Business context and trading conditions

The financial year was buoyant. The freight business is volume-driven and congestion can be a significant problem, both in harbour areas and on roads. The quality and limited capacity of roads and harbours has a major impact on our business. A modal shift from rail to road transport has led to an increase in congestion at our terminals. This necessitates ongoing engagements with Transnet Freight Rail. Our employees did well to expedite higher volumes in this difficult working environment.

This year we began to set sustainability targets for the division.

International demand for commodities remained strong while the beginning of a revival in South Africa’s retail economy was positive for the import of manufactured goods. Air freight volumes improved and it was another year of good maize harvests.

Bulk commodities were in demand and our throughput of bulk liquids and vegetable oils increased significantly. The full-year effect of the 60 000m³ expansion of our Island View Storage tankage at Richards Bay was also beneficial.

There was little uniformity in demand patterns as import and export volumes for automotive components and fully built vehicles rose but wine exports stalled in the face of the strong rand. Forestry product volumes were again sluggish and aid cargoes into other parts of Africa were down.

Capital expenditure of R314,6 million was committed. We are half way through a R200 million two-year investment programme at Bulk Connections in Durban. This programme will convert under-used capacity, allowing Bulk Connections to handle copper concentrates, manganese, sized coal and other bulk products.

A R20 million investment was made in Safcor Panalpina’s CargoWise software, driving efficiencies throughout the business.

Performance

Performance was strong following the previous year’s dip in volumes. Trading profit rose 11,6% to R886,2 million (2010: R794,3 million) while revenue moved 20,8% higher to R19,3 billion (2010: R15,9 billion).

The performance of our people was particularly noteworthy. Rail bottlenecks, road congestion and pressure on national ports infrastructure created knock-on challenges for operational teams. Despite these difficulties, the people of Bidvest Freight put in a sterling effort to optimise the opportunities presented by economic recovery and rising trade volumes. Bulk businesses did particularly well, especially SABT. Pleasing performance was registered at IVS, BPO and Safcor Panalpina.

Sustainability

	at Bulk Connections, a R200 million terminal and environmental upgrade is in progress. This has cut water consumption and reduced dust from operations, improving air quality;
	the new SACD Freight Cape Town building incorporated various sustainability initiatives, including the reuse of building materials and increased use of natural light to reduce power usage;
	South African Bulk Terminals invested significantly to maintain surrounding areas and regulate traffic flow around our terminals;
	Island View Storage has ISO 14001:2004 accreditation at all its terminals; and
	ongoing environmental training and awareness programmes for employees.

Overall diesel consumption increased by 12,0% as new trucks and equipment were purchased to handle volumes. We implemented various initiatives to reduce diesel consumption, focusing on greener, more efficient technologies, improved monitoring and driver training to maximise fuel efficiency.

The division’s overall electricity consumption fell. A number of initiatives were implemented, focusing on operational and energy efficiency, particularly lighting.

Operations continue to focus on minimising waste sent to landfills while increasing the amount recycled. Rennies Distribution Services achieved its target of recycling at least 60% of waste.

Growing maize volumes underline the challenge of reducing dust levels, which affect air quality. At South African Bulk Terminals, a R160 million upgrade for Durban Bulk Shipping (Island View) is in the final stages of planning. This will replace current equipment and enable the terminal to handle grain in an environmentally friendly manner at the normal speed. Other initiatives include monitoring the environmental impact of dust and an upgraded water mist suppression system to further reduce airborne dust.

Bulk Connections has launched a variety of initiatives to combat the dust generated from handling bulk products.

Despite our stringent training and safety measures, Bidvest Freight regrettably recorded three fatalities including the death of one contract worker. Full investigations were conducted into these fatalities, and we are taking additional measures to reinforce safety awareness.

We are a significant employer integral to certain port communities, especially in Durban. Beyond the employment opportunities we offer, we aim to have a positive impact wherever possible and have an overarching corporate social investment policy that focuses on education and HIV/Aids.

Each business implements CSI initiatives to address needs in the communities in which it operates. Most Bidvest Freight companies contribute to education initiatives. Businesses assist soup kitchens and street shelters, sponsor HIV/Aids projects and raise funds for cancer sufferers. We contributed R5 million to our projects.