Does this mean Transnet has finally turned a corner? It would be foolhardy to usher in spring for one of the Southeast's most divided state-owned enterprises, but at least there is a silver lining.
Coal exports along the Northern Corridor to Richards Bay Coal Terminal (RBCT) increased by more than 10% in the December 2023 quarter to an average of 1.1 million tonnes per week. The Northern Corridor is the main rail route between the Mpumalanga coalfields and Richards Bay Port, accounting for approximately 41% of Transnet Freight Rail's total traffic.
advertisement
Continue reading below
Including shipments from other routes from September to December, shipments to RBCT increased by nearly 4% to 48.74 million tonnes.
read:
Logistics crisis: reaching a turning point
South African coal exports fall to 1992 levels due to railway disruption
Transnet said in a statement last week that it expects 49 million tonnes of coal exports to RBCT to be transported by rail, compared to its announced capacity of 60 million tonnes in the financial year ending March 2024. This will require sustained improvements to the 35.8 million tonnes shipped to date. His first three quarters of the year.
RBCT has a designed capacity of 90 million tonnes per year, which is currently underutilized as Transnet is unable to transport sufficient quantities to the port.
Recent improvements in rail performance will go some way to recouping some of the estimated R150 billion in lost revenue that Transnet's inefficiencies cost the mining industry in 2022. These inefficiencies will cost the economy nearly 5% of GDP in 2023, he said. This was a study by his GAIN group and meant that the global commodity boom of recent years had passed.
Read: Transnet’s dagger pointed at the heart of SA economy
There was also encouraging news from Transnet Ports, which reported that an unprecedented backlog of vessels anchored outside Durban Container Port had fallen to single digits from around 20 vessels in December. There are also signs of improvement at Cape Town's container terminal, which has increased staffing to cope with a 14% drop in deciduous fruit exports compared to last season.
Read: Transnet boosts Cape Town port capacity to save fruit export season
What has changed?
Jan Havenga, a logistics professor at Stellenbosch University, said the state-owned logistics operator's turnaround was almost entirely due to personnel changes.
“Transnet is a victim of state capture and the solutions proposed by those in charge are [during the tenure of then CEO Brian Molefe and CFO Anoj Singh] The obvious way to enrich his friends was to buy more locomotives. Locomotives and wagons are certainly needed, but the problem is much bigger than that.
“Transnet has an old signaling system that was installed on the main coal transmission line to Richards Bay in the 70s. Our infrastructure has aged with little or no maintenance for many years. There is a culture of pushing out people who are advanced and trained.”
Read: Driving long-distance freight trains “blind”
The government has responded to pressure from the mining and business sectors, particularly Minerals Council SA and the Durban Chamber of Commerce and Industry, to sack former CEO Portia Darby and former Transnet Freight Railway CEO Sizakhele Mzimela. This is because other executives appear to be “obstructing” the business.
What had been simmering in private for years suddenly came to the fore, especially when Mr Darby mentioned at a Bloomberg seminar last year that jobs could be lost in the trucking sector if Transnet improved rail service. Although this was taken by many as an admission of indifference from her executives, it was clear that she was in the wrong job.
Listen/Read:
Prosecutor's Office calls on Transnet CEO to 'pack his bags and leave'
The limits of corporate patience with Transnet
Transnet CEO receives dismissal order from Durban Chamber of Commerce and Industry
The government was forced to act. Earlier this year, President Cyril Ramaphosa established the National Logistics Crisis Committee (NLCC) in collaboration with Business for South Africa to address major bottlenecks and inefficiencies at Transnet. While this was a great idea on paper, the company soon realized that Darby and his team resented outsiders interfering with their affairs and disrupting their plans to turn the company around. Ta.
read:
A journey of cooperation begins between government and business
SA aims to boost economic growth with revival of ports and railways
Public Enterprises Minister Pravin Gordhan then brought a butcher knife to the board meeting.
In July 2023, Andile Sank, vice-chairman of the Minerals Council, will take over as Transnet chairman, and will be working with the mining industry, which is the company's largest customer, accounting for approximately 80% of Transnet Freight Railway's business and 50% of its total revenue. It gave the department a say. The board was full of engineers, industry representatives, workers, people who knew how to run this complex company.
advertisement
Continue reading below
Mr Darby and Mr Mzimela have resigned and been replaced by Michelle Phillips as Acting Group CEO and Russell Burgess as Acting Freight Rail CEO.
Several former Transnet executives who have left the organization over the years have been brought back, including former program director Marc Descoigne.
Hebunga says several other former executives are also involved in the Transnet restructuring plan, many of whom are on the payroll of Business South Africa.
Listen/Read:
Significant revamp of Transnet's board for rail and port modifications [Jul 2023]
Transnet boss Portia Darby resigns [Sept 2023]
Transnet Freight Rail CEO Siza Mzimela resigns [Oct 2023]
New Transnet executive appointed, glimmer of hope [Oct 2023]
encourage signs of progress
Writing in progress money web Last week, SA Freight Carriers Association CEO Juanita Murray, who sounded the alarm on Transnet a year ago, pointed to encouraging signs of progress since companies engaged with the NLCC. . The restoration of Durban Container Terminal Pier 2 will be carried out in accordance with a recovery plan developed and implemented by the Crisis Committee, which is expected to clear the demurrage of vessels by the end of this month.
“Cabinet approval and activation of the Freight Logistics Roadmap also paves the way for South Africa and the region to restore a world-class, multi-modal logistics network with adequate resources,” Murray said.
Transnet appears to be open to collaboration with businesses.
“Through our partnership with industry, cable theft incidents in the corridors are on the decline, but sporadic incidents still occur,” the agency said in a statement last week.
“Transnet continues to increase the implementation of security measures to reduce cable theft and infrastructure vandalism.”
Mr Heibenga added that the new management team, led by Mr Phillips and Mr Burgess, had changed the culture and atmosphere of Transnet.
“All of the improvements we have seen in recent months have been achieved without major investment in locomotives or wagons. These improvements are the result of operating smarter. Transnet is approx. We have a 21,000km rail network, but virtually all of our rail revenue comes from just 1,500km of that network, so that's where we need to focus.
“If we can improve the turnaround time on the Xishen-Sardana Bay Railway Line so that trains turn around in 80 hours instead of 100 hours, we can run additional trains a day using the same rolling stock. , this can be achieved.”
The 861km Sishene-Sardanha line between the Northern Cape and Western Cape's Saldanha Bay ports handles the majority of the country's iron ore exports, and its efficiency has direct implications for Kumba iron ore and other iron ore revenues and profits. It's having an impact. Exporter.
Trains traveling as long as 10km are difficult to slow down, and the switches used to allow trains in the opposite direction to pass are old and need updating. Miners using the line and Transnet have been able to improve the line's efficiency through better scheduling and maintenance.
Perhaps Transnet has finally turned a corner and demonstrated what can be done when executives are replaced by industry experts.
read:
SA supply chain disruption is not over yet, says PwC
Logistics crisis: Neighbors eat SA lunch
Labor unions jeopardize billionaire's takeover of Durban port terminal
Difficult to select billionaire Razon as partner for Transnet
