Freeman Dickie's Masters Thesis Paper - Nacala Development Corridor Performance Evaluation

STC- NETHERLANDS MARITIME UNIVERSITY, ROTTERDAM
Nacala Development Corridor

Performance Evaluation
An evaluative research focused on producing solutions for
inefficiencies and bottlenecks associated with the Nacala
Development Corridor.
A Dissertation Submitted in Partial Fulfillment of the Requirements for the Degree of Masters in
Shipping and Transport
Freeman Dickie
Rotterdam, the Netherlands
15-Feb-12
ABSTRACT: This paper presents an evaluative research of the problems related to the logistics,
operational bottlenecks and constraints of the Nacala Development Corridor. It sets forth the
status quo, reviews the related literature and evaluates the modus operandi. The paper
concludes with recommendations of remedial actions and areas for further research.
Nacala Development Corridor Performance Evaluation
PREFACE
This paper presents the final report of the Master of Shipping and Transport thesis titled “Nacala
Development Corridor Performance Evaluation”. This paper is part of my masters program at
the Netherland Maritime University, Rotterdam.
The thesis work has been conducted while working for Corredor de Desenvolvimento do Norte
(CDN), under the direct supervision of Eng. Agostinho Langa (MSc), the Nacala Port Executive
Director. CDN is a private company with a 15 year concession to operate the Port of Nacala and
the railway link to Malawi which makes up the Nacala Development Corridor.
The research has been to evaluate the performance of the corridor producing recommendations
and solutions for inefficiencies and bottlenecks associated therewith.
I would like to extend my appreciation and gratitude to my thesis supervisors Mr. Corné Hulst,
Mr. René Naudts and Eng. Agostinho Langa, for their guidance and advice. I also thank all my
colleagues at CDN and CEAR for their support and assistance during this research study. Not
forgetting Amalia Dickie and Blessings Maturure for their proof-reading my material before
presentation. Lastly to my family for their unconditional support and encouragement during the
whole Masters course.
Freeman Dickie
Rotterdam, February 2012
2|P ag e FR EEMAN DICKI E Netherlands Maritime University

DECLARATION
The work contained in this thesis paper was carried out by the author while studying at the
Netherlands Maritime University, from 2010 – 2012. It is his own original work except where due
references are provided. It has never been submitted to any other university for an award or
certification. No part of this work shall be reproduced without prior permission from the author or
the Netherlands Maritime University.
Freeman Dickie
___________________________________
Date: 15 February 2012

To Sue and the kids
For all the time you didn’t have a husband and father present and you had to cope without me.

Table of Contents
PREFACE.............................................................................................................................................. 2
DECLARATION .................................................................................................................................... 3
Glossary of terms................................................................................................................................ 11
Abbreviations ...................................................................................................................................... 12
1 INTRODUCTION......................................................................................................................... 13
1.1 The need for a research study ........................................................................................... 13
1.2 Problem assessment........................................................................................................... 13
1.3 Problem definition ................................................................................................................ 14
1.4 Objectives of the study........................................................................................................ 14
1.5 Main research questions ..................................................................................................... 14
1.6 Limitations of study.............................................................................................................. 14
1.7 Implications of the research................................................................................................ 14
1.8 Structure of this paper......................................................................................................... 15
2 STATUS QUO ............................................................................................................................. 16
2.1 Historical Information .......................................................................................................... 16
2.2 Background information of the Nacala Development Corridor ........................................ 16
2.3 CDN- Nacala Port ................................................................................................................ 17
2.3.1 Port authority ................................................................................................................ 17
2.3.2 Port operations ............................................................................................................. 17
2.3.3 Container terminal ....................................................................................................... 17
2.3.4 Multi-purpose terminal ................................................................................................. 17
2.4 CDN- Railways .................................................................................................................... 18
2.5 Present conditions and development trends of the Corridor area ................................... 18
2.5.1 Northern Mozambique ................................................................................................. 18
2.5.2 Malawi ........................................................................................................................... 18
2.5.3 Zambia .......................................................................................................................... 18
3 RESEARCH METHODOLOGY ................................................................................................. 19
3.1 Introduction .......................................................................................................................... 19
3.2 Conceptual (theoretical) framework ................................................................................... 19

3.3 Methods of data collection .................................................................................................. 19

3.3.1 Primary data collection methods ................................................................................ 19
3.4 Research tools ..................................................................................................................... 20
3.4.1 Observation tool ........................................................................................................... 20
3.4.2 Interview questions to Corridor/Port users ................................................................ 21
3.4.3 Interview questions to Corridor representatives ........................................................ 21
3.5 Data analysis ....................................................................................................................... 22
3.6 Conclusion ........................................................................................................................... 22
4 LITERATURE REVIEW .............................................................................................................. 23
4.1 Introduction .......................................................................................................................... 23
4.2 Port governance model ....................................................................................................... 23
4.2.1 Service port model ....................................................................................................... 23
4.2.2 Tool port model ............................................................................................................ 23
4.2.3 Landlord model ............................................................................................................ 24
4.2.4 Private Service port model .......................................................................................... 24
4.3 Port Authority’s role in improving hinterland accessibility ................................................ 24
4.4 Gateways ............................................................................................................................. 25
4.5 Transport corridors .............................................................................................................. 25
4.6 The maritime/land interface ................................................................................................ 26
4.7 Hinterland ............................................................................................................................. 27
4.8 Types of hinterlands ............................................................................................................ 28
4.8.1 Macro-economic hinterland......................................................................................... 28
4.8.2 The physical hinterland ............................................................................................... 28
4.8.3 The logistical hinterland............................................................................................... 29
4.9 Bottlenecks........................................................................................................................... 29
4.9.1 Infrastructure and equipment bottlenecks ................................................................. 29
4.9.2 Regulations .................................................................................................................. 30
4.9.3 Supply chain bottlenecks ............................................................................................ 30
4.10 The Challenges of Landlocked Countries ......................................................................... 30
4.11 Four Possible Trade Routes for Malawi ............................................................................ 32
4.12 Port selection ....................................................................................................................... 32
4.13 Port competition ................................................................................................................... 33
4.13.1 Inter-port competition................................................................................................... 33

4.13.2 Intra-port competition................................................................................................... 33

4.14 Port performance ................................................................................................................. 34
4.14.1 Port effectiveness ........................................................................................................ 34
4.14.2 Port efficiency............................................................................................................... 34
4.15 Key Performance Indicators ............................................................................................... 35
4.15.1 Operational performance indicators ........................................................................... 35
4.16 Conclusion ........................................................................................................................... 37
5 MODUS OPERANDI................................................................................................................... 38
5.1 Introduction .......................................................................................................................... 38
5.2 Governance structure.......................................................................................................... 38
5.3 Port cargo operations .......................................................................................................... 38
5.3.1 Container handling....................................................................................................... 38
5.3.2 Dry/break bulk handling............................................................................................... 40
5.4 Current operations productivity and efficiency rate .......................................................... 40
5.5 Railways operations ............................................................................................................ 42
5.5.1 Nacala railway station ................................................................................................. 42
5.5.2 Nampula railway station .............................................................................................. 42
5.5.3 Cuamba railway station ............................................................................................... 42
5.5.4 Entre-Lagos / Nayuchi International border post ...................................................... 42
5.6 Hinterland transportation of seaborne cargoes ................................................................. 43
5.6.1 Containers .................................................................................................................... 43
5.6.2 Bulk Cargo .................................................................................................................... 44
5.7 Cargo throughput and vessel traffic ................................................................................... 44
5.8 Conclusion ........................................................................................................................... 45
6 RESEARCH FINDINGS ............................................................................................................. 46
6.1 Introduction .......................................................................................................................... 46
6.2 Quantitative research: Operations observation and evaluation ...................................... 47
6.2.1 Key performance indicators ........................................................................................ 47
6.2.2 Vessel operations ........................................................................................................ 48
6.2.3 Port gate operations .................................................................................................... 49
6.2.4 Railway operations ...................................................................................................... 50
6.2.5 Border operations ........................................................................................................ 51
6.2.6 General observations .................................................................................................. 51

6.2.7 Distribution center operations ..................................................................................... 51

6.2.8 Rail efficiency or low demand for capacity? .............................................................. 52
6.3 Personal interviews ............................................................................................................. 53
6.3.1 What determines a shipper’s port selection criteria? ................................................ 53
6.3.2 Why has your cargo through Nacala Corridor gone down? ..................................... 54
6.3.3 Which other alternative ports do you use and what are the pull factors? ............... 55
6.3.4 What do you think can be done to improve port productivity? ................................. 55
6.3.5 What are your cargo volumes and how are they split over the regional ports? ..... 56
6.4 A vicious cargo cycle........................................................................................................... 57
6.5 Conclusion ........................................................................................................................... 57
7 REASONS FOR THE BOTTLENECK SITUATION AND POSSIBLE SOLUTIONS ............. 58
7.1 Introduction .......................................................................................................................... 58
7.2 Infrastructure and equipment bottlenecks ......................................................................... 58
7.2.1 Cargo handling equipment and machinery ................................................................ 58
7.2.2 Lack of locomotives, railway equipment and deteriorating infrastructure ............... 59
7.2.3 CEAR/CDN Locomotives ............................................................................................ 59
7.3 Regulatory bottlenecks ....................................................................................................... 60
7.3.1 Lack of One-stop Border Post .................................................................................... 60
7.3.2 Monopolistic nature of stevedoring in the port .......................................................... 60
7.3.3 Compulsory scanning at port entrance ...................................................................... 61
7.4 Supply chain bottlenecks .................................................................................................... 61
7.4.1 Lack of a centralized distribution center or inland container terminal ..................... 61
7.4.2 Documentation flow and logistics ............................................................................... 62
7.4.3 Railways logistics ......................................................................................................... 62
7.4.4 Port/terminal logistics .................................................................................................. 62
7.4.5 Lack of an EDI system ................................................................................................ 62
7.4.6 Lack of Key Performance Indicators awareness ....................................................... 63
7.5 Bottleneck impact analysis ................................................................................................. 64
7.5.1 Score analysis .............................................................................................................. 64
7.6 Conclusion ........................................................................................................................... 65
8 CONCLUSION ............................................................................................................................ 66
8.1 Corridor potential ................................................................................................................. 66
8.2 The bottleneck situation ...................................................................................................... 66
8.3 Port selection criteria........................................................................................................... 66

8.4 Why other ports over Nacala? ............................................................................................ 66

8.5 Cargo handling equipment ................................................................................................. 67
8.6 Port performance ................................................................................................................. 67
8.7 Port Authority ....................................................................................................................... 67
8.8 Conclusion ........................................................................................................................... 68
9 Bibliography ................................................................................................................................. 69
10 Attachment 6.1: Statement of Facts for Pacific Trader 440N .............................................. 72
11 Interviews conducted .............................................................................................................. 73

List of figures
Figure 2.1: Maputo, Beira and Nacala Corridors with railway networks 16
Figure 3.1: Conceptual framework 19
Figure 4.1: Allocation of responsibilities in port administrative models 24
Figure 4.2: Physical cargo flow in the Nacala Development Corridor 26
Figure 4.3: Various firms involved in a hinterland chain, source: Langen (2008) 27
Figure 4.4: The two kinds of hinterland; adapted from Rodrigue (2005 28
Figure 4.5: Types of port hinterland, (Notteboom and Rodrigue 2007) 29
Figure 4.6: Three types of bottlenecks in a transport system (World Bank report) 30
Figure 4.7: Intermodal Transit in SADC from LLCs (World Bank report) 31
Figure 4.8: Time related KPIs (Carriou, 2011) 36
Figure 5.1: Container handling productivity trends 41
Figure 6.1: Time performance indicators for Pacific Trader 48
Figure 6.2: Vicious transit cargo cycle observed at Nacala Port 57
Figure 7.1: Bottlenecks along the Nacala Corridor (by author) 58
List of tables and graphs
Table 1.1: Current CDN productivity ratios 13

Table 3.1: KPI Observation tool 20
Table 4.1: Four possible Trade routes for Malawi 32
Table 4.2 Summary of operational indicators, adapted from Carlson (1993) 36
Table 5.1: Average container dwell time at Nacala Port 41
Table 5.2: Dry/break bulk handling productivity 41
Table 5.3: Container cargo volumes in 2008 43
Table 5.4: Bulk cargo volumes in 2008 44
Table 5.5: Cargo throughput at Nacala Port between years 2000 and 2011 44
Graph 5.1: Cargo throughput at Nacala Port between years 2000 and 2011 45
Table 6.1: Nacala Port 2011 KPIs 47
Table 6.2: Pacific Trader vessel operations at Nacala Port 48
Table 6.3: Gate operations waiting time 49
Table 6.4: Main corridor rail stations 50
Table 6.5: Distribution centers’ most common features 52
Table 6.6: Transit cargo vs. total throughput for past 4 years 52
Graph 6.1: Transit cargo as a percentage of total port throughput 53
Table 6.7: Client/agent port selection criteria 53
Table 6.8: Corridor users’ response to reduced throughput 54
Table 6.9: Encouraging & discouraging factors 55
Table 6.10: Transmaritime cargo throughput via Nacala Port and Beira Port 56
Graph 6.2: Throughput comparison between Nacala and Beira Ports 56
Table 7.1: Impact analysis of performance impediments 63
Table 7.2: Score analysis and recommended mitigation action 64
10 | P a g e F R E E M A N D I C K I E Netherlands Maritime University

Glossary of terms
Bottleneck- is a phenomenon where the performance or capacity of an entire system is limited

by a single or limited number of components or resources.
Hinterland- is an area or region that covers the port’s sphere of influence, which is
interdependently connected to the port system.
Corridor- is a set of routes between interacting hub centers, integrating economic activities of
more than a single nation, providing access to the sea for landlocked countries.
Turnaround- this refers to the total time taken by a train or vessel from the time it arrives in
port, through cargo operations, until it leaves port.
Vessel- also referred to as a ship; a maritime vessel carrying cargo
Status quo- the current status situation
Modus operandi- the mode of operation

Abbreviations
CDN- Corredor de Desenvolvimento do Norte (Northern Development Corridor)
SDCN- Sociedade de Desenvolvimento do Corredor de Nacala (Northern Development

Corridor Society)
CEAR- Central East African Railways (Malawian Railways Authority, operated by CDN)
MOT- Ministry of Transport
LLCs- Landlocked Countries
CFM- Portos e Caminhos de Ferro de Mozambique (Mozambique Ports & Railways

Authority)
TN- Terminais do Norte (Stevedoring Company subcontracted by CDN)
SADC- Southern Africa Development Community
UNCTAD- United Nations Conference on Trade and Development
TEUs- Twenty foot Equivalent Unit (containers standards size measures)
KPIs- Key Performance Indicators
FIFO- First in First out (sequence followed in releasing cargo)
EDI- Electronic Data Interchange
JICA- Japanese International Cooperation Agency

1 INTRODUCTION
Ports do not operate in isolation. Ports are part of a network system which connects both the
foreland and the hinterland making up a shipper’s supply chain. Shippers consider how the
whole network fits into their supply chain when deciding on port choice. Most supply chains are
connected to transport corridors. Most corridors provide access to sea to the landlocked
hinterland.
Within these corridors there are key functional areas. When the functional areas are neglected
bottlenecks situations are formed that hinder the efficiency of the whole network. Like the
bullwhip effect, in most cases the negative consequences are usually reflected at the end of the
chain, in this case at the port. Hence most of the problems at ports and terminals may be but a
symptom of these bottleneck situations along the transport network. A proper diagnosis requires
looking at each key area and measuring its role, productivity and effectiveness as part of the
whole. A chain is only as strong as its weakest link.
Thus, improving port efficiency calls for a holistic approach at the whole supply chain and the
corridors connecting to the hinterland concerned. In responding to this need for an integrated
and comprehensive approach, it is essential to synergize port activities with the logistic services,
trade and cargo flow within the hinterland.
1.1 The need for a research study

Of late there has been growing interest in ports and transport corridors in the developing world,
coupled with The World Bank funded research studies. These studies focus on port reforms.
However, a subject on ports and corridor performance has received little attention in terms of
academic research. There has also been little research into the issues affecting the Nacala
Development Corridor performance and competitiveness.
While existing problems have been attributed to poor infrastructure, lack of equipment and
shortage of space, there is however lack of research on how high levels of productivity may be
attained with the existing resources within the corridor. For this reason there has been notable
reluctance in providing solutions to some of the bottleneck problems along the corridor. To
bridge this gap, a study is essential to specifically evaluate all key operational areas, identify the
bottlenecks and recommend possible solutions with the chief aim of increasing productivity and
efficiency.
1.2 Problem assessment

The Nacala Development Corridor has been characterized by inefficiencies and low productivity,
both in port and railway operations. Evidence of this has been noted in poor vessel and train
turnaround times, long dwell time for transit and international containers, congestion and delays.
The current CDN productivity ratios are as stated in table below.
Productivity Target Actual Deviation
Quay side productivity (TEUs) 10 6 40%

Average container dwell time (days) 5 8 37%
Transit container dwell time (days) 12 30 60%
Train turnaround time (days) 3 4 25%
Gate waiting time (hours) 1.5 6 75%
Table 1.1: Current CDN productivity ratios

Consequently, there has been loss of potential cargo and revenues to other much more
competitive regional ports.
1.3 Problem definition

Given the advantageous location of Nacala Port, its deep natural draft and diversity of
opportunities in its backyard hinterland, the port has great potential for growth. Nacala Port is
losing a big share of the hinterland market to Beira, Dar es Salaam, and Durban ports. The fact
that these ports are much further than Nacala Port from the hinterland, transportation to them
means high freight costs and long transit times. For instance it costs $2.500 for a twenty foot
container to Blantyre through Beira, yet it will cost $1.400 for the same container through Nacala
Port. But for one reason or the other, shippers seem to be favoring them over Nacala Port.
1.4 Objectives of the study

