LOGISTICS & TRANSPORTATION CHALLENGES FOR OILS & FATS IN SUB-SAHARAN AFRICA PREPARED BY: DERRICK FRANCIS FR WARING (INTERNATIONAL) (PTY) LTD

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1 LOGISTICS & TRANSPORTATION CHALLENGES FOR OILS & FATS IN SUB-SAHARAN AFRICA PREPARED BY: DERRICK FRANCIS FR WARING (INTERNATIONAL) (PTY) LTD

2 CONTENT PORT BY PORT ANALYSIS - MOMBASA DAR ES SALAAM NACALA BEIRA MAPUTO DURBAN CAPE TOWN TANK STORAGE CHALLENGES PERIPHERAL CHALLENGES SUMMARY & CONCLUSION ACKNOWLEDGEMENTS

3 MOMBASA ANNUAL PALM IMPORT VOLUME: (KENYA) (UGANDA) = MT PER ANNUM MOMBASA TANK SPACE : MT (PRESENT) / MT (AFTER EXPANSION) TANK TURN: 12.5 TIMES PER ANNUM (PRESENT) MBARAKI BERTH SERVES LAFARGE AND KENYA FLUORSPAR WHO ENJOY PRIORITY- PIPED TO 3 TERMINALS MAIN PORT PIPED FOR OILS TO 2 TANK FARMS M DRAFT, AT BERTHS 7 TO 10 (BERTH 9 IS 10.3M ALMOST ENTIRELY DEDICATED TO MAGADI SODA ASH) (SOT) 9.75 M DRAFT 100% PETROLEUM AND LPG EVEN THOUGH 3 VEGOIL PIPELINES, STAINLESS STEEL FOR CAUSTIC AND CHEMICALS, BUNKER BARGES ENJOY PRIORITY BERTHING AVG 4-7 DAY BERTHING DELAY FOR VEGOIL TANKERS SUGAR / RELIEF CARGO AND PETROLEUM ENJOY PREFERENTIAL BERTHING PRIORITY INDIAN OCEAN PIRACY IMPACT ON FREIGHT RATES, WAR RISK INSURANCE AND STOCK-OUTS. KENYA NAVY TAKE AN INTEREST IN ESCORTING VESSELS FROM TIME TO TIME LABOUR ISSUES / EQUIPMENT DOWNTIME / INEFFICIENT REVENUE AUTHORITY ARE THE MAJOR PROBLEMS DUE TO ANTI-DUMPING MEASURES, KENYAN REVENUE AUTHORITY IMPOSED 14 DAY LIMIT ON TRANSIT CARGO, REFERRED TO AS CUSTOMS WAREHOUSE RENT - US$ 3 PMT PER DAY PENALTY PORT CHARGES ARE REASONABLE COMPARED TO OTHER EAST AND SOUTH AFRICAN PORTS RAIL / ROAD RATES ARE HIGH MORE THAN DOUBLE THE OCEAN FREIGHT TO SOME HINTERLAND LOCATIONS LACK OF SUFFICIENT CAPACITY IN RAIL AND ROAD LOGISTICS ROAD TRANSPORT NOT COILED, LIVE STEAM INTRODUCED TO SOFTEN MATERIAL (INCREASES FFA AND PV) ROAD AND RAIL INFRASTRUCTURE AND EQUIPMENT IN A DEPLORABLE STATE RVR (RIFT VALLEY RAILWAYS) PRIVATIZED KENYA AND UGANDAN RAILWAYS NETWORK - HAVE BEGUN IMPROVING INFRASTRUCTURE, WILL TAKE YEARS TO SHOW IMPROVEMENT

4 DAR ES SALAAM VESSELS KNOWN TO WAIT 2 TO 6 WEEKS FOR BERTHING CURRENT TANK CAPACITY 60,000 MT FOR VEG OILS AVERAGE ANNUAL IMPORT VOLUME 250,000 MT AVERAGE TANK TURN 4 TIMES KOJ (KURASINI OIL JETTY) 11 M DRAFT 3 DOCK LINES, 183 LOA COJ (COASTAL OIL JETTY) 7 M DRAFT, 132 LOA, 2 DOCK LINES PRIORITY BERTHING FOR PETROLEUM CHEMICALS AND VEGOILS HAVE TO WAIT! TENDERS AWARDED TO MAKE VARIOUS IMPROVEMENTS TO OIL JETTIIES DURING 2012/2013 FLOW METERS FINALLY WITHDRAWN ROAD TRAFFIC CONGESTION RAIL NOT AN OPTION FOR VEGOILS MORE THAN 100% MORE EXPENSIVE THAN MOMBASA IN TERMS OF PORT CHARGES

5 INDIAN OCEAN PIRACY HAS BECOME LUCRATIVE BUSINESS

6 INDIAN OCEAN PIRACY

7 SOUTHERN HEMISPHERE PIRACY

8 LUXURY PIRACY CRUISES You'll relax like never before! Board our luxury cruise ships in Djibouti on the Gulf of Aden and disembark in Mombasa Kenya, seven adrenaline-charged days later. Reservations start at only $5,200 per-person and $6,900 (verandah with bench rest room) The object of our cruise is to sail up and down the Somali Coast waiting to get hijacked by pirates!...pirate TARGET PRACTICE!

