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A new generation of ultra-large container vessels has been sailing the oceans in recent years. Container ships such as the Madrid Maersk, COSCO Shipping Universe, OOCL Hong Kong and Ever Golden can carry more than 20 000 TEUs (twenty-foot equivalent units).

These vessels measure around 400 m in length, with beams of between 49 m and 59 m, and a draft of 15 m.

Early container vessels were usually modified bulk vessels or tankers that could carry around 1 000 TEUs.

However, over the past 50 years, the capacity of container vessels has increased by around 1 500%, doubling over the past decade alone, says the South African Association of Freight Forwarders (SAAFF) in a newly published report which analyses the ability of local ports to handle a new generation of container ships.

This rapid growth has largely been influenced by shipping lines' focus on economies of scale to improve profit margins, says the association.

“In general terms, the more containers shipping lines can load on a vessel, the greater the income generated by these vessels.”

The extreme size of the new generation of container vessels is, however, creating a new set of physical problems, notes SAAFF.

For example, owing to strong winds, the Ever Given vessel earlier in 2021 blocked the Suez Canal, and a large portion of global trade, for six days.

Other problems include the limited number of ports that can receive these vessels.

Today Very Large Containerships (VLCSs) and Ultra Large Containerships (ULCVs) are the norm and too big even for the Panama Canal.

Furthermore, these ships come close to the limitations that the Suez Canal can accommodate today and remain limited to routes between Asia and Europe.

“Despite this, the situation serves as a warning to ports across the world, foreshadowing serious issues in terms of port capacities,” notes the SAAFF report.

“If ports and hinterland operations do not adjust to service these vessels to the best of their capabilities, these ports and countries could face some severe challenges, and possibly lose their spots in the supply chain due to bypassing vessels.”

WHAT ABOUT SOUTH AFRICAN PORTS?

The congestion struggles at South African ports is no secret, with the Container Port Performance Index (CPPI) 2020 ranking the country’s container terminals at the bottom of the global pile.

While there is some controversy around the index and its findings, there is no smoke without fire, with regular reports of congestion at ports, especially at the Durban Container Terminals, notes SAAFF.

“A significant contributing factor is that while the size of vessels is growing, our ports have not expanded much over the past decade.

“Furthermore, the same can be said for the rest of our infrastructure on which logistics operations rely heavily.”

Durban's prime container berths are dredged at 12.2 m, Cape Town at 14 m and Ngqura 18 m, with ultra-large vessels requiring a draft of at least 15 m.

Furthermore, the Durban container terminals have moved an average of 5 000 TEUs per vessel over the past few years, with vessel sizes at this port rarely exceeding 10 000 TEUs capacity.

The MSC Katarina (12 400 TEUs) and Cape Tainaro (11 000 TEUs) were some of the largest vessels to call at the Port of Durban in the last year.

Furthermore, for Africa as a whole, the maximum ranges stop at about 15 200 TEU.

As per Alphaliner's monthly monitor report, only four vessels are servicing Africa within a spread of 12 500 TEUs to 15 200 TEUs, says SAAFF.

“These figures suggest that our largest port is not coming close to being able to service these ultra-large vessels,” warns SAAFF

“Of further concern lately has been the lack of investment in our ports in recent years,” adds the association.

“It might also explain why South Africa's port performance has been deteriorating over the past decade.”

A POSSIBLE SOLUTION?

In addition to the need for ports that can accommodate larger vessels, shipping lines and cargo owners are also looking for ports to service ves...

The Energy Regulator has approved five site licences for the importation and storage of liquefied natural gas (LNG) by black-owned energy company DNG Energy.

The Energy Regulator approved the site licences, along with the licence conditions and reasons for decision, at its meeting on December 6, following a recommendation by the National Energy Regulator of South Africa’s (Nersa’s) Petroleum Pipelines Subcommittee.

Full-time regulator member Nomfundo Maseti, who made the case for the approvals, reported that DNG had applied for two facilities in Gqeberha and one each in Ekurhuleni, Komatipoort and Mossel Bay.

Maseti reported that DNG would import the LNG through the ports of Maputo and Ngqura and transport it in ISO tank containers by road or rail to the storage facilities.

In 2020, DNG received final authorisation from the Transnet National Ports Authority to begin bunkering operations in the Port of Ngqura, in the Eastern Cape.

The company reports that it has deployed a 125 000-m3-capacity floating storage unit to support LNG bunkering operations.

The LNG will be sold in its liquefied form as alternative fuel to diesel in the transport sector with clients such as Imperial, Masana BP and Rea Vaya. It will also be sold to the marine, industrial and mining sectors and some of it will be re-gasified.

