tralac trade law centre Durban port leads way for African trade
Transporting goods by sea remains the most common way to trade globally, but in Africa cargo spends an abnormally long time in ports before it is moved inland, presenting a serious obstacle to the successful integration of sub-Saharan economies in worldwide trade networks. The port of Durban, however, has managed to buck the trend.
A World Bank study, titled Why does cargo spend weeks in sub-Saharan African ports? Lessons from six countries1, found the average cargo waiting time to be 20 days and that more than half of the time needed to transport cargo from ports to hinterland cities in landlocked countries in sub-Saharan Africa is wasted because of the time it spent in ports.
The average cargo dwell time in Durban is four days, which is on a par with ports in East Asia and Europe.
The African Development Bank s definition of dwell time is the time cargo remains in a terminal s in-transit storage areas while awaiting shipment for export or onward transportation by road or rail for import.
Dwell time is one indicator of a port s efficiency: the higher the dwell time, the lower the efficiency. And longer dwell times have an adverse effect on economic growth.
Long transport times reduce trade
A 2012 working paper produced by the National Bureau of Economic Research, titled Time as a trade barrier2, concluded that longer transport times dramatically reduce trade and estimates that each day in transit is worth 0.6% to 2% of the value of the goods.
Long transit delays also significantly lower the probability that a country will successfully export its goods.
Africa s estimated infrastructure deficit of $48-billion a year is often singled out as the culprit for hampering trade in and around the continent, but reasons for bottlenecks are far more complex and a lot more challenging to resolve.
Shantayanan Devarajan, the World Bank s chief economist for the Africa region, says that long dwell times are in the interest of certain players in the system and that dealing with the proximate cause of the problem, such as the apparent lack of berths in African ports, is unlikely to trigger a solution.
Specifically, importers use the ports to store their goods; in Douala Cameroon, for instance, storage in the port is the cheapest option for up to 22 days, Devarajan wrote in the foreword of the World Bank study.
Customs brokers, meanwhile, have little incentive to move the goods because they can pass on the costs of delay to the importers. Worse still, when the domestic market is a monopoly, the downstream producer has an incentive to keep the cargo dwell times long as a way of deterring entry of other producers.
Discretionary behaviours
The evidence in the study shows that discretionary behaviours increase system inefficiencies and raise total logistics costs.
In most ports in sub-Saharan Africa, the interests of controlling agencies, port authorities, private terminal operators, logistics operators (freight forwarders) and large shippers collude at the expense of consumers, the report said.
Surveys demonstrate that low logistics skills and cash constraints explain why most importers have no incentive to reduce cargo dwell time as, in most cases, doing so would increase their input costs.
Moreover, some terminal operators generate large revenues from storage, and customs brokers do not necessarily fight to reduce dwell time because time inefficiency is charged to the importer and eventually to the consumer.
Durban port is considered a good benchmark for sub-Saharan ports. Its average four-day waiting period for import and export cargo is much closer to best practice in East Asia and Europe, which is a three- or four-day waiting period.
South Africa s commercial ports have been placed firmly in the hands of the state through Transnet. With the exception of these ports and Mombasa in Kenya, all other ports surveyed in the study are run by private container terminal operators.
Lessons from the Durban port
The demand at South African ports surpasses all countries in East and Southern Africa and has a critical role to play in the international trade landscape for the region, according to a 2011 World Bank working paper.
It said Durban port could teach sub-Saharan African ports a few lessons namely that the onus was on public sector players such as customs and the ports authorities to put pressure on the private sector of port users to comply and reduce cargo dwell times.
Prohibitive charges for storage, coupled with strict enforcement and the possibility to preclear with customs with advantages attached to it and service level agreements binding both parties are critical tools for the reduction of cargo dwell time, the paper said.
In the late 1990s, Durban port was notoriously inefficient with high levels of congestion, characterised by long berthing delays for container vessels, long train turnaround times in the port and long queues for road trucks, which resulted in dwell times of six to seven days on average.
But in 1998, the paper said, shipping lines lost their patience and introduced a vessel delay surcharge.
This was a wake-up call for Transnet Port Terminals and the National Port Authority. A committee was created involving the port stakeholders with a defined strategy and several measures, which seem to have had the most important impacts.