9 NACALA DEEPEST PORT IN MOZAMBIQUE ONLY ONE TANKER BERTH ALTHOUGH NOT HEAVILY CONGESTED PORT CHARGES EXCESSIVE (HANDLING / AD VALOREM / SCANNER / WEIGHBRIDGE) SHORTAGE OF MULTI-GRADE TANK SPACE ALTHOUGH HAS INCREASED IN RECENT YEARS TOTAL 9,500 MT WITHIN THE REALMS OF PIRACY AREA HAS IMPACT ON FREIGHT RATES RAIL AND ROAD OUTBOUND LOGISTICS AVAILABLE ALTHOUGH RAIL PROBLEMATIC BUREAUCRACY AND RED TAPE IS A MAJOR ISSUE

10 BEIRA DREDGING COMPLETED NEW CHART DATUM IS 8 METRES QUAY DEPTH 9.5 METRES NIGHT NAVIGATION NOT PERMITTED VEGOIL TANK SPACE APPROXIMATELY 24,000MT ROAD AND RAIL OUTBOUND LOGISTICS REASONABLE NO DEDICATED VEG OIL BERTH BUT PETROLEUM DOES HAVE A DEDICATED BERTH - # 12

11 MAPUTO TANK CAPACITY: 9,000 MT (MAPUTO) PLUS 4,700 MT (MATOLA) DRAFTS IN THE CHANNEL AND BERTHS ARE REASONABLE GOOD CONDUIT FOR TRANSIT CARGO TO SA ALTHOUGH ROAD TRANSPORT to SOUTH AFRICA REMAINS EXPENSIVE DUE TO BORDER DELAYS / LACK OF BACK HAULS / TOLL FEES AND PORT CONGESTION MAPUTO (BERTH 16) DRAFT OF 11 METRES ACCOMODATES CHROME ORE / COAL AND VEGOILS MATOLA (STEMA GRAIN) DRAFT OF 10 METRES HANDLES VEG OILS ALTHOUGH GRAIN AND PETROLEUM ENJOY PRIORITY BERTHING

12 DURBAN OCEAN TANKERS HELD TO 7 BAR PRESSURE BY TANK INSTALLATION SHORE TANKS WERE DESIGNED FOR EXPORT, NOT IMPORT SHORE LINE INFRASTRUCTURE NOT TO INTERNATIONAL STANDARDS, SHORT IN NUMBER AND PUMP CAPACITY TO HANDLE VESSEL PUMP RATE PORT AUTHORITY LACK OF EXPERTISE IN SOME AREAS PORT CONTROL OFFICERS / PILOTS / TUG MASTERS / DREDGING MASTERS 10 TO 20 YEAR WAIT FOR EXPERIENCE TO DEVELOP CLOSURE OF IV BERTHS NOT PLANNED PROPERLY SHOULD HAVE BEEN A PHASED APPROACH COMLETE ONE AND CLOSE THE NEXT ONE WILL CONTINUE TILL 2013 LACK OF MAINTENTACE PLANNING OF PORT INFRASTRUCTURE IS A SERIOUS ISSUE, BERTHS / TUGS / ROADS / RAIL 4 BERTHS CLOSED AT THE SAME TIME AS DEEMED UNSAFE DRAFT RESTRICTIONS ARE NOT A FAULT OF PORT AUTHORITY, RESTRICTED TO DESIGN DEPTH. BERTHS SHOULD HAVE BEEN RE-DESIGNED YEARS AGO IN LINE WITH INTERNATIONAL STANDARDS NEW PORT ENTRANCE CHANNEL OF METRES, YET NO BERTHS OF THAT DEPTH AVAILABLE SHORE TANK SPACE LIMITATIONS ONLY CUBICS FOR VEG OILS (IV AND MW) TANKER BUSINESS RANKS SECOND TO CONTAINER BUSINESS WHICH ENJOY PILOT PRIORITY ON BERTHING AND SAILINGS ROAD REVAMP WILL TAKE ANOTHER MONTHS, RAIL A NON-STARTER ROAD TRANSPORT BAY 2 VERY CONGESTED, NEW SLOT LOADING SYSTEM MIGHT CREATE MORE ORDER

