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Coffee with the CEO: Maputo Port Development Company, Grindrod Terminals and DP World

 

Thank you for joining us on 12 June, for Coffee with the CEO digital session, featuring Osorio Lucas, CEO of MPDC, Vishal Deeplaul, CEO of Grindrod Terminals and Christian Roeder, CEO of DP World. Lots of questions were posed during this session, some answered live and as promised, all would be answered following the session. Please see the questions below, asked by you and answered by our CEOs.

 

Question:

Question for all panelists / particularly Osorio from Devi Paulsen, VP, dmg events: Do you see technology being the biggest enabler post COVID-19 disruptions to ports in Mozambique and for the greater continent. And could you share some examples of some of the tech that you envisage / will be implementing? Devi Paulsen – dmg events

Osório:
Dear Devi, Definitely yes. Ports like the rest of the service sector will have to rely more and more in technology and all. We will discover means of making the leapfrog by relying less on human labor. In our specific case, we were working on systems already but very much focused on port operations and less on the full logistic chain, although we had that in our pipeline. Today, due to the congestion at the border caused by Covid-19 and the preventive measures in place the main focus is to rely in systems to connect the whole value chain and allow instant communication between the different intervenient in the value chain. Covid-19 forced us to think the corridor as one single system and resort to tech to simplify paper work, reduce congestion of people at border and make the processes faster and simple.

Vishal:
As a further example of technology driven changes related to Covid, at the Maputo Car Terminal (MCTL) the team implemented on online quotation and tracking system using facebook and Twitter to remove manual processes with high people contact with Terminal administration. Various other IoT and digitalization initiatives are in progress at Grindrod Matola Terminal, TCM.

 

Question:

What is the plan for private investment in rail projects in Mozambique?  Joao Ramos – AECOM

Osório:
Dear João, Although this is outside the scope of MPDC as we are solely a port operator for Maputo, the Country has a rail private operator that operates the Line between Moatize Mine and the port of Nacala up north with the main focus for the export of coal. Other experiences have been tried like the Sena Line (from Moatize to Beira Port) again for coal. Not aware at this stage of specific plans to privatize the operation of other lines.

 

Question:

On subject of bunkering is the done in port or off port STS and what viscosity can be supplied? John Lawlor

Osório:
Yes John. Bunkering is done in the port and its approach channel. There are plans to provide STS. The port and its provider of marine service has equipped to provide STS. It as matter of opportunity.

In Maputo Port Marine Jurisdiction Area we make two types of STS:

Port STS
a) Alongside and,
b) At anchorage or in the entrance or close to the Fairway buoy.
c) Off Shore

We can provide Bunkers and Fresh Water for vessels which are in transit @ Maputo Port Roads.

Viscosity itself it´s a property of every fluid and the same fluid can change is viscosity depending the temperature. This also imply that for example the same volume of fluid at different temperatures have different weights. But yes, we supply different products with different viscosities, different types and different Sulphur concentrations, in special to align and comply with the MARPOL new regulation, started the implementation in the first of January this year.

Regarding Sulphur concentration, we can highlight the following products:
a) VLSFO – Very Low Sulphur Fuel Oil – (0.5% Sulphur)
b) LSMGO – Low Sulphur Marine Gas Oil – (0,1% Sulphur)
c) ULSMGO – Ultra Low Sulphur Marine Gas Oil – (% defined by country. In Mozambique it´s 50 ppm)

Internationally, with concentrations of 0,1 % it is already considered Ultra Low.

 

Question:

The newly implemented system of levying standby charges etc. will significantly increase calling costs at MPC. Do you believe that this, and the devaluation of the SA rand against the USD, will result in shippers redirecting their cargo to Richards Bay or Durban?  Chris Sutton – IVS International

Osório:
The drive of the initiative is aimed at vessel productivity and to enhance vessel turnaround time. We believe that with more efficient joint planning this can be achieved and good planning will contribute towards minimizing idle time of resources standing by. Resources are one of the biggest cost drivers for any port and it requires firm port operating rules to manage the joint efforts towards the sign off of a vessel plan that delivers efficiency and cost management by reducing drivers such as unnecessary idle time. We believe that with proper planning, duly carried out by both the shipper and the port, the stand by charges can be minimized.

