1. Results of Transnet’s long term freight transport demand model 1 July 2008

2. Understanding supply and demand Collated flows Detail flows Conclusion
Agenda
Background
Global context
Understanding supply and demand
Collated flows
Detail flows
Conclusion
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3. Integrated intelligence is imperative for long term infrastructure planning
Transnet commissioned the University of Stellenbosch to develop a freight transport demand forecast in January 2006 with the principle aim of the forecasts to provide an understanding of SA’s surface freight transport market
This understanding informs medium and long term capacity planning within Transnet
This was the first such model that was built in South Africa and significant advances in the modelling of freight demand were made during the course of the project
The model was recently updated and refined with 2006 data, with a resulting updated 20-year freight transport demand forecast on a 5-yearly basis i.e. 2011, 2016, 2021 and 2026
The refinements involved more detailed commodity research as well as detailed verification of flow model parameters
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4. The methodology is complex – and the level of detail modelled here is ground breaking work compared to similar global modelling efforts
Step 1
Step 2
Actual data – based on publications and personal interviews
Verify with:
Known flows
Rail data
National freight flow model
Macro-economic data
National I-O model
Apportionment - Supply and demand per commodity on a geographical basis
Allocation - Flows per commodity
Consolidation of data into corridor and rural flows
Macro-economic forecast
Commodity forecasts
Strategic interpretation
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5. As in the previous year, a robust verification process was employed
The total output was compared to the national freight flow model (SANRAL based) and strong correlation on corridor and rural flows confirmed a high degree of accuracy
A pareto based combination was followed. The modelling framework provided an economic structure by weight which was enhanced with empirical research for 90% of total GDP by weight
The detailed commodity forecasts were verified by the BER – the aggregated forecasts showed strong correlation with macro economic projections over the same time period
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6. Understanding supply and demand Collated flows Detail flows Conclusion
Agenda
Background
Global context
Understanding supply and demand
Collated flows
Detail flows
Conclusion
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7. In this global context, South Africa’s spatially challenged economy requires innovative thinking
Surface freight refers to road and rail freight
Source: Calculated by the Centre for Supply Chain Management, University of Stellenbosch, from various sources
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8. The imbalance between supply and demand for the various mode classes clearly demonstrates the key problem in the South African economy
Tonkm supply > tonkm demand
Tonkm supply = tonkm demand
Tonkm supply < tonkm demand
Tonkm supply expressed as % of tonkm demand for each mode
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Source: Centre for Supply Chain Management, University of Stellenbosch

9. The heavy vehicle fleet is growing exponentially
The continued absence of an intermodal solution has led to a sudden increase in South Africa’s truck fleet in an attempt to address freight owners’ door-to-door needs
The heavy vehicle fleet is growing exponentially
NFLS – National Freight Logistics Strategy
Source: NAAMSA data
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10. It is in finding the solutions to these challenges that the results of the Transnet freight transport model are invaluable
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11. Understanding supply and demand Collated flows Detail flows Conclusion
Agenda
Background
Global context
Understanding supply and demand
Collated flows
Detail flows
Conclusion
# 11

12. Total tonnage demand and shipped
In the likely scenario, total tonnage shipped will more than double in the next 20 years
Total tonnage demand and shipped
Likely scenario
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Source: Centre for Supply Chain Management, University of Stellenbosch

13. The top 28 commodities are reported individually
The commodities were picked based on:
Ensuring that commodities contributing 90% to total supply & demand tons and/or 90% to supply and demand tons per packaging type
Commodities that contribute 80% of Exports and 50% of Imports (rand value) (latter due to granular commodities and evenly spread contribution)
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14. The weight data was compiled from 62 commodity groupings in the primary and secondary sectors of the economy. The primary sector includes mining and agriculture
Mining
Agriculture
Chrome
Coal Mining
Limestone & Lime Works
Other Stone Quarrying
Mining Of Chemical & Fertilizer Minerals
Rail only:
Iron Ore
Magnetite
Manganese
Other dry bulk: Copper
Other Mining
Other Non-Ferrous Metal Mining
Other Non-Metallic Minerals
Granite
Titanium
Zinc
Excluded from further analysis – not road/rail:
Crude Petroleum & Natural Gas
Maize
Sugar Cane
Other perishables:
Subtropical Fruit
Citrus
Deciduous Fruit
Viticulture
Livestock (Slaughtered)
Poultry Products
Vegetables
Dairy
Other break bulk:
Cotton
Other dry bulk:
Barley
Grain Sorghum
Soya Beans
Sunflower Seed
Wheat
Other Agriculture
Blue = Top 28
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15. The weight data was compiled from 62 commodity groupings in the primary and secondary sectors of the economy. The secondary sector is manufacturing
Manufacturing
Beverages
Bricks
Cement
Fertilizers And Pesticides
Food And Food Processing
Industrial Chemicals
Machinery And Equipment
Metal Products Excluding Machinery
Motor Vehicle Parts And Accessories
Motor Vehicles
Non-Metallic Mineral Products
Other Chemicals
Other Iron And Steel Basic Industries
Wood And Wood Products
Non-Ferrous Metal Basic Industries
Transport Equipment
Paper & Paper Products
Petroleum products
Other break bulk:
Pharmaceutical, Detergents And Toiletries
Printing And Publishing
Rubber Products
Textiles, Clothing, Leather Products And Footwear
Furniture
Tobacco Products
Electrical Machinery
Ferrochrome
Ferromanganese
Other Manufacturing Industries
Blue = Top 28
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16. The 2006 actuals and 2026 forecasts are depicted for the Top 28 commodities (Supply/Demand)
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Source: Centre for Supply Chain Management, University of Stellenbosch

