Operational factors

Power supplies to ports were maintained during Eskom load shedding. The only effects of power interruptions were secondary as load shedding impacted our customers.

Management at all our port operations were challenged to optimise our investment in recent years in new equipment and infrastructure.

South African Bulk Terminals continued to reduce berth times through ultra-efficient handling of grain shipments by the continent’s 2,3 million tons.

In the liquid bulk sector, a business such as Island View Storage benefits from the mounting product-handling pressures faced by the major oil companies. In the past, these companies had little need to outsource a portion of their storage capacity as they had ample in-house storage facilities. More recently, they have used IVS to complement their own tank infrastructure.

The team at Bulk Connections handled a record 22 000 tons onto a single vessel in a day. They also broke their previous record by storing 386 000 tons of product on-site, at one time.

Early in the financial year, our international clearing and forwarding business completed the second phase of the expansion programme at OR Tambo International Airport. The bigger platform supports a strategic drive for new business.

Innovations/investments

We launched no major new initiatives and no significant acquisitions were made. The focus was on incremental enhancement of existing infrastructure.

Capital expenditure totalled R342 million. This included R34 million on warehousing extensions at Maydon Wharf and new equipment to support container pack and unpack operations. A further R15 million was spent on improvements to our container depot to speed up bulk container handling. Six new grain silos were completed at a cost of R49 million. They were commissioned in December. IVS invested R60 million, principally at Richards Bay to create additional capacity for specific customers.

Risks

Our risk committee system has bedded down and become an integral part of the planning and review process. Every Bidfreight business has its own risk committee and liaises with the divisional committee to share experience.

Credit risks rise when interest rates move higher, but the nature of provides a cushion. We partner some of South resources are in little doubt.

Reputational risk is ever present at high-profile harbour operations. A major accident here makes national headlines, as demonstrated by the fire early in the period at IVS. Tragically, one of our contract workers died in the blaze.

Understandably, public fears rise when fire occurs anywhere near a petrochemical tank farm while flames and billowing smoke create spectacular visuals for TV news and print media. The whole country is watching; therefore safety systems have to be first class and management response must be prompt and energetic.

Performance

Revenue of R22,0 billion (2007: R18,8 billion) was up by 17,2% while trading profit rose 18,0% to R690,8 million (2007: R585,6 million). Results were somewhat ahead of expectations, driven by exceptionally high volume throughput across Bidfreight’s port-based assets

Utilisation levels were sustained by large import volumes (principally wheat, maize and bulk liquids) and buoyant co mmodity exports (chiefly coal and manganese).

Subsequent investigations by fire department experts and environmental agencies showed that the necessary safety measures and equipment were in place, that our people had received appropriate training and had done everything possible to protect human life, property and the environment. The reputation of Bidfreight as a responsible, safety-conscious employer was confirmed.

There is no direct correlation between media attention and the business impact of the event making the headlines. In this instance, the net effect was a 3% reduction in IVS capacity for 18 months while the cost of tank replacement was about R50 million. The financial impact on Bidfreight was not significant as appropriate insurance cover was in place.

Two employees died during warehousing and stevedoring operations. Due enquiries were conducted and the operations concerned have further improved safety measures, as well as staff training in order to minimise the risk of further incident.

Skills retention has emerged as a mission-critical issue for major groups that take their employment equity obligations seriously. Development of black African executives into senior positions has become an important area of the BBBEE scorecard and therefore receives a lot of attention from Bidfreight.

Bidfreight performs functions vital to the national economy, but our work is unglamorous and time commitments at senior level can be onerous. As a result, we have to come up with innovative ways to compete with other industries for key management personnel that might feel attracted by well-rewarded roles elsewhere.

As a significant player in a strategically important industry such as transport, we acknowledge some exposure to political policy risk. We maintain positive relationships with all the relevant state agencies in South Africa. We are correctly perceived as a complementary resource that has a role to play in providing freight solutions that help drive the national economy.