13 CAPE TOWN SHALLOW ENTRANCE CHANNEL OF 12.2 m TO 13.1 m. BERTHS: TB1 AND TB2-15 M DRAFTS! RED LINER BERTHING IN LINE WITH INTERNATIONAL SAFETY STANDARDS IF VESSEL DISCHARGING LOW FLASH AT TB1 AT NIGHTFALL, TB 2 CLOSED TO BERTHING AND DEPARTURES UNTIL DAYLIGHT! SHORTAGE OF DEDICATED VEG OIL TANK SPACE ONLY ONE SHORE LINE TO HANDLE MULTIPLE GRADES OF PALM AND SOFT OILS HIGH INCIDENCE OF DEMURRAGE BERTH TO TANK DISTANCE FAR SLOW DISCHARGE RATE OUTBOUND LOGISTICS BY ROAD ONLY NO RAIL

14 TANK STORAGE TANKS ARE GENERALLY NOT IN GOOD CONDITION, UNLESS PRIVATELY OWNED AND OPERATED DISTINCT SHORTAGE OF TANK CAPACITY IN SOME PORTS TANK CALIBRATIONS ARE NOT ACCURATE IN SOME PORTS SHARED LINES FOR ALL TYPES OF PRODUCTS HIGH RISK OF CONTAMINATION SHORTAGE OF TANK SPACE IN SOME PORTS CAUSES NEED FOR OUTLOADING DURING VESSEL DISCHARGE SHORTAGE OF SLOP TANKS

15 TANKS (BEFORE)

16 TANKS (AFTER)

17 PERIPHERAL CHALLENGES SECURITY IN SOME PORTS LEAVE ALOT TO BE DESIRED GENERAL POOR STATE OF PORT INFRASTRUCTURE NON-COMPLIANCE TO INTERNATIONAL STANDARDS HIGH LEVELS OF CORRUPTION IN PORT ACTIVITIES IN SOME SOUTH EASTERN PORTS ROAD AND RAIL OUTBOUND LOGISTICS NEED TO BE IMPROVED BERTHS / TUGS / PORT ROADS AND ENTRANCES NOT PROPERLY MAINTAINED BUREAUCRACY BY PORT AND CUSTOMS AUTHORITIES

18 SUMMARY & CONCLUSION PUSH FOR IMPROVEMENT OF PORT INFRASTRUCTURE AND ACCOUNTABILITY BY PORT AUTHORITIES MUST BE DONE BY PORT USERS WHO MUST DEMAND SERVICE FOR THEIR WHARFAGE SPEND PERCENTAGE BASED PORT CHARGES IN SOME PORTS (CUSTOMS BROKERAGE / AD VALOREM) MUST BE SCRAPPED! VESSELS SPEND AS MUCH AS 40% OF THEIR TIME IN PORT DUE TO PORT INEFFICIENCY! PORT AUTHORITIES MUST TAKE COGNISANCE OF COMMERCIAL CONSEQUENCES OF DELAYS AND BAD INFRASTRUCTURE ON SHIP OWNERS / CHARTERERS AND RECEIVERS EFFECTIVE COMPETITION IN CRITICAL PORT AND PRIVATE SERVICES NEEDS TO BE ADDRESSED AND ENCOURAGED INEXPERIENCE AMONG PORT PERSONELL MUST BE ADDRESSED BEST MAN FOR THE JOB! RAIL TRANSPORT MUST BE REVIVED - OUTBOUND LOGISTICS NEED TO BE IMPROVED ROAD TRANSPORT IS NOT THE ANSWER! PORT CHARGES MUST REMAIN COMPETITIVE BY WORLD STANDARDS FOR COUNTRIES TO BE ABLE TO COMPETE IN INTERNATIONAL EXPORT TRADE FOSFA PRACTICES NEED TO BE FOLLOWED THROUGH ON SHORE SIDE SHORE TANKS AND ROAD TRANSPORT, HEATING, LAST CARGOES ETC PORT WEIGHBRIDGES MUST BE CALIBRATED PROPERLY AND REGULARY SLOW PACE OF PRIVATISATION IN PORTS (WHICH ARE SEEN AS NATIONAL / POLITICAL ASSETS) MUST BE ADDRESSED - PRIVISATION NEEDS TO HAPPEN TO IMPROVE SERVICE LEVELS!

19 ACKNOWLEDGEMENTS ODFJELL SEACHEM TOKYO MARINE RIVERSIDE TANKER CHARTERING NACALA TANK TERMINALS MANICA FREIGHT SERVICES (MOCAMBIQUE) MENTOR SHIPPING AGENCY ISLAND VIEW STORAGE (DURBAN) TRANSNET PORT AUTHORITY