MCLI Operational Work Group & One Stop Border Post Meeting 4 th & 5 th February 2010

1. MCLI Operational Work Group & One Stop Border Post Meeting 4th & 5th February 2010 “A Citrus Perspective”

2. Agenda • Brief Overview • Shipping Constraints • Operational Constraints • Cost Constraints • Coordination Initiative

3. Agenda • Brief Overview • Geographical position of Maputo in relation to citrus production • Citrus export volume trends

5. 50% Growth Expected Growth rate curve Capacity threshold curve Source: PPECB & CRI

6. Port Shipping Mode Volume Source: PPECB

7. Durban & Maputo Port Market Shipping Mode Volume Source: PPECB

8. North & West EU / UK Shipping Mode Volume Source: PPECB

9. Brief Overview • Summary • Maputo is geographically positioned to the northern citrus regions to add better value • Maputo port has the potential to increase volume throughput substantially • Maputo essential infrastructure not only to reduce the cost of the supply chain, but also to ensure that the Durban port is not over utilized causing logistics instability • Infrastructural capacity development and adaption to containerized exports is lagging • Citrus growth expectations necessitates volume growth through Maputo • Migration toward containerized shipping is pulling the fruit to Durban • There is potential to pull Europe / Med / Russia / Middle East market fruit to Maputo • Middle East and Far East markets should be prioritized for container lines

10. Agenda • Shipping Constraints • Named day shipping schedules (7 – 10 days) to Europe / Med via Reefer Ship • Europe volume diversion to Durban constraining vessel commitments from Maputo • Other key markets Middle East / Russia not on fixed calls • No direct container shipping option to key citrus markets? (Europe / Med / Middle East / Far East) • Durban port offers direct shipping opportunity to all citrus markets – this offers flexibility to divert cargo to alternative markets should the need arise

11. Agenda • Operational Constraints • Market Consolidation • Because all markets can be accesses from Durban, Durban provides a consolidation hub • All growers fruit for various markets can be consolidated to ship to specific market requirements • Packhouses have limited floor capacity to hold fruit and accumulate for one specific market • Transportation • Trucks are loaded with mixed markets and this restricts the use of Maputo • Limited return haulage increases the cost of transportation • Cross border delays may also be a contributing factor to the cost of transportation to Maputo • Rail • Packhouse rail accessibility limited • Rail that is used is considered inefficient due to delays • Rail is costly • Rail is considered strategically critical to the citrus industry • Imperative that rail constraints are overcome (TFR / CFM concession?)

12. Operational Constraints • Rail • What is the problem? • Accessibility and Delays • What is the solution? • Integrate Road and Rail Transportation • How do we do this? • Create rail hubs on the main lines • Road trucks shuttle fruit between packhouse and rail hub • Citrus train shuttles from rail hub to port cold store • There are two options? • Road truck to a warehouse at the rail hub and transfer to rail (Pallet Friendly Container) • Use adapted Pallet Friendly Containers and transfer from rail to road • Road truck transports the container from siding to packhouse • Load and truck back to the rail siding and transfer back to rail

13. Consideration for rail hubs / rail sidings • Will work anywhere where a high volume of citrus is grown and 30 rail wagons (600 pallets) can be accumulated within 24hrs

14. Container is railed to a siding and the container is sent to be stuffed at a packhouse and brought back Container is transferred from road to rail The future of citrus transportation Feasible to accumulate at least 30 containers or wagons Container is railed to a port cold store or container terminal in the case of Reefer containers

15. Can be loaded from the side • CX type Pallet Friendly Ambient Container • Can be loaded and offloaded from the side • This will allow for efficiency at packhouse and port cold store • These containers can load 10 high cube pallets / 20 per wagon • We need to develop a 40ft CX container to load 24 high cube pallets

17. Agenda • Cost Constraints Cost Comparison Transportation Handling Shipping Maputo Current Cost Condition Transportation Handling Shipping Maputo Required Cost Condition Transportation Handling Shipping Durban Current Cost Condition

18. Transportation

19. Cost Constraints • Transportation • Transportation cost to Maputo advantageous for Onderberg, Karino, Nelspruit • Transportation cost for other key regions is considerably less to Durban • How do we overcome this? • Handling • A container can be packed at a price of R160 – R170 per pallet in Durban • Maputo handling cost is flexible but still high – Storage costs? • Shipping • VSA Europe / Med service $12.00 surcharge from Maputo should be made redundant • Why? Because as the previous slides have shown Durban & Maputo are the VSA’s main ports • Container shipping through Maputo is higher than Durban • Transportation excluded

20. Agenda • Coordination Initiative • Principle • The short term solution for Maputo is to ship a higher volume of citrus to Europe markets • Why? Europe is the only viable and regular shipping option from Maputo at present • How do we achieve this? • We need to ensure that we create an attractive export cost that is lower than shipping from Durban • And how do we achieve this? • We need to make sure that the transportation, handling and shipping cost is optimized • Transportation and Handling • We need suggestions and feedback from the road transport industry • Cost of rail should be re-strategized • Maputo transportation cost reduction is critical

21. Coordination Initiative • Shipping • In order to reduce the cost of shipping we need to load full and complete vessels to Europe out of Maputo • 1 Full ship (4,500 pallets) a week from week 20 – week 38 • A competitive transportation, handling and shipping rate could be achieved • Shipping Coordination • The CGA is proposing through Growers, Exporters, Packhouses and Agents to coordinate sufficient weekly volume to achieve this objective • Monitor vessel Booked vs. Stock situation • Weekly telecon between coordination group to ascertain volume • To get started we need commitment from participating Growers, Exporters, Agents and • Shipping Lines

22. Maputo Key Strategic Success Criteria • Efficient and cost effective transportation • Be it by Road or be it by Rail • Sufficient and adaptable storage and handling infrastructure • Be it at the port or be it inland • Sufficient for anticipated volume growth • Geared for rail, steri and containers • Shipping access to key citrus markets • Be it by Containers or be it by Reefer Ships • Cost effective and regular shipping service to key citrus markets • Shipping Coordination • Maputo citrus volume coordination group • Ensuring sufficient supply to vessels with minimal loading delays • Aiming to reduce the cost of shipping

23. On behalf of Citrus Growers, Exporters & Agents Thank You to MCLI www.cga.co.za