ADDRESS TO THE MARITIME AFRICA 2000 CONFERENCE BY THE MINISTER OF TRANSPORT, ABDULAH M. OMAR

Durban Tuesday, 11 april 2000

Chairperson,
Your excellencies,
Distinguished guests,
Members of the media,
Ladies and gentlemen.

It is indeed an honour to be with you at this historic Maritime Africa Conference 2000. This occasion provides me with a welcome opportunity to address not only the South African Maritime Community but also the larger International And African Maritime Communities.

I congratulate Buterworths and Transport World Africa for organising this wonderful event. I thank you for the invitation to deliver this address. I welcome all participants especially our visitors and wish all a successful conference and an enjoyable stay in Durban - one of South Africa's premier holiday destination (in addition of being a premier port city).

I am particularly pleased to be sharing with you the Department of Transport's views on maritime policy and especially our port strategy which is aligned with our national transport strategy. We believe that this is something very few countries have done. The complex economic challenges of the 21st century are very daunting for developing countries and highlight the relevance and importance of shipping and efficient port operations, given that over 90% of world trade is waterborne and will remain so for the foreseeable future.

Changes in South Africa's economic outlook Since 1994, South Africa has embarked on a process of economic liberalisation, underpinned by the Growth, Employment, and Reconstruction Policy (GEAR) and the Reconstruction and Development Programme (RDP), which in turn are firmly integrated into the global economy.

Emanating from the new political and economic dispensations, brought about by the new democratic government in 1994, the white paper on national transport policy of 1996 laid the foundation for a new transport strategy for our country. This strategy fundamentally impacts on all modes of transport.

The role of shipping and ports in economic development

Ports offer a strategic competitive advantage to a coastal country's economic development. They are in effect, the lungs of the economy. Restrict the efficiency of a maritime country's ports and you restrict the level of growth and economic efficiency of that country. Efficient ports are catalysts, facilitators and attractors of international seaborne trade. It is encouraging, therefore, to see that the new "cosmos" system [fully computerised container terminal management system -based on the port of Rotterdam model] is already yielding productivity gains (notwithstanding initial teething problems) after one of the fastest implementation times in the world for this type of system.

The vision that the ndot has for South African trade is one where our ports can permit the unhindered flow of goods through them at the lowest practical cost to the nation and with as much private sector participation as possible preferably without government subsidies being applied.

The traditional role of ports is changing quite rapidly as we advance into the new millennium. A quick glance at the top 100 container ports in the world shows how few are comprehensive ports [a comprehensive port is one where both port authority and port operation functions within the port are performed by the port authority, either public (as in South Africa) or private (as in Felixstow) as opposed to landlord ports where the port authority is primarily the landlord and port operations are provided by a combination of private and public operators that lease land and/or infra- and superstructure from the authority].

Our guess is that even 2 decades ago, this picture would have looked very different. This shows quite clearly that governments have placed the provision of port services in the more agile hands of the private sector, and rightly so.

The role of shipping and ports in transport strategy

The national transport strategy is something we are very excited about. In may this year, my predecessor released the national transport strategy under the banner "Moving South Africa - the action agenda". The action agenda was based on the findings of a 14 month research project called "Moving South Africa". It is one of the most comprehensive and ambitious national transport strategy exercises undertaken worldwide in the last 40 years and provides South Africa's transport industry with a long range vision into the future.

For freight transport, we developed an integrated freight strategy in which all critical and strategic challenges in the system were aligned and a systemic approach taken to finding solutions and developing the strategy based on customer needs, national objectives and ensuring the future sustainability of the system.

The key performance challenges of the current freight system in South Africa were found to be, inter alia:

Lack of sustainability in the system due to inadequate levels of re-investment in operations and infrastructure;
Lack of export competitiveness for general freight and containerised cargo; and
Barriers to cross-border traffic in the Southern African Development Community (SADC)

Of these challenges, the situational analysis identified the key areas of general cargo import and export as those aspects requiring the most improvement.

