Strategy, Benchmarking & Viability 06 June 2013 Text
  • 2. PAGE TABLE OF CONTENTS TPT CONTAINER STRATEGY NGQURA CONTAINER TERMINAL VIABILITY BENCHMARK TERMINAL HANDLING CHARGES IMPACT OF PRIVATE OPERATOR ON NGQURA BENCHMARK OPERATIONAL EFFICIENCY
  • 3. TPT CONTAINER STRATEGY - Southern Hub for World Shipping Routes The position of South Africa’s ports system enables it to access to South- South trade, Far East trade, Europe & USA, East & West Africa regional trade 2 Shortest Trade Route between Shanghai and Santos is via South Africa 10,972nm = 21 days @ 21 knots via Panama Canal12,967nm = 26 days + transit fee via Suez Canal 13,544nm = 28 days + transit fee Source: http://www.searates.com/reference/portdistance/
  • 4. 3 COMPLIMENTARY PORT SYSTEM delivering freight reliably Bulk – Iron Ore Containers - Refrigerated Bulk – Coal & Minerals Containers - Gateway Cars – Mercedes Benz Containers - Transhipment Bulk – Manganese 3
  • 5. COMPLIMENTARY PORT SYSTEM IN PRACTICE 2009/10 2010/11 2011/12 2012/13 2013/14 People Training NCT staff in Durban Moved planners to support NAVIS Moved planners to support NAVIS Moved OLE’s from PE to NCT Equipment OLE Training Simulator at NCT Divert STS cranes from CT Moved RTG’s from Durban Ships/Cargo Divert transhipment cargo to NCT Divert transhipment cargo to NCT Divert transhipment cargo to NCT Divert cargo from Durban (berths out) National Planning Centre Commercial CTOC CTOC CTOC CTOC for port system CTOC for port system 4
  • 6. 5 NGQURA ROLE AS A HUB PORT FOR TRANSSHIPMENT TRAFFIC IS TO ENABLE REGIONAL INTEGRATION Monrovia (Liberia) Lome (Togo) Port Louis (Mauritius) Toamasina (Madagascar) Takoradi (Ghana) San Pedro (Côte d'Ivoire) Lagos (Nigeria) Cotonou (Benin) Walvis Bay (Namibia) Tema (Ghana) Abidjan (Côte d'Ivoire) Cape Town (SA) Dar es Salaam (Tanzania) Tanga (Tanzania) Mombasa (Kenya) Nacala (Mozambique) Beira (Mozambique) Maputo (Mozambique) Richards Bay (SA) Durban (SA) East London (SA) Ngqura (SA) Libreville (Gabon) Pointe Noire Matadi (Congo) Douala (Cameroon) Source: Team analysis Port Elizabeth (SA) Lobito (Angola) Luanda (Angola) 1 m TEU 85,000 230,000 25,000 50,000 20,000 60,000 5 70,000 250,000 80,000 60,000 20,000 20,000 350 th TEU 100,0000300,000 Other
  • 7. 6 Integration into the Supply Chain Global Operations TPT NEW STRATEGIC DIRECTION Terminal Operations Defending the Home Turf Innovative Value Adding Services Expanding the Horizon
  • 8. 1. GROW AND DEFEND OUR HOME TURF - Containers, Bulk, Automotives, Break Bulk Operational Excellence (Efficiency, Safety) & Customer Service B Develop and grow a highly effective workforce D Innovation E 7 Grow and defend local turf
  • 9. Expand the Horizon 2. GLOBAL EXPANSION - Africa & Beyond • Support the regional integration agenda by promoting Ngqura as Transhipment Hub for Sub Saharan Africa • Target the SADC ports (Tanzania, Mozambique, Namibia & Angola) + include Kenya and Ghana which support the 3 main corridors with Container & Bulk operations • Follow & Support DBSA/IDC technical partners for port and rail opportunities • Offer Port Consulting and Advisory Work when needs arises to either Port & related businesses in Africa • Promote the sale of our IT system (GCOS) enterprise 3 to terminals in Africa and the rest of the world • Consult on Planning methodologies for African Ports Expand into global operations Port Consulting & Advisory Services Regional Transhipment Hub for Sub Saharan Africa Geographic expansion of Container & Bulk Ops in Sub Saharan Africa Training & Development through Maritime Centre of Excellence 8
  • 10. Expand into logistics services 3. FORWARD AND BACKWARD INTEGRATION INTO THE TRANSPORT VALUE CHAIN 9  TPT must expand its active role by forward and backwards integration into the transportation value chain  Potential businesses areas to support a fully integrated supply chain solution are: 1) Short Sea Shipping 2) Inland depots/external distribution warehouses (Value Adding Services - Stuffing & De-stuffing) 3) Container lifecycle management (Pre Trip Inspection, Repairs, Modifications) 4) Cargo support (Stevedoring, Freight Forwarding) 5) Equipment Maintenance (In-sourcing, Outsourcing to other clients/countries)
