Tag Archive | city deep

Transnet improves on road to rail switch

Transnet tries new formats…..

Troad railerransnet is piloting an innovative rail wagon termed a “road railer” which can use both rail track and the road system, all in further efforts to recover its loss of haulage to the private road sector, enter new markets and to improve turnaround times.   Addressing the Portfolio Committee on Public Enterprises on Transnet’s third quarter performance, Ravi Nair, Marketing and Operations Manager, said that this was one of the innovative pilot programmes in Transnet’s engineering facilities, which included also a flat rail wagon onto which private investors could invest with their own wagon specifications to meet tailored products hauled by Transnet rail. The meeting was specifically held to study Transnet’s road to rail strategy and progress.  Matters regarding Passenger Rail Agency (PRASA) were not involved.

Automotive industry important

Transnet, Ravi Nair said, were also introducing specialised wagons to meet the greater traffic needs of the automotive industry because of the introduction of SUVs and other wider bodied road vehicles, Ravi Nair said. The improvement of siding facilities for customers with necessary off loading equipment was also being undertaken as part of the general view taken of a strategy to improve the road to rail switch. It was noted that rail traffic with the automotive industry had greatly increased at the expense of road haulage. Nair said that on the whole there had been a 28% improvement in turnaround on the Durban/Gauteng line with an improvement in Duran harbour with new crane installations and container handling facilities.  An average turnaround time of 23hrs had been reduced to 18hrs for the trip.

Gauteng terminal reducing blockage

high-density-container-terminal-picture-credit-getty-imagesRaisile Letibe of Transnet said that the City Deep terminal in Johannesburg was due for further investment in sidings, warehousing and equipment. Throughout Transnet, a principle had been adopted that where maintaining line and signalling that had gone way beyond its age and maintenance was a waste of money, all line, signalling and switching gear was being replaced if maintenance was deemed necessary. Approximately 450 new locomotives were starting to pass through Transnet’s new plant at Kodooesberg, Pretoria, this being GE and South China Railway (CSR) locomotives of which some 100 CSR type had already emerged. Only 10 were built by CSR in China during the training period.

Hauling more

In mining terms, these locos will be able to improve a haul of 75 wagons up to 150 for magnetite, up to 200 wagons for manganese and probably double whatever was required with chrome, all possible according to the different class of locomotive used in the new range. The balance of Bombardier and China North locomotives will be built in Transnet’s Durban engineeringbombardier train works, taking the total number for Transnet freight haulage locos to well over 1,000. Transnet took advantage of a R50bn loan from China to conclude these contracts with the main operators and their BEE constituents, Transnet said. However, as things stood at present there was a general increase of 19% turnabout in mining haulage with increases for steel and cement, agriculture and bulk liquids and a major improvement in automotive products haulage and general manufacturing all recorded.

Freight and commuters

A daily meeting was now held with the Passenger Railway Agency (PRASA) on frequency of needs for commuters and the need for haulage of goods on the same track and the system was working well. There was a common understanding on signalling use and track needs at certain hours in cities and to industrial areas. PRASA were also engaged on their  massive development of commuter locomotives and carriages, or “trains” and the integration of both the needs of Transnet and PRASA were being satisfactorily co-ordinated, Transnet commented. rail sidings Raisile Letibe said that R300m had been invested in branch lines to attempt to keep them in shape for concessionaires when the plan to privatise branch lines was finalised. He said that the matter of branch lines brought Transnet with into contact with many other bodies involved in developmental matters including agricultural development, SEZ planning and rural development generally.

Private investment: branch lines

It was hoped to get the issue of the development of branch lines underway as soon as possible. Opposition members complained that this proposal was five or six years old. Under questioning, Transnet admitted that major “challenges” at the moment were breakdown of locomotives, all of which were now aged and parts had to be especially engineered a bought. Wagon availability was also a problem but both these “challenges” should be addressed by new rail stock. Industrial action and economic conditions contributed to the problems facing Transnet but to a lesser degree.