 

Question:

Good morning, thank you for hosting this session, my question regarding the master plan that he spoke about is the master plan including all transport fraternity or is just port and are they have considered the infrastructure in the plan? Siyabonga Ndlela

Osório:
Dear Siyabonga, the master plan under revision covers mainly infrastructure development, new zoning of the port, technological development. It also covers the required improvements to accommodate additional truck and railway transport to and from the port. However, being the port a private operator, the development of a master plan for the transport fraternity and other servitudes is outside of our scope.

 

Question:

What is the reason for the large variance between road and rail in bulk coming from South Africa? Does this require additional infrastructure investment?  Nazeer Slarmie

Osório:
Dear Nazeer, in my opinion there is a multitude of reasons behind this (1) cost is probably the main one as it is still cheaper to transport by road than by rail to Maputo; (2) not every mine has rail siding at the mine, requiring cargo to be road hauled to the nearest rail loading facility. This necessitates additional handling of the cargo and the exercise of double handling is expensive when compared to direct call of road transport to the port (3) I believe there is a need and opportunity for a further integration of resources between TFR and CFM (the two railway operators that interact between SA and Moz.

 

Question:

In light of Covid-19 which has prompted many companies to look to retain cash, how has this effected your capex plans? Also, what does your capex comprise over the next 12-18 months, particularly in respect to infrastructure (new-build and rehabilitation/upgrading)?  Andrew Maggs

Osório:
Dear Andrew, like with almost every company we had to refocus our business to protect cash flow and guarantee sustainability to the business as it appears that no one knows when this pandemic and its negative impacts will cease. However as we indicated during the presentation we have not stopped what we consider to be strategic investments for our immediate future (post covid), namely rehab and upgrade of 1000m of quay bringing it to between 15 and 16 meters depth. We have also maintained the investment to increase our internal railway footprint in order to contribute to a more balance share between road and railway.

As to future investment, we are completing our master plan. Once that is completed will define a lot of what our future investment will look

 

Question:

As the number of cases spike……how are the chances of economy, port being closed again ? will the operations continue during the second big wave ?  Ntokozo Nene

Osório:
Dear Ntokozo, first of all we hope and pray that there is no second waive or if there is, that we are more informed and prepared. That might be wishful thinking. However, Mozambique has legislated that ports are considered strategic assets to our economy and like in many countries around the world did not close the ports but it imposed some restrictions in terms of labor engagement and movement. We don’t expect that to change as ports are crucial not only to the economy but to social life as well. We have stepped up our controls and are working closely with the border institutions to improve controls in the whole value chain.

 

Question:

Good Morning Osorio. Please advise on your plans to link into the planned Dry Ports of Cato Ridge and Tambo Springs in SA? Warwick Lord

Osório:
Dear Warwick, we have no such plan. Currently our focus is to the main corridors linking to Maputo namely Mpumalanga, Gauteng, Limpopo, Zimbabwe and Swaziland.

 

Question:

What are the perspectives for the container terminal in the regional context competition? Fernando Grilo

Christian:
Dear Fernando, naturally we focus on the areas where we have a distance advantage compared to Durban and Beira. Cargo from certain parts of South Africa, Eswatini and southern Zimbabwe is interesting for us. Where we are equidistant or at a disadvantage we aim to be a viable alternative in case of supply chain disruptions through other ports.

To offer a more competitive product we need to reduce bureaucracy and increase efficiencies. Here we work closely with MPDC, CFM and the government. Further, we invested in a facility in Komatipoort to serve potential South African clients better. Our main effort is focused on setting up competitive intermodal products. We believe that the Maputo Corridor has an important role to play in the Region and base our expansion plans around a positive outlook. We want to assist the economies to enable trade by offering cost effective logistics solutions.

