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Transnet Freight Rail is a division of Transnet SOC Ltd Reg no.: 1990/000900/30
An Authorised Financial Services Provider – FSP 18828
Transnet Freight RailAnnual Customer Conference 2013
Keynote Address
Mr Siyabonga Gama
Chief Executive Officer
4th – 6th September 2013
2
Freight Rail Overview
Freight Rail transports 14% of the nations freight tonnage annually or 35%
of ton kilometers
Owns and maintains a network of ~22 000 route km connected to ports
and the rail networks of neighbouring countries
Network of 30 100 track km is 1067mm or Cape Gauge
Operates World Class Heavy Haul export corridors
Operates ~1 050+ trains per day
Serves ~450 key accounts
Conveys 98 commodity groups over more than 4 000 origin – destination
combinations
Transports 4.5mt per week
Moved 208 million tons in the 2012/13 financial year
Employs 31 511 people
Why the Market Demand Strategy?
3
Job Creation
Reducing the Cost of Logistics
Catalyst for Economic Growth
Road-Rail Freight Industry Imbalance-
Meet Customer Demand & Improve Service Delivery
Regional Integration
Market Demand Strategy
4
Market Growth
Operational Efficiency
Operations efficiency & execution
Reliable, safe scheduled railway
Efficient Operations practices
Capital Investment Accountability
High Performing Customer Focused Business Units
People
Strategic Workforce Plan
Inspirational and Empowerment Programmes
Safety
Mature safety performance
Technology to reduce human error & equipment failure
Sustainable Rail Environment Rail Policy development aligned with DPE & DOT to promote Road to Rail shift
Capacity created ahead of demand
World class capital execution function
Customer service culture
Road- Railer solutions
PSPs & Regional integration
Market Demand Strategy –A Robust Plan for Growth, Modernisation &
Continuous Improvement
5Transnet Freight Rail is a division of Transnet SOC Ltd Reg no.: 1990/000900/30
An Authorised Financial Services Provider – FSP 18828 52011 2013 2017 2020
Preparation for GrowthIntensive capital investment and
operating efficiency 0 – 2 years
Sustained GrowthConsistent, reliable and maintained
Scheduled Railway 2 – 5 years
Consolidate High tempo & high volume growth;
high performing organisation in service provision to customers
5 – 7 years
Performance organisation Improving service
reliability & predictability
People Strategy – Training and development High Performance Customer
Centric Culture
Business Model –Customer-facing BUs
Manpower PlanIncreased Employee base &
skills for volume growth
Funding Strategy• PSPs
Sustaining & Expansionary investment programme & Improved operations Locomotives; Infrastructure; Wagons;
Technology
Prioritised investment for Growth focus• Mining – Common user facilities, Junior miners,
Coalfields, Eskom, Waterberg, Northern Cape & North East Mining Expansion
• Manufacturing – Containers, Intermodalism• Rural Development – Branch line access• Africa
Investment for Growth• Domestic Intermodal
• Inland Terminals• Manufacturing sector – wagons
for beneficiated products
Operate in reformed Rail Policy Environment
Correct Road-Rail Modal Balance
Operating a Scheduled
Railway
Job CreationRailway skills and
enterprise development
Sustainable Railway Business Model
Safety performance improvement.
Measurement, Recognition & Consequences
Systematic approach to safety
Excellent Safety Performance is the Standard – Safety is
Manageable
Transnet Freight Rail Strategic Rail Track Map This is a Journey
6
220
360
320
300
240
340
260
200
180
160
140
120
100
80
60
40
280
2018/19
350,2
2017/18
334,4
2016/17
305,7
328,5
2015/16
283,5
321,8
2014/15
261,8
309,4
2013/14
230,0
278,8
2012/13
208,0
268,1
2011 / 2012
201,0
247,2
334,0
Freight Rail Volumes
Market Demand
Magnetite
GF Coal
Eskom Coal
Manganese
Waterberg GF Exports
Containers
Regional Integration
Volume GrowthStriving to Meet Customer Demand
Enabling Programmes to achieve National Objectives through Strategic Integrated
Projects (SIPs)
Transnet InvolvementSIP Programmes
• Waterberg Integrated Development
• Durban-Gauteng Development Region
• South Eastern Node & Corridor
• Saldanha-Northern Cape Corridor
Catalytic Projects
Geographic SIPS
Spatial SIPS
Regional Infra SIPS
Unlocking the Northern Mineral Belt (Waterberg)
Durban-Free State-Gauteng Logistics & Industrial Corridor
South Eastern node and corridor development
Unlock Economic Opportunities in North West Province
1
2
3
4
Agri-logistics and rural infrastructure11
Regional Integration for African cooperation and development
17
Saldanha-Northern Cape Development Corridor
5
8
16.5
9.4
66.3
11.8
71.1
125
Land,Buildings &
Structures
Pipeline
Port Facilities
Machinery &
Equipment
Perway
Rolling Stock
A Capital Programme Supporting Growth
The Market Demand Strategy is a catalyst for infrastructure development and
economic growth
9
Sishen
Saldanha
Cape Town
East London
Port Elizabeth
Hotazel
Musina