Rural outreach

Parliamentarians continued to be intrigued with the idea of a “road railer” which served the double purpose to become an off-rail road transport trailer. Nair, in answer to questions on this, said probably the private sector would be called in on road haulage issues to rural destinations and the system was used in many other parts of the world. A prototype was being constructed at the Transnet engineering workshops. Nair said that a number of bi-lateral meetings were being held with SADC countries, DRC, Mozambique and Namibia all with the purpose of improving volumes of haulage, particularly in Zambia where copper could be moved despite that country’s plans to open a rail link to the West Coast. However, the general purpose also was to strengthen economic growth through rail in the Southern Region. MPs all agreed that it was good news that at least one state utility in their portfolio was improving. Other articles in this category or as background Transnet says freight rail operations coming right Operation Phakisa to develop merchant shipping – ParlyReportSA Transnet doing better but resists carving up its assets South Africa remains without rail plan – ParlyReportSA Minister comments on taxi and rail plans – ParlyReportSA

Posted in Public utilities, Special Recent Posts, Trade & Industry, Transport0 Comments

Customs Duty Bill cuts out inland ports

Customs Duty Bill allows only for coastal ports…..

city deepIn dealing with the Customs Duty Bill, and its two tandem enabling Bills,  and talking to representatives of SARS and those advising them, there can be no doubt that SARS is working on the basis that current losses to the fiscus due to fraud and avoidance on matters regarding customs duty must be in the region of R4bn to R5bn, based on conservative estimating.  A weak link in the customs collection chain is cited as the line to City Deep and the terminal itself.

No official statement on an estimated figure however can be given, such issues are unproven and unquantifiable, they said, but if current SARS customs revenue is estimated this year at R50bn then a simple loss of 10% will produce such figures.

The massive Bill, drafted purely by SARS, clearly defines that the customs system in South Africa will change and customs clearance will have to be at a coastal port and that the present system of allowing uncleared goods moving to an inland port will cease.

Treasury going ahead

In responding to all the points made during public hearings, Kosi Louw, chief legal advisor, SARS, stated that it will proceed with its tabling on the basis that clear procedures for all stages of the supply chain are set out, monitoring of all stages are more easily monitored by SARS and that the increase in penalties are necessary.

A major concession allowed made by SARS is to include a “fallback” clause; in other words, if the new system imposed by SARS is found not to work or should fail in practice, then SARS would allow automatic reversal to the original situation; i.e. to allow inland ports. Kosi Louw said, however, that he was convinced that the new system would not only work but save the country a lot of money.

BUSA,JCCI opinions rejected

Most of the points raised by BUSA and JCCI were rejected by SARS in the light of the fact that the national interests that arose simply because of the vast amounts of revenue that were being lost to the fiscus. The new Bill brought about few changes in the trading positions of both importer and exporter, they said. 

SARS is insistent that it does not wish to close inland ports, stop container flow, congest the ports or discourage the use of rail or disrupt legitimate trade. However, now that so much digital flow of information is in the form of electronic transmissions rather than paperwork, it is time for SARS to undertake better risk assessments, Louw said, asking for more information that can be easily provided and to provide earlier information to traders and stakeholders so as to plan their supply chains, working on a basis of 1-2% interventions representing investigations.

Goods cannot continue to move purely on the basis of a manifest to an inland port, such manifest not containing tariff, value and origin to determine risk, they said. Thus with no manifest, the goods must in future be cleared by the importer at coastal locations and goods imported by them, not the supplier. Liability therefore becomes an importer’s issue as the ship docks.

Importers will have to pay from port

On the JCCI issues raised that traders will have to change their contracts of sale; sellers will be reluctant to sell goods under the new terms; importers will be badly affected and that delays and congestion will occur at ports, SARS has rejected all these points.

On the issue of CIF determinations, supply contracts and bills of lading, SARS confirmed that they had taken legal advice from Prof, Eiselen, a trade law expert; a maritime law expert, Adv Pammenter SC and Adv, Joubert SC, a customs law expert and no process of importation will be affected at law, they were advised.

A problem was ‘grouping” where say five parties shared a container to import goods where they could not fill a container alone. All five must submit customs clearance forms at coastal points and if one member of the grouping had a problem, then the whole container would be stopped, said Kosie Louw but this only represented 1% of all containers used, they noted.

WTO isues raised

On the issue that JCCI raised that the new Bill was in contravention of World Trade Organisation (WTO) treaties, SARS disagreed, They were party to the discussions with WTO and it is quite clear, they said, that any importation was subjected to national regulations imposed.

The moves in South Africa followed similar moves in Canada, the UK and Russia where specific information is now obtained. Where long distances by road and rail to inland bond points occur, enormous losses to the fiscus in those countries were occurring. The losses at City Deep, Johannesburg, are as high as 26%.

Penalties after three days

Three days are required for a clearance of goods that arrive by ship and penalties will arise after three days.

The implementation of such changes will be delayed by 12 months once the Bill is passed and “a clause will be inserted to allow for consideration of unintended consequences”. Freight forwarding associations and ship operators and their agents also supported the Bill, SARS said, as did Transnet.