Furthermore, the major goals of our future freight system are:

lower total system costs;
increase profitability and sustainability in the transport industry
internalise externality costs externality costs such as pollution, congestion, accidents and infrastructure damage are currently not being paid for by users and providers, particularly in road transport. Instead these costs are a burden on the nation. We need to ensure that providers and users of different components of the transport system pay as much as is practical for the externality costs that their activities create.
improve reliability and transit times throughout the system one cannot have an efficient port - and then have cargo sit idle for 3 days on the rail siding or at an inland terminal.
improve the operational efficiencies of operators and service providers across all modes of the transport chain.

So what is our freight transport strategy for the future? Our strategy is, quite simply, a "corridor vision", particularly for general cargo, that is designed to meet customer needs for faster more efficient transport systems and that is in tune with global trends and international modal economics.

The vision encompasses:

a limited number of highly developed multi-modal transportation corridors

between our domestic centres and international destinations. corridors must be connected to a limited number of highly specialised ports
international container hubs, bulk ports, feeder ports and niche ports. lower density route lines must feed traffic into main corridors and modes, and efficient transfers between modes at the major ports and inland terminals must be achieved.

The potential benefits of this corridor vision are:

maritime benefits

2 to 11% savings in cost;
3 to 5 days saving in transit time, depending on port rotation; and
focussed port investment (investing in the key port identified for the corridor), fixed vessel arrivals as opposed to random vessel arrivals, vessels will announce their expected time of arrival to the port 24 hours before arriving and operating efficiencies eliminate excess port delays

inland benefits

separation of core rail lines from branch lines reduces core line costs by 15%;
focussed investment in strategic freight corridor network reduces vehicle operating costs;
increased use of unit trains increases service reliability; rail operational improvements reduce general freight costs by 25%; road freight productivity improvements also reduce road freight costs by 25%; and
road user charges for infrastructure and externalities increase 0.5 to 1 cent per net tonne kilometre

improving the sustainability of road transport.

The three main courses of strategic action required to achieve this vision are: building densities

by focussing on freight flows of priority segments in select corridors of the strategic network.
effectively using the different transport modes in the strategic and supporting networks, and
improving firm-level [transport businesses/ operators/providers] competitiveness. This involves the removal of obstacles that exist at the system level (govt. Parastatals, legislation, policies, etc. that constrain the ability of transport firms to be competitive must be addressed.

Therefore, whatever strategic actions we need to take in each of the modes must follow from these main streams.

What are the strategic actions for ports?

First we need to look at the major problems and strategic challenges within the port system. These have been identified as:

1. High ocean transport freight costs and transit times for containerised cargo

up to 65% of transport costs and 83% of travel time.

2. Imminent balancing of import

export flows with major trading partners
which further increases ocean freight rates.

3. Consolidation trends in the line shipping industries and the resultant consolidation of ports of call (global and regional hubs).

4. High percentage of multiple port stops for international container traffic

and barriers to rationalisation.

5. Excessive delays of ships and cargo at our leading port

Durban

6. High wharfage charges, with an additional penalty on high value export goods.

Strategic actions (led by government)

These actions will set the scope and scale of the system and although led by government, the decision-making process will have to include all key role players.

For example the following will have to be achieved:

identify core international container ports of the future: the "partial east-west" port vision
focus the role of the ports with particular emphasis on:

cargo types
core, feeder and niche ports
origins and destinations in this regard we must maximise the location of each port to ensure the most effective/shortest transit times possible eg. Using the west coast container hub for traffic flows between sa and north/south america rather then using ports on the east coast for those routes.

remove capacity constraints and focus infrastructure investment accordingly.

co-ordinate the ports system and integrate it with other modes of transportation.

implement the institutional reorganization of ports into the following structures:

port authority,
private operations, and an independent regulator
as advocated in the white paper.

enable the improvement of operational efficiencies by eliminating the barrier that prevent this.

You will be aware that cabinet has recently resolved that the restructuring of the Transnet stable is to be prioritised and fast-tracked.

