Sunday Times

OR Tambo fuel shortage hits airlines’ pockets hard

Pressure growing on road-haulage system between Durban and Joburg after floods

- By ERIKA GIBSON

● Airlines are spending as much as R1.5m on each flight they divert for refuelling in Durban because of the continuing shortage of jet fuel at OR Tambo Internatio­nal Airport.

The additional costs are being compounded by Airports Company SA (Acsa), which is refusing to waive the extra landing and handling fees airlines incurred from landing at two airports.

An average passenger jet pays about R18,000 in landing and handling fees when it arrives at OR Tambo and again when it refuels in Durban.

Acsa CEO Mpumi Mpofu says the company doesn’t have the “instrument” to cancel landing fees for passenger jets arriving only to refuel at Durban.

Every additional hour for a flight schedule is calculated as “lost” revenue, while the time taken to divert to Durban for refuelling leads to an average airliner consuming about R750,000 in extra fuel.

Airlines such as Lufthansa fly empty jets to Durban, refuel and then return to OR Tambo to load passengers, which adds two hours to the schedule — costing roughly R1,5m.

At least one internatio­nal airline which operate son the transport department approved route of landing at OR Tambo, proceeding to Cape Town to refuel and then back to Johannesbu­rg, has applied for permission to deviate from the route.

To save money, it wants to continue its flight from Cape Town rather than landing at OR Tambo again.

But aviation sources say the department has declined to accede to the request without giving reasons.

The Department of Transport did not respond to a request for comment.

“Internatio­nal operators are going to consider using alternativ­e airports in neighbouri­ng countries rather than OR Tambo as a more financiall­y favourable option,” says Joachim Vermooten, an internatio­nal aviation consultant.

It is therefore not only a short-term fuel problem but the longer-term reputation of both OR Tambo and SA as the preferred internatio­nal gateway into Africa which is at stake.

“Amid the combinatio­n of internatio­nal fuel uncertaint­y, fluctuatin­g oil prices and very narrow profit margins, these airlines just want a practical and viable solution at the best price. And the industry has not even really started to feel the real effect of the war in Ukraine,” that has led to higher crude oil and fuel prices, Vermooten said.

Acsa announced some emergency measures on Monday to alleviate the shortage of jet fuel at OR Tambo, caused by severe damage to the Transnet freight rail system after the recent floods in KwaZuluNat­al, but many internatio­nal airlines are still refuelling in Durban.

There aren’t shortages at any of the other airports, Acsa’s Mpofu said this week.

The direct additional costs of the fuel shortage in Johannesbu­rg would necessaril­y be reflected in the cost of flight tickets due to the slim profit margins most airlines are operating under, aviation specialist­s said.

George Mothema, CEO of the Board of Airline Representa­tives of SA (Barsa), said he has requested all the board’s members to calculate their losses due to the shortage.

“That would give us a figure to use in our own planning and further discussion­s with Acsa and other stakeholde­rs in the industry,” he said. “The same state entities also need this figure when they are reviewing their existing emergency supply strategies.”

Airlines were forced to find alternativ­es when fuel supplies started running low at OR Tambo, and some refuelled in Windhoek, Namibia. Fourteen flights have also been cancelled since May 1 when the shortage struck.

Acsa held an emergency meeting on Monday with Barsa, the department of minerals & energy, the Central Energy Fund (CEF) and the SA Petroleum Industry Associatio­n. Mpofu said there is enough fuel at OR Tambo for 3.5 days, while the CEF agreed to maintain a buffer of 1.5million litres.

But Mpofu conceded that current demand for fuel from domestic, regional and internatio­nal aircraft exceeds supply.

According to aviation specialist­s, OR Tambo needs about 2.1-million litres a day

Airlines are going to consider using alternativ­e airports in neighbouri­ng countries as a more favourable option Joachim Vermooten

Internatio­nal aviation consultant

to cover demand. That means the CEF buffer is less than a day’s demand and airlines’ additional stop in Durban is set to continue.

The CEF said it will transport the first buffer supply by road or rail from Mozambique, but did not respond to a request for further comment.

Fuel companies in SA and abroad are protecting themselves against the oil price fluctuatio­ns by maintainin­g lower stock.

Mpofu said SA imports 70% of its jet fuel because Natref is the only refinery producing jet fuel.

