MCLI Operational Work Group & One Stop Border Post Meeting

4th & 5th February 2010

““A Citrus Perspective”A Citrus Perspective”

AgendaAgenda Brief Overview Shipping Constraints Operational Constraints Cost Constraints Coordination Initiative

AgendaAgenda Brief Overview

Geographical position of Maputo in relation to citrus production

Citrus export volume trends

Sum of Volume Year

Load Port Product 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

DURBAN / MAPUTO

GRAPEFRUIT 197 236 259 641 157 862 216 472 188 926 206 098 215 000 215 000 215 000 215 000

LEMONS 29 128 31 856 22 312 23 710 37 889 29 183 40 000 41 000 42 000 44 000

ORANGES 409 830 464 838 406 808 555 195 543 659 481 012 560 000 580 000 600 000 620 000

SOFT CITRUS 3 646 8 536 6 781 12 917 12 242 13 364 14 000 14 500 15 000 16 000

DURBAN / MAPUTO - Sum 639 840 764 871 593 763 808 294 782 716 729 657 829 000 840 500 852 000 865 000

Source: PPECB & CRI

50% Growth Expected

Capacity threshold curve

Growth rate curve

Source: PPECB

Port Shipping Mode Volume

Source: PPECB

Durban & Maputo Port Market Shipping Mode Volume

Source: PPECB

North & West EU / UK Shipping Mode Volume

Brief OverviewSummary Maputo is geographically positioned to the northern citrus regions to add better value Maputo port has the potential to increase volume throughput substantially Maputo essential infrastructure not only to reduce the cost of the supply chain, but also to ensure that the Durban port is not over utilized causing logistics instability Infrastructural capacity development and adaption to containerized exports is lagging Citrus growth expectations necessitates volume growth through Maputo Migration toward containerized shipping is pulling the fruit to Durban There is potential to pull Europe / Med / Russia / Middle East market fruit to Maputo Middle East and Far East markets should be prioritized for container lines

Shipping Constraints Named day shipping schedules (7 – 10 days) to Europe / Med via Reefer Ship

Europe volume diversion to Durban constraining vessel commitments from Maputo

Other key markets Middle East / Russia not on fixed calls

No direct container shipping option to key citrus markets? (Europe / Med / Middle East / Far East)

Durban port offers direct shipping opportunity to all citrus markets – this offers flexibility to divert cargo

to alternative markets should the need arise

AgendaAgenda

Operational Constraints Market Consolidation

Because all markets can be accesses from Durban, Durban provides a consolidation hub All growers fruit for various markets can be consolidated to ship to specific market requirements Packhouses have limited floor capacity to hold fruit and accumulate for one specific market

Transportation Trucks are loaded with mixed markets and this restricts the use of Maputo Limited return haulage increases the cost of transportation Cross border delays may also be a contributing factor to the cost of transportation to Maputo

Rail Packhouse rail accessibility limited Rail that is used is considered inefficient due to delays Rail is costly Rail is considered strategically critical to the citrus industry Imperative that rail constraints are overcome (TFR / CFM concession?)

AgendaAgenda

Operational ConstraintsRail

What is the problem? Accessibility and DelaysWhat is the solution? Integrate Road and Rail TransportationHow do we do this? Create rail hubs on the main lines Road trucks shuttle fruit between packhouse and rail hub Citrus train shuttles from rail hub to port cold storeThere are two options? Road truck to a warehouse at the rail hub and transfer to rail (Pallet Friendly Container) Use adapted Pallet Friendly Containers and transfer from rail to road

• Road truck transports the container from siding to packhouse• Load and truck back to the rail siding and transfer back to rail

Consideration for rail hubs / rail sidings Will work anywhere where a high volume of citrus is grown and 30 rail wagons (600 pallets) can be accumulated within 24hrs

