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Transnet Freight Rail's Siyabonga Gama Elaborates on The Market …

November 15, 2012 | 0 Comment JOHN BATWELL catches up with TFR s CEO face-to-face Transnet Freight Rail (TFR) CEO Siyabonga Gama told me during an interface session in his Parktown office suite in early July that he is really upbeat about the rebirth of South Africa s railway system. This has been brought about by TFR unveiling its plans earlier this year to invest R206 billion in rail projects over the next seven years as part of a drive to treble revenues and support booming mineral exports. Of the R206bn, TFR will utilise R201bn, with engineering subsidiary Transnet Rail Engineering (TRE) taking up R5bn.

A R300bn Market Demand Strategy (MDS) aims to expand South Africa s rail, port and pipeline capacity to generate a significant increase in freight volumes (see Railways Africa issue 2/2012). In July, Transnet announced that it had representatives going to London. For example, an extended locomotive procurement programme planned by TFR could benefit from low interest rates from distressed overseas manufacturers desperate for growth.

The MDS means significant additional capacity will be required on the Sishen-Saldanha iron-ore line, while the newly-announced Swazi-link project will relieve the congested Richards Bay coal corridor by providing an alternative route for general freight between Ermelo and the port, which is expanding rapidly to meet demand. In addition, Gama said, it would be useful as a bypass route in the event of derailments on the coal line. Currently, he explained, every third movement on the corridor is a non-coal train.

Considerable mineral traffic emanating from the Steelpoort area also endorses the need for another rail artery to Richards Bay. Commenting on Mozambique s concern at the extent of export volumes moving by road from South Africa to Maputo (as opposed to far greater rail usage), Gama pointed to the constraints of the Maputo harbour, as well as safety aspects along the route. Some 15-20 million tonnes of traffic do use this eastbound corridor to the Indian Ocean.

Also, customer requests dictate the use of particular destinations and there are user-friendly considerations in the conditions at the various ports. With reference to manganese, Gama was emphatic that this export traffic is to continue using the Eastern Cape port of Ngqura, and will not be routed to Saldanha. Manganese export volumes are envisaged to catapult from the current 5.5m tonnes a year to 12mtpa by 2016/7.

Of the R300bn MDS, R33bn was earmarked for the expansion and improvement of Transnet Port Terminals (TPT) bulk and container terminals. On the issue of General Freight Business (GFB) Transnet foresees overall rail freight volumes increasing from 200 to 350 million tons by 2019. In addition to substantial growth in mineral traffic, TFR projects the market share of intermodal rising from 79% to 92% by the end of the decade.

With R140bn capex, the GFB says Gama has the greatest opportunity for growth and market share. It is planned to grow this business from 13% to 30% over the next seven years. This is a turnaround from Maria Ramos s era in Transnet when the mineral corridors ruled the day.

Agricultural products, chrome and granite are just three commodities that Gama identifies as definitely needing to be moved by rail. He reiterates that rail costs are 60% cheaper than those by road. As far as getting product out of railway yards to the customers door expeditiously, he says a number of trucking companies are now customers of Transnet and are striving for what he calls terminal efficiency the movement of goods over the last mile to their destination.

Specific commodity business units have been created within TFR (see Railways Africa Issue 3/2012) to replace a regions-based operating business model. A dramatic success story for TFR is its Johannesburg-Durban route, known as Natcor (Natal Corridor). TFR has 34% of the market share on Natcor where it once held as little as 15%.

There are now 22 container trains out of a total of 55 consists daily, and all Toyota s motor vehicles are now moved by rail. Asked about volumes on the Johannesburg-Cape Town corridor, Gama mentioned problems caused by serious flooding in the Kamfersdam area near Kimberley which required specialist technical attention. Otherwise, this route lends itself well to fast-moving consumer goods, a market that still needs attention for corridor growth.

The MDS allocates TFR R78bn over the next seven years for new locomotives. Around half of this amount is to be spent with local suppliers. Besides the current manufacturing of the environment-friendly General Electric class 43 locomotives in TRE s workshops in Koedoespoort, Pretoria, tenders are imminent for 600 new electric units, 102 coal corridor-specific locos and an additional 465 diesels.

Six to seven manufacturers have expressed interest in the electric units tender and the diesel procurement programme had interested the overseas faithfuls, General Electric and EMD. Such tender awards take cognisance of local supplier contributions. The General Electric C30ACi model locos on the assembly floor at TRE have 37% local content.

Furthermore, this latest batch of diesel locomotives is technically designed to reduce emissions by 1,500 tonnes of carbon dioxide per annum. Regarding the issue of branch line concessioning, Gama acknowledges that little has been said publicly since the initial Expressions of Interest (EOIs). Three branches have been firmed up, but one has to tread very carefully, he says, with such concessions.

Transnet Freight Rail does not want to be party to what he calls 30-day wonders , with concessionaires coming in blazing but quickly going under. He agrees that such concessions could precipitate job creation and opportunities for people in the relevant areas. TFR expertise would still be required of course and there are aspects like motive power and rolling stock refurbishment to consider.

Asked about other rail operators being allowed to move product off a branch line to a destination that involved running on TFR tracks, Gama says this issue of access is on the cards but stringent requirements by the Rail Safety Regulator (RSR) would have to be met. Through the implementation of the MDS, Transnet expects revenues to increase from R46bn to R128bn by 2019. Besides the bells and whistles of new hardware and growing markets, Gama acknowledges that a huge challenge existed on the human resources front.

With 34,000 employees, it has not been easy to change the mindset of people with the nine-to-five mentality that characterises so many government-oriented businesses, in order to buy into the MDS. Gama is happy however that mental attitudes are already far better than they were five years back. In his words, the organisation is witnessing a new snake moving from its old skin.

And a talent nurturing programme is also in place. Crime is a massive problem afflicting TFR. According to Transnet security head Rodney Toka, there were 6,917 incidents of cable theft on the railway in the past three years.

The nominal value of the stolen wire was some R95.5m but it cost R239m to replace.

These figures take no account of the cost of train delays caused by the theft plague .

Source: www.railwaysafrica.com Date: 14.11.2012

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Transnet Freight Rail's Siyabonga Gama Elaborates on The Market …

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