The research seeks to look for what can be done to improve efficiency and productivity of the
Nacala Development Corridor in order to increase Nacala Port’s competitiveness within the
South-East African region? It will be focused on a study of the operational resources and
equipments side of requirements and will not discuss human resources. The specific objectives
of the research thus are:
1. To evaluate the current mode of operation in the Nacala Development Corridor with the
aim of identifying key functional areas;
2. To identify possible bottlenecks at these focal points;
3. To recommend possible solutions.
1.5 Main research questions

1. What are the key functional areas?
2. Which of the functional areas can be seen as the bottlenecks in the corridor?
3. What are the reasons of the bottleneck situation?
3.1. Why are shippers willing to take their cargo to ports that are further away, when
Nacala Port is the closest in distance and travel time?
3.2. What factors at Nacala Port discourage growth; and what factors at the competing
ports encourages growth?
4. What are the possible solutions to resolve the bottleneck situations?
1.6 Limitations of study

This research and study is limited to productivity investigations on port and railway operations
which are directly run by CDN and CEAR. The railway represent a high percentage share in the
modal split accessing the hinterland. However, references to other modalities will be noted as
necessitated by the research. The paper will also be limited to the scope covered by the Nacala
Development Corridor. To understand the application of the problem and proposed solutions at
a national level, the researcher recommends a detailed research and analysis on a wider scale.
This research does not investigate and apply the problem to financial performance in the
corridor; nevertheless similar trends may be identified since operational and financial
performances are interdependent.
1.7 Implications of the research

The results of this research may lead to recommendations to CDN management for a guided
implementation of the outcome. The results may also imply changes in port management
systems and processes as well as giving a new approach to operational management. Though

the research will be based exclusively on the Nacala Development Corridor, as the researcher
and author the intention is to give the work a global meaning and application.
1.8 Structure of this paper

This research paper is composed of eight chapters which are organized as follows:
Chapter 1 - This introductory chapter defines the problem and justifies the need for this
research. It presents the scope of this study and outlines the specific objectives.
Chapter 2 - This chapter focuses on the status quo of the Nacala Development Corridor
highlighting all the relevant areas to this study. The chapter gives a description of the
components that make up the corridor, namely Port of Nacala, CDN rail and CEAR Rail
companies. It introduces the present conditions and development of the corridor area at the time
the research was carried out.
Chapter 3 - In chapter 3, shall be presented the conceptual structure within which the
research for this paper was carried out. It shall outline the various steps adopted in studying the
research problem. As well as an evaluation of the relevant techniques used in the research,
what they would mean and indicate and the logic behind them.
Chapter 4 - Chapter 4 reviews relevant literature so as to provide a perspective of published

literature and studies related to corridor performance. It will include views and opinions of other
authorities on port and corridor operations, port selection criteria and operational performance
indicators. The chapter will also point out relevant research areas.
Chapter 5 - This chapter builds on the status quo presented in the second chapter. It further
defines the mode of operation, the method of functioning of the Nacala Development Corridor.
In closing, the chapter illustrates the current corridor’s productivity and performance rate.
Chapter 6 - Results collected from the research will be discussed in this chapter. The
chapter will discuss the operations observation results as well as the responses to personal
interview questions. This chapter will link the literature from different authors as reviewed in
chapter four with existing conditions in the corridor.
Chapter 7 - In this chapter the research results presented and discussed in the previous
chapter will be analyzed. The analysis will be done by assessing the performance of transport
logistics in terms of time and reliability as well as determine their impact on corridor efficiency.
Suggestions and recommendations in the light of the findings and some theories already
presented by various authors are made.
Chapter 8 - Finally this closing chapter will present conclusions, in which key aspects of the
work are presented. The chapter seals the paper with the author’s final conclusion based on
evidences, facts and theories already presented. This chapter also presents a bibliography as
an acknowledgement of the authors who provided the researcher with relevant material to the
research work and the appendices that show evidence of some materials used in the research
process.

2 STATUS QUO
2.1 Historical Information

During the 20th century in Mozambique, ports were regarded as an essential economic
instrument of the Arab and later Portuguese colonial powers. After independence in 1975, all
ports were taken back by the government and were run and operated under the Ministry of
Transport (MOT). Later with the government’s privatization campaign, the MOT gave out
concession to private companies to run and operate the country’s major commercial ports,
Maputo, Beira and Nacala Ports. However, through CFM, a Mozambican Port Authority
Company, MOT still maintains a stake in each port as a silent landlord.
The three major commercial ports in Mozambique play a fundamental role by giving gateway
access to sea to the geographically disadvantaged regions they serve as well as the nearby
land locked countries (LLCs). The three ports, Maputo Port in the Southern region, Beira Port in
the Central and Nacala Port to Northern part of Mozambique, strategically make up the nucleus
of the regional transport corridors. Below is an illustration of these main corridors.
Figure 2.1: showing the Maputo, Beira and Nacala Corridors with railway networks linking their respective hinterlands
Source: Africa-confidence.com
2.2 Background information of the Nacala Development Corridor

The Nacala Development Corridor is the principal gateway to the sea for Northern Mozambique,
most of Malawi and Southern Zambia. It interlinks Nacala Port with the railway network of
Northern Mozambique and Malawi creating a shorter connection to the sea than through the
alternative route which is through Zimbabwe to South African sea ports. Refer to the illustration
on figure 2.1 above.

Corredor de Desenvolvimento do Norte (CDN) is a private public partnership (PPP) that is

integrated into the Nacala Development Corridor. The majority of the shares in CDN are owned
by Sociedade de Desenvolvimento do Corredor de Nacala (SDCN) with 51%. The other 49%
are owned by Portos e Caminhos de Ferro de Moçambique (CFM), a state enterprise that
oversees ports and the railway system of Mozambique. The PPP was awarded a renewable 15
year concession (2005-2020) to run the Port of Nacala, the Northern railway network of
Mozambique (610Km) and the railway systems of Malawi (797Km). CDN operates under three
heads, respectively CDN- Port of Nacala, CDN- Rail and CEAR Malawi (Central East African
Railways), under a single management with the intention of integrating the synergies between
different intermodal transport systems in the corridor.
2.3 CDN- Nacala Port

Nacala Port is the third largest port in Mozambique in terms of cargo handling. The port is
situated at Longitude 40º 40' E and 14º 27' S, on the southern side of Baia de Bengo, a large
and sheltered bay of about 60m deep and 800m wide at its entrance. It is advantageously
located at the international container network cross-section of the Eastern African and the
Southern African circuits. Because of its natural deep waters and sheltered position Nacala has
no restrictions on ship movement or size with the exception of alongside the quay.
The port operates 24/07 on 3 x 8 hours shifts (from 07.00 to 15.00, 15.00 to 23.00 & 23.00 to
07.00 Hrs). Work on Saturdays (half day) and Sundays (full day) is charged as overtime.
Customs officials have an office at the entrance to the port but there is no shared data
interchange with the port, all information flow is through documentation and paperwork.
2.3.1 Port authority

The concession agreement between CDN and CFM gives the duties and jurisdiction of port
authority to CDN. It gives CDN legal rights, responsibilities and duties to manage, operate (even
through outsourcing to third parties) and rehabilitate the port during the agreed 15 year period.
CDN is also responsible by contract for providing pilot and tug assistance.
2.3.2 Port operations

CDN- PN is responsible for all port operations. They have however outsourced the operational
management to Terminais do Norte (TN), but still controls and monitors all operational activities.
The main role of CDN in operations is planning and instruction.
2.3.3 Container terminal

The container terminal is to the south of the port. It is 372m in length and has 2 berths and the
draft alongside is up to -14m. The terminal has an annual handling capacity of about
75,000TEUs. When full to capacity (3 high of full containers and 4 high on empties), it can
handle up to 6,722TEUs including 36 reefer units. The port also has a dry terminal for empty
containers outside the port area. The container terminal is divided into several areas designated
for container storage per regime namely, import area, export area and transit area.
There is one rail mounted train/truck transfer gantry crane with a loading capacity of 25tons.
Ship to shore handling is done by using vessel gear while handling in the terminal is done by
reach-stackers, tractors and forklifts.
2.3.4 Multi-purpose terminal

To the north of the port is located the multipurpose terminal. It has a length of 620m, with 4
berths. The draft alongside varies from -7.5m to -10m. Large bulk carriers with a large draft use
the container terminal, but priority is still given to container vessels. The terminal has 8

warehouses with total covered storage area of 21.000 square meters (an average of 7.000 tons
each) and an open storage area of 80.000 square meters.
There are 4 shore cranes in this terminal with a capacity between 5 - 20tons. Other handling
equipment include 3 bagging machines, 7 grabs, 2 forklifts, 6 hoppers, 2 evacuators and bale
clamps. The terminal has an annual throughput of 2,400,000tons.
2.4 CDN- Railways

Nacala Port is connected to the rest of the Northern Province and hinterland by a railway line
that runs directly into the port. In Nacala CDN Rail operates the shunting station with tracks
running into the port area separating the Container from the Multi-purpose terminals. It also
operates stations along the network which include Nampula, Cuamba and Lichinga. Along the
rail network, CDN provides both cargo freight service as well as passenger services.
The freight service is provided for imports and exports (both in containers and as bulk) to and
from Malawi via the Port. This is operated in unit trains of 1000 freight tons or 25 wagons of
freight usually shared by more than one customer. The transit times to or from points in Malawi
for these trains are on average 34 hours. Freight is also hauled to and from any of the stations
on the CDN network. Rail accounts for more than 70% of all transit traffic.
2.5 Present conditions and development trends of the Corridor area
2.5.1 Northern Mozambique

The Mozambican government in 2007 created the Nacala Special Economic Zone. The zone
consists of the district of Nacala Porto and Nacala-a-Velha (Old Nacala). Within this zone are
two Industrial Free Zones dedicated especially for industrial activities. The majority of the
population engages in agricultural activities and fishing. Forestry-related industries are also
prospering in this region compared to other parts of the country.
Heavy sands mining in Moma constitute the most important mining project in this region. Vale
has shown interests in mining the phosphate deposits in Nampula Province. Vale will also mine
1 million tons of iron annually from Monapo mines in Nampula Province. Vale and Australia's
Riverdale mining companies are heavily invested in Tete Province’s estimated 23 billion ton of
coal, which is one of the world's largest untapped coal reserves. The mines have an annual
production target of 12million tons in the first phase i. Vale plans to use Nacala bay once the
Beira port reaches full capacity by 2014.
2.5.2 Malawi
In 2006, the main contributor to the Malawian GDP was agriculture with 32.6%. Main agricultural
products consist of corn, rice, sugar, tobacco and tea among many other small scale products.
Tobacco and sugar are the main export agricultural products.
2.5.3 Zambia
Zambia’s main industrial product is copper. Zambia is the world’s number 7 largest producer of
copper and world’s number 2 producer of cobalt. Yet the country being landlocked means it
does not have a direct access to the sea.

3 RESEARCH METHODOLOGY
3.1 Introduction
This study is an evaluative research; it seeks to assess the current logistics and operational
activities. It also provides useful information about clients’ port selection criteria other than might
be gleaned by mere observation of cargo throughput trends. The evaluation research seeks to
provide objective assessments of past and present performance of the corridor.
This chapter will highlight the conceptual structure within which the research for this paper will
be carried out. It shall outline the various steps adopted in studying the research problem. Also
herewith shall be evaluated the techniques relevant for the research, what they would mean and
indicate and the logic behind them. Herein, the following shall receive much consideration:
 Conceptual structure,
 Methods that will be employed in data collection,
 Research tools, and
 Data analysis- qualitative and quantitative.
3.2 Conceptual (theoretical) framework

The following flowchart shows the conceptual framework of the activities that shall be followed
in this research process. The study will discuss several methodologies related to operational
management and key performance indicators for measuring terminal and corridor productivity
and efficiency levels.
Literature review
Review concepts
Define Interpret
& theories Design Data Data
and
research research collection analysis
Review previous report
problem research findings
Figure 3.1: Conceptual framework
3.3 Methods of data collection

In this research both primary and secondary data will be used. Primary data refers to data which
will be collected for the first time, while secondary data refers to data already collected by other
researchers which shall be adopted in this research and to whom reference and due credit will
be given.
3.3.1 Primary data collection methods
3.3.1.1 Observation
Through a tour of the whole Nacala Development Corridor, observations of all key operational
and logistics areas will be made. A more structured observation will be made for this descriptive
research. The strength of this method lies in the fact that it can yield more information than what
people are able or willing to share through interviews and questionnaires. However, the

weakness is the method’s limitation towards attitudes and policies that govern the corridor’s
cargo flow behavior. Infrequent behavior may not be observed. Intense observations will be
conducted in the following key areas:
a. Quayside operations (Ship loading and discharge)

b. Truck & train operations
c. Documentation and cross-border formalities
d. Malawi railway turnaround system
e. Distribution centers
f. End users of the supply chain: hinterland delivery
Because of the limitations described above, the observation method will be supplemented by a
survey method.
3.3.1.2 Survey research method

The researcher will follow both structured and unstructured survey methods. The approaches
will be a mixture of both direct and indirect, with the aim of getting as much detailed feedback as
possible. The main methods that will be employed here include email correspondence, skype
interviews and personal one-on-one interviews. For the main corridor users and potential big
players, personal interviews will be conducted. This is because personal interviews provide a
more flexible setting and allow the interviewer to respond according to the interviewee’s
reactions.
This type of research reaches the selected market segment and the targeted operational areas.
Nonetheless, respondents might be reluctant to share private company information; while others
may be biased by giving pleasant answers in a spirit of wanting to corporate.
3.4 Research tools

The objective in creating a research tool is to make sure that the research questions relate to
the objectives of the research study, thus qualifying the validity and quality of the research. It will
also help guide the research and avoid sidetracking into other might be interesting subjects but
not related to the topic.
3.4.1 Observation tool

In order to guide the observation exercise, the following tool will be used. Already established
Key Performance Indicators (KPIs) for the key functional areas within the corridor will be used
as a standard to measure against the observed result. Thus any deviation from the established
KPIs raises concern for further analysis and scrutiny.
Key functional area K.P.I (standard) Observed result Deviation %
Quayside (Vessel crane) productivity 10 containers/hr ? ?

Truck waiting time in port 2hrs ? ?
Train waiting time in port 1 day ? ?
Waiting time at en-route stations ? ?
Boarder formalities 1 hour ? ?
Train turn-around time 3 days ? ?
Table 3.1: KPI Observation tool

3.4.2 Interview questions to Corridor/Port users

A mixture of both open ended questions and closed questions will be used in interviews as
deemed necessary. Where possible, corridor users will be interviewed in their cargo reception
facilities; while corridor operators will interviewed in their working sites. This is important so as
to allow the interviewer to identify with the situation and generate further relevant questions from
the conducive setting. Following is a sample of interview questions to be used:
3.4.2.1 Clients
 What are your cargo volumes and how are they split over the regional ports?
 What criteria do you use when choosing a port for your imports/exports cargoes?
 What percentage of your cargo passes through Nacala Port and why not all since it’s the
closest port to your location?
 What is it that you like about our competitors (Beira, Dar es Salaam, Durban ports)?
 What do you think needs to be improved at the Port of Nacala to make it more
attractive?
 What do you think needs to be improved with the railway operations to be more
efficient?
 What do you think are the main impediments or barriers to corridor efficiency?
3.4.2.2 Shipping lines/agents

 What are your cargo volumes and how are they split over the regional ports?
 Are you responsible for any cargo coming into your/our hinterland through other ports?
What are the volumes?
 Why do you think your clients sometimes choose other ports over Nacala?
 What do you think can be changed in the corridor to attract more clients to use Nacala
port?
 How do you feel about the corridor’s current operational approach/system?
 How can port & agents integrate their efforts in attracting more clients to the port?
 What do you think can be done to improve port & rail productivity?
 What do you think are the main hindrances to corridor efficiency?
3.4.2.3 Trucking companies

 Which areas do you serve?
 How do you feel about the corridor’s current operational approach/system?
 What is the average waiting time for your trucks at the port & at the border with Malawi?
 What are your main concerns with port operations?
 What do you think the port can do to improve truck/gate operations from your
perspective?
3.4.3 Interview questions to Corridor representatives
3.4.3.1 Senior management

 Which areas would you consider to be the corridor’s hinterland?
 Which areas of the corridor would you consider as the key functional areas?
 What are the Key Performance Indicators for the corridor?
 What do think are the reasons for the loss of clients from the corridor?
 What is the corridor doing to regain the lost market share?
 What are the corridor’s plans for improvement?
 Does the fact that the port directly subcontracted an operator eliminating direct
relationships between operator and shipping lines/agents, affect productivity?

 What incentives do you have in place for your operational team to increase their
productivity?
3.4.3.2 Port/Terminal operator

 Do you think loss in port customers is related to operator’s productivity?
 What is your current quayside productivity rate?
 What needs to be done to improve cargo handling productivity and service delivery
rates?
 What incentives do you have in place for your operational teams to increase their
productivity?
 How do you feel about the relationship between you as operator and the port?
3.4.3.3 Shift supervisors

 What are your Key Performance Indicators?
 What do you think needs to be done to increase port productivity?
 How do you feel about the relationship between yourselves and the subcontracted
port/terminal operator?
3.4.3.4 Rail operators

 What is your annual cargo throughput?
 How do you feel about the relationship between port & rail?
 What are your major Key Performance Indicators?
 What is the average train turn-around time?
 What is the average train waiting time at this particular station?
3.5 Data analysis

Quantitative data shall be analyzed using descriptive statistics, mainly on percentages. The
results shall be presented in tables, pie charts, histograms and bar charts. Qualitative data shall
be analyzed and interpreted using relationships and linkages to the research question. Tables
and charts shall be used to illustrate the results.
3.6 Conclusion
The quality and type of information and data collected entirely depend upon the quality of the
research methodology utilized. In an attempt to get as much information as is possible, the
researcher will resort to using a variety of research methods and approaches. The approaches
will be customized and adapted to match the situation. This chapter has attempted to establish
the procedures through which the research will be conducted.

