Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Spoornet Rail Freight Challenges Positioning for Growth and Prosperity Siyabonga Gama Chief Executive, Spoornet Global Rail Freight Conference 22-24 March 2007 1 Transnet Structure Strategy Delivering effective and competitive services Focused freight transport company TRANSNET COMPANY Structure Non-core portfolio Operational divisions (continued businesses) RAIL Spoornet Enabling economic growth Transwerk PORTS National Ports Authority SA Port Operations Discontinued businesses PIPELINE Petronet • • • • • • • • SAA Viamax V & A Waterfront Autopax Metrorail freightdynamics Equity Aviation VAE Perway Other to be sold • Propnet – non-core portfolio • Housing assets • SA Express • “C” class preference shares 2 Spoornet Network Messina Spoornet is the largest division of Transnet with a focus on the transportation of freight. Pretoria Johannesburg Sishen Kimberley Bloemfontein Richards Bay Durban High Density Light Density East London Port Elizabeth Saldanha Cape Town 3 Low Density No Service Lines Facts about Spoornet ● Moves 17% of the nations freight annually 70mt of export coal on the heavy-haul Ermelo – Richards Bay line 32mt of export iron ore on the heavy haul Sishen - Saldanha line 80mt of general freight across various freight corridors ● 30% of the core network carries 95% of freight volumes ● 3 million inter-city passengers annually ● Annual revenues of over R14billion (US$2.2bn) ● R7 billion in annual capital investment over the next 5 years ● Total assets of R24 billion ( ’03/07) up from 18.4bn (’03/06) ● 25 068 employees system wide (from 33 450 in March 2006) 4 Spoornet Statistics ● ● ● ● ● ● ● ● ● ● Freight Wagons Locomotives Track km Route km Freight volumes 93 700 (active) 2 157 (active) 30 400 km 20 298 km 182 mV (2005/06) Passenger Coaches Long distance Passengers Blue Train occupancy 1 227 (active) 3.15 million (2006/05) 164 trips, 90% Turnover Employees R14.3 billion (2005/06) 25 068 (Dec. 2006) 5 Spoornet : Density over the network Messina High Density Lines (<3m nt/a) High Density Lines (3 - 7m nt/a) High Density Lines (7 - 10m nt/a) High Density Lines (10 - 20m nt/a) High Density Lines (20 - 30m nt/a) High Density Lines (>30m nt/a) Low Density Lines (Open) No Significant Service Lines Picked up Lines Louis Trichardt Soekmekaar Ellisras Vaalwater Drummondlea Chroomvallei Zebediela Phalaborwa Naboomspruit Middelwit Nylstroom Steelpoort Marble Hall Roossenekal Northam Graskop Plaston Cullinan Mafekeng Lichtenburg Hawerklip Bethal Orkney Schweizer-Reneke Wolwehoek Sishen Vrede Westleig h Naroegas Warrenton Glen H Bultfontein Upington Lothair Standerton Vierfontein Makwass ie Pudimoe Gelukpos Potchestroom Klerksdorp Ottosdal Hotazel Machadodorp Baberton Olifantsfontein Johannesburg Coligny Vermaas Komatiepoort Belfast Rayton Pretoria Charlestown Utrecht Hlobane Warden New Castle Whites Virginia Bethlehem Vryheid Harrismith Glencoe Theunisen Kimberley Kakamas Douglas Bloemfontein Belmont Prieska Ladysmith Winburg Marquard Koffiefontein Bergville Ladybrand Sannaspos Kranskop Moorleigh Nkwalini Eshowe Stanger Howick Hilton Underberg Donnybrook Richmond Mid Ilovo Springfontein Dreunberg Jamestown Noupoort Kootjieskolk Calvinia Kokstad Aliwal North Sakrivier Bitterfontein Rosmead Barkley East Maclear Simuma Port Shepstone Queenstown Qamata Tarkastad Beaufort West Klawer Seymour Somerset East Klipplaat Porterville Saldanha Prins Alfred Hamlet Atlantis Simonstad Kelso Coal exports > 70mt Umtata Hofmeyer Cape Town Harding Durban Schombee Hutchinson Iron ore exports > 30mt Mandonela Franklin Matatiele Bethulie Richards Bay Greytown Maseru Copperton De Aar Empangeni Fort Beaufort Blaney East London Touwsrivier Ladysmith Worcester Franschhoek Stellenbosch Strand Amabele Cookhouse Kirkwood Calitzdor p Oudtshoorn George Avontuur Protem Alexandria Patensie Uitenhage Port Alfred Port Elizabeth