17. Coal mining is large. It is easier to make comparisons when it is excluded
Supply/Demand data
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Source: Centre for Supply Chain Management, University of Stellenbosch

18. The economy will grow the fastest, by weight, in basic energy related commodities, basic earthworks, building related and food commodities
Supply/Demand data: Growth in tons – 2006 to 2026
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Source: Centre for Supply Chain Management, University of Stellenbosch

19. But when depicted as a % growth more beneficiated growth is expected
Supply/Demand data: % Growth in tons – 2006 to 2026
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Source: Centre for Supply Chain Management, University of Stellenbosch

20. With a continuing decline in rail operational capacity
Current distribution
Freight fleets are enduring. Once on the road a truck will not go away and over cropping of the vehicle fleet will make the problem worse
copyright University of Stellenbosch

21. Primary flows are completely rail orientated for obvious reasons (and not reported on in further analysis)
Million tons 2006, 2011, 2016, 2021, 2026
Likely and high scenario
Magnetite
Domestic iron ore
Export iron ore
Export coal
Domestic manganese
Export manganese
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Source: Centre for Supply Chain Management, University of Stellenbosch

22. Total corridor. flows are better understood in stylized form
Total corridor* flows are better understood in stylized form. Our structural problem with corridors will grow.
Million tons 2006, 2011, 2016, 2021, 2026
Likely and high scenario
Gauteng-Beitbridge (incl. Polokwane)
Gauteng-Nelspruit (incl. Witbank)
* Corridor flows for this and the following illustrations include partial flows on the corridor
Gauteng-Lobatse
Gauteng-Richards Bay
Gauteng-Cape Town
Gauteng-Durban
Coastal
Gauteng-East London
Gauteng-PE
The industry must think differently to address the growth on the two major corridors
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23. Rural flows Million tons 2006, 2011, 2016, 2021, 2026
Likely and high scenario
Limpopo
Mpumalanga
North West
Kwazulu Natal
Northern Cape
Free State
Eastern Cape
Western Cape
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24. Understanding supply and demand Collated flows Detail flows Conclusion
Agenda
Background
Global context
Understanding supply and demand
Collated flows
Detail flows
Conclusion
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25. The detailed commodity view can now be extracted for all corridors and rural areas. Some corridor examples: Commodities transported between Cape Town and Gauteng (One Direction)
Note: The 3 commodities referred to in the graph as other break bulk, other dry bulk, and perishables are the remainder of the commodities (i.e. excl. the Top 28) grouped together
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Source: Centre for Supply Chain Management, University of Stellenbosch

26. Between Gauteng and Cape Town (One Direction)
Note: The 3 commodities referred to in the graph as other break bulk, other dry bulk, and perishables are the remainder of the commodities (i.e. excl. the Top 28) grouped together
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Source: Centre for Supply Chain Management, University of Stellenbosch

27. Between Durban and Gauteng (One Direction)
Note: The 3 commodities referred to in the graph as other break bulk, other dry bulk, and perishables are the remainder of the commodities (i.e. excl. the Top 28) grouped together
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Source: Centre for Supply Chain Management, University of Stellenbosch

28. Between Gauteng and Durban (One Direction)
Note: The 3 commodities referred to in the graph as other break bulk, other dry bulk, and perishables are the remainder of the commodities (i.e. excl. the Top 23) grouped together
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Source: Centre for Supply Chain Management, University of Stellenbosch

29. Understanding supply and demand Collated flows Detail flows Conclusion
Agenda
Background
Global context
Understanding supply and demand
Collated flows
Detail flows
Conclusion
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30. Conclusion The model is used extensively in South Africa
Transnet sponsors the work and is a user, but wider application and use is possible with extensions
Researchers from the University of Utrecht are involved. Discussions are underway to involve researchers from the University of Antwerp
Additional funding could extend the work into:
An improved view of total cost, especially adding externalities and environmental cost
Understanding regional specific parameters (decay factors, global maritime freight flows)
An opportunity to do a more detailed presentation at the next meeting will be appreciated
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31. Thank you
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