Storage charges
Major stakeholders acknowledge that the introduction of the punitive storage charge after day three is probably the most important single factor affecting dwell time at Durban port, the working paper said.
This means that, after 72 hours, containers incur heavy storage charges. The result is that storage charges in Durban are almost six times as high as other ports in the country.
But investment in infrastructure has certainly also helped the process. At the time when Durban adopted its port liberalisation policy, South Africa s trade infrastructure was ageing and had been neglected for many years, and most of the country s ports were not performing well.
From 2002, Transnet invested more than $700-million in ports over a five-year period, focusing on creating capacity and equipment. An average dwell time for cargo of four days at Durban port has been achieved and maintained since 2006.
More investment is also on the way. Just last month, Minister of Public Enterprises Malusi Gigaba unveiled Transnet s seven new state-of-the-art ship-to-shore cranes at the Durban Container Terminal as the company surges ahead in its drive to boost productivity and efficiency in arguably the southern hemisphere s biggest and busiest port.
The cranes are part of Transnet s rolling R300-billion seven-year investment programme the market demand strategy , the state-owned enterprise said.
Over the next 20 years, Transnet Port Terminals, which currently operates 45 cranes in seven ports across the country, will buy 39 new ship-to-shore cranes.
Improvements
While Durban may remain top dog when it comes to the continent s ports, improvements elsewhere will undoubtedly have positive spin-offs for South Africa.
Ga l Raballand, World Bank senior economist and co-author of the cargo dwell-time study, told the Mail & Guardian that reducing dwell time could possibly increase competition in Sub-Saharan Africa.
But, he added, what matters in transport are economies of scale and, therefore, there is somehow a first- mover advantage the biggest economy is likely to attract more flows, which are going to lead to reduced transport costs, which will reinforce its position. South Africa is the gateway because it is also the largest economy.
Source: http://mg.co.za/article/2013-06-14-00-durban-port-leads-way-for-african-trade3
References
- ^ Why does cargo spend weeks in sub-Saharan African ports? Lessons from six countries (econ.worldbank.org)
- ^ Time as a trade barrier (www.nber.org)
- ^ http://mg.co.za/article/2013-06-14-00-durban-port-leads-way-for-african-trade (mg.co.za)
This Week in Review: Trucking Pakistan
ON THE KHYBER ROAD
When the Pulitzer Center agreed with Foreign Policy to co-publish a series of e-books on borderlands, we hoped to send great writers to explore some of the more contested regions of the world and let them use the longer-form platform of e-books to tell their stories in a deeper, more compelling way. Matthieu Aikins has done just that in Bird of Chaman, Flower of the Khyber: Riding Shotgun from Karachi to Kabul in a Pakistani Truck1, a mesmerizing account of a single trip through the Kyber Pass that somehow encapsulates the whole harrowing story of America s decade-long engagement in that region.
COMBATING FAKE DRUGS
The flood of fake drugs is an increasing threat to public health, and a subject of continuing interest to the Pulitzer Center. Grantee Esha Chhabra, writing for the Guardian2, reports on a promising new weapon in the fight to beat back the fakes: the use of mobile-phone technology to authenticate drugs. The India-based initiative is aimed at coding drugs so that consumers, even those with basic phones, can verify that what they are buying is real. The stakes are high: The experts Esha quotes say that fake drugs lead to 100,000 deaths per year.
THE FIRST 1,000 DAYS
Grantee Roger Thurow s previous book, The Last Hunger Season3, was a novel-like story about the extraordinary challenges faced by small-scale farmers in western Kenya, and the difference that new agricultural techniques and inputs were making in their lives. Roger has just launched an equally exciting project, in collaboration with the Pulitzer Center, that will track the impact of better nutrition and health practices for children in the critical first 1,000 days after conception, with ground-level reporting from Uganda, India, Guatemala and the United States. This week we feature the first of many dispatches4 as we follow Roger on this journey.
