Transnet back on track
SA’S rail giant is aiming to play catch-up with a huge investment in its infrastructure spending
In April 2012 Transnet threw down the gauntlet to the road transport industry when it unveiled its seven-year Market Demand Strategy (MDS) aimed at luring general freight traffic back onto rail.
This followed over two decades of underspending on rail infrastructure on the back of deregulation of land transport in 1988, which had devastated Transnet’s general freight traffic market share. It had left road hauliers responsible for moving 72% of the over 780 Mt transported annually.
Transnet is now aiming to play catch-up with an infrastructure spending programme that calls for the investment of R300bn between 2012 and 2019. This is almost treble the R118bn spent on infrastructure in the seven years to 2012.
“The capex is all about increasing efficiency,” says Michael Asefovitz, Transnet Freight Rail’s senior communications manager. Transnet is aiming for big returns as ambitious volume growth targets set by its MDS in 2012 indicate. Targeted for the biggest increase is general freight business, with volumes projected to rise 117% between 2012 and 2019, from
80 Mt to 170 Mt.
This was followed by container traffic with projected growth of 76%, from 4.34m containers annually to 7.65m containers. Of the total R300bn to be spent, general freight and container services are to receive the lion’s share: R151bn.
In Transnet’s stronghold, commodities, a R50bn capex was earmarked to up coal export traffic by a projected 44%, from 68 Mt to 98 Mt, and up iron ore export traffic by 57%, from 53 Mt to 83 Mt. Total revenue wise, an increase of 178% from R46bn to R128bn was projected.
A crucial step in Transnet’s traffic growth strategy was taken in 2014 when orders worth R50bn were placed for 1,064 new electric and diesel locomotives. Transnet took delivery of the first locomotive in April 2015 with the last locomotive due to be delivered in late 2018. All but 70 will have been assembled by Transnet Engineering’s facilities in Pretoria and Durban. The biggest portion of the purchase went to two Chinese stateowned companies: China South Railway and China North Railway, for the supply of 591 electric locomotives. An order for a further 240 electric locomotives was placed with Canadian group Bombardier while 233 diesel locomotives were ordered from US group General Electric.
Transnet, following department of trade & industry (DTI) guidelines, set demanding local content requirements: 60% for electric locomotives and 55% for diesel locomotives. Not all, it seems, has gone to plan.
In a study published in late2016 by the University of Johannesburg’s Centre for Competition Regulation & Economic Development, its authors note: “Transnet’s contracts did not match the DTI’S local content expectations.”
Initiatives including Transnet’s locomotive fleet upgrade and an almost complete R6.5bn upgrade of its signalling system, contracted to Siemens, are delivering positive efficiency gains.
“PWC was brought in to measure efficiency gains so far,” says Asefovitz. “The figures must first go to the board but what I can say is that efficiency gains being achieved with the new locomotives are unbelievably good.”
Transnet has also launched new services since 2012, including a dedicated service targeting motor manufacturers. To provide the service, 350 specialised enclosed wagons built by Transnet Engineering’s Uitenhage facility in 2013 and 2014 are serving motor industry players including BMW, Volkswagen, Ford, Nissan and Toyota.
“The service has proved a big success,” says Asefovitz.
Also set to take to Transnet’s rails is Railrunner, a new approach to container train operation, which Transnet group CEO Siyabonga Gama has termed “disruptive technology”. It also marks an important step towards bringing private sector participants on board. Transnet is actively seeking partnerships as a way of broadening funding sources and gaining access to skills and expertise.
Brought to SA by local firm Kaleida Project Management Company, the Us-developed Railrunner enables a trailer to be converted rapidly from road wheels to rail wheels to form part of a locomotive-hauled train. At the end of the journey the process is reversed.
“We have a 20-year, US$400M agreement with Transnet in place,” says Mike Daniel, MD of Railrunner SA. “We are now finalising negotiations with funders.”
If all goes according to plan the first two, Sa-built 40 wagon Railrunner test trains will begin operating on the Cape Town to Gauteng route in 2018 between terminals in Bellville and Isando. Beyond greatly improving terminal efficiency, Railrunner also allows 20%-40% more payload to be carried for a given length of train.
Another of Transnet’s unique private sector partnerships is with Ceres Rail Company (CRC). On Saturdays, CRC operates a steam locomotive-hauled tourist train over the 135 km between Cape Town and Ceres (Western Cape), and on weekdays a diesel-hauled service transporting fruit and fruit juice concentrates.
Transnet set the wheels in motion of another major private sector tie-up in 2016 when it called for tenders from SA and foreign logistics service providers for the design, building, and operation of a proposed container terminal in Tambo Springs, east of Johannes-