We welcome feedback to our current service offerings and competitiveness and engage in a dialogue.

 

Question:

I would like to know how many job losses due to Covid 19 pandemic and what is the plan is place to recover from that and how many job opportunities will be created?  Siyabonga Ndlela

Osório:
Dear Siyabonga, as we had the opportunity to indicate during the presentation, we have not registered loss of jobs as yet as maintaining jobs as well preserving our liquidity became the main focus. It must be said though that there must be some loss in terms of casual labor as that is very much linked to volumes and vessel calls that have reduced. This will certainly be recovered as volume returns. Neither MPDC nor the sub-concessionaires operating inside the port have dismissed employees. We embarked in other kind of cost savings in order to protect labor. Core port labor is specialized and scarce so keeping them is a key objective.

 

Question:

With the prospect of Covid19 pandemic impacting regional economy for another 6 months to a year, is there a risk of South African freight traffic moving away from Maputo to other South African ports like Richards Bay and Durban and what is MPDC doing to prevent this?  Paris Marques – Aurecon

Osório:
Dear Paris Marques, we believe that the fear of losing business must be permanently in the minds of every company (with or without Covid). That generates a positive force through constant innovation and by being client centric. We have accelerated our investment in systems and improved coordination with different actors to make “doing business” with Maputo Port much easier and pleasant. Our focus is to offer a different experience to the clients. The other drivers include the preservation of our market share through operational efficiencies, improving Turn Around Times at the port and improving the whole value chain. This is work in progress but we believe that we are offering a good proposition to the market.

Christian:
Of course it is easier to attract cargo to Maputo when other ports have capacity issues. However, we do not see Maputo’s role as an ‘overflow’ port. We are building a viable alternative that must be more cost effective for our clients.

 

Question:

What is your anticipated recovery scene/profile look like and what are the key determinants for this? Anonymous Attendee

Osório:
As you might be aware, most of the cargo transiting through Maputo has china as the destination. China economy keeps moving and the demand for south Africa exports is there. The negative impact of Covid over the Port operations came from the supply side, with the lockdown of South Africa. Mines are back to work and mineral exports have been permitted by South Africa Government.

However, taking in consideration that due to Covid 19 advent several rules and procedures will change we believe in a slow but steady recover to the levels before Covid.

Key determinants are, obviously the market and our ability, as a region, to quickly implement measures that will compensate the inefficiencies imposed by the covid prevention measures ( digitalization, streamlining processes, integrating different parts of the logistic chain etc).

Christian:
We expect a situation that we have to live with Corona for many more months. During the session we touched upon a “new reality”. As soon as the government reduces the restrictions we will return to a more normal situation as well. However, we will monitor the situation closely and continue to protect our employees. If we see signs of a second wave, we can quickly respond through our updated contingency plans. The past months have helped us tremendously to become a more resilient organization.

 

Question:

How is the Maputo Port stand to benefit from the Oil & Gas prospects ahead of us all?  Godfrey Munedzi – Standard Bank Maputo

Osorio:
Dear Godfrey, in responding to your question, one needs to split between the short term opportunities ie, the ones linked to the Cabo Delgado Area and potential future opportunities down south. For the first ones, we need to have in mind that we are around 1500 nautical miles away making our port not necessarily the preferred port and we are mindful of that. We are however prepared to work as a supporting port for the needs that may arise for which the other local ports might not be in a position to serve. A different philosophy can be taken for the opportunities in the south region that are not yet well known.

 

Question:

How has the security situation in Northern regions of Mozambique affected and what measures are in place to secure port operation in Nacala and the other ports. Are there contingency plans for Mozambique maritime transport users?  Graham Walker – SAAB

Osório:
Dear Graham, because of our geographical position we are not directly impacted by the situation up north but are definitely concerned as there are lives being lost, people being displaced and infrastructures being destroyed. As to the last part of your question, being a private operator we are not involved in security matters so not really much aware of plans to address the matter.