Kimberley
Polokwane
De Aar
Ngqura
Ermelo
Lephalale
Durban
Richards Bay
Johannesburg
SADC
Containers and Intermodal
Iron Ore
Manganese
Coal
Agriculture/ Timber
Rock-phosphate/ Magnetite
Chrome and Ferrochrome
Phalaborwa
Maputo
10
Area of investment
Utilisation in 2019/20
100%
100%
100%
Terminals: 63%
Ports: 70%
Terminals: 100%
Ports: 98%
Terminals: 74%
Ports: 39%
87%
Existing capacity
71mtpa
58.7 mtpa
85.2 mtpa
Terminals: 5.4 mTEUs
Ports: 7.4 mTEUs
Terminals: 90.1 mtpa
Ports: 196mtpa
Terminals: 15mtpa
Ports: 28 mtpa
4.4 billion litres pa
TFR Coal LineR30.2bn
TFR Ore LineR17.1bn
TFR General Freight
R141.4bn
Maritime Containers
R26.3bn
BulkR27.0bn
BreakbulkR10.2bn
NMPP*R6.9bn
Capacity created over 7 years
21mtpa
23.8 mtpa
90.5mtpa
Terminals: 3.9m TEUs
Ports: 1.0 mTEUs
Terminals: 36.9mtpa
Ports: 14mtpa
Mainly sustaining
4.3 billion litres pa
Future Capacity
92mtpa
82.5 mtpa
175.4 mtpa
Terminals: 9.3mTEUs
Ports: 8.4mTEUs
Terminals: 127.0 mtpa
Ports: 232 mtpa
Terminals: 15 mtpa
Ports: 31 mtpa
8.7 billion litres pa
Capacity Creation To Serve Customer Demand
11
“The recent upswing in the rail share
has occurred more rapidly than
anticipated. The modal shift objectives of
increasing bulk exports of coal and iron
ore; recapturing both export and
domestic bulk markets for other ores;
and making first attempts to increase the
high-value and corridor market
shares are beginning to bear fruit. The
modal shift strategy of increased rail
investment and improved service
levels should receive further support”Source: 9th Annual State of Logistics Survey for South Africa 2012
Rail Turnaround has startedMarket Share Growth
Significant inroads being made by the Container business
12
23%21%20%
18%
13%
38%
34%31%
27%
21%
+16%
2015201420132011 2012
Long HaulTotal Port
Continued implementation of robust strategy for Road to Rail shift - supported by market
development, improvements in operational efficiency and the investment programme
Technology and Process for Intermodal Solutions
Intermodal solutions & Development of Terminals
Using own Real Estate and in co-operation with the private
sector
Common User loading facilities & terminals
Navis terminal operating system shared with ports
14
Imperative to work togetherMitigate Challenges
Slowdown in global economic activity
GDP growth lower than projected
Unexploited Regional growth
Unfavourable exchange rates
High energy costs
High levels of industrial action
Lower commodity prices
Delays in expansion plans
Operational problems
15
Grow tonnages and market share
Modernise and upgrade rolling
stock and infrastructure
Optimise operations
Expand capacity
Deploy rail technology
Develop markets
Build human capacity
Sustainable transport- Green and
carbon efficient supply chains
Benchmark against other Modern
railways
Transnet Freight Rail Grow & Modernise South Africa’s Railway
16
Collaborating for Growth
Transnet Value Chain Focus
Improved service levels across corridors
Shared planning and forecasting– short and
long term
Communicating Needs & Requirements
Aligned development & investment
Modal Integration
Major Project Implementation
Road & Rail Collaboration – Last mile
Public Private Partnerships
Building a workforce that is Skilled, Motivated, Inspired,
Entrepreneurial, Accountable
Adopted philosophy of Lean and Six Sigma – training Champions and
Operations teams
Operations training and capability building
Train driver training simulators for new route and technology training,
scenario training and refreshers
Development of the School of Rail as a Corporate University including
Regional Railways training - collaboration with CFM, NRZ, Swazi Rail and
Botswana Rail
Job creation in accordance with productive rail volume growth
Creating opportunities for unemployed graduates
Standardising Railway Operations and Technical Skills
Developing our People for the Railway of the Future
Operational Discipline
Inspirational Leadership
People Performance & Review
Strategic Clarity
Openness & Trust
Leadership Archetypes
Sustainability strategies :
Reduction of our carbon footprint
Contribution to our operational efficiencies and meeting targets safely
Reduce the cost of doing business by achieving more with less
Application of electricity - regenerative braking technology on 15E and
19E Class Locomotives
Installing energy efficient technology in offices and buildings
We are transport leaders that champion the integration of the green
economy
18
Sustainable TransportRail Strategies
19
Freight Rail is determined to:-
Win back rail friendly tonnages
Develop Partnerships to offer
innovative logistics solutions to the
Southern African region
Continuously improve its service
offering
Meet Customers’ Needs
Reduce the cost of logistics
Contribute to the competitiveness
of South Africa
Conclusion
20Transnet Freight Rail is a division of Transnet SOC Ltd Reg no.: 1990/000900/30
An Authorised Financial Services Provider – FSP 18828
Thank you