  • 11. PAGE TABLE OF CONTENTS TPT CONTAINER STRATEGY NGQURA CONTAINER TERMINAL VIABILITY BENCHMARK TERMINAL HANDLING CHARGES IMPACT OF PRIVATE OPERATOR ON NGQURA BENCHMARK OPERATIONAL EFFICIENCY
  • 12. 11 SOURCE: World Bank, Cost of doing business, 2009 1 Current exchange rate based on 1 USD = 7.8 HKD = 85.6 JPY = 31.9 TWD = 7.3 ZAR, 2009 exchange rate 1 EUR = 10.6 ZAR, 1 USD = 7.6 ZAR - Port and terminal handling costs USD per export TEU, 2009 COMPARATIVE PORT COSTS Excluded from study Included in study 758585 135 165 181190 225 260265 284 316 350350360 400 430 450 600 Saudi Arabia ChinaThai- land Malay- sia Indo- nesia Taiwan, Pro- vince of China BrazilGer- many Ne- ther- lands Hong Kong South Africa ItalyAus- tralia BelgiumUnited Kingdom United States Nami- bia Argen- tina Cana- da Ports Regulator’s Cost benchmarks was not comparing like for like
  • 13. 12 TRANSNET IS A SELF FUNDING, TAX PAYING SYSTEM SOURCE: World Bank, Cost of doing business, 2009 1 Current exchange rate based on 1 USD = 7.8 HKD = 85.6 JPY = 31.9 TWD = 7.3 ZAR, 2009 exchange rate 1 EUR = 10.6 ZAR, 1 USD = 7.6 ZAR - Port and terminal handling costs (containers) USD per export TEU, 2009 758585 135 165 181190 225 260265 284 316 350350360 400 430 450 600 US (Long Beach) Financially self- supporting; receives little operating and capital grants South Africa: Fully self-funding system, incl. expansion Belgium: Receive income subsidies, mainly from the Flemish region under the terms of the Port Decree Netherlands: Recognises operating grants as income, also receives grants on investments Germany: Pricing based on depreciated asset base China: Significant subsidies from government, e.g., funding Yangshan port expansion (Shanghai) (~ 3 bn EUR)
  • 14. TABLE OF CONTENTS TPT CONTAINER STRATEGY NGQURA CONTAINER TERMINAL VIABILITY BENCHMARK TERMINAL HANDLING CHARGES IMPACT OF PRIVATE OPERATOR ON NGQURA BENCHMARK OPERATIONAL EFFICIENCY
  • 15. BENCHMARK OPERATIONAL EFFICIENCY - Moves per Gross Crane Hour 14 Commentary Over and above previous articles on benchmarks that have been distributed in the past (all indicating a benchmark in the region of 30 + GCH), an interesting article has emerged on the average GCH on Maersk Vessels Study only for Maersk Vessels internationally – published on 25 Feb 2012: ▪ Average of Top Performers internationally reflect an average of 32 moves per hour ▪ Lesser performers reflect an average of 23 moves per hour ▪ TPT Container Terminals currently reflect GCH targets of between 28 and 32. ▪ Port size, ship size, labour restrictions and other factors do not fully explain the differences. ▪ Roger Kerr, CEO New Zealand Business Roundtable 26 242424 222221 0 5 10 15 20 25 30 Ø 23,3 USA West Coast Sri LankaNorth EuropeAustraliaIndonesiaIndiaNew Zealand 272828 323334 42 0 10 20 30 40 50 MalaysiaThailandJapan Ø 32,0 Singapore South KoreaChina Taiwan Benchmarking Exercise (2011) Benchmarking Exercise (2011) Benchmarking against other terminals Source: Roger Kerr, New Zealand Business Roundtable – Information from Maersk New Zealand (25 Feb 2011)
  • 16. PAGE TABLE OF CONTENTS TPT CONTAINER STRATEGY NGQURA CONTAINER TERMINAL VIABILITY BENCHMARK TERMINAL HANDLING CHARGES IMPACT OF PRIVATE OPERATOR ON NGQURA BENCHMARK OPERATIONAL EFFICIENCY
  • 17. 16 PRIVATISATION OF NGQURA? - CONTAINER TRANSHIPMENT HUB
  • 18. Ngqura – Fastest Growing Terminal in the World • According to Drewry, February year on year figures puts Ngqura as the fastest growing port in the world. • Ngqura more than doubled its container volumes (up 129% year-on-year) thanks to an upsurge in transhipment. 17 Source: Drewry report April 2013 (for period ending Feb 2013) 17
  • 19. 18 18 ACCOLADES FOR EASTERN CAPE TERMINALS - Client Recognition
  • 20. 19 19 Terminal Operator 2011 Total Throughput ‘000 TEU 2011 Equity Throughput (‘000 TEU) Equity TEU as % of Regional Throughput 1 Transnet 4,403 4,403 18.07% 2 APM Terminals 7,640 4,236 17.39% 3 Bolloré Africa Logistics 3,348 1,671 6.86% 4 DP World 2,094 1,193 4.89% 5 Port Said CCHC 922 922 3.79% 6 Damietta CCHC 809 809 3.32% 7 CMA CGM/Terminal Link 1,218 661 2.71% 8 Cosco Pacific 3,247 649 2.67% 9 Hutchison Port Holdings 949 548 2.25% 10 Alexandria CHC 517 506 2.08% Source: Drewry on Africa Transnet’s hold on the top ranking for terminal owning/operating companies in Africa will make them an ideal partnership candidate for bigger, international companies. TRANSNET REMAINS ATOP AFRICA’S RANKINGS - Independent study done by University of Illinois