 

Question:

What can be considered to be Covid 19 impacts as a force for good?  Godfrey Munedzi – Standard Bank Maputo

Osório: 
Hi Godfrey, as we have indicated before, we have been forced to accelerate technological developments by looking at the corridor in its entirety and offering our tools and means to contribute so that the corridor works as a system. The main plus is that we believe we now understand that we either see the corridor as one integral peace or we all stand to lose.

Christian:
Dear Godfrey, to add to Osorio’s comments I also think that the hygienic standards for employees and port users improved. The situation is an eye-opener for us and we aim to maintain the new standards.

 

Question:

What are the key technological challenges in the rollout of the MPDC Master Plan and what is the general overview of the required digital systems will will be needed as Maputo (and other Mozambique’s Ports) expand to handle more traffic and volumes in future? Graham Walker – SAAB

Osório:
Dear Graham, MPDC embarked on this technological transformation almost 8 years ago with a team of young Mozambican developers employed by MPDC. The main challenge faced today is the high demand for technological transformation and not enough hands to deliver. The solutions being put in place are not hindered by the size of the business or volumes coming through the Port. An additional challenge is transforming IT illiterate people to IT gurus, however this challenge MPDC has been working on over the years by employing with minimum 12 grade and under the age of 25.

 

Question:

Hearing all about bulk and commodity handling in Maputo, is there a masterplan to attract more containerized cargo and general cargo to make Maputo less dependent from commodities? Anonymous Attendee

Christian:
Dear Sir, we will play our part in making the Maputo Corridor more resilient. We have growth plans that are closely coordinated with MPDC. These revolve around diversification but also on balancing cargo flows. Currently, the Corridor is too focused on export cargoes. Supporting our planned container port expansion project we encourage additional facilities, e.g. depots along the Corridor that tie in with intermodal products. Only competitive (reliable and cost effective) cross-border solutions will assist us in delivering on our container volume growth plans and MPDC’s diversification strategy.

 

Question:

Not sure who can answer. When, which year, would Maputo port overtake Durban in terms of volume and lower cost of using port? Best estimate. TK CHUA

Osório:
Dear TK. We don’t envisage that as the focus of the port. We understand Maputo port as a support to the region, particularly to the South African Economy. The aim is to make sure that the end consumer benefits with an overall quality service and pays just a fair price and therefore, contributing to the growth of the region. Durban has it historical and strategic placed.

The choice of a suitable port is driven from a corridor perspective and customers make decisions based on the best value obtained from a specific corridor from both a cost as well as an efficiency perspective. Using Bulk cargo as an example, Mines situated in the Western rim of South Africa find that the rail network is better suited towards the Ports of Richards Bay and Durban, offering a shorter distance as well as better efficiency compared to Maputo.

Mines situated in the Eastern rim of SA find that road haulage distances to Maputo are significantly shorter than to Richards Bay & Durban, allowing for this corridor to be more efficient and cost effective.

 

Question:

Bom dia Osório, percebi que o Portelo de Maputo teve que refazer ajustes para se adaptar a pandemia do COVID-19, tenha duas perguntas.
1- Gostaria de saber se fizeram ajustes nos vossos processos de procurment.
2- O vosso processo de procurment está disponível e é de acesso fácil ( facilita a ligação com as micro empresas e PME’s de jovens empreendedores de Moçambique )?”  Isildo Massambo

Osório:
Dear Isildo, we did not have to adjust our procurement processes, as we believe we have strong and transparent Procurement policies and procedures. We support working with the small and medium companies as long as they are able to deliver the standard and quality of service required by MPDC. We will soon be launching our online supplier registration platform through our website, so you are more than welcome to do so.

 

Question:

But will your companies keep the tele working after the Covid or will request the staff to be always behind the desk?  Rui Narcy

Osório:
Thanks Rui. Being a port, it is most likely that we will resume back to the face to face interaction with our staff. It is likely that for shared services some form of telework or flexwork is adopted.