This decision has been accompanied by a parallel decision that the Department of Transport fast-track policy and legislation to enable the implementation of our existing policy and strategy. To this end, an inter-departmental task team between the ndot, department of public enterprises, department of trade and industry and the department of finance has been created to prepare draft detailed ports policy and legislation which we hope to publish within the next two months for public comment and consultation. It is my fervent hope that industry will work together with government to ensure that the policy framework is implemented as a matter of urgency.

Tactical choices (led by port sector)

Once the strategic actions have been implemented the port sector will then have to make it's own tactical decisions so that these will assist in accomplishing the overall vision for freight transport.

These decisions would include:

what level of economic return to set?
how to improve operating efficiencies?
level of concessioning of terminal and other port operations to embark on
what ownership structures are most appropriate, and what combinations of asset should owners be permitted to hold?
allowing and improving competition within the ports
rationalisation of port calls for international container traffic currently, over 50% of deep sea (international trade) container vessels calling at sa stop at three ports viz. Durban, PE and CT. This increases the costs of the journey to the shippingne which is passed on to sa cargo owners. It also as substantially increases the number of days that is spent on our coastline before ships continue on their rotation/route. This obviously drastically delays the time (up to 5 days) that South African goods and products get to their markets. The effect is to place us at a disadvantage vis a vis our competitors because they are so far away. We therefore need to reduce ports of call to only one as far as possible for international container traffic. Other types of traffic can be approached differently.
the establishment of vibrant and competitive feeder services.

These are the elements of the shipping and ports strategy that we have adopted in the moving South Africa action agenda except for the "east west" port vision. Here, we still need to reach consensus with key stakeholders.

Let me pause here briefly to touch on the issue of the port of Ngqura, or Coega as it is sometimes known. As part of our spatial development initiatives, government had identified this port as a potential industrial development zone linked to a port. Recently government, through the coega development corporation issued a request for proposals as part of the process to seek a private partner to participate in the development of the port and the idz. This process is now underway, and my colleague, the minister of trade and industry together with his provincial counterpart mec Godongwana have committed themselves to making an announcement in this respect within the next few weeks.

I mention this because the experience around Coega has taught us some important lessons. Firstly, that ports are more than just inter-modal interchanges, but real enablers of economic development. Secondly, that port development and infrastructure investment in the current South African reality is a priority which can only move forward at the requisite pace if the partnership between government and the private sector is cemented and consolidated. The fiscal realities dictate that every opportunity for private sector investment in projects of national strategic importance must be exploited to the full.

The recent decisions by government on portnet restructuring, port policy and legislation as well as Coega must all be seen as decisive steps towards implementation of our economic and transport strategies. The message is: south africa is open for business.

Work in progress and the way forward

The Department of Transport has undergone significant institutional changes so that it can focus most of its energy on implementing the national transport strategy. Our business plan will be directed towards the implementation of specific objectives of this strategy.

In addition the major current initiatives for freight transport are:

development of a national ports policy and draft legislation.
development of a freight flow database
development of a mechanism for strategic road pricing
liaison with spoornet, portnet, road freight association, department of trade and industry, department of finance and other key players.

The last point is quite critical in our implementation agenda, because the department does not have direct influence over most of the implementation actions of the strategy. We have therefore embarked on a "partnership for moving South Africa" where responsibility for action is placed where it can best be carried out. The Department of Transport cannot, and should not, be responsible for implementing the strategy on its own.

Whilst the department will play the role of custodian, implementation must be driven through a process of concerted and collective effort by the key role-players in transport under the leadership of government. It must therefore be the joint responsibility of an innovative four-way partnership between government, the private sector, labour and the customers.

South Africa's international obligations and commitments South Africa is an important member of the international maritime community and has certain obligations and commitments to the international maritime organisation. South Africa has been a member of the imo since 1995 and has been a member of the imo council since 1997. We therefore aim to continue our close relationship with this organisation and strengthen our commitment to it. South Africa is committed to ensure that high safety standards are maintained within the South African shipping industry in accordance with key international conventions and that we share our expertise with our sadc and african neighbours.