4 LITERATURE REVIEW
4.1 Introduction
Since improving port efficiency calls for a holistic approach, the low productivity and
inefficiencies of the Nacala Port can only be resolved by looking at the corridor as a whole. It is
alleged that the loss of clients and potential revenue is attributed to the corridor’s inefficiency.
However, it takes understanding the parameters that determine clients’ port selection criteria;
the hinterland served and port performance to evaluate the reasons for the port’s inefficiency.
The main objective of this literature review is to provide a perspective of published literature and
studies that have been conducted to this regard. The chapter will also point out relevant
research areas. This chapter will thus review the literature relating to the following:
a) Port governance model;

b) Port Authority’s role in ensuring hinterland accessibility;
c) Gateways and transport corridors;
d) The maritime/land interface;
e) The challenges of landlocked countries;
f) Port selection;
g) Port competition;
h) Port performance; and
i) Performance Indicators.
4.2 Port governance model

Jacobs (2007) defines the port governance model as “the system of governance that steers
both infrastructure investment and maintenance, and the set of institutions underpinning service
provision which in turn answers questions of what is the balance between public and private
interests and when decisions about infrastructure development are made”. The governance
model also defines the procedures by which the provision of leasing schemes and how
regulatory issues are settled. The division of the port governance models divides them into four
groups corresponding to the division of responsibilities of the public and private sector (Brooks
and Cullinane, 2007; World Bank, 2001; Jacobs, 2007):
4.2.1 Service port model

The first model is a predominantly public administrative model where the Port Authority owns all
the land and all available assets. It is normally controlled by the Ministry of Transportation. With
that organization it is normal that the responsibility for the performance of regulatory functions,
development of infra and superstructure and the execution of operational activities will be the
responsibility of the same governmental entity. Brooks and Cullinane (2007) add that because
of the centralized approach there is limited internal competition and as the result of there will be
inefficiency. That can lead to under-investments.
4.2.2 Tool port model

In this model the public Port Authority develops, owns and maintains the port infra and
superstructure. This includes cargo handling equipment such as quay cranes, forklift trucks, etc.
The equipment of the PA is operated by its own labor force, but other operations can be
performed by private companies. Brooks and Cullinane (2007) argue that such companies are

usually small, and the “fragmentation in responsibility for cargo handling can lead to conflict
between those operators, and between the stevedoring companies and port administrators.”
This approach avoids duplication of facilities and resources, but has the risk of underinvestment.
4.2.3 Landlord model

In a landlord model, the land of the port is in the hands of the PA, but the infrastructure is leased
to private operators. The private operators employ their own labor force; they maintain, install
and use their own superstructure. The responsibilities of the PA are to assure the long term
development of the land, and maintain the infrastructure. According to Brooks and Cullinane
(2007), that model leads to more efficiency and faster response to market changing
environment. The risks are connected with excess capacity in infrastructure that can press upon
expansion and private investment, and duplication of marketing efforts by the public and private
sectors.
4.2.4 Private Service port model

In this model, the government shows a lack of interest in the port activities. The land, infra and
superstructure, and labor force are privately owned or provided. The model is mostly spread in
the United Kingdom. It is said, that the port operations in this model can be flexible and market
oriented, but are bound to result in monopolistic behavior and lack of long term economic policy
or strategies.
The following figure summarizes the allocation of responsibilities in the different port models as
presented by the World Bank:
Figure 4.1: Allocation of responsibilities in port administrative models by the World Bank (www.worldbank.org)
Brooks and Cullinane (2007) argue that the World Bank typology is a “simple approach of
allocating responsibilities that fails to provide adequate guidance to a government faced with
pressure to devolve port administration, taking in account local situations”. Chapter 5 will
investigate that allocation of responsibilities at the port of Nacala. For the ongoing discussion let
it suffice to say that the Nacala Port falls under the service port model, though it takes the form
of a landlord port model.
4.3 Port Authority’s role in improving hinterland accessibility

Once the port governance model is defined, the port authority’s roles must be identified. Langen
(2008) argues that Port Authority should have a more active involvement in coordinating port
cluster and the supply chain. He suggests a more active involvement in hinterland connectivity.
Langen further supports his argument by observing that hinterland connectivity is becoming a

main bottleneck in international door-to-door transport chains. The rail and road network linking
Nacala Port to its hinterland especially Malawi reflects the existence of this bottleneck situation.
With the objectives of improving hinterland accessibility, investigations conducted by Langen

(2008) identified five necessary conditions for efficiency. First, well developed transport
infrastructure linking port to hinterland. Second, the transport infrastructure needs to be used
efficiently. Third, well coordinated transport chains. Fourth, sustainable hinterland transport
system; and fifth, attractive hinterland transport and auxiliary services. As will be acknowledged
later, the Nacala Port Authority has been less focused on improving hinterland accessibility and
more concerned with cargo operations.
4.4 Gateways
A gateway is a network point that acts as an entrance to another network argues Theo
Notteboom (2008). Rodrigue (2006) further defines a gateway as a pivot point of access
involving the flow of cargo through terminals constructed with the chief aim of efficient cargo
handling, thus facilitating intermodal transfers. Gateways are more than just terminals; they are
more about inland transportation connections that enforce continuity in freight distribution.
Robert J. McCalla points out the main components of a marine transport gateway to be: “the
port, the urban center in which the port is located, the zone of influence (hinterland with its
inland distribution and consumption centers), and transportation connections tying the port to its
hinterland.” This concept of gateway-corridor is also reflected by the Nacala Port which serves
as a gateway to its hinterland making up the Nacala Development Corridor.
4.5 Transport corridors

Fleming (1999) defines a transport corridor as a set of routes between interacting hub centers
where maritime, fluvial, land and air transportation converge. Transport corridors can be
regional, integrating economic activities of more than a single nation, providing access to the
sea for geographically disadvantaged Land Locked Counties (LLCs). As Rodrigue (1996)
observed, transport corridors reduces and aims to eliminate inequality of accessibility at a
regional level. Their main objective should be to facilitate cargo flow within the concerned
region.
The best corridor paradigm that exemplify the Nacala Corridor is explained by Rodrigue (2009);
he states that the distribution model is one in which a major gateway acts as the main interface
between global, national and regional systems. It consists of the following characteristics: first,
regulating freight, passenger and information flows; second, transport corridors with a linear
accumulation of infrastructure serving a set of gateways; and finally, flows of merchandise and
their underlying activities of production, circulation and consumption. Following is an illustration
of the Nacala Development Corridor.
Figure 4.2 below shows how Nacala Port acts as the maritime/land interface as well as gateway
into the landlocked hinterland.

Figure 4.2: Physical cargo flow in the Nacala Development Corridor, compiled by author
In most African countries, transport corridors are vital as they serve as LLCs’ gateway to the
sea. The main transportation arteries associated with these corridors are divided into two modes
having in most cases separated logistics, namely road and rail. Rodrigue (2009) observed that
each mode has its own technical constraints. He concluded that modes reflect the challenges in
reconciling the surge of maritime traffic and the capacity of inland transportation in distributing
the traffic flow.
Road: It is a commonly accepted fact that while road transportation is the most flexible mode
with a far reaching capability than other modes, it is also equally expensive. Apart from the poor
road infrastructure which reduces road traffic, the usage of road to access the Nacala Corridor
hinterland is longer in distance and more expensive this in turn places the burden of cargo
distribution on rail, consequently offsetting the balance in modality split in favor of rail.
Rail: This mode of transportation offers both capacity and low cost, but all at the expense of
flexibility. Henstra & Woxenius (1999) argues that rail logistics are “highly complex and imply
network management strategies under several constraints of capacity, schedule, nature of
shipment, origin and destination”.
The main challenges of the Sub-Saharan Africa transport corridors as reported by The World
Bank’s Independent Evaluation Group1 include poorly maintained roads and railways,
complicated customs and administrative procedures which add to delays and costs; and
inefficiency in terminal cargo handling especially during transfer from one mode to another.
4.6 The maritime/land interface

According to Rodrigue (2009), the main functional elements that define the maritime/land
interface include:
1
Improving African Transport Corridor 2011 publication

Foreland- from whence the cargo is flowing into the port system for further (re)distribution. This
involves the services provided by agents and shipping lines in terms of vessel calls, capacity
and frequency of services.
Port system- these act as gateways providing infrastructure for modal change as well as
granting access for inland cargo flow and circulation into the hinterland.
Hinterland- this refers to the inland geographical area interdependently connected to the port
system.
Langen (2008) argues that the quality of a port’s hinterland access depends on the behavior of
many actors, including terminal operators, freight forwarders, container operators, and the port
authority. Figure 4.2 adapted from Langen and Horst (2008) below shows various firms involved
in a rail hinterland chain.
Figure 4.3: Various firms involved in a hinterland chain, source: Langen (2008)
4.7 Hinterland
A hinterland is widely acknowledged to be an area over which a port draws the majority of its
business, regardless to whether or not the hinterland is within the administrative jurisdiction of
the port authority. Fageda (2005) defined it as an area where a port has a monopolistic position.
Rodrigue (2005) further adds that port hinterlands are composed of two kinds of hinterlands, the
main hinterland and competition margin hinterland. He defined the main hinterland as an
exclusive area where a port has a monopolistic position in drawing cargo. While he defied the
competition hinterland, as the outer area where more than two ports compete for cargo. In this
regards, the Nacala Port hinterland can be divided between the two kinds of hinterland as below
illustrated. The main hinterland of Nacala Port is thus considered to be the most accessible
areas from the port. This is the area over for which the port has a more competitive advantage
compared to other ports.

Competitive margin
Main hinterland
Figure 4.4: The two kinds of hinterland; adapted from Rodrigue (2005)
4.8 Types of hinterlands

Notteboom and Rodrigue (2007) identify three sub-components of a hinterland: the macro-
economic, the physical and the logistical hinterland.
4.8.1 Macro-economic hinterland

Notteboom and Rodrigue (2007) observed that a macro-economic hinterland involves factors
which affect transport demand such as origins, destinations, and the whole transactional
environment in which the actors generating this demand evolve. Other factors considered which
affect the generation of international maritime freight traffic include interest rates, exchange
rates, prices, savings, and productive capacities.
4.8.2 The physical hinterland

The physical hinterland is a matter of transport supply, from a modal and intermodal
perspective. This type of hinterland considers the network of transport infrastructure, modes and
terminals connecting the port to its hinterland. ECMT 2001 observed that, intermodal
transportation has become of particular relevance to improve the efficiency and accessibility of
hinterlands as it links the global access of the port (through its intermodal facilities) with regional
customers. The Nacala Development Corridor serves this type of hinterland.
There are significant variations in the structure of hinterlands, mainly because of differences in
the capacity and efficiency of inland transport infrastructures. Wang and Oliver (2006) noted that
China is characterized by smaller hinterlands due to the container export-oriented strategy;
while North America and European ports have larger hinterlands shaped along long distance
inland corridors. The Nacala Development Corridor is medium in structural size, but its limitation
is more due to infrastructure development and little less to corridor capacity.

4.8.3 The logistical hinterland

Logistical hinterland is more to do with cargo and information flow, how they are organized, and
how they relate to both macro-economic and physical settings of the hinterland. Hesse and
Rodrigue (2004) contend that the competitiveness of global supply chains is to a large part
determined by the performance of the logistics networks as they link production, distribution and
consumption. Figure 4.4 below summarizes the elements, attributes and challenges of the three
types of hinterland as discussed above.
Figure 4.5: Types of port hinterland, (Notteboom and Rodrigue 2007)
4.9 Bottlenecks
Webster's Millennium Dictionary of English" (Lexico Publishing Group, 2003) defines bottleneck
as: "n: a narrowing that reduces the flow through a channel; v 1: slow down or impede by
creating an obstruction; 2: become narrow, like a bottleneck...” As water is poured out of a
bottle, the rate of outflow is limited by the width of the conduit of exit—that is, bottleneck.
Wikipedia also defines it as “a phenomenon where the performance or capacity of an entire
system is limited by a single or limited number of components or resources.”ii
From the above definitions we can deduce that a bottleneck situation in a transport corridor is a
part of the network that reduces the performance or capacity of the whole system. These
situations are in most cases a result of limited resources. Scott Barber iii (2007) argued that, the
symptoms of a bottleneck are almost never observed at the actual location of the bottleneck.
B. Prentice (2004) observed that there are three different types of bottlenecks in transport
systems. These include infrastructural, regulatory and supply chain bottlenecks.
4.9.1 Infrastructure and equipment bottlenecks

These are formed by physical restrictions such as roads, railway lines or handling equipment.
Lack of investment in infrastructure can produce chronic bottlenecks especially when rapid
economic growth takes place in the hinterland served. This implies that the capacity will thus
become insufficient to keep up with the demand. A surge in demand can also create a
bottleneck as infrastructures and equipment are designed to convey a constant level of service.
Some of the bottlenecks along the Nacala Corridor are attributed to poor and deteriorating
infrastructure. The railways line with constant derailments and breakdowns causes congestion
and delays at various stations along the line. Shortage of rail wagons also creates another
bottleneck as cargo is forced to accumulate at the port waiting to be railed out.

4.9.2 Regulations
Regulations that delay cargo movements for security or safety inspections create bottlenecks as
a direct consequence. Even if the intention is not to convey delays, regulations inevitably cause
delays and disruptions. Three sources of bottlenecks created by the indirect effects of regulation
are cabotage restrictions, competition policies and fiscal policies. Cabotage restrictions prevent
foreign carriers from carrying freight within a country; their capacity is thus not available.
Competition policies can create bottlenecks either by supporting a monopoly where the operator
engages in rent seeking strategies or by complete deregulation where many carriers will
compete for the similar transport segments. Fiscal policies can deter investments through
taxation and create bottlenecks.
In Nacala Corridor, the compulsory scanning and weighing of incoming and outgoing cargo
within the port facilities poses a bottleneck situation. A lot of time is lost by each truck queuing
for scanning and at the weighbridge. This in turn reduces the efficiency of the corridor as a
whole.
4.9.3 Supply chain bottlenecks

These relate to specific procedures in supply chain management that trigger bottlenecks. For
instance labor availability, such as work shifts, may impose time dependent capacity shortages.
Technology can also be an issue as different information exchange protocols can create delays
in information processing and therefore delays in shipments (or transshipments). The figure
below illustrates the three types of bottlenecks.
Figure 4.6: three types of bottlenecks in a transport system (World Bank report)
In a bottleneck situation, optimizing features or processes in other areas of the process will not
produce a change in the performance of the network until the performance problems in the
bottleneck itself are addressed.
4.10 The Challenges of Landlocked Countries

Africa has the most number of landlocked countries in the world. The main problem with regard
to being landlocked is the geographical remoteness from the sea and transit dependence which
complicates the export and import processes. As a result landlocked countries’ trade less and
grow more slowly than neighbouring coastal countries.
According to a World Bank study the cost of transporting a container from a landlocked country
to a port in a developed country is 20% higher than transporting from a coastal country. The

main causes of the higher costs are inadequate transit transport inter-modal connections,
regulation and poor service.
The cost of importing from a landlocked country is also rising and the study also suggests that
improving road infrastructure alone is not sufficient to eradicate inefficiency and high transport
costs. The other main problems are associated with port infrastructure and the quality of port
services which affect the cost and process of dispatching goods in and out of transit countries.
In addition, it is estimated that manufacturers shipping from within the Southern African
Development Community (SADC) hinterland pay nearly three times more in container handling
charges at SADC ports than manufacturers shipping from Europe. In some countries the cost of
importing a standard-sized container is reportedly more than twice the world average. Added to
these charges are the indirect costs associated with time delays at the port of entry and costs of
transporting goods to inland destinations and in particular onward delivery to landlocked
countries2.
The time required exporting and importing goods, including inland transport, customs clearance,
and port clearance, is greater in the SADC region possibly than in any other region of the world.
In 2007, the average time to export from SADC was 18.9 days, of which nearly one-half
consisted of customs clearance, whereas the average import time was 28.5 days, divided about
evenly among inland transport, customs, and ports 3.
Figure 4.7: Intermodal Transit in SADC from LLCs (World Bank report)
The many steps, the fragmentation of control, and the low quality of services make the supply
chain unpredictable, which shows up in the spread in transit times (refer to figure 4.7 above).
Other factors make the delivery process unpredictable or unreliable from one end of the chain to
the other: breakdowns of key infrastructure, breakdowns of transport equipment, insecurity, and
fuel shortages4. All these factors mean additional inventories, emergency shipments, suspended
operations, and lost markets.
Clark’s evaluation of seaport efficiency (2005) concludes that shipping costs would reduce
greatly if there is a notable improvement in seaport infrastructure and cargo handling services
quality. Haddad (2006) also adds that the level of port efficiency directly determine the relative
distance and cost between different trading regions. Thus as Ducruet, Notteboom and Langen
2
Source: Lynette Gitonga (a resource for global trade issues and solutions from an African perspective)
3
World Bank’s Doing Business 2007 report
4
Subsidies of diesel in landlocked states are potentially a fiscal drain, as truckers from transit countries will fill up
in the landlocked states.