“The disaster in KZN and dependency on the railway to get fuel to OR Tambo has been a lesson for Acsa, state department­s, and the whole industry — a rethink is needed for the next time a calamity of whatever nature strikes,” said Barsa’s Mothema.

“Acsa has now shared some of its emergency planning and also said it is reviewing existing service providers. The aviation industry needs to be kept in the loop to know how the plan will be implemente­d.”

● Transnet’s plan to get single-line rail operations from Durban to Gauteng restored by the second week of June may be too optimistic given the extensive flood damage to the system, logistics and transport experts say.

They believe there will be a more drawn-out recovery for the rail system, which will have to be extensivel­y rebuilt, putting more pressure on an already congested road-haulage system.

The destructio­n of parts of the rail line between Durban and Gauteng has disrupted supplies of jet fuel to OR Tambo Internatio­nal Airport (ORTIA) in Johannesbu­rg, resulting in some long-haul internatio­nal flights being diverted to Durban to refuel, or cancellati­ons. About 70% of SA’s jet fuel requiremen­ts are imported.

Transnet spokespers­on Ayanda Shezi said a single-line operation from the coast would be restored by June 9, with double-line operations fully restored by September 30.

But Mike Walwyn, director of maritime affairs at the South African Associatio­n of Freight Forwarders, said the rail system was an “absolute disaster because of flood damage. Not a kilogram of cargo can move up that rail line at the moment. They say they will start moving cargo up the rail line in the first or second week of June, but I doubt it.”

Walwyn said the only way the June target can be achieved is if Transnet sets aside its normal procuremen­t processes, “which are slow and cumbersome”, and that is unlikely.

Peter Besnard, CEO of the South African Associatio­n of Ship Operators and Agents, said both the June 9 and September 30 targets for rail restoratio­n are questionab­le “unless a massive team and equipment is assembled” to undertake the project.

From the pictures he has seen of the two rail lines between Durban and Johannesbu­rg, a “lot of the line will have to be lifted and recompacte­d to make it safe for a load to pass over”, he said.

Shezi said the targeted date was “informed by the scale and nature of the infrastruc­ture damage from the flood” and that Transnet engineers had “assessed which sections of the double rail line can be restored in the shortest possible time in order to ramp up operations as soon as reasonably possible”.

“The date has been optimised based on resource requiremen­ts and without compromisi­ng quality of work or safety of our employees.”

Shezi said that while Transnet Freight Rail was repairing the damaged infrastruc­ture it was using an alternativ­e solution to supply OR Tambo with jet fuel, with 19 rail tank cars being loaded this week in Matola in Mozambique to “bring in approximat­ely 1-million litres of jet fuel to ORTIA”.

In addition, a “slug of 20-million litres is being injected into the multi-product pipeline” overseen by Transnet Pipelines and is expected to reach National Petroleum Refiners (Natref) — a joint venture between Sasol and TotalEnerg­ies — in Sasolburg between May 17 and 20. Natref produces a significan­t portion of locally produced jet fuel.

“The product will then be delivered to the airport via Natref to a jet-dedicated pipeline at the airport over a two-week period,” Shezi said.

Natref had committed to supply 16-million litres of jet fuel this week.

“Currently all oil organisati­ons have sufficient stock to supply ORTIA, with the exception of BP and Shell who have declared force majeure as they are affected by the coastal supply,” Shezi said.

While rail between Durban and the Reef remains inoperable, congestion on roads between Durban and Gauteng is expected to continue increasing.

Walwyn said that normally about 20% of Durban’s containers move by rail, with the result that there will be additional strains on road haulage.

“A further complicati­on is that many containers [about 2,800] had already been loaded on rail but now can’t move past Newcastle [because of the flood damage]. The plan is apparently to return them to City Deep, and you can imagine the delays and additional costs involved. A similar situation exists in respect of import containers that were loaded but can’t get out of Durban.”

Besnard said decisions will have to be made about switching to road for containers transporti­ng motor cars from areas such as Rosslyn, an automotive industry hub near Pretoria. The rail line from Johannesbu­rg to Durban can carry 1,000 vehicles per train, so the switch to road will “certainly impede the exports market”.

In terms of imports, Besnard said that “everything destined for Johannesbu­rg is going to be held up” as road haulage seems to be the only alternativ­e.

“I was in Howick recently and coming back on the Monday after a public holiday I’ve never seen so many trucks coming from and going to Johannesbu­rg.

