Acting General Manager (Office of the C.E) Linking Ports to Railway Infrastructure African Ports and Maritime Conference 10 December 2009 Alex Masianoga Acting General Manager (Office of the C.E) Transnet Freight Rail

1 2 4 5 6 Presentation Outline Global & Regional Perspective State of Port and Rail Infrastructure 4 Integration Challenges and Intermodalism 5 Transnet’s Approach 6 Conclusions

The Competitive Challenge for the Region Global trade routes Trade Trade Political Political inhibitors inhibitors Instability Instability Sustained Sustained Poverty Poverty Currency Currency Economic Economic Instability Instability Growth Growth Reliance on Reliance on minerals minerals Monopolies Monopolies Logistics Infrastructure not developed and integrated The Relevance factor Intensity of global shipping

Trade Agreements: Stimulate Regional Economic Growth and Create a Borderless Region The region requires integrated transport infrastructure to move the products created by trade agreements

Regional Geographical Catchment Areas & Economic Centres

Key Drivers of Regional Growth National Policies (Economic) Commodities ‘Chindiafication Factor’ De- / Re-Regulation & Policy

Key Drivers of Rail Growth in the Region Economic Growth Recovery Mining sector contributes largest volumes to GDP in Africa/ Region Intermodalism Immediate access to road/rail systems Standard for freight handling (rail and ports) Support small and large scale developments across all economic sectors, incl. mining/ bulk Port Capacity Rail preferential access Higher turnaround Better asset utilisation Road Network Condition Legislative pressure Costs: 200% more than rest of the world

Adequacy of Transport Infrastructure in the Region 1 December 20181 December 2018 Adequacy of Transport Infrastructure in the Region Southern Africa Context The Rail network provides: A vast footprint Strategic lines to landlocked countries Uni-gauge (1067mm) Links to existing and developing ports Region benefiting from donor funding and private investment for infrastructure development Southern Africa Railway network Source: Transnet Group Planning 8

Regional Transport Corridors & Ports

Regional Logistics Challenges Africa lags behind the rest of the world in all aspects of infrastructure development -- quantity, quality, cost and access - a very fragile system Transport infrastructure development and investment Road; Rail; Ports Integrated transport operations across borders Leadership & expertise Logistics costs Share of world trade Modal imbalance between road and rail Poor sharing of resources Political and economic instability directly influence foreign direct investment Freight cost as a % of total import value: 8.8% for developing countries, 5.2% for industrial countries (UNCTAD 2002) At a sub-regional level West Africa: 14% East & Southern Africa: 15.2% North Africa: 11% In Africa- Rail is a strategic resource

State of Transport Infrastructure in the Region Capacity of the transport system and regional corridors is as good as the weakest link

Rail and Port Issues in the Region Main Challenges Road & Rail infrastructure that connects hinterland to the ports Traffic Congestion Infrastructure development Conversion to containerisation not complete nor integrated Investment and funding constraints

Status of Intermodalism in the Region Response SADC largest contributor to GDP is Mining, suited to rail Economic growth for SADC requires development of export driven manufacturing sectors Manufacturers require intermodal connectivity into global markets Intermodal infrastructure is limited Containerisation is the preferred mode of transport in international trade It integrates SADC into global trade It is the foundation of logistics infrastructure that will support the growth of the manufacturing sector It creates seamless logistics corridors It provides for productive use of modes and funds It provides ease of operational integration with ports It will contribute to reducing the cost of doing business It is the bridge between 3rd and 1st world competitiveness

Modal Co-operation to create ‘Superhighways’ in the Region Composition Interchange Decomposition Connection Maputo Logistics Corridor Rail provides access to multi-country long haul routes Road must create efficient local/ in-country networks Ports are the global gateways Freight Trans-Kalahari Logistics Corridor Local Distribution National/ Regional ‘Superhighways’ Intermodal Terminals