(2009) observed, the quality and improvement of the infrastructure brings trade partners
theoretically closer or more distant.
4.11 Four Possible Trade Routes for Malawi

Nacala Beira Durban Dar-es-Salaam
Distance 1,000km 900km 2,300km 2,000km
Main transport mode Railway Road Road Road
Infrastructure condition Poor Good/fair Good Good/fair
Port reliability Low Medium High Medium
Delay in port 3 weeks or more 2 weeks 1 day 4 weeks
Transit time Unpredictable 2-3 days 1 week Unpredictable
Main export product Sugar Tobacco Tea/tobacco Limited
Table 4.1: Four possible Trade routes for Malawi, adapted from World Bank 2009
The table above shows the four main possible and often used trade routes for Malawi as
published by the World Bank in 2009. Besides being the second closest to Malawi, Nacala is the
only trade route offering Malawi a direct railway connection to the sea port. Railway comes with
many advantages of cost effective as well as accommodating heavy containers and bulky
cargoes. A twenty foot container costs $1.100 less to Blantyre through Nacala Port than it will
cost through Beira Port.
4.12 Port selection

Hence it follows; there is more to just distance and travel time that determine the shipper’s port
selection criteria. The literature reviewed indicates that the determinants to port selection vary
from port/corridor-service related factors to cost related factors. For different port regions, the
authors have identified important criteria respectively. The widely mentioned criteria with
reference to shippers according to Guy and Urli (2006) include:
a) Infrastructure: nautical accessibility profile, terminal infrastructure, handling equipment and

hinterland accessibility;
b) The geographical location: distance from hinterland and major shipping routes;
c) Port efficiency: port operations quality and reputation;
d) Reliability, efficiency, frequency and cost of inland transport services by truck or rail;
e) Quality and cost of auxiliary services: stuffing and stripping, storage, etc;
f) Efficiency and costs of port management and administration (port dues);
g) Port security/safety reputation;
Notteboom (2008) emphasizes on the shipper’s need for a more supply-chain oriented
approach to port selection. In his discussion paper presented at the International Transport
Forum, he argued that since the supply chain is becoming more relevant in analyzing port
competitiveness; “port competitiveness thus becomes more dependent on external coordination
and control by outside actors.” This therefore means that port choice becomes a function of
network costs.
Port selection criteria thus take into consideration the whole supply chain wherein the port is just
a node and part of the whole. A shipper will then select a sea port that will contribute in total
transport cost reduction. Magala and Sammons (2008) observed that port choice is but a by-
product of a choice of a logistic pathway.

Notteboom (2008) argues that shippers more often than not opt for a more expensive port due
to additional port related and modal costs in the other relatively cheaper port, which can be
offset and compensated for by savings in other logistical costs. These other costs include:
a) Time costs of the goods: capital tied up in the transported goods as well as economic
and technical depreciation; and
b) Inventory costs.
He concludes that concerns over capacity both of ports and inland infrastructure have led to the
opinion makers base their port selection decisions on reliability and capacity over pure cost
considerations. Robinson (2002) adds that in a competitive environment, ports do not compete
only on the basis of location and operational efficiency, but also on the basis of how well they
are embedded in the supply chains of port users. The competitiveness of a port thus does not
depend entirely on its internal forces alone, but also on its ability to synergize efforts with other
transport nodes and logistics networks that shape the supply chain of the corridor.
4.13 Port competition

There are two generally accepted types of port competition, inter-port and intra-port competition.
The former refers to competition between ports, while the later refers to competition within ports.
Due to the almost nonexistence of intra-port competition within the scope of this study, only
literature relating to inter-port competition will be reviewed herewith.
4.13.1 Inter-port competition

The rail linkage to Malawi gives Nacala Port a substantial advantage forming a captive
hinterland. But due to inefficiency and lack of investment in transport facilities, the advantage is
diminished leading into a contestable hinterland. Langen (2008) defined a contestable
hinterland as one in which more than one port shares the same market. He further maintains
that captive hinterlands have diminished as ports become unsatisfied with cargo coming only
from their captive hinterlands, but rather stretches their influence further.
Fleming and Baird (1999) argue that inter-port competition is influenced by the following factors:
a) Port performance; b) Port location and accessibility; c) Port tradition; d) governance
assistance; e) Port user’s preferences. Wayne (2009) further adds that improved port
performance, and reducing “technical and costs inefficiencies” will increase the port’s
competitiveness.
Port’s competitiveness also is increased by accessibility both to land and to the sea. The closer
the port is to the open sea, the lower the auxiliary costs associated with bringing a ship to berth.
Better hinterland connectivity to the port reduces inland transit times and transportation costs.
All these factors pull and attract port users.
4.13.2 Intra-port competition

Intra-port competition is essential and beneficial in curbing monopolistic pricing by service
providers, argued Wayne (2009). Apart from reduction in prices, it is a widely accepted fact that
in areas where there are two or more providers of the same service, the quality of the service
provided is bound to be of an improved quality. It can be argued that some of the service
inefficiencies within Nacala port are related to lack of intra-port competition. Langen and Pallis
(2006) argue that competition in the port will lead to more innovation and specialization with
benefits for the port as a whole.

4.14 Port performance

Notteboom and Rodrigue (2007) argue that the performance of seaports is strongly entwined
with the development and performance of associated inland networks that give access to cargo
bases in the hinterland. As far back as tradition goes, ports have been measuring their
performances by comparing their actual cargo throughput against their optimum throughput.
Any deviation from the optimum was interpreted as either an improvement in performance or
deterioration. However, for the sake of this study, much attention shall be given to the use of
performance indicators to evaluate port performance. Port performance shall be discussed
under two headings, port effectiveness and port efficiency.
4.14.1 Port effectiveness

Efficiency has been defined as ‘doing things right’ while effectiveness is ‘doing the right things’
by Taylor and Francis (2011). It is essential that a balance between the two is created and
maintained. Brooks (2011) argues that in order to improve the performance of the port system,
efficiency measurement must be accompanied by the measurement of effectiveness of the
whole system.
Taylor and Francis (2011) support their argument by asserting that port effectiveness must be
assessed in two ways. First by users determining that the port’s performance is satisfactory; and
secondly, by an assessment done by the relevant decision-makers, i.e. governments, port
authorities, or service providers. The findings should then be addressed with ports so that they
may fine tune operations to meet customers’ expectations and competition.
4.14.2 Port efficiency

An efficient port facilitates the efficient flow of goods which lowers the cost of transportation and
improves the quality of service provided, thus allowing more competition among carriers and
attracting more users. A port is regarded as ‘efficient’ or ‘highly productive’ if it is able to produce
a maximum output for given inputs or uses minimal inputs for the production of a given level of
output Notteboom (2000). The efficiency of a port is measured against its objectives.
Wayne (2009) contends that efficiency operating objectives are classed in two. First- port
efficiency operating objectives also referred to as the port’s economic production function- this is
the port’s technical ability to maximize throughput using a given level of resources. Second- cost
efficiency or the port’s economic cost function- which is the ability to minimize cost in the
provision of a given level of throughput.
He further adds that for a port to be cost efficient, it must be technically efficient. World over
there is ample evidence to support the claim that when ports are technically inefficient, it has a
negative effect on both sides of the supply chain. It leads to longer ship turnaround times and
increased cargo dwell time in ports.
The results as observed by Wayne (2009) will be on one hand, the shipping line deploying more
vessels to service the affected trade route; and on the other hand, shippers will be forced to
increase their inventories due to the less reliable delivery systems. Marlow and Paixao Casaca
(2003) conclude that as a consequence ineffective ports usually have lower profits, thus having
less profit to invest in further port development.
Poitras, Tongzon and Hongyu Li (1996) observed that being efficient involves combining
available inputs to achieve a higher level of outputs. Now it follows that to be able to measure
efficiency, the right inputs and outputs must be defined and measurable. They identified two
measures for port outputs, namely, one, total number of cargo loaded and unloaded; and two,

cargo handled per berth hour. Improving efficiency in cargo handling leads to quicker ship
turnaround time and consequently maximizing berth utilization.
Poitras, Tongzon and Hongyu Li (1996) supports their argument by adding that once the major
port output measures are identified, it becomes easy also to identify the various input factors
involved. Such input factors include: number and frequency of ship calls as determined by port
geography; the quality and quantity of support infrastructure such as container berths, and
gantry cranes.
4.15 Key Performance Indicators

“Performance indicators quantify and simplify information for decision-makers and other
stakeholders to assess how activities and operations affect the direction and magnitude of
change in terms of social economic, governance and environmental conditions.” Vitsounis
(2011).
Due to the existence of inter-related aspects and activities in the port which cannot be
considered in one single measure or indicator, a number of efficiency indicators have been
developed to use as a basis for evaluating port performance. These indicators should provide
insight to port management into the operation and behavior of key functional areas. According
to the UNCTAD manual on port statistics (TD/B/C.4/131/Supp.1/Rev.1), performance indicators
can be used, first to compare performance with another target, and secondly, to observe the
trend in performance levels.
Talley (1986) contends that there are two methodologies that may be followed when selecting
performance indicators. These two are operating objectives specification methodology and the
criteria specification methodology. The first methodology requires the specification of operating
objectives, while the second specifies the criteria that should be satisfied by the selected
performance indicators. Since the Nacala Corridor is run by a private party, the main operating
objectives are to get a return on investment within the contracted concession period.
Performance indicators can be both operational and financial. The primary financial indicator for
each terminal is the contribution per ton of cargo handled over a specific period of time. For the
sake of this research, only literature regarding the operational performance indicators shall be
taken into account.
4.15.1 Operational performance indicators

Operational indicators are of more direct concern to port management than financial indicators.
The United Nations Conference on Trade and Development (UNCTAD) publication on Port
performance indicators argues that with all things being equal, through the control of operational
performance, management will be able to simultaneously control financial as well as operational
performance. The United Nations publication contends that the most important operational
indicators are as below stated:
a. Arrival Rate: This is the number of ships arriving in a month divided by the number of days
in the month.
b. Waiting Time: This refers to the total amount of time a ship waits after arriving at the pilot
station until berthing in the terminal divided by the number of berthing ships.
c. Service Time: This is the total time between berthing and departure of a ship divided by the
number of ships calling in the time period under consideration.
d. Turnaround Time: This refers to the total time between arrival and departure of ships
divided by the number of ships.

e. Ton/TEUs per ship: This is the total tonnage/TEUs worked for all ships divided by the
number of ships worked.
f. Fraction of time berthed ships worked: This is the total actual time that berthed ships
worked. It is calculated by dividing the total working time for all ships by total time between
berthing and departure.
g. Average Berth Occupancy Ratio: This ratio is obtained by dividing the time a berth has
been occupied by the time a berth is available during a given period of time.
h. Tons/TEUs per ship hour in port: This is calculated by dividing the total tonnage/TEUs
moved by total time between arrival and departure.
i. Tons/TEUs per gang-hour: This is calculated by dividing total tonnage/TEUs worked by
total gang time.
A standard should be established for measuring performance in each indicator. Corrective

action should follow in cases where actual performance is outside the established ranges in
order to determine reasons for the variations and take steps to correct the deviation. Below is a
table showing a summary of a port’s operational key performance indicators.
Primary Indicators Subsidiary indicators
Time awaiting berth

Time at berth
Ship turnaround time (Hours/ship) Service time (Time at berth working)
Time awaiting departure
Total port time
Tons/TEUs per ship-hour in port
Shipping performance Tons/TEUs per gang-hour in port
Delays while alongside
Arrival rate
Average berth occupancy ratio
Port
Arrival entry delays
Tons/TEUs per ship
Cargo dwell time Tons/TEUs per working time
Table 4.2 Summary of operational indicators, adapted from Carlson (1993)
Figure 4.8: Time related KPIs (Carriou, 2011)

The figure above from Port Economics was adopted from Carriou (2011) and illustrates the time
performance indicators between ship arrivals until leaving the port. It also shows how productive
time which is time in cargo operations is but a small fraction of the total time.
4.16 Conclusion
This chapter has summarized relevant literature related to transport corridors, the problems
faced by landlocked countries, port selection criterion as used by shippers, port competition,
performance as well as performance indicators. Transport corridors are very essential in
providing easy accessibility for the distribution of cargo into geographically disadvantaged
landlocked hinterlands. The literature herewith reviewed has emphasized the importance of
synchronizing efforts within the entire corridor in order to improve competitiveness of the whole
network. It has also suggested that setting up performance indicators creates the standards for
the key operational areas directing them at achieving established functional objectives.
However, this literature review is not exhaustive; other relevant references that were not cited
herein may be used in the succeeding chapters as appropriate.

5 MODUS OPERANDI
5.1 Introduction
Chapter two was an introduction to the Nacala Development Corridor and the socio-economic
environment surrounding it that influence in one way or the other, the function of the corridor.
This chapter shall illustrate the modus operandi, the method of operating and functioning in the
Nacala Corridor. It will thus lay the foundation for a discussion on the research findings in
relation to the literature already reviewed. The chapter will also identify corridor’s functional
areas and highlight some of the bottlenecks associated with these functional areas.
5.2 Governance structure

The management structure and legal position of the port authority in Nacala Port drifts a little
from the generally accepted landlord model. All infrastructures belong to the state enterprise
CFM. Unlike the landlord model discussed in the literature review, CFM passed on the legal
rights of Port Authority (PA) to CDN in the concession agreement. Thus CDN is responsible for
developing the port, managing the government assets dedicated to international maritime
commerce, assuring access to the port and the hinterland thereof.
CDN collects all the access, light, canal and quay dues connected with the entrance or stay in
the port of a ship. CDN is also responsible for funding the port for superstructure and
infrastructure needed. The initial idea is that the PA should be responsible for funding normal
operations, while the other requirements should be supplied by the government when
demanded and approved. CDN also runs port cargo operations through a subcontracted
company. By this, CDN assumes the responsibility of providing cargo handling equipment as
well as servicing and maintaining the equipment.
As the PA of Nacala Port, the port does not perfectly fit in the Landlord model, as there are a
mixture of roles and responsibilities. The port governance structure for Nacala Port is stuck in-
between a service port and a landlord port. CDN is responsible for all labor involved in port
administration and operational activities. This brings the port model in close resemblance of the
service port model. Brooks and Cullinane (2007) argue that because of the centralized
approach there is limited internal competition and as the result of there will be inefficiency.
5.3 Port cargo operations
5.3.1 Container handling

Vessels calling Nacala Port are required to give a notification of arrival through the shore agent.
36hrs prior to arrival, the agent has to submit to the port a provisional loading and discharge list,
followed by the final lists 24hrs prior to vessel arrival. The final lists are submitted at or prior to a
vessel operations pre-plan meeting held with the agent, CDN, TN (stevedoring), ITS and
pilotage. The provisional lists are used by CDN terminal management for yard planning.
Because the container terminal has no ship-to-shore handling equipment, all containerships
calling Nacala Port need to have own loading and discharging gear. Each vessel is operated by
a gang of 14 stevedores. 1 crane operator, 1 signal man, 4 on board (lashing & unlashing) and
4 on the ground and the other 4 are chiefs/supervisors.

5.3.1.1 Import cycle

Containers are unloaded parallel to the quay by the vessel cranes, allowing for more space to
place unloaded containers on the quayside. A reach-stacker picks them from the side facing the
vessel and places the container on a terminal chassis/truck. The container is taken to the
previously designated area for storage. These moves including the end yard location are
recorded on mapa 1125iv by a stevedore tally clerk and checked on the bay plan by a tally clerk
on board.
5.3.1.2 Transshipment containers

Containers in this regime are discharged and block-stacked together with export containers.
This is for ease in locating them as well as loading to the respective vessel. The containers are
stacked discriminated by first vessel, then destination, and depending on the quantities,
sometimes even by weight. In 2011, Nacala port moved about 8,153 TEUs as transshipment.
5.3.1.3 Export cycle

Using the final load list and the vessel stowage/bay plan, the tally clerks in the yard identifies
and has the right containers loaded onto terminal chassis and sends them to the vessel.
Containers are placed at right angles to the quay by a reach stacker and are loaded by the ship
crane. This process allows for many containers to be waiting loading on the quayside and easy
for the ship’s crane to lift. All moves are likewise recorded on mapa 1125 by a tally clerk on
shore and checked on the bay plan by a clerk on board.
The lack of modernized ship-to-shore gantry cranes limits the quayside productivity. The other
major regional ports within the South East African range are equipped with gantry cranes, and
thus have higher quayside productivity.
This process of port/vessel interface form one of the key functional areas. TN has as a golden
rule to always keep the crane moving. As a way to measure and closely monitor the
performance thereof, the port has put in place a standard indicator of 10 containers per group
hour. Any deviations from the norm must be explained by justifiable delays as recorded. The
target has rarely been met; the average productivity is about 5 containers per group hour which
is about 9 containers per vessel.
5.3.1.4 Gate (Truck) operations

Clients who wish to collect import container or bring in export containers by road, make an
appointment 24hrs in advance.
5.3.1.4.1 Import containers

The list of appointments (programav) is used to physically locate import containers. The truck
driver is allowed at gate 1 if the container number on his guia de saidavi corresponds to the
container number on the programa. At gate # 2 there is security check and then the truck
passes to a weighbridge before queuing to go into the container terminal. At gate # 3 the truck
driver hands his guia de saida to the clerk at the window who confirms container location and
directs the driver to the location. After loading, the tally clerk signs the guia de saida and
registers the operation on a form provided. The truck driver passes through gate # 3 where he
hands the guia de saida to the clerk at the window who records that the container has been
released to the client. The truck passes through a weighbridge and then a security check at gate
# 2 and leaves the guia de saida at the tally window. At gate # 1 he is obliged to pass through
the customs operated scanning machines at a designated inspection area. After customs
release the container, the driver is free to leave.