On December 3, the company announced that it had received its first shipment to its plant in Germiston, in Ekurhuleni, from the Netherlands.

The Energy Regulator also approved an application, at the same meeting, for the revoking of a licence issued to Oiltanking Grindrod Calulo for the construction of a liquid bulk terminal in the Port of Ngqura.

The licence was revoked after the venture was unable to achieve a commercially viable business case for the terminal, which led to the project being discontinued in late 2020.

Liquefied natural gas (LNG) supplier DNG Energy on December 3 announced its official entry into the South African market, after receiving its first gas shipment from the Netherlands at its plant in Germiston last week.

The company is targeting the supply of LNG as an alternative fuel to diesel, and thereby a cleaner option for transport, industrial applications, power generation, mining and maritime transport.

DNG Energy is commissioning a $17-million 125 000 m3 LNG vessel at the Port of Ngqura, in the Eastern Cape, which will supply into its feeding networks across the country where needed.

The country is posed to become a premium LNG bunkering hub in Southern Africa.

DNG Energy group CEO Aldworth Mbalati tells Engineering News the company plans to expand LNG bunkering capacity at the Maputo port, in Mozambique, soon.

He says energy is a foundation for growth and hopes to see a cleaner, cheaper solution being incorporated into South Africa’s economy.

LNG has 80% fewer carbon emissions compared with diesel and it does not require much refining, or beneficiation, to produce. He says the gas has a key role to play in growing industry output and power supply, as well as reducing greenhouse-gas emissions.

LNG can be used to produce electricity, or provide fuel for industrial processes, transport and heating. It can also be used as a raw material to produce chemicals, fertiliser and hydrogen.

Mbalati hopes to see at least 2 000 LNG-powered trucks on South Africa's roads in 2022 and is targeting to be a catalyst of growth in the LNG space.

DNG Energy has spent seven years on planning, permitting and licensing efforts and, with a planned investment programme of R5-billion over the next few years, it hopes to ensure bulk affordable and reliable LNG supply in South Africa.

Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about the latest legal wrangle between Eskom and Nersa, why Eskom sought the court's intervention against Nersa, some of the highlights of the judgment and the way forward.

Ford South Africa (SA) is on schedule with its R15.8-billion expansion programme to significantly boost its exports from the Silverton plant in Pretoria as from next year, says Ford Motor Company Africa president Neale Hill.

Ford SA will produce the new-generation Ranger pick-up at the Tshwane plant, starting in 2022.

The local arm of the US vehicle maker produced about 732 000 units of the current Ranger model from 2011 to 2021.

“The expansion of the production facility will enable us to build 200 000 vehicles a year – 32 000 units more than before,” says Hill.

The vast majority of these vehicles will be exported.

“The next-generation Ranger . . . will be produced for more than a hundred left- and right-hand-drive markets globally, including markets across Africa,” notes Hill.

To realise the new production targets, the Silverton assembly line has undergone extensive transformation focused on modernising the facility, enhancing efficiency and improving production quality throughout the plant.

Additionally, Ford is currently constructing a new body shop and stamping plant on the Silverton site, along with an in-house frame line in the newly developed adjacent Tshwane Automotive Special Economic Zone (TASEZ).

“Our entire focus is on being world-class and comparable with the best Ford manufacturing plants globally,” says Hill.

“This is essential as we work towards delivering the required production volumes and achieving the highest quality levels for our customers.”

The expanded Ranger production programme will help create 1 200 incremental Ford jobs in South Africa, increasing the local workforce to 5 500 employees, while also adding an estimated 10 000 new jobs across the automaker’s local supplier network, bringing the total to 60 000 jobs, notes Hill.

Ford will also build a new vehicle modification centre, as well as a new training centre, with the latter to ensure all Ford employees are equipped with the knowledge and skills required to maximise the efficiencies of the enhanced Silverton facility.

Expanded production at the Silverton plant will include the new Volkswagen Amarok bakkie, as part of a global agreement between Ford and the German automaker, and will account for some of the added capacity at the facility.

New Rail Link, Africa

Ford continues to work closely with all three spheres of government and relevant State-owned entities, such as Transnet, in developing the Gauteng Province (GP) to Eastern Cape Province (EC) High-Capacity Rail Freight Corridor, says Hill.

This corridor is set to be a full-service line linking the Silverton assembly plant and the TASEZ with Port Elizabeth, which is home to Ford’s Struandale engine plant and the Coega Special Economic Zone.