The future of citrus transportationThe future of citrus transportation

Container is railed to a siding and the container is sent to be stuffed at a packhouse and brought

back

Feasible to accumulate at least 30 containers or

wagons

Container is transferred from road to rail

Container is railed to a port cold store or

container terminal in the case of Reefer

containers

CX type Pallet Friendly Ambient Container Can be loaded and offloaded from the side This will allow for efficiency at packhouse and port cold store These containers can load 10 high cube pallets / 20 per wagon We need to develop a 40ft CX container to load 24 high cube pallets

Can be loaded from the side

6 7 8 9 10

1 2 3 4 5

CX Container load pattern

Agenda

Transportation Handling Shipping

Transportation Handling Shipping

Transportation Handling Shipping

Maputo Current Cost Condition

Maputo Required Cost Condition

Durban Current Cost Condition

Cost Constraints

Cost Comparison

Area Maputo (Km)

Durban (Km)

Difference(Km)

Maputo (Cost)

Durban (Cost)

Difference (Cost)

Zimbabwe 600 1000 400 R26,000 R22,000 +R4000

Limpopo River 550 950 400 R24,000 R17,500 +R6,500

Letsitele 450 850 400 R17,000 R16,000 +R1,000

Hoedspruit 350 750 400 R14,000 R15,000 -R1,000

Senwes 400 650 250 R15,000 R12,000 +R3,000

Nelspruit 200 600 400 R8,000 R12,000 -R4,000

Onderberg 100 500 400 R7,000 R10,000 -R3,000

Swaziland 150 400 250 R12,000 R10,000 +R2,000

Transportation

Cost ConstraintsTransportation

Transportation cost to Maputo advantageous for Onderberg, Karino, Nelspruit Transportation cost for other key regions is considerably less to Durban How do we overcome this?

Handling A container can be packed at a price of R160 – R170 per pallet in Durban Maputo handling cost is flexible but still high – Storage costs?

Shipping VSA Europe / Med service $12.00 surcharge from Maputo should be made redundant Why? Because as the previous slides have shown Durban & Maputo are the VSA’s main ports Container shipping through Maputo is higher than Durban Transportation excluded

Coordination InitiativePrinciple

The short term solution for Maputo is to ship a higher volume of citrus to Europe markets Why? Europe is the only viable and regular shipping option from Maputo at present

How do we achieve this? We need to ensure that we create an attractive export cost that is lower than shipping from Durban

And how do we achieve this? We need to make sure that the transportation, handling and shipping cost is optimized

Transportation and Handling We need suggestions and feedback from the road transport industry Cost of rail should be re-strategized Maputo transportation cost reduction is critical

AgendaAgenda

Coordination InitiativeShipping In order to reduce the cost of shipping we need to load full and complete vessels to Europe out of Maputo 1 Full ship (4,500 pallets) a week from week 20 – week 38 A competitive transportation, handling and shipping rate could be achieved

Shipping Coordination The CGA is proposing through Growers, Exporters, Packhouses and Agents to coordinate sufficient weekly volume to achieve this objective Monitor vessel Booked vs. Stock situation Weekly telecon between coordination group to ascertain volume

To get started we need commitment from To get started we need commitment from participating Growers, Exporters, Agents and participating Growers, Exporters, Agents and Shipping LinesShipping Lines

Maputo Key Strategic Success Criteria Efficient and cost effective transportation

• Be it by Road or be it by Rail Sufficient and adaptable storage and handling infrastructure

• Be it at the port or be it inland• Sufficient for anticipated volume growth• Geared for rail, steri and containers

Shipping access to key citrus markets• Be it by Containers or be it by Reefer Ships• Cost effective and regular shipping service to key citrus markets

Shipping Coordination• Maputo citrus volume coordination group• Ensuring sufficient supply to vessels with minimal loading delays• Aiming to reduce the cost of shipping

On behalf of Citrus Growers, Exporters & Agents

Thank You to MCLI

www.cga.co.zawww.cga.co.za