5.3.1.4.2 Export containers

They follow the same cycle as import containers only in reverse. At gate # 1, trucks carrying
export containers are admitted entrance if they have a guia de entradavii. After being allowed in,
they are obliged to pass through the customs inspection area for scanning. Then the truck
follows security procedures at gate # 2 after which it passes through the weighbridge. From the
weighbridge, the truck queues for entry into the container terminal. At gate # 3, the driver hands
his guia de saida to the clerk at the window who records gate entry and indicates to the driver
where he should go to drop the container. The tally clerk receiving the container signs and
keeps the guia de entrada. The truck either leaves the port or queues to be loaded with an
import container.
5.3.1.4.3 Transit containers

Transit containers are kept in a separate area within the port facility close to the rail tracks. As
aforementioned, 70% of the transit cargo is moved by rail. Both reach-stackers and a rail
mounted gantry crane are used in loading and offloading containers from rail wagons. Due to
congestion, transit containers have a long dwell time in the port of up to 28 days.
The involvement of several parties in gate operations turns the operation in itself complex,
making it another key functional area in port operations. Any neglect or improper planning of
gate operations naturally leads to congestion and thus a potential bottleneck cropping up.
5.3.2 Dry/break bulk handling

Large clinker and wheat carriers dock at the container berth, while other dry bulk cargoes are
unloaded at the multi-purpose terminal berths. Clinker, wheat, fertilizer and other grains are
generally unloaded using grabs through hoppers into either dump trucks or open top rail
wagons. Transit bulk fertilizer is at times bagged inside the port before being shipped to Malawi.
Transit cargo is either loaded directly onto rail wagons or temporarily stored in warehouses;
while most Mozambique bound cargoes are usually unloaded directly onto trucks and carried to
the receiver’s warehouse. When cargo leaves the port it follows the same process as does the
containers, through the weighbridge, security checks and customs inspection and scanning.
5.4 Current operations productivity and efficiency rate

The Nacala Development Corridor has been characterized by inefficiencies and low productivity,
both in port and railway operations. Evidence of this has been noted in poor vessel and train
turnaround times, long dwell time for transit containers, congestion and delays.
The graph below shows the trend in the container handling productivity over the past 5 years.
The productivity level varies from a few containers per hour to about 22 containers per hour.
Currently the average productivity is 9 containers per hour.

Container Annual Productivity

10
9
8
Container/hour 7
6
5
4
3
2
1
0
2006
1 2007
2 2008
3 2009
4 2010
5 2011
6
Containers 5 7 7 8 9 8
Figure 5.1: showing container handling productivity trends

Source: compiled by author
The average dwell time of containers handled is as follows:
Import containers 10 days

Export containers (incl. transshipment) 5 days
Transit containers 25-30 days
Truck turn-around-time 3-5 hrs
Table 5.2: showing average container dwell time at Nacala Port

For dry and break bulk, productivity differs with the cargo due to differences in the methods of
unloading. The following table shows the different productivity levels per commodity as at 2009.
Commodity Volume Operation Productivity
Type
2009 ton hours t / hr
Plaster(Gesso) 5,822 142 41.0 Bulk
Wheat(Trigo) 116,072 1,589 73.0 Bulk
Clinker 186,563 1,182 157.8 Bulk
Fertilizer(Adubo) 42,481 941 45.1 Bulk/Bag
Mixed 2,348 234 10.0 Bag
Bran (Ferelo) 2,949 147 20.1 Bag
Sugar (Açucar) 15,739 199 79.1 Bag
Rice (Arroz) 17,611 444 39.7 Bag
Cement (Cimento) 53,842 1,266 42.5 Bag
CXAS, TKS 181 41 4.4 Other
Mchine (Maquinas) 238 10 23.8 Other
Locomotive 304 3 101.3 Other
Fish (Peixa) 1,069 114 9.4 Other
Scrap (Sucata) 3,378 149 22.7 Other
Total 448,597
Table 5.3: showing dry/break bulk handling productivity
Source: adapted from JICA report (04/2010)

5.5 Railways operations
5.5.1 Nacala railway station

The Nacala Railways station is the starting point and finishing point for all rail operations along
the corridor. When a train arrives at the station, an arrival notice is sent to the agent (and or
client) and a copy to the port. The port will make a shunt request stating onto which rail track
and into which terminal the wagons should be shunted.
For general cargo terminal, the wagons are placed in front of the respective warehouse where
the cargo will be offloaded into. A gang of stevedores is requested to do the operations. Upon
completion the wagons are shunted in front of the warehouse with transit cargo destined for
Malawi and reloaded soonest possible.
For containers carrying wagons, the wagons are offloaded and containers stacked into the
terminal according to the yard planner’s instructions. A loading plan is created and made
available even before the offloading is completed, following a FIFO (first in, first out) system.
After completion, the wagons are again loaded with transit containers for Malawi.
Another shunt request is done to shunt the wagons back to the station. Each terminal is
responsible for completing a consignment note for cargo loaded and submits together with the
respective documentation to railway operators. The target turnaround time for a train in Nacala
is 3 days.
Trains are made up at the station, giving priority to old wagons but also respecting cargo
destinations and perishables. The average train pulls approximately 1,000tons equivalent to
about 25 container carrying wagons, i.e. 50 TEUs.
5.5.2 Nampula railway station

At an average speed of 50-60km/hr, the train transit time from Nacala to Nampula is 5-6hours.
In Nampula, cargo is rechecked and if there is any Nampula cargo it is taken out of the train
composition. Likewise if there is any extra capacity, additional cargo may be loaded from
Nampula. At an average, the train stays in Nampula for at least 11 hours.
5.5.3 Cuamba railway station

The next train stop from Nampula is Malema, where it stays for at least 30 minutes and leaves
for Cuamba. Cuamba has more traffic from Nampula and Lichinga in the north. The shunting out
and in of wagons on a mixed train takes about 37 hours.
5.5.4 Entre-Lagos / Nayuchi International border post

This point is also regarded as the exchange point. It was at this point where the CDN
locomotives would drop off their load and pick up cargo destined for Nacala Port. Their cargo
would likewise be picked by CEAR locomotives into Malawi. But due to fuel shortages, the CDN
locomotives have to pull their load up to Liwonde about 70km further into Malawi. Going the
distance up to Liwonde allows the locomotives to have minimum fuel to come back and fuel
again in Cuamba for the trip back.

Entre-Lagos is the station within the border town on the Mozambican side, 610km away from
Nacala and 2km away from the border. All the paperwork is put in order and presented to the
customs authorities on the Mozambican side of the border. The border formalities take at least 1
hour for a fully loaded train with all documentation in place. Besides there being only one rail
line crossing, there is no congestion at all. A maximum of 2 trains cross the border each day.
The Nayuchi border post (Malawi side) is about 3km away from the Entre-Lagos border post.
The border post suffers from electricity problems. Since the border post is detached from the
national electricity supply grid of Malawi, electricity is provided by means of a diesel-powered
generator. During a fuel crisis, the border post doesn’t get enough supply of diesel; therefore
they are forced to close down at sunset due to no lighting and electrical power. That means any
trains arriving after sunset will have to wait for clearance on the next day.
The above discussion on railway operations in the corridor describes the operations and
logistics involved in the turnaround of a train. Rail operations is another functional area that
deserves research and constant monitoring and performance measuring. Bottlenecks can easily
form and reduce rail efficiency where the logistics are not coordinated properly.
5.6 Hinterland transportation of seaborne cargoes
5.6.1 Containers
Despite the geographical distance advantage that Nacala Port has over the other regional ports
in accessing the landlocked Malawi and Zambia hinterland, it still records the lowest on cargo
throughput to and from these LLCs. The bulk of the cargo goes through Beira, Durban, Dar es
Salaam and Walvis Bay Ports. The transit traffic volume through Nacala Port is small when
compared with the cargo volume from its hinterland. This is due to bottlenecks along the
corridor that make the other alternative ports preferential.
56.2% of containers coming to/from Malawi pass through Beira, 21.3% through Durban, while
14.8% passes through Nacala, and the remaining 11.9% through Dar es Salaam. Through the
Tazara Corridor the port of Dar es Salaam handles about 56% of containers in and out of
Zambia. Beira handles 12.2%, Walvis Bay 8.1% while Nacala currently does not serve Zambia
as gateway to the sea. The table below shows a graphical illustration of these figures.

Table 5.1: Source: adapted from JICA report (04/2010)
5.6.2 Bulk Cargo

Import and export bulk/general cargoes for Malawi and Zambia follow the same pattern as the
container flow. However, Durban’s share of Zambian bulk cargo is much higher than the
container share since most of the cargo out of Zambia is copper in bulk. Beira’s share of
Malawi’s cargo is also increased by imports of fuel oil. The following table gives an illustration of
the units being moved.
Table 5.2: Source: adapted from JICA report (04/2010)
5.7 Cargo throughput and vessel traffic

Three quarters of containers passing through the port are international cargoes to and from
Mozambique, transit containers account for about 10% of the total throughput. Nacala Port is
the only port in Mozambique that handles transshipment containers. The volume of inbound
cargo is larger than outbound cargo, both in domestic traffic as well as transit. Containers have
the greatest share of all import cargos accounting for one third of total throughput. The main
cargoes handled through the multi-purpose terminal are clinker, fertilizer, sugar, fuel, cereals
and cement.

The port is designed to handle Handymax and Panamax cargo ships. The following table shows
the volume of cargo passing through the port in the four main regimes, domestic, international
Mozambique, international transit and international transshipment.
Regime Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total cargo volume (1000tons) 673.0 743.3 779.7 817.9 906.8 875.4 950.2 1,100.1 1,045.9 1,049.8 1,155.4 1,354.4
Domestic 94.5 72.6 78.5 75.3 58.6 27.1 30.0 12.3
International (Moz) 628.2 615.8 740.7 783.8 699.4 720.9 804.9 975.0
International (Transit) 175.2 185.1 108.4 218.1 252.8 260.9 220.7 203.0
International (Transship) 8.9 1.8 22.5 22.9 35.1 40.9 99.8 140.9
Containers (TEUs) 25,307 26,709 28,063 28,527 30,225 31,118 33,128 44,687 49,770 53,199 71,112 89,714
Domestic 5,625 4,955 5,344 4,793 3,787 4,327 5,877 2,648
International Total 24,600 25,849 26,788 37,558 43,104 44,949 57,121 76,917
International (Moz) 18,869 21,691 22,879 31,515 36,896 38,927 52,233 70,677
International (Transit) 5,153 4,158 3,909 6,043 6,208 6,020 4,888 6,240
International (Transship) 578 314 996 2,336 2,879 3,925 8,114 8,153
Table 5.3: showing the cargo throughput at Nacala Port between years 2000 and 2011
Annual Container Throughput

2000 ate 2011
100,000
80,000
60,000
TEUs
40,000
20,000
-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Series1 25,30 26,70 28,06 28,52 30,22 31,11 33,12 44,68 49,77 53,19 71,11 89,71
Graph 5.1: showing the cargo throughput at Nacala Port between years 2000 and 2011
5.8 Conclusion
This chapter has given a brief overview of the current governance structure at Nacala Port. It
also presented the way port and rail operations are carried out in the Nacala Development
Corridor. Though bringing in the least revenue contribution to the corridor, rail operations are
spread over several rail stations on different locations along the corridor. Conventional cargo
handling facilities, equipment and systems are still being used in corridor operations. Despite
the notable growth in both world and regional trade and the subsequent growth in traffic, the
corridor has been adapting slowly and lacking in modern cargo handling equipment. The result
of which is reflected by the poor productivity ratios and time targets set as indicated above for
each operational area compared to world standards.
From the preceding review, it can be concluded that the key functional areas of the corridor
include one, vessel operations; two, the entry and exit points of cargo into the port; and three,
rail operations and logistics. A diagnosis and detailed discussion of the same shall be presented
in the following chapter.

6 RESEARCH FINDINGS
6.1 Introduction
It must be here observed that during the time of this research, there was an economic crisis and
severe fuel shortages in Malawi which also was affecting corridor users’ import and export
habits. During the tour of the corridor, the researcher had to pause in Cuamba Mozambique for
about 8 hours due to fuel shortage. The stations were waiting for rail fuel tankers loaded at
Nacala Port. The researcher also had to carry an extra 40 liters in two jerry cans in the car for
the Malawi part of the trip where fuel shortages were said to be severe.
This research was carried out during the last quarter of the year 2011, Mozambique whose
exports relies a lot on seasonal agricultural produce was at this time just coming out of the
pigeon peas season and cashew nuts season was due to start in January. Thus it was a period
of low export traffic and yet high import traffic due to the festive season starting. It was also
soon after new but unfavorable trade regulations and taxes were imposed by the government to
discourage timber exports.
At the same time, Vale Mozambique had just been created that year by the Brazilian ore and
coal mining giant Vale, after acquiring a majority of shares in SDCN. Vale also was at the time
doing feasibility studies on rehabilitating the railway line from the port linking the port’s
hinterland. The same has a long term plan of constructing a coal terminal within the jurisdiction
of the Nacala Port/Corridor.
The preceding chapter on modus operandi presented the way operations are conducted in the
Nacala Development Corridor. It also highlighted the corridor’s key functional areas that were
taken into much consideration during the field research. In this chapter shall be highlighted the
functional areas that are associated with bottleneck situations. Reasons as to why they form
bottlenecks shall also be presented herein. The proceeding chapter shall give an analysis of the
bottleneck situations and point out some recommendations and possible solutions for the same.
Since the research’s main objective has been to evaluate the operational function of the Nacala
Development Corridor, the findings in this chapter are mostly operational. The evaluation was
conducted through observation of operations in selected areas as well as through interview
questions to selected individuals representing CDN and corridor users. Most of the research
was done during a tour of the corridor and shall be presented chronologically.
As a prelude to the field work, a discussion was held between the author and the port executive
director, Eng. Agostinho Langa. It was observed that the following key functional areas of the
corridor were associated with the corridor’s major bottlenecks: one, quay side operations; two,
gate operations; and three, rail operations. Eng. Langa also observed that the corridor’s major
bottlenecks are in one way or the other related to inefficiency in these functional areas. The
named functional areas and other areas related thereto shall receive special attention in this
discussion. This chapter therefore aims at giving reasons for the existence of the bottleneck
situation.

a) Quantitative research: Operations observation and evaluation

i. Vessel operations
ii. Port gate operations;
iii. Railway station operations and logistics;
iv. Border operations;
v. Distribution center operations and logistics;
b) Responses to personal interview questions
i. What determines a shipper’s port selection criteria?
ii. Why has your cargo through Nacala Corridor gone down?
iii. Which other alternative ports do you use and what are the pull factors?
iv. A vicious cargo cycle
6.2 Quantitative research: Operations observation and evaluation

While port handling capacity (75.000TEUs) has remained the same since the concession of the
port infrastructure and terminals in January 2005, throughput has been growing at an ever
alarming rate. In 2011 the total throughput was 89.714TEUs, about 20% above the terminal
handling capacity. Thus the port is operating beyond its handling capacity. Despite the decline
in transit traffic to and from Malawi in 2011, northern Mozambique cargo through the Nacala
Corridor was still able to outgrow 2010 figures by 22.6%.
6.2.1 Key performance indicators

The table below shows the key performance indicators for the container terminal at Nacala Port
in 2011.
Primary Indicators Subsidiary indicators Target 2011 Deviation
Time awaiting berth 0.5 1.2 +58.3%

Time at berth (hours) 44 65.45 +32.8%
Ship turnaround time
Service time (hours) 48 79.97 +39.9%
(Hours/ship)
Time awaiting departure (hours) 0.5 0.7 +28.6%
Total port time (hours) 50 81 +38.3%
TEUs per ship-hour in port 8 6.93 -13.4%
TEUs per gang-hour in port 10 5.8 -42%
Shipping performance
Delays while alongside (hours) 2 3.5 +42.9%
Average berth occupancy ratio 39% 59% +33.9%
Transit containers (days) 15 25 +40%
Cargo dwell time Import containers (days) 10 9 +10%
Export containers (days) 13 10 +23.1%
Table 6.1: Nacala Port 2011 KPIs
The deviations in the table above indicate the port’s failure to archive set goals and thus falling
short in efficiency. The average deviation for ship turnaround time from the port’s target is
45.3% which means a ship stays longer in port than is expected. Shipping performance show
the greatest deviation from set standards. The variance is a reflection of the bottleneck situation
in vessel operations. The inefficiency in ship turnaround often times means congestion and long

waiting times for the next berthing vessel. This ultimately discourages shipping lines such as
Maersk and Evergreen from making direct calls at Nacala Port.
6.2.2 Vessel operations

Following is a case study conducted with the objective of investigating reasons for this
bottleneck situation in vessel operations. The study presents preparations and operations on a
CMA-CGM vessel Pacific Trader voyage SW440N.
On the morning of the 19th of December, container terminal planned to begin operations on
Pacific Trader. The following table summarizes the vessel operations as adapted from Nacala
Port’s vessel Statement of Facts (see attachment 6.1).
Vessel Details Total Containers moved Productivities Target Real

19-12-11 22:00
PACIFIC TRADER
Cont\Hr\berth time\vessel
Total
Berthed Fulls Empties 12 7.6 63%
Description
Started Ops 20-12-11 07:00 20' 40' 20' 40' Cont\Hr\Ops time\vessel 10 11.0 110%
Finished Ops 21-12-11 18:40 Discharge 46 34 52 132 Cont\Hr\Ops time\Group 6 4.9 81%
UnBerth 21-12-11 20:15 Loading 140 63 1 204
Total berth time 46.25 Restow 16 16 Total Gangs 9
Delays/stoppages 32.58 Total Contrs 186 97 52 17 352 Total gang hours 72
Total operational time
32.05 Total TEUs 186 194 52 34 466
Table 6.2: Pacific Trader vessel operations at Nacala Port
In this vessel’s operations, the port had available 2 reach-stackers and 1 top lifter for full
containers and 2 light machines for handling empty containers. Other parallel operations going
on during vessel operations included, gate operation where in 33 road trucks were offloaded
and 76 were loaded. 6 empty containers were moved for stuffing and 5 full containers were
moved for stripping. 8 rail wagons were offloaded and the same were back loaded.
Figure 6.1 below shows the time line performance indicators of Pacific Trader from arrival time
on the 19th of December at 22:30hours until departure on 21 st December at 21:22hours. During
the 49.3 hours total time of the vessel at Nacala Port, only 35.7 hours were productive time.
While the rest of the time was used during maneuvering, more than 12 hours were lost as idle
during operations; most of it being idle time waiting for cargo on the quayside and the other
waiting for reach stackers to remove cargo from the quayside.
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12-19-11 22:20 12-19-11 22:48 12-19-11 23:54 12-20-11 7:00 12-21-11 18:40 12-21-11 20:30 12-21-11 21:22
Total time 49.33 hours
Waiting time 0.47 hours
Maneuvering time 1.1 hours 0.86 hours
Berthing time 44.6 hours
Productive time 35.67 hours
Delays : 12.3hours
Idle time 7.1 hours 1.8 hours
Figure 6.1: Time performance indicators for Pacific Trader (Compiled by author)