The GP-EC High-Capacity Rail Freight Corridor will channel all of Ford’s inbound and outbound logistics exclusively through Port Elizabeth to support the facility’s higher production volumes, says Hill.

“It is projected to create thousands of jobs within the value chain.”

Moving to the Port Elizabeth corridor means that Ford will avoid the increasingly congested and underperforming port of Durban, in KwaZulu-Natal.

When looking at the broader African context, Hill notes that it is crucial that the US carmaker aligns its business with the implementation of the African Continental Free Trade Agreement (AfCFTA), as this will “play an important role in developing a winning strategy for Ford across Africa”.

“AfCFTA is a key component of the African Union’s (AU’s) Agenda 2063, which aims to boost the continent’s socioeconomic growth,” he adds.

“It would do so by accelerating the industrialisation of Africa, integrating regional markets, stimulating growth, and supporting the welfare of its people.

“Underpinning that is the role of faster, easier, more economically viable trade and trade networks.”

After the World Trade Organisation, AfCFTA is the world’s largest trade agreement, with 54 signatories, says Hill.

“This holds great promise, for not only the conti...

Judge Jody Kollapen has ordered that Eskom’s revenue application for the 2022/23 financial year be decided by the National Energy Regulator of South Africa (Nersa) by February 25 and that it be adjudicated in line with the multiyear pricing determination (MYPD) methodology published in 2016.

The ruling follows Eskom’s application to have Nersa’s decision to reject the utility’s revenue application set aside as unlawful.

Eskom formally lodged its MYPD5 application on June 2, but the Energy Regulator rejected it on September 30 on the basis that it was prepared using a methodology that it deemed to have expired.

No replacement methodology was in place, however, with Nersa instead initiating public consultations on the “principles” that should govern any new methodology.

To ensure a tariff decision was made in time for implementation on April 1, 2022, Nersa proposed that Eskom prepare a new application incorporating those principles, which were finalised on November 25, but which had not yet been formally communicated to Eskom by the date of the court hearing on December 1.

In his judgment, published with reasons on December 3, Kollapen ruled that Nersa’s proposed option for determining the tariff was “both unlawful as well as impractical”.

“It is unlawful in that it proposes a route directly in conflict with the obligation created for Eskom by Section 42(2) of the Municipal Finance Management Act (MFMA) and it is impractical in that it proposes a tariff determination be submitted and decided upon, including public comment thereon, on the back of a non-existent methodology.”

The MFMA section referred to compels Eskom to give the National Treasury and the South Africa Local Government Association clear notice of an intention to increase the price of electricity and the opportunity to comment thereon – a process that typically take 40 days.

The judgment also rejected Nersa’s assertion that the MYPD4 methodology was timebound, arguing that history points to the fact that the methodology endures until it is changed or replaced.

“Given the need to at all times have a methodology in place for the reasons already given, Nersa’s suggestion that MYPD4 is timebound is not sustainable.

“It does not make any business sense, it is impractical and leads to a legal lacuna.”

Kollapen also states that Eskom has made a prima facie case “that it is not only entitled to but obliged to apply for a tariff determination for 2022/23 and further, that it was justified in doing so on the basis of MYPD4”.

“Whatever the merits of the Eskom' tariff application may be it must follow that if the application is not dealt with legally and in accordance with the prescribed procedures there must be a real risk of irreparable harm to Eskom in their attempts to secure a tariff that accords with the principles set out in the Electricity Regulation Act.

“This is turn has consequences for the viability of Eskom’s operations as well as its liquidity.”

In his order, Kollapen also set out a timetable for the determination of the 2023/23 tariff, which states that:

Eskom’s revenue application submitted on June 2, 2021 be published on December 8, 2021;

the public have until January 14, 2022, to make representations on the content of Eskom’s application;

public hearings on the merits of Eskom’s revenue application be held between January 17 and 21, 2022; and

that Nersa shall make a final decision on Eskom’s application by February 25, 2022.

The timetable is in line with the requirement to table a final determination in Parliament before March 15, 2022, in accordance with the requirements of the MFMA.

While the contents of Eskom’s 2022/23 application have not yet been made public it has been reported that the utility would be seeking a tariff increase of about 20% for the coming year. However, the utility rarely receives a tariff in line with its request.

Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about the latest legal wrangle between Eskom and Nersa, why Eskom is seeking to have Nersa's decision on its latest revenue application set aside and when an outcome is expected.

Automotive company Ford Motor Company on December 2 announced an investment of R600-million into its Struandale engine plant, in Gqeberha (formerly Port Elizabeth).