Competitive Challenges: Conflicting Interests W e s t r n S a h M l i N g C d B u k F o A f c R p b L D m T z w Z q G I v y E j K U Maputo Walvis Bay International Consortiums focus on lock-in strategies through concession and funding mechanisms Country Competitive Strategies focus on lock-out through port and rail links into key markets Competitive Port Strategies Transhipment hub & Feeder for West Africa Transhipment hub & Feeder Port for SADC Namibia Angola Emerging contender for Feeder services TFR strategy to develop and optimise rail corridors with SADC partners SA Dar es Salaam Illustrative Competitor Strategies Strategic position of Logistics Companies via (Commodity Trading, Shipping, Terminals, Rail, Road & Logistics Services) Transhipment hub & Feeder Port for East Africa Transhipment hub & Feeder Port for SADC

Strategic Approach to Regional Integration 1 Corridor Approach to Economic Growth Economic Development Nodes Transport Corridors Policy and Regulatory Implementation and Enforcement 2 Infrastructure Planning System wide Supply chain focus in support of Transport Corridors Holistic Approach, sum is greater than the individual parts 3 Funding Corridor logic (address weakest link first) Optimal mix of private and public sector funding Shared benefits

Transnet Approach

Metamorphosis of Ports and Rail Shifts in the role of Ports : From Traditional to Knowledge / Global Economy Public Agencies Independent Competing Businesses Elements in a Logistics System Trade Enablers Focus on improving internal efficiencies Focus on achieving network efficiencies Focus on achieving global performance Central control Publicly owned Harbour Boards/ Authorities Autonomous ports Privatised/ quasi-privatised Internal KPI’s Planning focus Vertical & horizontal integration Economic performance Global competition Mid 80’s Late 90’s Current Shifts in the role of Rail : From Stand Alone  Connectors From Agriculture & Mining  Intermodal From Engineering Run  Customer Service Focus Rail is integral to the total ‘supply chain promise’ Port Rail Maritime Customer/ Terminal

Rail and Port as Integrated Systems Terminal Service Rail Service Assets & Resources Rolling Stock People Assets & Resources: Terminal Equipment People Infrastructure Infrastructure Rail – Port Corridor

Strategic corridors linking ports, the hinterland and SADC routes, benefiting from integration and intermodalism Northcor Capecor Southcor Natalcor R.Baycor N.Westcor Eastcor N.Eastcor Sishen-Saldanha Sentracor South East Cor Westcor Freestate Namibia Overborder corridors Beit Bridge Musina Makhadot Soekmekaar Ellisras Polokwane Naboomspruit Tzaneen Thabazimbi Phalaborwa Nylstroom Northam Pienaarsrivier Marble Hall Hoedspruit Rustenburg Pretoria- North Steelpoort Pyramid South Graskop Macmullins Pendoring Roossenekal Nelspruit Magaliesburg Rayton Belfast Kaapmuiden Komatipoort Mafikeng Pretoria Witbank Machadodorp Lichtenburg Krugersdorp Sentrarand Ogies Vryburg Coligny Delmas Vermaas J’burg Welverdiend Kaydale Vereeniging Bethal Ermelo Hotazel Ottosdal Klerksdorp Volksrust Orkney Sasolburg Erts Pudimoe Makwassie Newcastle Kroonstad Piet Retief Golela Nakop Sishen Dundee Warrenton Gunhill Vryheid Upington Bethlehem Theunisen Harrismith Postmasburg Danskraal Kimberley Ladysmith Empangeni Kakamas Boksputs Marseilles Bergville Estcourt Bloemfontein Maseru Cedara Koffiefontein Richards Bay Prieska Belmont Sannaspos Underberg Pietermaritzburg Cato Ridge Stanger Copperton Kokstad Aliwal North Springfontein Richmond Barkly East Durban Bitterfontein De Aar Dreunberg Liebendal Burgersdorp Harding Noupoort Stormberg Maclear Port Shepstone Rosmead Calvinia Hutchinson Sterkstroom Umtata Cradock Queenstown Cookhouse Stutterheim Beaufort West Somerset East Fort Beaufort Kalbaskraal Klipplaat Blaney Dal Josafat Touwsrivier Alicedale Saldanha Atlantis East London Worcester Uitenhage New Brighton Oudtshoorn Port Alfred Kraaifontein Avontuur Patensie Cape Town Bellville Port Elizabeth Mosselbaai George Knysna Bredasdorp

