Container Strategy, benchmarking and viability Ngqura Container Terminal

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Transnet Port Terminals DPE Site visit to Ngqura Container Terminal - Container Strategy, Benchmarking & Viability 06 June 2013 Text

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Transcript of Container Strategy, benchmarking and viability Ngqura Container Terminal

Page 1: Container Strategy, benchmarking and viability  Ngqura Container Terminal

Transnet Port Terminals DPE Site visit to Ngqura Container Terminal - Container Strategy, Benchmarking & Viability

06 June 2013

Text

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TABLE OF CONTENTS

TPT CONTAINER STRATEGY

NGQURA CONTAINER TERMINAL VIABILITY

BENCHMARK TERMINAL HANDLING CHARGES

IMPACT OF PRIVATE OPERATOR ON NGQURA

BENCHMARK OPERATIONAL EFFICIENCY

Page 3: Container Strategy, benchmarking and viability  Ngqura Container Terminal

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

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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/

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COMPLIMENTARY PORT SYSTEM

delivering freight reliably

Bulk – Iron Ore

Containers - Refrigerated

Bulk – Coal & Minerals

Containers - Gateway

Cars – Mercedes Benz

Containers - Transhipment

Bulk – Manganese

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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

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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

100,0000 300,000

Other

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Integration into the Supply Chain

Global Operations

TPT NEW STRATEGIC DIRECTION

Terminal

Operations

Defending the

Home Turf

Innovative

Value Adding

Services

Expanding the

Horizon

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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

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Grow and

defend

local turf

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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

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Expand

into

logistics

services

3. FORWARD AND BACKWARD INTEGRATION INTO THE TRANSPORT VALUE CHAIN

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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)

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TABLE OF CONTENTS

TPT CONTAINER STRATEGY

NGQURA CONTAINER TERMINAL VIABILITY

BENCHMARK TERMINAL HANDLING CHARGES

IMPACT OF PRIVATE OPERATOR ON NGQURA

BENCHMARK OPERATIONAL EFFICIENCY

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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

165181190

225

260265284

316

350350360

400

430450

600

Saudi

Arabia

China Thai-

land

Malay-

sia

Indo-

nesia

Taiwan,

Pro-

vince of

China

Brazil Ger-

many

Ne-

ther-

lands

Hong

Kong

South

Africa

Italy Aus-

tralia

Belgium United

Kingdom

United

States

Nami-

bia

Argen-

tina

Cana-

da

Ports Regulator’s Cost benchmarks was not comparing like for like

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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

135165

181190

225

260265284

316

350350360

400430

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)

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TABLE OF CONTENTS

TPT CONTAINER STRATEGY

NGQURA CONTAINER TERMINAL VIABILITY

BENCHMARK TERMINAL HANDLING CHARGES

IMPACT OF PRIVATE OPERATOR ON NGQURA

BENCHMARK OPERATIONAL EFFICIENCY

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BENCHMARK OPERATIONAL EFFICIENCY - Moves per Gross Crane Hour

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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

26242424

222221

0

5

10

15

20

25

30

Ø 23,3

USA West Coast

Sri Lanka North Europe Australia Indonesia India New Zealand

272828323334

42

0

10

20

30

40

50

Malaysia Thailand Japan

Ø 32,0

Singapore South Korea China 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)

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TPT CONTAINER STRATEGY

NGQURA CONTAINER TERMINAL VIABILITY

BENCHMARK TERMINAL HANDLING CHARGES

IMPACT OF PRIVATE OPERATOR ON NGQURA

BENCHMARK OPERATIONAL EFFICIENCY

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PRIVATISATION OF NGQURA? - CONTAINER TRANSHIPMENT HUB

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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.

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Source: Drewry report April 2013 (for period ending Feb 2013) 17

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ACCOLADES FOR EASTERN CAPE TERMINALS - Client Recognition

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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

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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.

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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

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TABLE OF CONTENTS

TPT CONTAINER STRATEGY

NGQURA CONTAINER TERMINAL VIABILITY

BENCHMARK TERMINAL HANDLING CHARGES

IMPACT OF PRIVATE OPERATOR ON NGQURA

BENCHMARK OPERATIONAL EFFICIENCY

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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.

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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

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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

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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