This investment will support the launch of a new 3 litre V6 turbodiesel engine, as well as upgrades to the existing assembly line for the 2 litre single turbo and 2 litre bi-turbo diesel engines, which will be offered in the company’s recently unveiled next-generation Ford Ranger pick-up, slated to launch next year.

The announcement was made during a media site visit to the Struandale engine plant. Speaking at the event, Ford South Africa Operations VP Ockert Berry said the investment was part of the company’s drive to modernise and enhance its local operations and that it would showcase the quality of South Africa’s manufacturing capabilities, with quality products for both the local export market.

This investment follows Ford’s R15.8-billion investment into the Silverton assembly plant and supplier tooling, that was announced in February to support production of the next-generation Ranger.

Through the R600-million investment, Ford is introducing a third diesel engine to the Struandale operations, with the new 3 litre V6 turbodiesel engine that will power selected next-generation Ranger models when production begins next year.

The majority of the investment will be used to expand and modernise the current assembly line that has produced the existing 2.2 litre and 3.2 litre Duratorq TDCi engines since 2011.

Milestones from this line include 792 000 engines assembled to date, for both South Africa and various export markets.

Moreover, Ford Struandale engine plant manager Shawn Govender highlighted that, to date, the plant has produced more than 3.81-million engines, comprising ten different engine programmes, since opening in 1964.

Production of the 2 litre single turbo and bi-turbo four-cylinder turbodiesel engines has hit the 175 000 unit mark since it was launched in 2019 for the current Ranger pick-up.

The extensive changes to this assembly line would enable the Struandale engine plant to run a flexible format, as it will produce the new 3 litre V6 turbodiesel engine alongside the Duratorq TDCi engines.

There are 40 stations on the line that will be common to both engines, with a further 25 stations unique to the 3 litre V6.

The plant will have a yearly installed capacity of 21 000 units of the 3 litre V6 turbodiesel engine when production begins in mid-2022.

The combined installed capacity for this line is 130 000 engines a year. However, it has been designed to allow the split between the two engine programmes to be adjusted based on future demand.

The plant will encompass Ford’s production technologies, including the latest tooling along with advanced camera and transponder systems that are fully integrated into Ford’s global Quality Management System, as used in its modern assembly line for the 2 litre single turbo and 2 litre bi-turbo engines.

Berry explained that this would allow the company to record and validate every step of the assembly operations to capture the entire history of each engine, to ensure quality control.

Further to the assembly operations, the Struandale engine plant will also be responsible for machining the cylinder heads for the 3 litre V6 diesel engine.

The investment programme includes new equipment, as well as retooling, upgrading and redeployment of existing machining operations for the cylinder head.

The machining line has an initial installed capacity of 42 000 cylinder heads a year for the V6 engine and it has also been designed to accommodate higher volumes in future should demand necessitate.

Further to to the new 3 litre V6 engine programme, Ford is modernising and upgrading the existing assembly line for the 2 litre single turbo and 2 litre bi-turbo engines to accommodate design changes for the next-generation Ranger.

Moreover, the updates being introduced on this assembly line would facilitate greater complexity with ad...

South Africa's food security is linked to the competitiveness of its agricultural production. Therefore, improving productivity through innovation and global best practices will support food security amid challenges such as climate change, and local electricity and water supply constraints, as well as logistics challenges, outgoing agricultural business organisation Agricultural Business Chamber (Agbiz) CEO Dr John Purchase has said.

Providing an overview of agricultural business in South Africa during the launch of Agbiz/Industrial Development Corporation Agribusiness Confidence Index for the fourth quarter of this year, he gave the example of how higher maize yields from 2 t/ha to 5 t/ha over the past two to three years has enabled South Africa to maintain its competitiveness, compared with Brazil, although both were below US yields.

This enabled the industry to maintain its competitiveness and remain a net exporter, and trading export parity is slightly below international prices owing to the costs of logistics to export. The competitiveness of this sector of the agricultural industry allowed higher value-adding agricultural sectors, such as meat and poultry, to also remain competitive, produce food at a relatively cheap price and make it available to the population at affordable prices.

"Competitiveness is one of the key pillars of food security and we must keep driving productivity improvements. This is true of almost all agricultural sectors," Purchase said on December 2.

The work Agbiz does, especially with the Agriculture and Agroprocessing Masterplan (AAMP) initiative, is to ensure food security and the competitiveness of the agricultural value chains, he added.

The South African agricultural sector managed to grow investments, productivity and value, and increased its exports during the year. In 2018, South Africa exported $10-billion worth of agricultural products, and Agibz is confident this will reach $11-billion for 2021, and achieve a trade balance surplus of $5-billion.