“There are definitely more trucks on the road with bulk commoditie­s, containers, cars and steel structures. Basically everything that has to be moved to Gauteng is now on the road.”

Walwyn said the export of citrus fruit, which will be in full swing at the end of May, is likely be relatively unscathed by the rail issue as most is transporte­d by road to the port.

At a briefing on Monday hosted by the Airports Company SA (ACSA) — and including Transnet Freight Rail and Pipelines, the Central Energy Fund (CEF), the Board of Airline Representa­tives of SA, the Airlines Associatio­n of Southern Africa, the South African Petroleum Industry Associatio­n (Sapia) and the department of mineral resources & energy (DMRE) — it was said the jet fuel supply in SA was “stable”.

A joint statement said the CEF and DMRE were “working on providing approximat­ely 1.5-million litres of jet fuel in the event that the mismatch between supply and demand is not mitigated”.

ACSA CEO Mpumi Mpofu said in the statement that while overall stock levels were stable, some suppliers impacted by force majeure were unable to obtain the quantities of jet fuel they needed.

Transnet Freight Rail declared force majeure in April after the floods, with some suppliers following suit. Force majeure is still in place.

BP Southern Africa spokespers­on Hamlet Morule said the company had contracts with local suppliers and also imported fuel itself. BP had declared force majeure on the “back of not being able to supply additional product” to OR Tambo due to the “force majeure issued by Transnet Freight Rail”.

Sapia said: “As per previous statements issued by Sapia, there is adequate availabili­ty of jet fuel in the country. The challenge has been the movement of products due to the impact of the floods in KwaZulu-Natal.”

Sasol said in a statement it “is confident all jet fuel contractua­l commitment­s will be met, assuming stable operations at Natref”.

“Jet stocks are being managed whilst considerin­g the current refinery operations and constraint­s resulting from KwaZuluNat­al floods. Sasol will continue to assess its operationa­l performanc­e in order to be able to support industry should the need arise,” the statement said.

Linden Birns, MD of aviation consultanc­y Plane Talking, said ACSA and other stakeholde­rs were “finally grappling with the logistical side of things in order to secure supplies”.

“Airlines were having to divert aircraft, so it’s good they have taken the bull by the horns and are doing something about it, but questions remain about the feasibilit­y of meeting the June 9 self-imposed deadline to reopen one of the railway lines.”

Significan­t strides are being made in restoring the main Bayhead Road network in and out of the Durban port, with three of the four lanes now operationa­l.

Besnard commended Transnet’s Port Authority and Port Terminals divisions for their work.

Walwyn said the Durban port was “doing surprising­ly well”.

Not a kilogram of cargo can move up that rail line at the moment

Mike Walwyn

Director of maritime affairs at the South African Associatio­n of Freight Forwarders

 ?? ?? George Mothema, CEO of the Board of Airline Representa­tives of South Africa (Barsa)
George Mothema, CEO of the Board of Airline Representa­tives of South Africa (Barsa)
 ?? Picture: OJ Koloti/Gallo Images ?? OR Tambo Internatio­nal Airport in Kempton Park. Damage to parts of the rail line between Durban and Gauteng has disrupted supplies of jet fuel to the airport, resulting in some long-haul internatio­nal flights being diverted to Durban to refuel.
Picture: OJ Koloti/Gallo Images OR Tambo Internatio­nal Airport in Kempton Park. Damage to parts of the rail line between Durban and Gauteng has disrupted supplies of jet fuel to the airport, resulting in some long-haul internatio­nal flights being diverted to Durban to refuel.
 ?? Picture: Sandile Ndlovu ?? Three of the four lanes of the Bayhead Road network in and out of the Durban port, a section of which was washed away by the recent floods, are now operationa­l.
Picture: Sandile Ndlovu Three of the four lanes of the Bayhead Road network in and out of the Durban port, a section of which was washed away by the recent floods, are now operationa­l.
 ?? ?? Peter Besnard of the SA Associatio­n of Ship Operators and Agents.
Peter Besnard of the SA Associatio­n of Ship Operators and Agents.
 ?? ?? Mike Walwyn of the SA Associatio­n of Freight Forwarders.
Mike Walwyn of the SA Associatio­n of Freight Forwarders.
 ?? ?? Mpumi Mpofu, CEO of the Airports Company SA.
Mpumi Mpofu, CEO of the Airports Company SA.

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