This is an acceleration and adaption virus, which means that everything we do today would actually be done in the medium or long term, including telework and flexy work; we are conscious that after covid 19, nothing will be the same again, most innovations are here to stay.

For some time now we have been working on the technologies such as security of installations via cameras or drones, cargo reception via unmanned weighbridges and other techs that allow us to access internal management platforms remotely.
So yes, given the nature of our activities, we will return to the form of natural work but other activities will maintain telework and flexy work.

Christian:
Dear Rui, we will likely ask our employees to return to ‘traditional’ office work. Especially, in the operational environment we need strong supervision on the ground to avoid accidents and maintain efficient communication. We will, however, be more flexible in specific cases to allow our colleagues to work from home.

This being said, we now have the capabilities to enable many of our colleagues to work from home. We can always return to this if we deem it beneficial.

 

Question:

First I would like to congratulate the organization team for this great initiative and opportunity to let us learn more about this amazing sector. I would like to know, apart from the measures mentioned in respect to what can be done after the COVID-19 outbreak, related to the digitalization of the Port. Taking in consideration the lessons that were possible to be taken from this outbreak, having seen that the biggest impact on the Port’s balance came from the restrictions imposed on SA and not from china’s lockdown, is this a sign that the Port should invest more in the costumers from the countries of the region, especially those in the Hinterland? is there any plan to strengthen the trades within those countries?  Anonymous Attendee

Osório:
The port of Maputo in its diversification strategy considers not a diversification of commodities but also a diversification of markets and regions. This includes all the countries in the region that have a potential link and/or corridor to the port of Maputo, over which we can provide assistance. Although South African is our most beneficial trade partner, it is not the only country we cater for. We currently already provide services to Swaziland and Zimbabwe for instance, and we intend on growing this market share as we are well positioned to cater to Botswana, Zambia and Malawi as well.

 

Question:

Will Maputo port be ready and willing to support the LNG Developments and Projects in Afungi in terms of a potential transshipment hub? Anonymous Attendee

Osório:
Definitely so. The port has all the conditions to work as a hub. However, note that our strategy is assuming that the prime ports for these projects are the ports located up north like Nacala. We are, however, well positioned and more than willing to support this important project for the country.

 

Question:

Why has the Ponto de Or border not been opened for commercial traffic? Shane Nesbitt

Osório:
Dear Shane, this must be out of health considerations. However, as a private operator we would not know the main reasons although we can guess that it might have to do with the government definition of essential service to the economy in a context of state of emergency.

 

Question:

Do you think your Clients and Customers will be happy with and support continuing virtual communication post Covid or is personal face to face contact still going to be preferred?  Gareth Pollit – Moore Integrate

Osório:
Dear Garreth, our belief is that life after Covid will be a mix of the two. Definitely virtual communication is here to stay as it is a business need as it reduces costs and introduces efficiencies- time saving). However, we believe that some face to face communication will always be there as clients will continue to need to visit their stocks, see the port that serves them and do their quality controls. Due to the large customer base in SA, MPDC does have an Office based in Durban which is manned by one of the senior members of our Executive Team. In the past this contributed to more efficient customer engagement and as soon as local travel restrictions are lifted, face to face customer engagement will be resumed.

Christian:
Dear Gareth, our aim is to maintain the virtual communication in certain areas, e.g. container releases. The pre-Covid process has been inefficient and frustrating (long queues, waiting times, several trips to various service providers). In such areas we rather aim at reducing physical interaction further. Covid has shown to be a great enabler creating urgency. However, on the commercial side and certain interactions with our suppliers we will engage in more face-to-face interaction again.

 

 

PART OF THE GLOBAL SERIES OF TRANSPORT EVOLUTION FORUMS

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Mozambique

11 – 12 May 2022

South Africa

28 – 29 September 2022