"The sector is garnering attention from government because this competitiveness underpins the rand and food security. But can we sustain this? If we do not have specific interventions into agrofood systems and address constraints, such as electricity, water and logistics costs and barriers, the industry will not grow and remain competitive," said Purchase.

INDEX FINDINGS

Agbiz chief economist Wandile Sihlobo highlighted that the turnover subindex improved by ten points to 92 owing to a good 2020/21 season harvest in field crops and horticulture, and higher commodity prices for grains and oilseeds.

"Importantly, this large harvest coincided with sustained higher prices. South Africa is well integrated with global markets and benefitted from these prices. The higher prices may partly offset some of the rises in input costs, including 30% higher fertiliser and 40% higher agrochemicals costs, which is one reason why the net operating income subindex increased by one point to 85 in the fourth quarter," he said.

The export volumes subindex increased by six points to 79 owing to the sizable harvest from the field crops and horticulture and cooperation among the logistics stakeholders and Transnet in facilitating exports, as well as normalisation in export activity.

Further, the employment conditions subindex, while showing a drop of 4% between the second quarter and the third quarter, improved by two points to 62 during the fourth quarter, with around 829 000 people employed in primary agriculture. This employment figure is 3% higher than fourth quarter of 2020, Sihlobo said.

"Besides indicating that about 5% of working people are employed in primary agriculture, employment remains above the long-term average of the past ten years," he said.

The employment subindex benefitted from general improvement in agricultural activity, including from favourable rainfall and the estimated 5% year-on-year improvement in summer crop plantings, as well as a gener...

The Altron Fintech Household Financial Resilience Index (Afhri) for the second quarter has confirmed that the average household in South Africa enjoys a more advantageous disposition towards incurring and managing debt than before the Covid-19-pandemic.

The results of the Afhri index released in August also showed this, meaning that the long-term upward trend in the index is likely to continue in 2022.

The purpose of the Afhri index is to assess the state of micro-lending in South Africa from the perspective of the ability of borrowers to repay their loans. The data provides more clarity on the financial disposition of households and their ability to cope with debt.

Optimum Investment Group economic adviser Dr Roelof Botha says the results of the second-quarter Afhri show a consistent improvement in the ratio of South African household income to debt costs, with an improvement of 20% over the past two years, and the recovery of household disposable income since the first quarter of this year – a 3.3% gain.

“Although most of the constituent indicators of the Afhri have continued to recover in the second quarter, it is a point of concern that total private sector credit extension remains on a downward trajectory.

“This raises questions over the recent decision by the South African Reserve Bank to raise short-term interest rates at a time when insufficient progress has been made with a recovery of job losses.

“Owing to the strong positive correlation between private sector credit extension and gross domestic product (GDP) growth, it has become a matter of urgency for government to reconsider the undue regulatory burden that has been placed on the formal microfinance sector,” Botha explains.

He adds that, unless lower-income groups are allowed easier access to credit, the pace of employment creation in South Africa will remain muted.

Some of the Afhri indicators include pension lump sums, unit trust assets, annuities, civil debt defaults, household income to debt cost ratio and long-term insurance claims.

Following the predictable sharp downturn in the Afhri during the second quarter of 2020, a fairly swift recovery of most key economic sectors since the third quarter of 2020 has assisted the Afhri trend line in returning to a positive growth trajectory.

A V-shaped recovery has been evident in a number of other key economic indicators, especially GDP, retail trade sales and the Reserve Bank’s composite leading business cycle indicator. The latter indicator reached an all-time record high during the first quarter of this year.

Since the base period for the index, which spans more than seven years, only three of the 20 indicators have recorded negative outcomes, two of which are marginal. This confirms a systemic improvement in the ability of the median household in South Africa to incur and service debt.

Between the first and second quarters of this year, only six of the 20 indicators recorded declines, which is an indication of further progress with the recovery of the financial disposition of households.

Compared with the second quarter of 2019 (pre-Covid), seven of the indicators have recorded double-digit rates of improvement. Although half of the indicators are still languishing in negative territory, only one of them (credit impairments by banks) still has a meaningful negative trend, with the overall AFHRI having returned to growth mode, albeit marginal.

Unfortunately, the four indicators that possess the largest weighting in the index have not yet recovered from the effects of the Covid-19 pandemic. These are employment (public and private sectors) and salaries (public and private sectors).

Altron Fintech MD Johan Gellatly says the index was developed with the key purpose of providing the market with critical insights on the level of resilience of those who apply for credit. It has specific relevance to the provision and state of micro-credit, an important segment of the overall credit market, and often the only option f...