CHINA IN ZAMBIA, GOOD AND BAD
Grantee Alexis Okeowo s first report from Zambia is an eye-opening account5 of China s rapidly increasing presence in that country, and across Africa. China is making real improvements, from health care to government buildings and jobs, a local watchdog tells her, but there are also incidents of labor abuse and the sense among many Zambians that they are losing control of their own economy.
FROM BOSTON TO DAGESTAN
The alleged bombers of the Boston Marathon have family roots in the Russian region of Chechyna and one of them spent several months last year in nearby Dagestan. In an Untold Story6 our guest writer James V. Wertsch, vice chancellor of Washington University in St. Louis and a specialist on the Caucasus, says that what we don t know about the Tsarnaevs shouldn t keep us from absorbing what we do know or should about the tangled history of their native land. Washington University is one of our Campus Consortium7 partners.
References
- ^ Bird of Chaman, Flower of the Khyber: Riding Shotgun from Karachi to Kabul in a Pakistani Truck (pulitzercenter.org)
- ^ the Guardian (pulitzercenter.org)
- ^ The Last Hunger Season (www.amazon.com)
- ^ first of many dispatches (pulitzercenter.org)
- ^ an eye-opening account (pulitzercenter.org)
- ^ Untold Story (pulitzercenter.org)
- ^ Campus Consortium (pulitzercenter.org)
EAC Trade Expected to Further Improve as Kenya-Uganda Launch …
17 May 2013, Malaba At least 400 clearing and forwarding agents based at one of the busiest border posts on the Kenya-Uganda border have signed up for the East Africa Customs Freight forwarding Practicing Certificate (EACFFPC); a top notch regional training program that is equipping participants with the relevant skills and knowledge to enable them meet the demands of increased trade in the region.
The programme which is run by the region s apex freight logistics governing body, Federation of East African Freight Forwarders Associations (FEAFFA) in partnership with TradeMark East Africa ( TMEA1 ), is soon going to be a mandatory licensing requirement for all clearing and forwarding agents in the EAC by end of 2013.
Speaking at the launch of the border post class, Executive Director of FEAFFA John Mathenge said, All these initiatives are aimed at moving this region forward. TradeMark has committed over 1.5 Million dollars to this program, we are proud of their partnership and that of the national associations and revenue authorities that have given us support that has seen them commit their staff and time. We are excited at the opportunity that the Busia-Malaba border class will offer the industry in terms of professionalizing it to further ensure it operates efficiently and cost effectively.
Ms Elizabeth Opondo an official from Kenya Revenue Authority added that the training was important to Kenya Revenue authority. Speaking on behalf of the station manager, she said, As an authority we are committed to enhancing professionalism in cross boarder trade. As Kenya Revenue Authority it is our desire to engage professionally with the clearing fraternity that can articulate customs laws and regulations.
Echoing her sentiments, Mr Geoffrey Balamaga, the regional manager Uganda Revenue Authority added that the joint boarder training in Busia and Malaba was a remarkable milestone. Speaking on behalf of Mr Richard Kamajugo Commissioner Customs, he said that Uganda Revenue Authority was committed to removing Tariff and Non-Tariff trade barriers, simplifying and automating customs procedures. He added that, Uganda Revenue Authority has invested in various ICT applications aimed at enhancing coordination among various agencies in and across boarders.
The regional training programme was developed by FEAFFA in collaboration with the East Africa Revenue Authorities. With support from TMEA2 , the programme is being implemented regionally under the stewardship of the Curriculum Implementation Committee (CIC), a joint committee of the FEAFFA/National Freight Forwarders Associations and Revenue Authorities. The joint boarder classes have been launched with support among the various customs and freight logistics agencies in Kenya and Uganda. The launch also saw the awarding of certificates to accredited trainers who completed the Training of trainers (ToT) courses carried out to cater for the need to build capacity of facilitators for the EACFFPC program.
Ms Vicky Kamanguza, the EACFFPC Regional Training Coordinator explained that the purpose of the launch was to acknowledge the efforts by the EACFFPC and its stakeholders to put together not just one but eight classes that would cater to the 400 students. The eight classes comprise two from the Kenya-Malaba border, two on the Malaba-Uganda border and four in Busia, she said. So far we can confirm that in Uganda 119 students have fully registered to attend the class in Malaba and 90 will attend the class in Busia. In Kenya 75 students will go to class in Malaba while 106 attend the Busia class.