Creating Integrated Rail/ Port Freight Corridors Fit-for-purpose, efficient Transport Linkages Integrate Operations, Planning, and Resource utilisation of Ports and Rail Macro and Micro Interface Port / Rail structures for operations and infrastructure maintenance Integrated Port/ Rail Expansion and Investment Programmes In-port Rail Enhancement Projects i.e. Kingsrest rail stack in Durban Joint Industry and Customer Consultation Joint Benefits and Performance tracking No “Us and Them” – Teamwork is the key Integrated Freight Corridors require aligned strategies for both Rail and Ports Immediately establish efficient transport linkages between ports and major industrial areas through process, systems and resources improvement Consultation with strategic customers/ Industries re their market growth strategies Logistics asset acquisition aligned with freight requirements In-port rail enhancement projects, shunting yards/ parks feeding stockpile and stack areas Develop/ upgrade inland rail terminals for break-bulk and Intermodal to effectively “hub” cargo from non-corridor areas and rail it directly into the port Joint Master Network Planning Joint Investment Planning and Capital submissions

Critical Success Factors for Rail/Port Integration 1 Services Joint Customer/ Industry strategies Preferential access for Rail into terminals Information sharing and planning 2 Assets and Resources Quick turnaround of rolling stock Joint efficiency targets Joint investment planning 3 Infrastructure Modernised, well maintained rail infrastructure Joint developmental objectives incl. spatial development Integrated investment cases

Africa: Strategic Approach Service Focus Geographic Focus Uniformity of Service – Reliability & Predictability Corridor throughput optimisation and management Migrate to block trains Load consolidation at Ndola and Lusaka Manage wagon turnaround Make services customer friendly Integrated planning and operations with Ports Alliances Operator focus for joint planning and execution Supply of Resources SADC SARA alignment on marketing strategy Bilateral and Interface Agreements with overborder railways Similar Operating model on all corridors Position SARA in the SADC trade protocol Joint alignment at CEO level Beyond SADC Selective involvement augment to SA/ SADC business Objectives Protect Corridors Grow Volumes Reduce the cost of logistics (20-25%) for SADC countries Influenced by global trade flows and industry developments

Forecast Rail and Corridor Growth in SADC (mt) Malawi Zambia Botswana Namibia South Africa Mocambique United Republic of Tanzania Democratic Republic of Congo Zimbabwe Angola Swaziland Africa TFR (Mt) ’09/10 ’10/11 ’11/12 Forwarded 1.03 0.6 0.8 Received 4.7 5.4 6.7 80% of rail freight in SADC is northbound 70% of these flows return empty Rail has SARA ‘corridor’ agreements TFR focuses on integration of strategic corridors through integrated rail operations with SARA and Concessionaires Key opportunities: Intermodal Fuel Sulphuric Acid Maize

Transnet participation in mechanisms to promote Regional Integration between Rail and Ports 30 year Infrastructure Plan Inter-operability Initiatives SADC Initiatives SARA UAR UIC Operations & Information Technology Human Resources Includes SADC corridors Infrastructure & Equipment Marketing

Rail and Ports: Integrated Capital Investments 1 December 20181 December 2018 Rail and Ports: Integrated Capital Investments Source : Transnet Corporate Plan 26

High potential growth in the Region Conclusions High potential growth in the Region Region has to promote Intermodalism Rail and Port Infrastructure developed, and developing to enable trade flows, however not in a co-ordinated manner Rail and Ports not managed as strategic resources within a broader logistics system Aligned Public and Private partnerships Regional development requires: Joint Planning, Investment and Funding Integrated Operating Systems The “Will to make it Work”

Thank You