At the beginning of vessel operations, the stevedoring company, Terminais do Norte (TN) had a
target of moving 10 containers per group hour. Their performance was to be measured against
that target. In order to calculate the net container productivity, the total number of containers is
divided by total time worked. Then all delays experienced are subtracted and we factor in the
total number of gangs involved, as indicated below.
Divide the TEUs by time between arrival & 352/46.25

TEUs per ship hour in port
departure =7.6 cntrs/hr
352/72
TEUs per gang-hour Divide TEUs worked by total gang time
=4.9 cntrs/hr
The resulting net vessel productivity is 18.3% below the target. Productivity is thus reduced by
terminal not having enough handling equipment to run different terminal operations
simultaneously. The running of parallel operations in the terminal with limited resources thus
both limits terminal capacity and reduces performance.
6.2.3 Port gate operations

The main problems that are associated with port operations are equipment availability and lack
of a dependable electronic cargo control system. This makes yard and terminal planning
difficult. The consequence of this is reflected in long truck and rail waiting times. The following
table illustrates truck waiting time for different periods of the research.
Truck reg. Waiting Cargo

Date of gate in Date (off)loaded
number time destination
MNP 15-69 28/Oct/11 07:00hrs 28/Oct/11 10:00hrs 3 hours Nacala

AAB 982 MP 28/Oct/11 12:00hrs 28/Oct/11 19:00hrs 7 hours Nampula
ABI 948 MP 28/Oct/11 17:00hrs 28/Oct/11 21:30hrs 4.5 hours Blantyre
ABI 957 MP 19/Dec/11 19:00hrs 20/Dec/11 09:00hrs 13 hours Nacala Port
ABA 651 MC 20/Dec/11 07:30hrs 20/Dec/11 16:30hrs 9 hours Nampula
AAR 250 MC 20/Dec/11 14:45hrs 20/Dec/11 17:00hrs 2.15 hours Blantyre
MNB 95-16 20/Dec/11 16:00hrs 20/Dec/11 20:00hrs 4 hours Nacala Port
Average waiting time 6 hours

Table 6.3: Gate operations waiting time
The reason given for the delays in the December sample was that there was a CMA-CGM ship
in operation, Pacific Trader and all the equipment available were occupied (reach-stackers and
terminal chassis), in handling containers from this vessel. The order of priority for equipment
allocation is first vessel, second rail wagons and lastly road trucks. There are times when the
terminal does not attend road trucks as was the case on December 12 th to December 14th. This
was because there were 2 vessels operating in the port and the port was operating only on 3
reach-stackers for full containers. To compensate, the port had to open its doors on Saturday
and Sunday which otherwise would have been overtime on client’s request.

6.2.4 Railway operations

As has already been observed in the literature herein reviewed, efficient railway operations
depends partly on the level of infrastructure development, port equipment availability and
effective logistics management. The lacking in port equipment is already a negative factor
contributing to long train/wagon waiting time, awaiting equipment availability for discharge and
loading. Due to the economic crisis in Malawi as shall be observed from Malawi clients’
comments, there was low traffic moved to and from Malawi. Thus the effect of shortages in port
equipment could not be noticed on train waiting time in the port as there was low traffic flowing
from and into the hinterland.
During a tour of the corridor, the main rail stations were visited with the aim of operations
observations and evaluation. The corridor consists of 14 main stations, of them all, only 6 were
visited due to time and resources constraints. The following was observed to be common
among the station visited.
Station Waiting time Reasons for delays
Nacala (beginning) 24hrs Waiting client/port loadings (equipment availability)

Nampula 11hrs Shunting; breakdowns and crew changes
Cuamba 37hrs Crew resting (7hrs); awaiting cargo; breakdown
Entre-Lagos 4hrs Customs clearance (Mozambican side)
Liwonde 3hrs Waiting documentation from client
Limbe (end) +24hrs Waiting cargo distribution to consignee centers
Table 6.4: Rail stations
The station with most delays is Cuamba. In Cuamba the crew has to take a break of between 7
to 12 hours usually during cargo operations. Since Cuamba is more of a central station, there is
also a lot of shunting of wagons, separating national cargo from transit cargo to Malawi.
The station with second most delays is Liwonde. This is due to several factors. One being that,
Liwonde as the first station from the Malawi border, it carries all the burdens of Malawi customs
and revenue authority clearances and inspection. It was observed that the paperwork coming
with the cargo from Nacala Port, though enough for Nacala customs clearances is not sufficient
for Malawi authorities. Un-uniformity in customs demands for clearance. Arriving cargo at this
station has to wait for a Bill of Lading and a commercial invoice to be sent from the receiving
agent. In most cases, the station request for these documents after the cargo has arrived, thus
prolonging the train/cargo waiting time.
Secondly, CDN locomotives push trains only up to this point in Malawi and the CEAR
locomotives takes over. However, in times of fuel crisis in Malawi as the case during the time of
this research, CEAR locomotives have no fuel and cargo accumulates at Liwonde. When the
station is full to capacity, some wagons are shunted on the lines outside the normal shunting
and station areas.
And thirdly, there is no prior communication between this station and Entre-Lagos station on the
other side of the border. It is at this point that CDN and CEAR start being observed as it were

two different entities, yet in principle they are one. This attitude carries with it operational
implications that hinder corridor efficiency.
6.2.5 Border operations

The Entre-Lagos/Nayuchi border post is one of the least busy border posts in the country.
Besides being the only border post which has the railway connection between the two countries,
it takes about 4 hours for a 25 wagon train to be checked and pulled over to the other side. On
the Mozambican side, the customs clearances and documentation is prepared in the port soon
after loading. While for the Malawi side, the customs clearances and checks takes place in
Liwonde, a few kilometers away from the border.
However, the Malawian side of the border suffers from electricity problems and they use a
diesel powered generator. In times of fuel crisis, they sometimes do not have sufficient supply at
the border and they are forced to close the border at sunset. This becomes a bottleneck and
increase transit time when a train arrives and is cleared in Entre-Lagos in the evening, and gets
stuck in Nayuchi awaiting daylight.
6.2.6 General observations

It was observed during the tour of the corridor that prices of commodities goes up with
increasing distance from the port. Fuel in Nacala costs approximately 20% less than further into
the hinterland of the port. Thus a corresponding increase in road transportation costs with the
increasing distance into the hinterland is observed. This discourages the usage of road while
increasing dependence on railway transportation. While road trucks have to fill up several times
along the way, a train only fills up in Nacala where fuel is cheapest.
Typically, shops along the way keep a higher inventory level compared to shops closer to the
port as a way of hedging unreliability. As shall be observed further into the chapter, this might
be a result of less delivery reliability and hence merchant traders invest more in high inventory
level to compensate for lead time uncertainties.
6.2.7 Distribution center operations

The hub-spoke distribution paradigm supported by Fleming (1999) as already reviewed earlier is
here exemplified. Nacala Port acts as the hub connected to its distribution centers by spokes of
both rail and road. It has been observed that all the distribution centers on the Mozambican side
are run by the CDN itself and they do not include anything more than the railway station upon
which they are built.
However, in Malawi the distribution centers in both final train destinations, Blantyre and
Lilongwe are operated by private players. The centers consist of a rail siding with a capacity of
up to 9 wagons with the basic lifting gantry infrastructure, warehouses and container storage
space. When cargo arrives at the station, shunt operations are performed segregating the cargo
per receiving agent and then shunted into the receivers’ distribution center. Here the cargo is
distributed to the respective shippers and retailers.
A field visit of a few selected centers was done in Blantyre and the following table shows the
most common features and situation among them.

Containers
TEU Rail siding Delays awaiting
Distribution Center awaiting
capacity capacity loading
wagons
GMS- Transmaritime 400 9 wagons 1 x 40’ 6 hours
CTD- Manica 400 4 wagons 22 x 20’ 2 hours
SDV-AMI 800 7 wagons 131 x 20’ 5 hours
CCTL 900 15 wagons 17 x 20’ 3 hours
Table 6.5: Distribution centers’ most common features
The main reason for delays in shunting wagons into the distribution centers’ sidings is usually
because CEAR has one shunting locomotive to service and distribute to all centers and yet at
times there is congestion at the siding with wagons waiting offloading. Operations observed
indicate that some sidings will be wagons stationed waiting to be offloaded while other sidings
will have cargo under gantry waiting to be loaded. This was the case with SDV-AMI siding at the
time of research. They had up to 131 TEUs under gantry crane waiting for wagon allocation.
The agent with the most containers awaiting loading is SDV-AMI. SDV-AMI’s biggest client
Illovo exports sugar. According to Illovo management, CDN/CEAR does not have the capacity
to move as much sugar as they would have wanted to move all things being equal. Illovo has a
production capacity of up to 200 containers per month, while CDN/CEAR has moved an
average of about 365 containers per month in 2011 for all its clients put together.
Due to shortage in locomotives and at times of fuel crisis, CEAR serves the distribution siding
that will provide traffic for them in return. It was observed that if they are looking for empty
wagons, they would concentrate on sidings that are offloading that day.
6.2.8 Rail efficiency or low demand for capacity?

At the outset of this research it was not clear whether the short waiting times and short transit
container dwell times in the port as observed during the research, were due to improved rail
efficiency or a mere low demand for rail capacity. A data analysis was done comparing transit
throughput for the past 4 years same period of time in order to determine true variations. Table
6.6 below shows an analysis of transit cargo growth measured against a growth in total
throughput at the port. This was done so as to reflect the true growth or decline in transit cargo
for the same period.
year up to year up to year up to year up to

Nov. 2008 Nov. 2009 Nov. 2010 Nov. 2011
M. Ton (10*3) 219,626 235,816 198,264 194,812
Transit cargo
TEUs 5,747 5,613 4,228 5,803
Transit as a % of throughput 27% 24% 20% 16%
Total M. Ton (10*3) 801,832 969,873 1,011,994 1,213,084
throughput TEUs 44,525 45,372 64,074 83,113
Table 6.6: Transit cargo vs. total throughput for past 4 years

Transit as a % of total Throughput

30%
25%
% Growth 20%
15%
10%
5%
0%
2008 2009 2010 2011
Transit as a % of
27% 24% 20% 16%
thruput
Graph 6.1: Transit cargo as a percentage of total port throughput
Graph 6.1 above shows the results of the analysis. It indicates and confirms the hypothesis
made earlier in the problem assessment of decreasing cargo passing through Nacala Port into
Malawi. It also confirms that the current rail efficiency might be attributed to a decrease in
throughput and not necessarily due to improved rail logistics and operations. To find out the real
reason for seeming improved efficiency, personal interviews were conducted covering a
selected number of corridor users and operators. Some of the reasons to this decreasing trend
shall be addressed in the responses to interviews conducted.
6.3 Personal interviews

The objective for the personal interviews was to get answers to questions and concerns raised
during observations.
6.3.1 What determines a shipper’s port selection criteria?

As already identified in the literature reviewed in chapter 3, there are a lot of factors that port
and corridor users take into account when selecting a port to use. To determine which of those
factors played an essential role to the users within the Nacala Corridor, interviews of a selected
group of people was conducted and the results thereof are illustrated in the table below. The
scores are rated out of 5, the number of clients and agents consulted.
Rating in terms of importance &

Criteria
frequency
Always sometimes Rarely
Nautical accessibility 0 2 3
Frequency of vessel calls 4 1 0
Geographical location (distance from hinterland) 1 3 1
Port efficiency 5 0 0
Transportation cost from port to hinterland 1 3 1
Hinterland connectivity 5 0 0

Quality and cost of auxiliary services 0 2 3

Port security and safety reputation (cargo) 2 3 0
Container dwell time 5 0 0
Train turnaround time 1 3 1
Port charges (heavy and light cargoes) 2 3 0
Absence of trade barriers 5 0 0
Table 6.7: client/agent port selection criteria
Note: Ranking ranges from 0 (least important) to 5 (most important)
Junaid and Ismail Seedat, general manager and operations manager at Transmaritime, a freight
forwarder company representing about 70% of Nacala Corridor clientele; observed that the most
fundamental factors taken into consideration by corridor users when making a decision on port
choice are first: port efficiency; second: container dwell time; third: hinterland connectivity;
fourth: absence of trade barriers; and fifth: frequency of vessel calls. This behavior confirms
Notteboom’s (2008) observation of how shippers need a more supply-chain oriented approach
to port selection.
6.3.2 Why has your cargo through Nacala Corridor gone down?
This question followed by an analysis of the clients’ cargo throughput using Nacala and other
regional ports, was to determine the reasons contributing to the downward trend in transit cargo.
Corridor statistics of the clients asked the above question reflect a decline in cargo moving
through Nacala Port. The following people were interviewed and their responses are
summarized in the following table.
Company Company description Person interviewed
Imports soap noodles & manufactures Miachel Hubbe:

Candlex Industries
toiletries Managing Director
Lyton Tumeo: Exports
Illovo Sugar Grows, processes and exports sugar
Manager (SDV)
Taufiq Jagot:
MCS Freight Freight forwarders
Finance Director
Client Economic crisis Change of port Reasons & observations
-Shortage of foreign currency

-Moved 70% of cargo to
Candlex -Change source for raw materials -Shorter transit time
Mombasa port in Kenya
-Reduced production
-Due to heavy weight of Illovo
sugar containers, it’s
-Still maintains bulk of advantageous to use Nacala by
-Shortage of foreign currency
Illovo shipments through Nacala rail instead of Beira where only 1
-Reduced production
Port TEU can be loaded per truck.
-Claims CDN/CEAR has no
enough capacity for exports
-Time efficiency.
MCS -Shortage of foreign currency -Moved 100% to Beira
-Truck goes with export & comes
Freight -Reduced production port.
back with import cargo.
Table 6.8: Corridor users’ response to reduced throughput

The responses illustrated above show different reactions from the corridor’s main users. Their
reasons for decline in transit cargo passing through the Nacala Corridor are two-fold: first, the
economic crisis which has led to reduced imports and exports; and second, change in
port/corridor preference.
6.3.3 Which other alternative ports do you use and what are the pull factors?
Before embarking on this research, the impression was that the major competitors for Nacala
Port are the bigger regional ports, with more developed infrastructure and equipment. The
research brought to light another smaller emerging port that is competing for the same
hinterland even on a higher scale, Port of Quelimane in central Mozambique.
Manica is a freight forwarder in Malawi with one of the largest bonded distribution parks. In
response to this question, Mr. Exford Kaphula, the General Manager, informed that 60% of their
throughput was passing through Port of Quelimane, 35% through Nacala while the rest is
shared by other regional ports.
Besides the fact that cargo from Quelimane is transported by road to Blantyre, there are several
advantages cited by Mr. Kaphula in favor of this route. These include:
Attractive factors (Quelimane Port) Discouraging factors (Nacala Port)

Existence of United Feeder Lines (UFL)
operating weekly services from Far East to Irregular direct shipping services
Quelimane
Line operates with an option of door-to-door
Shipper has to organize for self and worry
delivery on courier haulage containers all the
about logistics & transportation to Malawi
way to Malawi
Courier haulage containers come with the
Courier haulage could be possible but not all
benefit of little or no demurrage on delay to
lines has preferred vessel services
redeliver empty containers back
Average dwell time for transit containers at Average dwell time changes with demand,
Quelimane port is 10 days between 25-30 days
Table 6.9: Attractive & discouraging factors
6.3.4 What do you think can be done to improve port productivity?

In response to this question the majority of individuals who participated in the interviews agree
that the port should invest in more cargo handling equipment. To support their claim they cite
incidents where they had to spend more than 24 hours waiting for their trucks to be loaded or
offloaded. The port while attending vessel operations will have limited equipment to attend gate
operations.
They also claim that lack of equipment is also another cause of the growing corruption in the
port. One importer who chose to remain anonymous said that every time he sends a driver to
pick up a container at the port, he gives him “some loose change for the boys”. He claims if he
pays the shift supervisor about 200meticais (about $10), his containers will be loaded quicker.
When there is a vessel in port and high demand for the reach stackers, the price charged goes
up.