Busia is the busiest border crossing between Kenya and Uganda while the border town of Malaba that is situated approximately 5 kilometres to the north on the Uganda-Kenya border is the second busiest crossing point along their common border.
The two borders are flooded with heavy commercial traffic in both directions. Goods from Uganda such as cash crops like coffee, cotton and timber are destined daily for the Kenyan port of Mombasa for export and foodstuffs like fish, bananas, pineapples and mangoes, maize, beans, groundnuts, sorghum destined for the Kenyan market also come across. In the opposite direction, Uganda imports petroleum products, manufactured goods and household items like cooking oil, soap, clothing, electronics and automobiles.
A report carried by The East African newspaper recently indicated that trade within the East African Community is expected to receive a major boost after Kenya prioritized the construction of five special border posts in its budget. According to the report, a pilot post at Malaba on Kenya s border with Uganda has reduced cargo clearance from two days to just two hours.
TradeMark East Africa s ( TMEA3 ) Deputy Chief Executive Officer, Scott Allen who also attended the launch said, The EACFFPC is an initiative that TradeMark East Africa is committed to in our efforts to realize regional economic integration in the EAC by strengthening human resource and institutional capacity. He added, TradeMark East Africa undertakes a holistic approach towards the facilitation of trade by identifying choke points and creating solutions to address them. Some of these solutions include programs such as 7 One stop boarder posts (OSBP s) whose aim is to reduce transit costs incurred in cross-border movement by combining the activities of both country s border organizations and agencies at either a single common location; Single Window Portals that will improve the management and access of documents and information by making them available online; Transport observatories which are an effort to collect data and information in real time for ships at ports; and the reduction of Non Tariff Barriers (NTB s)
The new class at the borders follows on the heels of the successful graduation of 100 clearing and forwarding agents in Uganda.
The next regional intake for the EACFFPC programme is scheduled for June 2013 and the call for applications is underway. The announcement is expected to be published in the public media to ensure all clearing agents are aware of the looming deadline of December 2013 when the certificate will become a pre-condition for any clearing agent to receive an operational license for the year starting January 2014.
For more information please contact4
The freight logistics industry in East Africa has been largely characterised by poor business practices due to an inadequate skills pool and limited use of modern technologies. With more than 40% of the business costs accruing to transport and logistics, there is increasing appreciation of the importance of this sector in international trade. In this context, clearing and forwarding agents are recognised as a key player in international trade logistics. Attempts by both the public and private sectors to raise the professional standard within the industry with a view to improve business practices and promote compliance have gained momentum.
A regional training program, the East Africa Customs and Freight Forwarding Practising Certificate (EACFFPC), has been developed by FEAFFA in collaboration with the East African Revenue Authorities. With support from TradeMark East Africa (TMEA), the programme is being implemented regionally under the stewardship of the Curriculum Implementation Committee (CIC), a joint committee of the FEAFFA/national freight forwarders associations and Revenue Authorities. To date, close to 2000 clearing and forwarding agents have been trained. By the end of 2013, qualification under the programme is expected to become a precondition for licensing of Customs agents.
Through financial support from TMEA, FEAFFA and the Revenue Authorities are expanding the delivery capacity of the training facilities within the five EAC member states to hasten the attainment of the desired critical mass of 4500 trained agents in East Africa. TMEA s assistance has enabled FEAFFA to review the EACFFPC s framework, update its curriculum and training materials, and hire 6 training coordinators. Further support will be provided to FEAFFA national associations to train trainers, issue Certificates of Competence (for those exempted to undergo training) and carry out training activities for the next two years beginning 2012.
Expected Results
- Enable the trainees to discharge their roles competently as Customs Agents;
- Entrench professionalism in cargo clearing and forwarding;
- Provide a common standard for professional practice and accreditation within the cargo clearing and forwarding industry across East Africa;
- Enhance ethical conduct, good governance and integrity in the profession; and
- Facilitate trade.