In conclusion SARS said that they cannot allow the movement of goods to such a points as City Deep without proper information, such systems now being purely electronic moving from any manual paperwork.

In answer to questions, Louw said that customs control officers at the port no longer would make the decision whether or not to allow through a container. The containers themselves would be cleared or would not be cleared by the new electronic system that received the importer’s information, even interventions would be instructed by the system.

Under questioning, SARS repeated that the seller’s risk ceases at the point of loading the ship in a foreign port after CIF is paid. The only thing that will change is that there is no manifest to clear goods required but a new customs clearance procedure at point of landing by ship at the SA coast or at a border. The first stage of clearance will be in advance, or provisional, and a final release then issued.

SARS convinced that fiscus losses paramount

Finally, in answer to the question as to whether SARS felt that the Bill would damage in any way South Africa’s trade relations or trade figures, SARS denied that it would. It was “just a question of SARS getting better and smarter in the fight to raise more for the fiscus”. The whole system was predictable for all parties, Kosi Louw said, and all carriers have said it will make no difference to trade.

There was no change to the legal status of inland ports, SARS, said. Final rules and regulations can only be issued once the Bill under debate was passed but at this stage the Bill looks set for final approval. Refer previous article in this report.

There is no doubt that all three linked Custom Duty Bills will be passed before Parliament closes
Earlier articles on this subject:
http://parlyreportsa.co.za//energy/fueloilrenewables/illegal-diesel-coming-in-from-mozambique/
http://parlyreportsa.co.za//finance-economic/one-stop-border-post-with-mozambique-almost-there/

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New Customs Duty Bill opposed by BUSA

SARS customs duty bill to close inland ports…

portsharboursThe newly tabled  Customs Duty Bill, with its two enabling Bills, were the subject of  vehement objections from Johannesburg Chamber of Commerce (JCCI) and Business Unity SA (BUSA), who both led the charge against the SARS proposals tabled by National Treasury.

This was in the  in the form of the vehement objections to the Customs Duty Bill, the Customs and Excise Amendment Bill and the Customs Control Bill, which propose that the principle of inland ports be scrapped and all clearances for imported goods be conducted at SA coastal locations.

Nevertheless, the Bills were eventually passed before the present government ended after an extended session of the NCOP to provide concurrence.

JCCI said that this would not only upset SADC and sub-Saharan  importers but also cause unintended consequences such as the “death of such inland ports as City Deep in Johannesburg” aside from inconveniencing local importers generally.

They said that many importers having now to be responsible for the movement of goods up the Durban/Johannesburg corridor would switch from rail to road freight to complete the import journey, thus placing further strain on Durban /Johannesburg road systems.

Transnet to become nonviable

Such unintended consequences , it was felt by JCCI, whilst of no consequence to SARS who were obviously only interested in the current losses of tax revenues by evasion, illegal imports  and corruption would result in serious strain for existing importers and make Transnet targets impossible.

Also, they said in their submission, the moves would cause further congestions at coastal ports and that the SARS proposals were in conflict with normal practices allowed for by the WTO.

Currently, JCCI told parliamentarians, only 20% of imports were being received through the Durban/Johannesburg corridor destined for movement by Transnet, who were in the process of spending enormous sums of money on infrastructure and rolling stock to change this imbalance. Now was not the time to encourage more road freight, they said.

BUSA weighs in

BUSA said that such radical changes of insisting that the three day customs clearance required by importers at port of entry, if construed as coastal only, was an unacceptable arrangement and although two alternative options were offered by SARS, neither had been found to be acceptable.

It was the wrong time to make such changes, said BUSA, and SARS should re-consider its approach and new ways found to reduce their losses of revenue in duty.

Also BUSA complained of the high penalties proposed for late clearances of goods if the proposed three day notice was not met and that new approaches should be considered generally that incorporated and embraced the concepts declared by the minister of trade and industry who has stated he wants to increase South Africa’s sub-Saharan business.

The concept of removing City Deep as a customs clearance point was akin to changing a practice that had existed for 37 years, JCCI noted.

SARS unmoved by the arguments presented.

(SARS responses to these submissions is in a later story on this website)

Earlier articles on this subject:
http://parlyreportsa.co.za//energy/fueloilrenewables/illegal-diesel-coming-in-from-mozambique/
http://parlyreportsa.co.za//finance-economic/one-stop-border-post-with-mozambique-almost-there/

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