  • 21. NGQURA PRIVATISATION - IMPACT ON TPT TPT OPERATED Part of complimentary port system; Support SA as a link between SSA and BRICS countries; Commitment to job creation, skills, enterprise & supplier development, etc.; Historical evidence of lowering cost of doing business; Guarantee of providing common user facilities; Capacity planning are aligned with other Transnet business units such as TFR. PRIVATELY OPERATED Stand alone terminal; No obligation to BRICS or Africa development agenda’s; No allegiance and obligation towards government’s NGP; Possible problems related to Transnet recovering of its investment in NCT; TFR efficiency not private operator’s concern. 20
  • 22. NGQURA ARTICLE 79 APPLICATION - TPT Value Proposition TPT offers a tried and tested, yet unique, low risk & innovative proposal to operate the NCT Integrate Ngqura as a complementary port in the SA integrated container port system Enhance developmental role for the Port of Ngqura in the Eastern Cape Provide non-aligned independent port operator status, with an excellent operations record Strengthen the position of Ngqura as a transhipment terminal South-East Asia 1 2 3 4 Fourfold value proposition from TPT
  • 23. TABLE OF CONTENTS TPT CONTAINER STRATEGY NGQURA CONTAINER TERMINAL VIABILITY BENCHMARK TERMINAL HANDLING CHARGES IMPACT OF PRIVATE OPERATOR ON NGQURA BENCHMARK OPERATIONAL EFFICIENCY
  • 24. 23 NGQURA VIABILITY - CONTAINER TRANSHIPMENT HUB STUDY PwC The outcome of the case studies demonstrate the following: • Cases show the strong position of Cape Town and Port Louis. • Case for Durban may be slightly under-represented as Durban is a must port of call. Its larger call sizes will continue to improve its position. • Strongest case found for Ngqura is MOL relay Santos/Singapore, but competition is high limiting upward tariff potential. • The tariff reduction as applied for MSC effectively strengths the position of NCT on the Europe trade route (Rotterdam). • BUT: Increases in call size which go hand in hand with increases in vessel size, typically on the Asia trade route re-order the attractiveness of the hubs: • Port Louis shifts from 1st to last, • Ngqura shifts to 1st position with large vessels and large call sizes, with differences in TPT ports mainly influenced by handling tariff (see following slide) • The lower handling tariff plays a substantial role in shifting Ngqura among TPT ports to 1st position. • Shipping lines control the bigger vessels as well as the bigger call sizes through transhipment volumes.
  • 25. 24 NGQURA VS PORT LOUIS - CONTAINER TRANSHIPMENT HUB STUDY PwC Unit Cost of Santos-NCT Sea leg Port calling cost at NCT - Arrive Transhipment cost in NCT per TEU Port calling cost at NCT - Depart Unit Cost of NCT-Shanghai Sea leg Total cost per 20ft (ZAR) with MSC LUCIANA (11,660 TEU) Total cost per 20ft (ZAR) with MSC LUCY (8,089 TEU) Example: Singapore – Walvis Bay Example of increase in ship size on Asia-leg
  • 26. 25 357 261 297 2012/13 1006 223 344 2022/23 NGQURA PRIVATISATION - IMPACT ON TPT 267 1979 1074 2012/13 423 3792 1469 2022/23 NCT DCT Other NCT Growth in Transhipment 2012/13 to 2022/23 - in thousands of TEU’s DCT Growth in Import/Export 2012/13 to 2022/23 - in thousands of TEU’s
  • 27. 26 NGQURA VALUE PROPOSITION - Baseline Scenario over 20 years Volume – 27.8 Mill TEUs PV Revenue – R5.45 bil PV Cost – R8.22 bil IRR – 10.24% NPV – (R200,156,002) Payback – 20 yrs Volume – 31.1 Mill TEUs PV Revenue – R5.7 bil PV Cost – R8.34 bil IRR – 14.12% NPV – (R92,788,585) Payback – 19yrs Volume – 33.9 Mill TEUs PV Revenue – R5.8 bil PV Cost – R8.3 bil IRR – 16.0% NPV – (R15,895,947) Payback – 19yrs Base Case Base Case with TPT budget Base Case with TPT budget and new service

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