For more information contact5 : Silas Kanamugire at silas.kanamugire@trademarkea.com6
About TRADEMARK EAST AFRICA
TradeMark East Africa (TMEA) is a not-for-profit organization funded by a range of development agencies to promote regional trade and economic integration in East Africa by working closely with East African Community (EAC) institutions, national governments, and private sector and civil society organizations.
TMEA seeks to support East African integration by unlocking economic potential through:
- A reduction in transport and related costs along the key corridors in East Africa;
- Supporting EAC institutions to develop a comprehensive framework for regional integration;
- Supporting partner states to substantially increase the implementation of a comprehensive framework for regional integration; and
- Engaging private sector and civil society to positively influence regional integration policies and practices for growth in trade.
TMEA is focused on ensuring gains from trade result in tangible gains for East Africans, in line with the EAC s Development Strategy. Increased trade contributes to increased economic growth and subsequently reduced poverty. Our focus is not just on big business, rather ensuring that trade results in as many pro- poor gains as possible, especially for women. TMEA has its headquarters in Nairobi with branches in Arusha, Bujumbura, Dar es Salaam, Juba, Kampala and Kigali.
To find out more please visit the TMEA website at www.trademarkea.com7
The Federation of East African Freight Forwarders Associations (FEAFFA) is an apex body of Freight Forwarders Associations in the five countries of the East African Community formed in 2005. It is registered and domiciled in the United Republic of Tanzania in 2006 but its Secretariat is situated in Nairobi, Kenya.
Our main focus is professionalizing the industry, provision of information, and advocacy for an effective freight logistics industry in the East African region.
FEAFFA main activities
- Advise National Associations on matters relating to freight forwarding and related activities;
- Promote the image of the Freight Forwarding Industry through public relations;
- Establish and maintain contacts with respective government institutions related to the operations of members and assist, through research and formulation of policies beneficial to the freight forwarding fraternity.
- Spearhead training of members of the national associations, and professionalize the function of the Freight Forwarding Industry.
- Establish professional standards for the Freight Forwarding Industry. FEAFFA runs the EACFFPC certificate course jointly with the East African Revenue Authorities. This course is now a mandatory for all freight logistics service providers in the East African region.
- Evolve, maintain and police a code of conduct for the Freight Forwarding Industry in the Region, to sustain ethics and integrity among member associations and their members. FEAFFA has a code of conduct that guides all practitioners in the east African region.
- Build the capacity of freight forwarders in key emerging issues affecting the freight logistics industry at regional and global level.
Contact8 Details for Officials at FEAFFA Secretariat
To find out more please visit the FEAFFA website at www.feaffa.com9
References
- ^ TMEA (www.trademarkea.com)
- ^ TMEA (www.trademarkea.com)
- ^ TMEA (www.trademarkea.com)
- ^ contact (www.trademarkea.com)
- ^ contact (www.trademarkea.com)
- ^ silas.kanamugire@trademarkea.com (www.trademarkea.com)
- ^ www.trademarkea.com (www.trademarkea.com)
- ^ Contact (www.trademarkea.com)
- ^ www.feaffa.com (www.feaffa.com)
the Loadstar EC backs down on road haulage cabotage …
EC transport commissioner Siim Kallas has bowed to pressure from road haulage federations and shelved plans to introduce a cabotage scheme without restrictions across the EU from 2014.
Last December, France s leading road haulage federation, the FNTR, teamed up with its counterpart in Scandinavia, the Nordic Logistics Association (NLA), to oppose the move. The Netherlands transport and logistics federation, TLN, had also come out against the total liberalisation of cabotage the movement of goods within a national state from 2014.
The FNTR s efforts have paid off following active lobbying in Paris and Brussels to block the transport commissioner s commitment to liberalising cabotage at all costs in 2014, the trade body said.
The creation of a coalition of European road haulage federations against the proposed cabotage legislation had proved its worth, it added.
At a time of deep economic crisis and in the absence of harmonisation in the European Union on employment and tax regulations, the liberalisation of cabotage was utter folly. It would have cost France and other European countries thousands of jobs.
Hauliers in the 27 EU member states are at present restricted to carrying out a maximum of three domestic transport operations in fellow member states over a seven-day period, immediately following an international operation. But in 2014 cabotage would have been free of any restrictions.
