1. 1 PORTFOLIO COMMITTEE ON TRANSPORT 28 March 2001

2. 2 uIntroduction uVision uMission uStrategic Objectives uCurrent Realities (Problems & Challenges) lGovernment Requirements lTotal Logistical Cost (TLC) l Internal l External uHow are we going to get there? uStrategic Imperatives uWhat does this mean for the stakeholder? u Focus Areas u SWITCH uIntroduction uVision uMission uStrategic Objectives uCurrent Realities (Problems & Challenges) lGovernment Requirements lTotal Logistical Cost (TLC) l Internal l External uHow are we going to get there? uStrategic Imperatives uWhat does this mean for the stakeholder? u Focus Areas u SWITCH POD Agenda

3. 3 Introduction SA Port Operations, a division of Transnet, manages and control cargo handling operations in the seven commercial ports on the South African Coastline – Richards Bay, Durban, East London, Port Elizabeth, Mossel Bay, Cape Town and Saldanha. The seven ports handle a wide range of commodities including coal, iron ore, grain products, steel, manganese ore, chemicals, wood chips paper and pulp, chrome ore, cars and fruit. The demise of trade sanctions has seen a dramatic increase in container traffic especially in Durban, which boats the largest and best-equipped terminal on the continent. POD

4. 4 Introduction (cont.) At present, SA Port Operations employs approximately eight thousand people nationally, handling 1,3 million container moves and 35,6 million tons and 16,2 million tons of bulk and general cargo respectively with a turnover of R1.6 billion per annum. SA Port Operation’s main goal is to facilitate international trade, increase growth and contribute towards the country’s development. The ports are able to offer all port users and customers’ modern and well-equipped facilities, which compare favourably with anything on offer anywhere in the world. SA Port Operations is currently investing aggressively in infrastructure and superstructure in order to provide capacity for current and future growth. POD

5. South African Ports Saldanha Cape Town Mossel Bay Port Elizabeth East London Durban Richards Bay POD

6. 6 Vision By 2003 all port-based cargo handling businesses are independent self-sustainable, and able to realise business growth targets. POD

7. 7 Mission To increase Shareholder value by creating independent, self-sustainable port based cargo handling businesses that are engrossed in satisfying customer needs. POD

8. 8 èEstablish business planning & performance management as key business behaviours in the business units èConfirm the definition & complete ringfencing of businesses èIncrease the market value of cargo handling business units èEstablish business planning & performance management as key business behaviours in the business units èConfirm the definition & complete ringfencing of businesses èIncrease the market value of cargo handling business units Key Strategic Objectives POD

9. 9 èEnsure business processes that are efficient and of a high quality èDevelop and activate a consolidated capital investment plan for businesses èEstablish effective communication mechanisms with key customers èDevelop the managerial & operational competency of POD staff in line with company equity & gender objectives èEnsure business processes that are efficient and of a high quality èDevelop and activate a consolidated capital investment plan for businesses èEstablish effective communication mechanisms with key customers èDevelop the managerial & operational competency of POD staff in line with company equity & gender objectives Key Strategic Objectives POD

10. 10 Government Requirements èExcellent service for export customers to enhance their global competitiveness èJob creation and the encouragement of SMMEs èThe correction of apartheid-driven spatial imbalances, in both development and redistribution èOptimal use of scarce resources, with minimal dependence on the fiscus èRDP objectives, including meeting basic needs POD

11. 11 èTotal world maritime freight costs, as a % of import values uDecreased from 6.6% (1980) to 5.3% (1995) èFor the developing world costs averaged 10.4% (1980) & 8.3% (1995) èFor our continent the costs are as high as 11.4%. èDistance from international markets èOcean freight costs:68% of total cost of transport (containerised imports) 60% of total cost of transport (containerised exports) èTotal world maritime freight costs, as a % of import values uDecreased from 6.6% (1980) to 5.3% (1995) èFor the developing world costs averaged 10.4% (1980) & 8.3% (1995) èFor our continent the costs are as high as 11.4%. èDistance from international markets èOcean freight costs:68% of total cost of transport (containerised imports) 60% of total cost of transport (containerised exports) Challenges Total Logistic Cost POD

12. 12 è High labour costs è Low productivity è Lack of equipment maintenance è Low equipment and asset utilisation è Uncoordinated capital investment è Low delivery service levels è Absence / lack of strategic decision-making & business planning processes è High labour costs è Low productivity è Lack of equipment maintenance è Low equipment and asset utilisation è Uncoordinated capital investment è Low delivery service levels è Absence / lack of strategic decision-making & business planning processes Internal Challenges POD