Because of the ever present risk of high loss of life at sea, the Department of Transport is committed to maintaining and increasing maritime safety standards. To this end we have launched a programme aimed at increasing safety standards particularly in the fishing industry.

The inadequacy of safety training in fishing vessels was highlighted by the findings of the marine court of enquiry held into the tragic incident of the sinking of the Palli Hja Mariannu off the Cape Coast on 24 july 1999 with a loss of 29 lives. Such tragedies are not acceptable and we will do everything in our power to ensure that this type of incident does not happen again.

The recently formed South African Maritime Safety Authority, is involved in the imo's technical co-operation programme which renders technical assistance to african states. This is aimed at fostering the effective implementation of maritime conventions in order to strengthen maritime administrations in their endeavours to implement sound safety standards in their waters. This SAMSA does through supporting imo surveyor training programmes and hosting relevant imo safety and pollution prevention seminars. It is through these initiatives that samsa is able to offer its expertise and technical support to SADC maritime states as well as other maritime countries in Africa.

In closing I would like to mention a few of the initiatives that our maritime authority is engaged in:

Flag state implementation:
the main responsibility for ensuring that imo resolutions are implemented rests with the flag state. To effect compliance with the various imo resolutions and the implementation of safety standards, South Africa has promulgated laws and regulations to give flag state instruments full and complete effect so as to ensure that, from a point of view of safety of life at sea and protection of the marine environment, a ship is fit for the service for which it is intended.

Ship registration and the South African fleet:
parliament adopted a new ship registration act in august 1998, signalling a change in the regime of ship registration maintained under the merchant shipping act of 1951. Other measures to promote the South African ships register are also under consideration, including possible fiscal reform and changes to admiralty legislation. But it is the new 1998 act that will bring about the most visible changes in the administration of the ships register when it is implemented later this year.

The SA Maritime Safety Authority will have a large role to play, with the establishment of the South African ships registration office and the office of the registrar of ships. Samsa's challenge will be to realise the seamless transition to the new regime, which includes the switch over to a new electronic central register within two years. The new electronic register is perhaps one of the most exciting aspects of the new regime, promising greater efficiency and convenience for administrator and client alike.

Ballast water problems: ballast water has increasingly been recognised as a viable mechanism for the transfer of harmful marine organisms from one part of the globe to another. In fact, evidence of such transfers and the consequential ecological, social and economic damage, has been at the centre of discussions in the ballast water working group established under the auspices of the marine environment protection committee (mepc) of the imo.

Moreover, the working group, of which South Africa is a member, is currently in the process of drafting a set of regulations to replace the existing imo voluntary guidelines on ballast water management. Once complete, these regulations will be adopted either as an additional annex to marpol, or as a separate convention.

The objective of the gef/undp/imo project on ballast water management is to assist developing countries to initially implement the guidelines, and subsequently the regulations on ballast water, thereby reducing the risk of serious consequences. South Africa is one of six countries participating in the project, the others being Brazil, China, India, Iran and Ukraine. In South Africa, the project will focus on developing a ballast water management plan for the port of Saldanha, where the proximity of mariculture facilities to port operations is a particular concern.

Ladies and gentlemen, South Africa's past has been steeped in maritime history and its future will invariably be dependent on its links with the international maritime community. Situated at the crossroad between the South Atlantic and Indian Oceans, we geographically straddle one of the busiest and most strategically important sealanes in the world, if not the most dangerous.

We are therefore very conscious of our maritime responsibilities to our fellow african maritime states and the international maritime community at large. We are consequently committed to the improvement of our ports and their facilities and to the maintenance of high safety standards in accordance with key international conventions as a service to the maritime nations that use our waters and harbours.

It therefore gives me great pleasure to again welcome all the international and local exhibitors to Maritime Africa 2000, which is fittingly held in the great port of durban. I sincerely trust that it will be a rich and rewarding experience for all of you. I have no doubt that we will all benefit from the event.

I now declare the Maritime Africa 2000 Conference officially open.

Thank you