The current cabotage restrictions go against the spirit of a European Single Market which guarantees the rights of all citizens to work, travel and trade freely. Nonetheless, they exist because of fears of possible abuse and lowering social standards, said EC spokesperson for Transport, Helen Kearns.
For this reason, we have commissioned a number of studies on the issue. Vice-President Kallas has also established a high level group to look into this issue.
It is clear that cabotage rules must evolve over the long term, but it needs to be done properly and in consultation with all stakeholders. That process is complex and it takes time making it difficult to deal with this issue in the lifetime of this Commission.
Chinese Shipping optimism
China Shipping Group is forecasting higher volumes of freight this year, but is not certain whether it can deliver higher profits. They foresee more uncertainty over freight rates, and think that revenue may fluctuate accordingly. The carrier is adjusting its own shipping capacity downwards, and is taking steps to reduce costs.
POLB forecasts 2013 imports & exports cargo rise – Greater China …
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Shipping unprepared for sulphur limits – RW Freight
According to the UK Chamber of Shipping, the UK industry is ill prepared for the introduction of sulphur limits. A report commissioned by the Chamber says that targets for shipping companies to reduce their sulphur emissions could cause adverse environmental effects and result in the loss of 2000 maritime services jobs.
India's Wheat Shipments Are Seen at Record on More Sales
Wheat exports from India, the world s second-biggest producer, may surge to an all-time high next year after the government approved additional shipments to make room for a near-record harvest starting next month.
A panel of ministers headed by Farm Minister Sharad Pawar authorized the export of 5 million metric tons from state reserves by private companies, Food Minister K.V. Thomas told reporters in New Delhi today. That s in addition to 4.5 million tons already approved for shipment by government-run companies since July, he said.
India s shipments are adding to global supplies even as Australia predicts a 13 percent increase in its harvest, snow replenishes soil moisture in the U.S., the biggest shipper, and Argentina eases export curbs. Sales from India may reach 10 million tons in the year from April 1, according to the New Delhi-based National Centre for Agricultural Economics and Policy Research. That, along with forecasted record rice inventories in the biggest exporters, may restrain world food costs that tumbled 12 percent from an all-time high in 2011.
India has got four to five months for exports until the Northern Hemisphere crop comes into the market in August and September, said Vijay Iyengar, managing director of Agrocorp International Pte., a Singapore-based trader. Countries in Asia, Africa and the Middle East will buy Indian wheat.
More exports of wheat by state-run trading companies may be allowed as we want to establish our brand, Thomas said. The government fixed a minimum price of 14,800 rupees ($271.88) a ton for exports and private traders need to buy the grain from 2011-12 crop supplies kept in warehouses in Punjab state, he said.
Asian Sales
Exports from India may total 5 million tons in the year ending March 31, with sales mostly to Southeast Asia, the Middle East and Africa at prices ranging from $305 to $315 a ton, displacing supplies from Ukraine and Australia, Veena Sharma, secretary of the Roller Flour Millers Federation of India, said yesterday. The country is boosting shipments at a time when prices are trading near eight-month lows after crops improved globally.
Futures have fallen 27 percent in Chicago since reaching a four-year high of $9.4725 a bushel in July. The contract for May delivery rose 0.6 percent to $6.88 a bushel on the Chicago Board of Trade by 9:33 a.m. Prices fell to as low as $6.80 yesterday, the lowest since June 22. The global wheat harvest may climb 4.3 percent to 690 million tons this year, the United Nations Food & Agriculture Organization said today in a report, as European farmers expanded acreage while yields rebound in Russia.
Global Price
The global wheat price looks bearish, so India should export as early as possible, said Vandana Bharti, assistant vice president at New Delhi-based SMC Comtrade Ltd. Though it is bearish globally as it will add to the surplus, the Indian market looks bullish.
India s wheat production may total 92.3 million tons in the year ending June, near the record 94.9 million tons a year earlier, according to the farms ministry. State wheat stockpiles in India expanded 32 percent to 31 million tons at the start of February. The government plans to boost purchases from farmers to 44 million tons in the marketing year starting April 1 from 38.1 million a year earlier, the food ministry said Feb. 19.
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