6.3.5 What are your cargo volumes and how are they split over the regional ports?
To this question Junaid and Ismail Seedat representing Transmaritime gave the figures
illustrated on the table and graph below. Transmaritime freight forwarders represent about 60%
of railway cargo in transit to and from Malawi.
2009 2010 2011

Port
20’ 40’ TEUs 20’ 40’ TEUs 20’ 40’ TEUs
Nacala 1,013 10 1033 945 2 949 739 21 781
Beira 180 313 806 381 393 1167 459 464 1387
Nacala Growth -3% 5% -3% -7% -400% -9% -37% 52% -32%
Beira growth 24% 8% 14% 53% 20% 31% 61% 33% 42%
Table 6.10: Transmaritime cargo throughput via Nacala Port and Beira Port
Table 6.10 above shows a comparison of Transmaritime containers between the Port of Nacala
and Beira port for three years. From the figures provided, it can be noticed that Transmaritime
prefers to move 40 foot containers through Beira port while most 20 foot containers passes
through Nacala Port. The Seedat brothers argue that 40 foot containers are less heavy and
easily ferried by road from Beira to Blantyre. While 20 foot containers the majority of which
contain soap noodles are heavier and if transported by road they would be loaded a single
container on a road truck. This is not financially attractive to the truck operators. The same are
however ideal for railway transportation which calculates to about 40% cheaper on heavy
containers compared to road.
20 ft container comparison 40 ft container comparison TEU comparison

1,200 500 1600
Cntainers moved
Containers moved
Containers moved
1,000 400 1400

1200
800 300 1000
600 800
400 200 600
100 400
200 200
0 0 0
20’ 20’ 20’ 40’ 40’ 40’ TEUs TEUs TEUs
2009 2010 2011 2009 2010 2011 2009 2010 2011
Nacala 1,013 945 739 Nacala 10 2 21 Nacala 1033 949 781
Beira 180 381 459 Beira 313 393 464 Beira 806 1167 1387
Graph 6.2: Throughput comparison between Nacala and Beira Ports
From graph 6.2 above, it can be concluded that Beira Port is growing at almost the same pace
as Nacala Port is declining. A global comparison of all TEUs moved between 2009 and 2011
illustrated on the graph above shows that by the beginning of 2010 Nacala Port was already
losing Transmaritime cargo to Beira.
Other corridor users were reluctant in giving information of their cargo throughput through other
regional ports for a wider comparison.

6.4 A vicious cargo cycle

A vicious cycle was also observed during these chains of interviews and data review wherein
corridor users’ behavior fluctuates and impacts greatly on corridor cargo flow. The cycle begins
with low traffic, which leads to efficient cargo flow; thus attracting more users to the corridor.
Users start changing ports and use Nacala Port, leading to accumulation of cargo and
consequentially delays in shipments. The next step will be users leaving the corridor and opting
for another port, thus again creating low traffic and the cycle starts again. The cycle is illustrated
in the diagram below.
Improved
Low traffic Cargo flow
efficiency
Clients
Attract
abandon
clients
corridor
Delays and
Clients
long dwell
accumulate
times
Congestion
at port
Figure 6.2: Vicious transit cargo cycle observed at Nacala Port
6.5 Conclusion
The field research that was conducted through both operations observation and personal
interviews was helpful in identifying problematic areas on the corridor. The research provided an
overview of the corridor regular clientele’s perspective on corridor performance, efficiency and
effectiveness in meeting their demands. The chapter clearly outlined that port selection follows a
number of several fundamental determinants to which port efficiency and hinterland connectivity
contributes highly. To conclude the research work herein presented, the following chapter will
analyze the data collected from this research and give an evaluative result of the Nacala
Corridor performance.

7 REASONS FOR THE BOTTLENECK SITUATION AND POSSIBLE

SOLUTIONS
7.1 Introduction
In chapter 4.8, the three types of bottlenecks were discussed; this chapter will put the same
concepts into the Nacala Development Corridor perspective. This chapter shall analyze the
bottleneck situations as presented in the previous chapter covering research findings. The
chapter will present reasons for the development of the bottleneck situation, as well as
determine their impact on corridor efficiency. It will also present conclusions on port and
logistics chain inefficiencies. For each bottleneck situation discussed, there will be
recommended potential solutions.
The previous chapter identified the functional areas that are associated with bottleneck situation
to be the following areas: one, quay side operations; two, gate operations; and three, rail
operations. Bottleneck situations at these functional areas are a symptom of failures and
inefficiencies in related areas. Figure 7.1 below illustrates these functional areas and the
bottleneck points associated with them.
Figure 7.1: Bottlenecks along the Nacala Corridor (by author)
7.2 Infrastructure and equipment bottlenecks
7.2.1 Cargo handling equipment and machinery

The greatest contributor to low productivity and high cargo dwell times in the Port of Nacala is
lack of sufficient equipment for port operations. During the course of this research the port has
been working on three machines for full containers and two for empty containers. These five
machines are responsible for handling all import, export and transit cargoes in the port. Due to
overuse, the machines have a high downtime, either for maintenance or for repairs. The
average machine availability has been observed to be 60% of the time, during the months
covered by this study.
Lack of equipment more often than not leads to bottleneck situations in gate operations.
Occasionally in the port, trucks queue for between 5hours to a day waiting to be loaded or
unloaded. Rail wagons have to wait sometimes up to 12hours to be offloaded and back loaded
with transit cargo. Thus cargo is forced to accumulate storage hours or days in the port due to
lack of sufficient cargo handling equipment and machinery.

In daily operations, equipment distribution follows the priority of, first vessels, second rail
wagons and finally road trucks. In cases where there is no enough handling equipment, other
operations will be suspended. At times the port chooses to work only one vessel at a time in
order to accommodate gate operations. In the end, this also assures high productivity on the
vessel in operations.
7.2.1.1 Possible solution

Instead of the port authority having to deal with the headaches of equipment availability,
downtime, repairs, maintenance, and spare parts procurements and logistics these activities
could be subcontracted to an expert third party. The third party will be contractually tasked with
making sure that there is sufficient equipment available at any given time, and they would have
to worry about how to make it available.
7.2.2 Lack of locomotives, railway equipment and deteriorating infrastructure

Illovo, the biggest Malawi sugar exporter highlighted the need for more wagons and equipment.
In an interview as recorded in the previous chapter, Illovo observed that, the corridor is
operating with deteriorating equipment against an ever increasing demand. Illovo argued that,
alone they have enough annual cargo throughput for the current railway capacity from Blantyre
to Nacala Port. The corridor does not have sufficient rail wagons to transport both import and
export transit cargo. As previously observed, Illovo had at the time of the research 131 x 20’ full
containers waiting for wagons. Thus the bottleneck of equipment shortage either limits shipper’s
production habits or worse still leads to shippers finding comfort in other options.
There is also need for rehabilitating the railway tracks especially in Malawi where almost every
rain season the railway line bridges are washed away and the line is forced to close. Besides
the efforts being made by Vale to rehabilitate the line, there are however some growing fears
and insecurities in most corridor users on the main usage of the rehabilitated line. Most fear that
the line will be monopolized by Vale’s transportation of coal from Moatize to Nacala Port.
Lack of a locomotive in Liwonde is another reason for the creation of a bottleneck situation.
Trains coming from Nacala leave their load in Liwonde where another locomotive coming from
Blantyre will pull the load with it back to Blantyre. Delays in arrival of a locomotive from Blantyre
to pull the lot, often times results in congestion at Liwonde station. The result is another rail
infrastructure/equipment bottleneck situation.

An investment in more equipment and capacity is required if the railway part of the corridor is to
meet the increase in demand. There is a need for locomotives of a higher capacity as well as
rail wagons. A speedy rehabilitation of the deteriorating rail facilities will also support this growth
in corridor efficiency and reliability.
7.2.3 CEAR/CDN Locomotives

Another bottleneck in the flow of trains and wagons is the discrimination between CDN and
CEAR locomotives. The two entities are one in essence and in ownership. But in operational
matters, they behave as two different companies; sometimes they appear to be competing
parties. Presently the CDN locomotives pull the train up to Liwonde. At Liwonde, depending on

fuel availability, CEAR locomotives are deployed to complete the trip. When there is a fuel
shortage, the wagons accumulate at the station and with the station’s limited capacity, the
station easily gets congested.

When a complete train composition leaves Nacala port destined for Blantyre or Lilongwe, it
would be ideal for the locomotive to complete the whole journey and not drop the wagons for
pick up at Liwonde. Local trains will be arranged for transporting local cargoes. Same train may
pull as part of its load a fuel tanker for itself and other trains along the corridor.
7.3 Regulatory bottlenecks
7.3.1 Lack of One-stop Border Post

The current border procedures and modus operandi make import and export processes more
costly and time consuming. There is need for customs clearances on both sides of the border
for all cargo on both train and road transport. The transporters are obliged to present different
documents in the two separate customs areas. There is an ever increasing demand and
growing trade in the regions covered by the corridor. A one-stop border post will mutually benefit
both countries involved thus facilitating trade and attracting more traffic. The post would also
speed up clearing processes, enhance security controls and synergize efforts from both parties.

Within the scope of SADC transport intermodal policies, policy and regulations reform is
recommended. Since the two countries are interdependent on trade and commerce, a one-stop
border post will facilitate trade and economic growth. This border post could use the already
existing facilities and synergize efforts and resources from both parties. An implementation of
uniform customs clearing documents will also help reduce paperwork complications.
7.3.2 Monopolistic nature of stevedoring in the port

The existence of only one stevedoring company operating in a monopolistic manner in port
activities reduces the incentive to outperform the status quo. Nacala Port subcontracted
Terminais do Norte (TN) to execute vessel operations, stuffing and striping, and all other port
operations. The shipping lines and agents book gangs of stevedores through the port. The port
intermediates between the stevedores and the agents or shipping lines.
The main disadvantage with this system is that it then becomes the responsibility of the port
authority to push for high productivity. This also means that the port authority will have to
respond to the vessel agent/line for any delays caused by the stevedores. The port authority
thus has limited time and reduced resources to concentrate on port development and
commercial services of looking for more clients to the corridor.

Agents and shipping lines should be granted the liberty to make their own independent
contracts with a stevedoring company of their choice at Nacala Port. The port should not
subcontract stevedoring company to operate ships, but rather facilitate intra-port competition by
opening up stevedoring opportunities to other interested companies.

7.3.3 Compulsory scanning at port entrance

There is an obligatory scanning performed and charged by Kudumba, a company subcontracted
by the customs authority for this purpose, for all cargo handled at Nacala Port. This was
adopted in adherence to the international security standards and to reduce and potential
violation of customs rules. This scanning is for all cargoes, containers laden or empty, bulk
cargo as well as liquids. The scanning fees vary between $50 for export and email $100 for
import which is not scaled to cargo value or volume.
Apart from high scanning costs, the scanning procedures are also time consuming as traffic has
to queue first at the customs scanning yard and then queue to get into the terminal. Other fees
accompany the scanning fee, such as, storage charges for trucks that are not scanned on the
day of entry into the yard. The scanning procedures are generating much criticism and the
consequences are alarming. There have been situations when the scanner breaks down and
trucks accumulate at the entrance for several hours. Some of the Malawian shippers
interviewed have already started to shift cargo to Quelimane, Durban and Dar-es-Salaam where
only 10 to 15% of containerized cargo is scanned.

A policy change in scanning procedures is highly recommended. With the increase in traffic,
congestion and long queues at the scanning facility are inevitable. A random cargo scanning of
between 20 to 40% per day of cargo coming through is recommended. This should mitigate
against long queues and possible bottlenecks. As part of the main roles of a Port Authority,
CDN may lobby with the government on behalf of corridor users for a change of the scanning
regulation.
7.4 Supply chain bottlenecks
7.4.1 Lack of a centralized distribution center or inland container terminal

When cargo arrives in Limbe, Malawi, it is distributed to the various distribution centers by
CEAR railway operators. This involves a lot of logistics, coordination, fuel, and equipment
usage, especially considering that the distribution centers are far apart in distance. This also
takes away valuable time and resources from rail authorities which could have been used in
commercial activities and creating more business for CEAR. When there is fuel shortages, like
the present situation, delays in cargo delivery creates congestion and bottlenecks. The
distribution in its self to many different centers reduces the performance and productivity of
CEAR/CDN Rail and slows the wagon turnaround.

CEAR/CDN Rail could open and operate or subcontract a third party to operate an inland
container terminal in Blantyre Malawi. The terminal will store all import containers on one side
separated per receiving agent or distributor; and export containers on the other side.
CEAR/CDN Rail will then have the sole responsibility of transporting the containers to this
terminal and either another party could be subcontracted to distribute to the respective agents,
or the agents will arrange own transportation from the terminal to their respective yards. A
further independent study into the benefits of an inland terminal is recommended.

7.4.2 Documentation flow and logistics
7.4.3 Railways logistics

One major factor contributing to delay in the wagon turnaround time is poor communication
between Nacala and Malawi rail logistics. When a train leaves Nacala Port it leaves with a
consignment note with Mozambique customs clearance. The rail logistics office at Liwonde
(Malawi) advises the client and asks for a commercial invoice and a bill of lading in order to
procede with customs clearances. To add on to the documentation flow problem, the Liwonde
office has no email and like Nayuchi border post, is not on the national electricity supply grid. It
also depends on diesel generated electricity. In most cases the office is not informed
beforehand of any coming cargoes, thus they only call and advise the client after cargo arrives
at the sub-station. The average time awaiting client response and faxing of the required
documentation ranges from 3 hours to a day.

The forwarding agent in Nacala has copies of the Bill of Lading and the commercial invoice.
When clearing cargo at port, these documents could be added to the consignment notes given
to CDN Rail and send together with the train. Once they travel together with the train, this
should reduce or even eliminate the waiting time in Liwonde. Rail logistics office in Liwonde will
not have to call client and ask for documents, but may go ahead and submit documents for
clearance.
7.4.4 Port/terminal logistics

The absence of an electronic system linking port operations to the administrative and finance
department creates loopholes wherein some operations may go unaccounted for and therefore
unbilled. There are several deficiencies in the current Phaeros Cargo System in use in the
container terminal to render it insufficient to meet the port’s objectives. The lack of an electronic
system also increases the flow of paperwork, stamps and signatures.

An electronic system should be introduced which links operations to finance such that once a
client pays for a certain job, operations department will automatically know about it, and vice
versa, once a job is done and recorded, the system automatically check if the job is paid for or
not.
The same system can be shared between CDN and CEAR so that on both ends of the chain,
information is available as to what cargo has been loaded, its tracking position and the
estimated time of arrival at the defined destination.
7.4.5 Lack of an EDI system

The corridor also doesn’t have an electronic data interchange (EDI) system linking port and rail
operations with customs, agents, forwarders and clients for data exchange. This even means a
more complex flow of paperwork. For instance a shipper has to make loading bookings with the
respective agent, collect the necessary documentation for customs clearance, after which the
same client will have to present the same proof of customs clearance to port administration.
After the client finishes with his part, the agent will still have to present a provisional loading list

to the port only reflecting containers booked for loading, 48 hours before vessel arrival. As the
individual clients clear their cargo with customs, they present the clearance documents to the
port for confirmation. The port then highlights what cleared and what not on the provisional load
list and 24 hours before vessel arrival, the agent is advised and asked to prepare a final load
list. This procedure involves a lot of going back and forth with documents, which procedure is
time consuming and inefficient.

The system defied in Recommendation 7.4.4.1 above could also have an EDI function and be
able to provide an interface which enables interaction with shipping lines, agents, customs and
authorized corridor users. All users can come together and invest in a port system that allows
for data interchange and reduce the need for paperwork. Each user will have an account limiting
accessibility to user interests.
7.4.6 Lack of Key Performance Indicators awareness

The importance of setting up and following up on Key Performance Indicators (KPIs) can never
be over emphasized. As observed in port and rail operations, KPIs are uncommon; despite their
existence most of the operations supervisors are unaware of them. Probably the most common
KPI is achieving 10 containers per hour on vessel operations. Other KPIs such as vessel
turnaround times and container dwell times are neither respected nor considered of importance.
For instance, after a vessel finishes operations, if there is no other vessel waiting to take the
same berth, the ship can take its time to leave berth. Neither the line agent nor the port authority
will pressure for the vessel to leave immediately after operations.

There is need to create a culture of performance measurement and setting targets for each
individual area of operation. This should be done by redesigning port and corridor performance
measurement system. As has been noted, some areas already have established KPIs. Such
areas include quayside operations where the 10 container per vessel hour is now a well known
standard. This gives a positive effect as operational management has a standard to measure
terminal performance.
However, performance in all the key functional areas and their supporting subareas need to be
monitored as well. Such include vessel time related KPIs. In Nacala Port as long as there is no
vessel waiting berth, there is no hurry for the current vessel to leave berth. A vessel may even
wait for cargo still coming outside the port while at berth accumulating delays. This in turn has a
negative effect on total port productivity. The same also distorts berth occupancy and utilization
rate.
KPIs should also be introduced in relation to utilization: berth occupancy and labor utilization;
terminal area productivity; storage productivity; equipment availability and downtime. A number
of possible operational KPIs were reviewed in this study; the study also recommends a further
study into financial indicators for measuring financial performance.