Riversdale Mosselbaai Knysna Bredasdorp 6 General Freight > 80mt General Freight: Portfolio Mix (Rbn) Coal & Containers generate highest revenues. Coal Other R1,8bn R1,6bn Containers Phosphate Ferrochrome Manganese 70% of other revenue is from mining/ bulk related freight. R1,1bn The portfolio mix is representative of most freight railways 7 Locomotive Age Profile Fleet Age - All Locomotives 30 y 200 150 Average No of Locos 100 50 45 44 43 42 41 40 39 38 36 37 35 34 33 31 32 30 29 27 28 26 25 23 24 21 22 20 19 18 16 17 14 15 12 13 9 10 11 8 7 6 5 4 3 2 1 No of Locomotives 250 Age (Years) ● ● ● ● The average age of the total fleet is 30 years compared to 12 years US Class One Last batch purchased more than 12 years ago Ageing fleet characterised by high maintenance costs, very low reliability and availability and high number of safety related incidents Aggravated by lack of effective maintenance over a long period 8 Wagon Fleet Age Profile Wagon Fleet Age distribution Quantity Wagons 16000 14000 12000 10000 Replace with equivalent wagon graph 8000 6000 4000 2000 58 55 52 49 46 43 40 37 34 31 28 25 22 19 16 13 10 7 4 1 0 Age (Years) ● The average age of the General Freight wagon fleet is 34 years ● Limited investment in wagons over the past 12 years (excl. coal & ore) ● Capital investment for wagon fleet modernisation behind schedule ● Availability of wagons is not achieving desired percentage and is deteriorating ● Lack of effective maintenance over a long period, leading to current backlog 9 Where have we come from? ● ● South Africa Spoornet 10 South Africa: Economic Outlook ● Export performance expected to improve high commodity prices increased profitability of a broader range of manufactured goods ● Growth in imports likely to remain high due to continued strong domestic demand ● Inflation projected to remain well within the target range ● Outlook for achieving 6% GDP growth by 2010 is bright 11 Issues that being addressed in South Africa ● Globalization ● Regional role ● Increase/enhance competitiveness Reduce cost of doing business Job creation and poverty alleviation ● Streamline/improve the national logistics infrastructure ● Transformation & BBBEE ● Understand the interaction between the 1st and 2nd economies 12 Structure of the South African Economy The total throughput in the South African economy that requires logistics intervention amounts to 830mt (transportable GDP) 2004 Manufacturing = 18% of GDP Manufacturing 45%330mt Mining 49% 370mt 45mt 2004 Agriculture = 6% of GDP @ 6% 13 2004 Mining = 7% of GDP Spoornet’s Strategic Intent Spoornet is a Freight Railway that satisfies the needs of our Customers ● ● ● ● Enables Economic Growth Facilitates Trade Growth by increasing South Africa’s competitiveness Reduces logistics costs by transferring traffic from road to rail Develops Skills 14 Spoornet Strategic Rail Track Map Divestment of Non-Core Non-Freight Business Activities Investigate Vertical Integration vs. Vertical Separation Volume & Market Share Growth Improve Operational Efficiency & Customer Service 2012 Desired Future SPOORNET Sustainable Business Position in Rail Industry Strategic Investment Current State of SPOORNET Improve Business Performance Stabilise and Re-engineer the Business 2005 2007 2008 15 2009 2012 Spoornet Objectives Safety Transform Spoornet into a safe railway 1 Customer Service Delivery Retain the desired customer base and improve service delivery 2 5 Create Capacity Invest to maintain, replace and increase capacity Scheduled Freight 3 Railway Leadership & Employee Capability 4 Implement efficiency improvements Optimise human capital deployment and development • Improve Corporate Governance • Change Leadership • Focus on high growth, high yield General Freight in key corridors 16 Spoornet : Levers for Growth Marketing / Pricing Capital Operational Efficiency Investment 17 Restructuring People Spoornet: Projected Volumes (mV) 2007-2012 300 250 200 150 100 50 0 Coal Iron Ore General Freight 2006/07 2007/08 68 72 31 79 35 82 2008/09 2009/10 2010/11 2011/12 74 77 81 86 42 89 44 95 44 102 47 105 Growth focus: Market share capture 18 Spoornet’s Service Offerings Heavy Haul Blockload Intermodal Purpose-built bulk conveyor belts Fixed origin and destination point with high level of empty returns, and focused asset utilization Terminal-toterminal blockloads with priority path status Fixed schedule service Charter service 19 Less than Blockload Varying OD’s, many operational moves, poor asset utilisation Consolidation service Spoornet Market Strategy Market Defense Strong relationships with base-load industries through: •dedicated service and tight integration with •their production processes Market Capture of Bulk freight through: Efficiency improvements translated into a competitive service offering 20 Market Attraction through Rail and Road partnerships to service the needs of growing, non-bulk sectors of the economy via intermodal solutions Efficiency focus for Rail Focus Area Optimal planning and execution of resources Quality and cost of service delivery Asset utilisation and efficiency Ring-fence rolling stock fleets and reduce cycle time Reduction in safety and security incidents Streamlined customer interface Execution of Backlog Maintenance, Capital Programme and improved maintenance practices Labour Productivity and Change Management 21 Measures Increase locomotive reliability Spoornet Capital Investments ● Rolling Stock Maintenance Key Projects & Backlog •Coal & Ore line expansions Reliability ● •Locomotive Renewal Programme Stabilisation o 110 AC/DC for Coal line Fleet Rightsizing & Standardisation o 212 Diesel-electric Upgrades o 163 AC/DC for General Freight Expansion General Freight Majuba Power Station o Rolling stock fleet renewal & Coal and Iron Ore Export lines ● modernization o Train authorisation systems Rail Master Planning: future o Infrastructure electrical systems o Relocation of CTC offices R34bn (US$5bn) Investment over next 5 years US$1.3bn invested in 2006 o Optic fibre cabling o Upgrade & sustain rail infrastructure: R4bn p.a. over next 5 years 22 The Competitive Challenge for South Africa Global trade routes SA trade routes 10k km 14k km 12k km SA is essentially a bulk net exporter: equidistant from all the main global markets 23 Influenced by global logistics trends… ● Sourcing of product is a global game ● Choice is influenced by agility and cost of the total supply chain ● Balance of power shifting to carriers ● Focus on Intermodalism and Integration ● Pressure on developing countries to reduce the cost of doing business ● Global Revival of Rail Rail is catalyst in positioning emerging economies Infrastructure investment critical Regulation of modal competition 24 Global Customer Requirements for Rail ● Heightened pressure for world-class competitiveness ● Efficient rail is a competitive advantage for customers to get product to market – 5 “R’s” of Rail: Right Place Right Time Right Quantity Right Cost Right Condition Rail is an integral part of the total supply chain, rail operators need to think outside the ‘rail’ box 25 Rail in the Customers’ Supply Chain ● ● ● For Customers the world is flat in terms of supply and demand Rail is the critical link between supply and demand Rail is part of a production system Each component needs to focus on product delivery Each component needs to perform based on quality standards Each component needs to invest in technology to improve If the production line fails the factory stops Supply Chains are global production lines 26 Future Outlook ● Volume based growth strategy & philosophy ● Capital investments to capture market growth (10% of GFB to 22% over 5 years) ● Investments in sustaining growth ● Sharper focus on customer service Reduce switching cost from road to rail 27 Thank You 28