1. THE NATIONAL FREIGHT LOGISTICS SYSTEM Department of Transport 02 June 2004 Department of Transport

2. Presentation Overview  Overview of freight transport infrastructure  Strategic Corridors  Overarching Strategic challenges  Transport Mode review  Rail  Ports  Road  Border posts  Government strategic initiatives

3. Ports Rail 7 commercial ports total imports - 39m tonnes total exports - 122m tonnes 20 041 km 9800 km of high density network; 4400 km of light rail track; and 5500 km of low density network RoadsAir 753 000 Road network moves about 647 million tons of goods per annum 11 000km national 57 000km paved road provincial network 160 000km urban network (metropolitan) 220 000km unclassified 10 ACSA airports Moves about 522 530 tons of cargo p.a. 80% through JIA Over 500 000 aircraft movement per annum PipelinesCross border Network of about 3900km 3300km owned by Petronet 600km owned by Caltex Total movement is 21 billion litres p.a. 60% of freight traffic handled by top five border posts Infrastructure Overview

4. Cape Town 6 (3) (6,2) Port Elizabeth 5 (3) (4,2) Durban 39 (21) (36,4) Saldanha 38 (21) (30,9) Richards Bay 116 (74) (80,3) East London 2 (1) (1,3) Maputo 39 21 15 8 9595 6363 97 62 57 31 25 9 12 7 Gauteng Sishen Windhoek Beitbridg e (Source: MSA 1999, NPA 2004 ) Strategic Corridors Department of Transport 2020 Traffic Volume (millions of tons (1997 Volume) (2003 Volume) 2020 Traffic Volume (millions of tons (1997 Volume) (2003 Volume) 16-30 Up to 5 6-15 >30 = 30

5. CorridorsBulk / Break Bulk ContainersTourismIndustries Gauteng – Durban LowHigh Minerals and Mining; Containerized goods; Perishables Beitbridge – Cape Town Medium Containers; Automotive; Bulk chemicals; Break bulk Walvis Bay – Maputo Medium HighContainers; Agro- processing, Chemical; Break bulk Northern Cape – Coega/PE HighLow Minerals and Mining Cape Town – Maputo coastal corridor Low High potential Tourism Areas requiring infrastructure investment immediately Strategic Corridors (2)

6. Overarching Strategic Challenges  Geographic position  Infrastructure backlogs  A lack of service predictability  High costs  Bottlenecks  Institutional reform issues  A lack of an integrated national freight transport policy

7. Immediate operational, infrastructural and financial bottlenecks in freight logistics system Rail RoadPorts Border Posts3PL & 4PL Operational Assets Financial Poor service levels to non- bulk customers Lack of reliable service Price increases Revenue streams weak in the context of required investment in assets Competition and over-trading leads to enhanced negative externalities Specific provincial roads which are under- maintained and over-utilised Highly competitive market, significant over- trading by smaller contract hauliers, leading to further negative externalities Poor service levels and turn- around times at container terminals Shortage of cargo handling equipment at container terminals, particularly at Durban Capacity restrictions at ports, particularly at Durban and Cape Town Revenue streams strong, no immediate financial constraint Infrastructure investment short- falls on main corridors, particularly for general freight Shortage of reliable rolling stock Inadequate security provided by private security companies Lack of appropriately trained and experienced staff Level of inter-dept integration, including IT, is low Investment shortfalls at Oshoek, Kopfontein and Lebombo Customs search, warehouse capacity and staff accomm require attention Government budgeting for border posts, particularly that of Dept of Public Works requires attention Operations world class but hindered by lack of efficiency in transport system Where assets are owned they tend to have similar problems to road freight sector Highly competitive private sector players who require government investment in transport assets to attain world class service

8. Rail Network Sishen Saldanha Cape Town East London Port Elizabeth Mafikeng Durban Richards Bay Komatipoort Messina Johannesburg Pretoria Kimberley Namibia Botswana Mozambique Zimbabwe Bloemfontein Low Density 2478 km Infrequent service No Service Lines 2432 km High Density 9874 km > 2m GTK/km Light Density 5221 km <2 m GTK/km

9. Rail: Resources 1995/962000/012002/03 Resources  Freight Wagons131 234120 677114 433 –COALlink6 6496 7466 900 –Orex2 2552 9243 305 –GFB122 330111 007104 228  Locomotives3 5163 2813 251 –COALlink180 –Orex31 –GFB3 3053 0703 040  Passenger Coaches –Shosholoza Meyl (total fleet)4 0973 2543 286 –Shosholoza Meyl (active)1 6232 0742 110 –Blue Train3236

10. Economic - Asset condition Customer / Stakeholder q Operations Human Resource / Social Strategic challenges faced by rail Years Average age of locomotives above best practice International best practice average Spoornet 16 yrs 25 yrs The cost of labour as a percentage of operating cost is significantly above international best practice and reflects the high number of employees within Spoornet The skills levels of Spoornet’s workforce is poor in a context where railways are becoming less labour intensive and more skills intensive Five most important issues faced by Spoornet customers:  Reliability  Equipment availability  Price structure  State and reliability of rolling stock  Rolling stock availability Customers report rail operations to be significantly below expectations Productivity improvement (percentage) CSX potential improvement in container supply chain Masimbambane actual improvement in coal supply chain 53% 50% Opportunities exist for productivity and efficiency improvements