7.5 Bottleneck impact analysis

Tables 7.1 and 7.2 below show the ranking of corridor impediments and their impact on corridor
performance, with an impact score of 1 up to 5.
Reason for Impact

Description of reason Impact on performance
Bottleneck score
1–5
No competition for
Poor performance
Stevedore stevedoring activities in the 2
Lack of motivation
port
Limits operations
Shortage of cargo handling Reduces quayside productivity
Port equipment 5
equipment Increases truck waiting time
Increases train turnaround time
Customs compulsory cargo Slows down traffic movement
Scanning scanning before entrance Promotes congestion & bottlenecks 2
into port Discourages trade
Lack of locomotives, railway
Poor railway Failure to satisfy demand
equipment and deteriorating 5
equipment High equipment down-time
infrastructure
Lack of a centralized High locomotive & fuel usage
Inland terminal distribution center or inland Time consuming cargo distribution 3
container terminal Station congestion
Poor communication and
Time consuming uncoordinated
coordination between CDN 2
operational activities
Communication and CEAR
Too much paperwork
Lack of ICT in the corridor 3
Inefficient cargo flow
Operators working unaware Unmeasured performance
Lack of KPIs 2
of KPIs and targets Lack of vision and direction
Table 7.1: Impact analysis of performance impediments
7.5.1 Score analysis

Reason
Score Recommended mitigation action
Bottleneck
Stevedore 2 Shipping lines should have direct access to contracting stevedores
Port equipment 5 An investment is required in acquiring more handling equipment
Change policy and scan a % of cargo passing through gates and

Scanning 2
not 100%
Railway 5 An investment is required to increase railway capacity to meet the
equipment escalating demand
CEAR rail can partner with already existing inland terminal or
Inland terminal 3
subcontract a third party to operate an inland terminal
An investment is needed in an ICT system (EDI) linking all corridor
Communication 3
operations to operators and corridor users
All operators at all levels must be made aware of their KPIs through
Lack of KPIs 2
participation in setting up operational targets
Table 7.2: Score analysis and recommended mitigation action

The variables which scored 5 are critical and they directly affect port and corridor productivity,
growth and efficiency. Immediate remedial action is required if any positive change is to be
anticipated. For items which scored 3, their impact and effect on corridor operations is
moderate, but improvements in those areas will accelerate efficiency. Finally items that are
ranked 2 may not have an immediate positive impact of performance but with the current
increase in cargo flow, their effect will become significant.
7.6 Conclusion
From the analysis presented in this chapter, there are several variables identified that contribute
to bottleneck situations along the corridor. With all these variables and bottleneck situations put
together the Nacala Development Corridor currently scores very poor as far as time and
reliability is concerned. The consequential result is delays and unpredictability, which represents
a cost that outweighs the benefits obtained from reducing direct transport cost.
The level of performance in both port and railway operations of the Nacala Development
Corridor’s transport/logistics chain depend largely on equipment availability. Jean-François Arvis
(2010) supported this observation when he noted that reliability may in some instances be the
key benefit of infrastructure improvement (more than the expected reduction in direct costs).
Nonetheless, other remedial actions have been recommended for each respective bottleneck
situation discussed above.

8 CONCLUSION
8.1 Corridor potential

With the advantages of the Nacala Port as mentioned in the opening chapters, which includes
1) a strategic location at the international container network cross-section of the Eastern African
and the Southern African circuits; 2) the port’s natural deep waters and sheltered position,
resulting in no restrictions on ship movement or size with the exception of alongside the quay; 3)
Nacala Corridor is the only corridor that directly link with Malawi and Southern Zambia by
railway line; and finally, there is one entity that operates and manages both port and the rail line
in its jurisdiction.
All these advantages give Nacala port and corridor not only unlimited opportunities and potential
for growth but also a competitive advantage over other regional ports. According to a research
carried out by JICA (2010), Nacala Port has the potential to become a major transshipment hub
for the Eastern African and the Southern African region. Nacala has got the natural draft for
large vessels and a favorable economical and political climate. With the planned rehabilitation of
the railway line and an increase in efficiency, the corridor can reinforce its position as the natural
gateway for the South East African hinterland. Nevertheless, to enable the corridor to realize its
potential, the transport logistics and operations systems must be efficient. Certain bottlenecks
have to be eliminated from the corridor’s key functional areas.
8.2 The bottleneck situation

There are several variables identified that contribute to bottleneck situations along the corridor.
With all these variables and bottleneck situations put together the Nacala Development Corridor
currently scores very poor as far as time and reliability is concerned. The consequential result is
delays and unpredictability. This situation represents a cost that outweighs the benefits obtained
from reducing direct transport cost. The existence of these bottleneck situations, discourage
shippers from using the corridor.
8.3 Port selection criteria

Apart from the bottlenecks and the discouragement they bring in, it has been proven that
shippers follows a certain criteria in selecting a port to use. For most corridor users, the
fundamental factors taken into consideration are first: port efficiency; second: container dwell
time; third: hinterland connectivity; fourth: absence of trade barriers; and fifth: frequency of
vessel calls. This behavior confirms Notteboom’s (2008) observation of how shippers need a
more supply-chain oriented approach to port selection.
8.4 Why other ports over Nacala?

As understood from the literature review and the research results, one of the reasons why
Nacala Port is losing clients and potential revenue to other regional ports is because of failing to
meet the shippers’ port selection criteria. The encouraging or discouraging factors for a shipper
is how the port is integrated within the transport network of its hinterland. Theo Notteboom
(2008) indicated that shippers now use a more supply-chain oriented approach to port selection.
It can thus be concluded that distance does not play an important role in shippers’ port selection
in the area covered by the research. Rather, the corridor is losing its clientele due to its poor

integration into the shippers’ supply chain. This poor integration is reflected by the corridor’s
unreliability to deliver as per shippers’ requirement. For instance long dwell times and
turnaround times; low quayside productivity; congestion; and shortage of adequate handling
equipment among other issues. In contrast Port of Quelimane, Beira and Durban have this
competitive advantage over Nacala, thus they are attracting more shippers through them.
Though Durban is more reliable, it is also the most expensive and the furthest in distance.
Nevertheless, the Nacala option has the advantage of the railway system making it the
cheapest gateway to the sea, but it is the least reliable. As already observed, the rising costs
and the unreliability of the Nacala corridor has reinforced the reputation of the Beira and
Quelimane ports as the most reliable and affordable gateways to the sea for Malawi.
8.5 Cargo handling equipment

Shortage of modern and reliable cargo handling equipment and rail capacity in the corridor is a
major hindrance to corridor efficiency. This equipment problem reduces handling capacity while
increasing turnaround times, thus rendering the corridor less reliable. Clark’s evaluation of
seaport efficiency (2005) concludes that shipping costs would reduce greatly if there is a notable
improvement in seaport infrastructure and cargo handling services quality. It is essential that the
increasing cargo throughput at Nacala Port is supported by a corresponding investment in cargo
handling equipment, if high efficiency levels are to be attained. High performance is directly
influenced by adequate handling equipment.
8.6 Port performance

Comparing the research results and the literature reviewed during this research it can be sadly
concluded that the Nacala Development Corridor is operating far beneath its potential. The main
impediments to realizing this potential is lack of investment in corridor transport facilities and
equipment. Contributing to this also is the corridor operators taking up facilitative responsibilities
and thus leaving less time and resources for the corridor’s core business.
The consequential result is shown in the performance indicators and ratios as already
presented. Only a few operational areas have established performance indicators in place and a
few of them are followed up on. Chapter 7.4 recommends some areas whose performance
should be monitored by well established standard KPIs.
The reluctance in measuring port performance through the use of relevant performance
indicators leads to performance going unmeasured. Thomas S. Monson observed that: "When
performance is measured, performance improves. When performance is measured and
reported back, the rate of improvement accelerates."
8.7 Port Authority

In conclusion, the Nacala Port Authority (PA) needs to make a paradigm shift from the roles of
operator and focus more on its core functions as the port authority. Which core functions include
taking an active role in increasing hinterland accessibility; investing in infrastructure; investing in
a port community system; and finally by ensuring sufficient competition between firms in all
parts of the corridor. To enable this, the port authority roles have to be redefined and separated
from operational objectives. This may mean outsourcing all terminal operations to global
terminal operators.

8.8 Conclusion
All in all, it can be concluded that the Nacala Development Corridor has great potential to fulfill
its measure as the natural gateway to the sea for Malawi, Southern Zambia and the Northern
Mozambican provinces. For the corridor to reach its true potential and be prepared for future
growth this report recommends a guided implementation of the key issues raised herein. An
elimination of the bottlenecks identified is equally essential. An in-depth research into the
creation of an inland terminal in Malawi considering both the financial and logistics benefits this
might bring to the corridor is suggested. It further recommends a redefinition of the port
authority’s roles and outsourcing terminal operations to a global terminal operator.
It should however be noted that some of the recommendations herein given involve change to
institutions, laws and policies of the governments involved. Planning and implementation of
these recommendations require sustained effort and involvement of multiple parties.

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10 Attachment 6.1: Statement of Facts for Pacific Trader 440N

Statement of Facts
PACIFIC TRADER VOY 440N
Atracou: 19-12-11 22:00
Iniciou: 20-12-11 7:00
Terminou: 21-12-11 18:40
Desatracou 21-12-11 20:15
Agente: CMA CGM
Vessel Stoppages/Delays
DATE SHIFT GRPS FROM TO DELAYS DELAY DESCRIPTION CONTRS MOV.
07:45 08:10 00:25 ABERTURA DO PORAO GRUA Nº 01

09:30 09:50 00:20 AG. REMOCAO DE CONTENTORES NA PRUMADA
11:30 13:00 01:30 AG. PLANO DE EMBARQUE
1º
14:15 14:30 00:15 FECHO DO PORAO GRUA Nº 02
14:30 15:00 00:30 TERMINO DO PERIODO
07/15
03:00
07:00 08:55 01:55 AVARIA DA GRUA Nº 03

11:20 11:40 00:20 MUDANCA DA GRUA Nº 03 PARA GRUA Nº 02
11:40 11:55 00:15 ESPIAMENTO DE CONTENTOR
2º
14:00 14:30 00:30 ABERTURA DO PORAO GRUA Nº 02
03:30
20-Dez-11
21:10 21:30 00:20 MUDANCA DE SPREADER DE 20 / 40

1º 22:30 23:00 00:30 TERMINO DO PERIODO
15/23
00:50
16:10 16:40 00:30 AG. REMOCAO POR FALTA DE MAQUINA

2º 22:30 23:00 00:30 TERMINO DO PERIODO
01:00
23:00 23:20 00:20 AG. CAMIAO COM CARGA

00:20 01:00 00:40 FECHO DO PORAO DO BAY 09/11
01:10 01:30 00:20 MUDANCA DO PORAO 3 / 5
1º 04:00 04:30 00:30 AB. DO PORAO DO BAY 33/35
05:55 06:10 00:15 FECHO DO PORAO DO BAY 33/35 SUMMARY
23/07
06:30 07:00 00:30 TERMINO DO PERIODO 20"F 40"F 20"E 40"E

02:35 Disch 46 34 52 0
Load 97 31 0 0
00:20 01:00 00:40 FECHO DO PORAO DO BAY 09/11 Rstw 0 0 0 0 TTL MVS
04:10 04:30 00:20 MUDANCA DO SPREADER DE 20 /040 Ttl 143 65 52 0 260
2º 04:45 05:10 00:25 FECHO DO PORAO DO BAY 17 / 19
06:30 07:00 00:30 TERMINO DO PERIODO DELAYS H OPS PRODUCTIVITY
01:55 12.8 32.2 5.8
07:05 08:40 01:35 AG. ACARGA

09:20 09:50 00:30 AG. ACARGA
12:10 13:00 00:50 ABERTURA DO PORAO Nº 01
1º
13:05 13:40 00:35 AG. ACARGA
04:00
07/15
21-Dez-11
07:15 07:40 00:25 AG. ABERTURA DO PORAO

07:40 07:55 00:15 AG. ACARGA
10:30 11:00 00:30 AG. ACARGA
11:50 12:30 00:40 AG. ACARGA
2º 13:10 13:25 00:15 AG. ACARGA QUE VEM DE FOR A
13:30 13:55 00:25 AG. ACARGA QUE VEM DE FOR A
14:00 14:30 00:30 AG. ACARGA SUMMARY
14:30 15:00 00:30 TERMINO DO PERIODO 20"F 40"F 20"E 40"E
03:30 Disch 0 0 0 0
Load 43 32 0 1
16:55 17:25 00:30 FECHO DO PORAO DO BAY 29/31 Rstw 0 0 0 16 TTL MVS
15/23
17:30 17:40 00:10 DESCARGA E EMBARQUE DE 2 CAIXAS DE LOGS Ttl 43 32 0 17 92

1º 18:50 22:30 03:40 FIM DAS OPERACOES DO NAVIO
22:30 23:00 00:30 TERMINO DO PERIODO DELAYS H OPS PRODUCTIVITY
04:50 12.3 10.2 4.1
SUMMARY
TOTAL CONTAINERS MOVED
FULL EMPTY Total cntrs 352 S/SHIPPED Delay Min.
20" 40" 20" 40" Net productivity group/hours 335.7 20" 40" TN 325
DISCH 46 34 52 0 132 Gross Productivity (Cntrs group /hour) 5.2 FCL 186 97 NPT 270
LOADING 140 63 0 1 204 Gross Productivity (Cntrs Navio /hour) 9.9 MTY 52 17 CDN 0
RESTOW 0 0 0 16 16 Tempo operacional (h) 35.7 TTL 455 114 Agent 895
TOTAL MVS 186 97 52 17 352 Tempo de atracacao (h) 46.3 Total 1490
TTL TEUS 466 TTL NR OF GANGS 9

11 Interviews conducted
Eng. Agostnho Langa, CDN, Port Executive Director, Nacala Port – Nacala, Mozambique –
October 2011
Eng. Manuel Macopa, CDN, Rail Executive Director, CDN Rail – nampula, Mozambique –
October 2011
Mrs Loni Shott, CDN, Port Operations Director, Nacala Port – Nacala, Mozambique – November
2011
Wilfred Ali, CEAR, Commercial and Marketing Director, CDN CEAR – Limbe, Malawi –
November 2011
Bertha Matope, CEAR, Rail Operations Manager, CDN CEAR – Limbe, Malawi – November
2011
Hendry Chimwanza, CEAR, Managing Director, CDN CEAR – Limber, Malawi – November
2011
Exford Kaphuka, General Manager, Manica Freight Forwarders – Blantyre, Malawi – November
2011
Taufiq Jagot, Finance Director, MCS Freight Ltd – Blantyre, Malawi – November 2011
Lyton C. Tumeo, Exports Manager, SDV-AMI – Blantyre, Malawi – November 2011
Juanid Seedat, General Manager, Transmaritime – Blantyre, Malawi – November 2011
Ismail Seedat, Operations manager, Transmaritime – Blantyre, Malawi – November 2011
Michael Hubbe, Managing Director, Candlex Limited – Blantyre, Malawi – November 2011
i
Vale Mozambique
ii
Source:Wikipedia. . URL http://en.wikipedia.org/wiki/Bottleneck
iii
http://www.logigear.com/2007/336-how-to-identify-the-usual-performance-suspects.html
iv
Official CDN/TN document for recording vessel operations.
v
Official CDN list of container with clearance and authorization to leave the port.
vi
Official CDN document issued by the vessel agent authorizing exit of containers. Same document must have authorizing stamps from customs,
port security and from CCOP.
vii
Official CDN document issued by the agent authorizing entry of containers. Same documents also carries authorizing stamps from customs,
port security and from CCOP.

Freeman Dickie&#39;s Masters Thesis Paper - Nacala Development Corridor Performance Evaluation

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STC- NETHERLANDS MARITIME UNIVERSITY, ROTTERDAM

Nacala Development Corridor

Rotterdam, February 2012

2|P ag e FR EEMAN DICKI E Netherlands Maritime University

Date: 15 February 2012

3|P ag e FR EEMAN DICKI E Netherlands Maritime University

To Sue and the kids

4|P ag e FR EEMAN DICKI E Netherlands Maritime University

5|P ag e FR EEMAN DICKI E Netherlands Maritime University

3.3 Methods of data collection .................................................................................................. 19

6|P ag e FR EEMAN DICKI E Netherlands Maritime University

4.13.2 Intra-port competition................................................................................................... 33

7|P ag e FR EEMAN DICKI E Netherlands Maritime University

6.2.7 Distribution center operations ..................................................................................... 51

8|P ag e FR EEMAN DICKI E Netherlands Maritime University

8.4 Why other ports over Nacala? ............................................................................................ 66

9|P ag e FR EEMAN DICKI E Netherlands Maritime University

List of tables and graphs

Table 1.1: Current CDN productivity ratios 13

10 | P a g e F R E E M A N D I C K I E Netherlands Maritime University

Bottleneck- is a phenomenon where the performance or capacity of an entire system is limited

Vessel- also referred to as a ship; a maritime vessel carrying cargo

Status quo- the current status situation

Modus operandi- the mode of operation

11 | P a g e F R E E M A N D I C K I E Netherlands Maritime University

CDN- Corredor de Desenvolvimento do Norte (Northern Development Corridor)

SDCN- Sociedade de Desenvolvimento do Corredor de Nacala (Northern Development

MOT- Ministry of Transport

LLCs- Landlocked Countries

CFM- Portos e Caminhos de Ferro de Mozambique (Mozambique Ports & Railways

TN- Terminais do Norte (Stevedoring Company subcontracted by CDN)

SADC- Southern Africa Development Community

UNCTAD- United Nations Conference on Trade and Development

TEUs- Twenty foot Equivalent Unit (containers standards size measures)

KPIs- Key Performance Indicators

FIFO- First in First out (sequence followed in releasing cargo)

EDI- Electronic Data Interchange

JICA- Japanese International Cooperation Agency

12 | P a g e F R E E M A N D I C K I E Netherlands Maritime University

1.1 The need for a research study

1.2 Problem assessment

Productivity Target Actual Deviation

Quay side productivity (TEUs) 10 6 40%

13 | P a g e F R E E M A N D I C K I E Netherlands Maritime University

1.3 Problem definition

1.4 Objectives of the study

1.5 Main research questions

1.6 Limitations of study

1.7 Implications of the research

14 | P a g e F R E E M A N D I C K I E Netherlands Maritime University

1.8 Structure of this paper

Chapter 4 - Chapter 4 reviews relevant literature so as to provide a perspective of published

15 | P a g e F R E E M A N D I C K I E Netherlands Maritime University

2.1 Historical Information

2.2 Background information of the Nacala Development Corridor

16 | P a g e F R E E M A N D I C K I E Netherlands Maritime University

Corredor de Desenvolvimento do Norte (CDN) is a private public partnership (PPP) that is

2.3 CDN- Nacala Port

2.3.1 Port authority

2.3.2 Port operations

2.3.3 Container terminal

2.3.4 Multi-purpose terminal

17 | P a g e F R E E M A N D I C K I E Netherlands Maritime University

2.4 CDN- Railways

Freeman Dickie's Masters Thesis Paper - Nacala Development Corridor Performance Evaluation

Freeman Dickie's Masters Thesis Paper - Nacala Development Corridor Performance Evaluation