13. 13 èTotal world maritime traffic is expected to grow by 4 to 5% annually between 1998 and 2010 èTotal world port container throughput is forecast to reach 270m TEUs by 2005 èContainerisation of general cargo traffic has progressed steadily over the last 20 years, resulting in the doubling of port container traffic between 1990 and 1998 èTotal world maritime traffic is expected to grow by 4 to 5% annually between 1998 and 2010 èTotal world port container throughput is forecast to reach 270m TEUs by 2005 èContainerisation of general cargo traffic has progressed steadily over the last 20 years, resulting in the doubling of port container traffic between 1990 and 1998 External POD Challenges

14. 14 èCustomers are demanding more for less, and they want a premium service èShippers & Ship owners expect the following from Port Operators: uReliability uLow cost uQuality service uAdaptability to their requirements èCustomers are demanding more for less, and they want a premium service èShippers & Ship owners expect the following from Port Operators: uReliability uLow cost uQuality service uAdaptability to their requirements External (cont.) POD Challenges

15. 15 è Bureaucratic structure and attitude èLack of transparency è Bureaucratic structure and attitude èLack of transparency POD Challenges External (cont.)

16. 16 How are we going to get there? Our value proposition and turnaround strategy is to all stakeholders POD

17. 17 Strategic Imperatives è Lower systems costs by uImproving Business-Unit-level competitiveness by raising productivity, through removing constraints to their improvement è Increase reliability and ship turnaround time by uImproving integration of the value chain and focusin Port Operations Business Units to optimise their service potential uRemoving bottlenecks currently in the system uEnsuring there is sufficient, properly co-ordinated reinvestment to maintain quality and effective operations è Lower systems costs by uImproving Business-Unit-level competitiveness by raising productivity, through removing constraints to their improvement è Increase reliability and ship turnaround time by uImproving integration of the value chain and focusin Port Operations Business Units to optimise their service potential uRemoving bottlenecks currently in the system uEnsuring there is sufficient, properly co-ordinated reinvestment to maintain quality and effective operations POD

18. 18 Strategic Imperatives (cont.) è Offer customer choice through the ability of Business Units to meet differentiated customer needs through the creation and provision of tailored services uBy building an industry platform which drives the Business Units to differentiate and innovate uBuilding capabilities in logistics and other related port operations skills è Offer customer choice through the ability of Business Units to meet differentiated customer needs through the creation and provision of tailored services uBy building an industry platform which drives the Business Units to differentiate and innovate uBuilding capabilities in logistics and other related port operations skills POD

19. 19 What does this mean to the stakeholders? POD is committed to deliver value consistently è Customers - POD has the right people, equipment and culture to satisfy customer needs è Employees - POD is a desirable and caring employer è Shareholder - POD is creating value and improving ROI POD is committed to deliver value consistently è Customers - POD has the right people, equipment and culture to satisfy customer needs è Employees - POD is a desirable and caring employer è Shareholder - POD is creating value and improving ROI POD

20. 20 What are the focus areas? By delivering Value Plus in the following areas: è Equipment maintenance è Terminal operations è Elimination of waste/Continuous Improvement è Employee motivation è Productivity & Focused customer service è Service Levels è General attitude of all POD employees By delivering Value Plus in the following areas: è Equipment maintenance è Terminal operations è Elimination of waste/Continuous Improvement è Employee motivation è Productivity & Focused customer service è Service Levels è General attitude of all POD employees POD

21. 21 The deployment of the strategy - SWITCH SWITCH is an acronym for: è S - Service excellence è W - Work smart and cut costs è I - Innovative problem solving è T - Teamwork è C - Commitment è H - Happy workforce and customers SWITCH is an acronym for: è S - Service excellence è W - Work smart and cut costs è I - Innovative problem solving è T - Teamwork è C - Commitment è H - Happy workforce and customers POD

22. 22 The repositioning programme We see ourselves as: è An extension of our customers’ business è A business partner to our customers è Value adding from the Shareholder’s perspective è An organisation that is desirable to our employees We see ourselves as: è An extension of our customers’ business è A business partner to our customers è Value adding from the Shareholder’s perspective è An organisation that is desirable to our employees POD

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