11. Port Network

12. Strategic challenges faced by ports Financial / Economic Customer / Stakeholder q Operations Human Resource / Social Even if SAPO is concessioned the capex burden will still remain with Government since the major capex is for NPA Five most important customer attributes:  Speed of service / no delays  Equipment availability  Reliability  Communication  Consistency of service Not enacting the NPA Bill has created a gap disallowing the ports sector to respond to the needs of the market The inefficiency of the container terminals is strangling the SA Economy The ports sector is severely lacking in port operations management expertise to raise the levels of performance to meet customer needs. Port Operations require a knowledge intensive logistics management capability: Private sector should inject  Best Practice and knowledge capital  Hands on terminal management expertise  Training and development

13. ata Welkom Witbank Pretoria Mafikeng Cape Town Kimberley Mdantsane Uitenhage East London Pietersburg Vereeniging Bloemfontein Potchefstroom Port Elizabeth Vanderbijlpark Pietermaritzburg Freight flow volumes per annum Sector: All sectors Sub-sector: All commodities – Only 4 sectors Mode: Road (Tons) LEGEND: (Tonnage per annum) 8938 Total Road Volumes* * Volumes less than 10000 tons not shown Road Flows per annum 10000 - 50 000 50 000 – 100 000 100 000 – 500 000 500 000 – 1 000 000 > 1 000 000 132288 30424 323944 366644 70418 44790 29430 648380 101184 694440 911802 137379 120081 272174 115741 32070 109497 128027 827413 31187 287417 75177 797806 Road Network

14. Road network with a high heavy vehicle impact Source : Bosman 2004

15. Strategic challenges faced by road Human Resource / SocialCustomer / StakeholderRoad InfrastructureFinancial / Economic The prevalence of HIV by drivers of long distance trucks has reached alarming proportions (estimated to be as high as 50% in SMME sector) Drivers work longer hours than stipulated leading to fatigue and increased accidents Lack of practical enforcement measures and insufficient rest areas to comply with safe driver hours Highjack and related criminal activities increase overhead costs and impact negatively on driver moral Customers have high expectations of road freight providers often because they are managing complex supply chains Six most important issues faced by road freight customers*: Customer service Order fulfillment Fleet reliability Inventory management Warehousing Transport costs * preliminary estimate Declining real road freight prices Road condition assessment

16. 1 2 3 4 5 6 7 8 9 10 11 12 1314 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 3637 38 3940 41 42 43 44 45 46 47 48 49 50 51 52 1. Alexander Bay 2. Vioolsdrift 3. Onseepkans 4. Nakop 5. Noenieput 6. Rietfontein 7. Gemsbok 8. Middelputs 9. Mc Carthy’s Rest 10. Makopong 11. Bray 12. Boshoek 13. Makgobistad 14. Ramatlabama 15. Skilpadshek 16. Swartkopfonteinhek 17. Kopfonteinhek 18. Derdepoort 19. Stockpoort 20. Groblers Bridge 21. Zanzibar 22. Platjan 23. Pontdrift 24. Beit Bridge 25. Pafuri 26. Lebombo 27. Mananga 28. Jeppe’s Reef 29. Josefdal 30. Oshoek 31. Lunatsi (Waverley) 32. Nerston 33. Emhalatini 34. Bothashoop 35. Mahamba 36. Onverwacht 37. Golela 38. Manhoca (Kozi Bay) 39. Montantsa Pass 40. Caledonspoort 41. Ficksburg Bridge 42. Peka Bridge 43. Maseru Bridge 44. Van Rooyens Gate 45. Sephaphos Gate 46. Makhaleng Bridge 47. Tele Bridge 48. Ongeluksnek 49. Qacha’snek 50. Ramatseliso Gate 51. Boesmansneck 52. Sani Pass Land Borders Northern Cape Western Cape Eastern Cape Freestate KwaZulu Natal Mpumalanga Gauteng North West Province Northern Province Border Posts

17. Strategic challenges faced by border posts  In terms of South Africa’s value of world trade – trade to our neighbouring countries has declined from 8% in 1995 to 6% in 2002  Trade in real value to region increasing at approximately 20%  Rail transport is still the dominant mode of transport for cross border freight movement  Road freight cross border movement is increasing particularly through the Lebombo border post Shifts in cross-border tradeChallenges Infrastructure requirements  Infrastructure investment at border posts Integration requirement  Systems integration and data collection  Inter-departmental coordination  Rapid implementation of bi-National border protocols  No properly structured database on freight movements in the region Customer interface requirements  Operator awareness campaign  Training and capacity building

18. Work streamOutputTimeframeBudget Development of 2014 Scenarios National, Regional and continental freight scenarios To be confirmed Development of an overall National Freight Logistics Strategy Phase 1 – Strategic overview Phase 2 _ Strategy Phase 1 May 2004 Phase 2 November 2004 R2,6m (approved) R3m ( still to be approved) Development of Corridor Strategies: Commission studies Draft short and medium term interventions Intervention roadmap (including corridor approach) March 2004 May 2005 R10m Implementation of corridor strategies Implementation of Corridor Strategies  Gauteng/Durban Corridor Plan/Implement as Pilot  Gauteng / Beitbridge/Corridor Implement  Walvis Bay/Maputo Corridor Implement  Northern Cape/ Coega/PE Corridor Implement To be confirmed Funding levels and financial implications for the implementation of corridors strategies would come from the various studies that are to be carried out Government strategic initiatives Department of Transport

19. Thank you Department of Transport