Transnet, in some form or other, has provided infrastructure support to South Africa and the neighbouring region, for well over a century. The company has always followed market trends, laying tracks northwards in the late nineteenth century after gold deposits were discovered in the Transvaal Republic. Since then the company has remained under state ownership and supervision, gaining control of oil pipelines and port authorities while retaining its control of freight rail. Supply Chain Director, Garry Pita explained the company played “a vital role not only in everyday life, but in the national economy and economics of several other African states that use the networks and harbours within South Africa to transfer their imports and exports.”
With such a wide remit, Transnet has its work cut out in securing results for users, meeting government targets, and keeping its own employees happy. In order to coordinate this vast and sometimes convoluted network of operations, Transnet adheres to directives issued by the Department of State Enterprises, including the New Growth Path (NGP) and the National Development Plan (NDP) These initiatives seek to restructure the South African economy in order to reduce inequality and poverty through the promotion of quality work opportunities. The backbone of this economic driver will be supported a strong infrastructure system of rail, ports, and pipelines, so the support Transnet provides is absolutely vital.
Through its commitment to these government initiatives, Transnet is looking to create new jobs across the South African economy and reduce the total cost of doing business across the country by 0.5 percent, a small but nonetheless significant figure. The company also has much potential to boost the skills profile of the communities it operates in through its dedicated localisation programme.
In recognition of this need for increased capacity, Garry Pita said: “It is our intention to strengthen our partnerships to derive greater value from our freight logistics system. We intend to play a positive role in achieving economic growth in South Africa.”
Demand for Transnet’s services is increasing continuously and is set to continue for a long time; after all, economic growth on a national scale must be supported by reliable, cost-effective infrastructure if it is to be lasting. Its responsibility to the well-being of the country is reflected through its implementation of Market Demand Strategy (MDS) which focuses on a seven year capital investment, with a projected total spend of R312 billion – Mr Pita is keen to inform us that this “excludes at least R500 billion of operational expenditure, including personnel costs.” Aside from developing modern, sustainable infrastructure, the MDS aims to create almost 600,000 new jobs by supporting the growth of local businesses.
This enthusiasm for investment breaks away from the prerogatives of previous management teams, which Mr Pita described as “conservative.” Most capital investments are planned to be completed in the next five years, which will be across the company’s freight and freight rail operations. Perhaps the most important of these is to increase rail capacity growth to meet growth in market demand volumes, which will see capacity soar from 79.7 megatonnes to 170.2 megatonnes. Increases in coal, iron ore, and manganese exports are planned as global demand for these resources increases, especially from China.
Rail Operations is by far Transnet’s oldest and largest division, and the network has snaked across the Southern half of the African continent for well over a century. With so many decades of growth and innovation behind it, Transnet’s freight rail accounts for almost 80 percent of sub-Saharan Africa’s total freight infrastructure, which helps to explain why the country retains its place as one of the most developed countries on the continent. Past investment and foresight has ensured that the company has the capacity to transport freight from all of the country’s key industries including minerals, automotive, coal, and agriculture. Beyond its extensive coverage of South Africa, the company oversees a web of operations which spans 17 other countries in Africa, employing 25,000 people.
As part of Transnet’s Socio-Economic Infrastructure Development (SEID) portfolio, the company donates old freight trailers to under-resourced communities and transforms them into usable facilities. So far, over 30 such structures have been completed, enhancing the lives of over 100,000 citizens. This project has been particularly successful in delivering security to remote areas, in terms of both policing and healthcare.
Transnet Foundation Head, Cynthia Mgijima said: “We have invested over R27 million into the programme since 2001 and have built 19 satellite police stations and 14 multi-purpose centres. Added to this, 27,000 jobs have been created. We aim to meet the needs of the present, without compromising the ability of future generations to meet their own needs.”
Transnet Port Terminals (TPT) operates container terminals at Durban, Richards Bay, Ngqura, Port Elizabeth, and Cape Town. In 2007 redevelopment on Durban Container Terminal Pier 1 facility finished, the port becoming South Africa’s first ever rubber tyred gantry operator. Ngqura Container Terminal has also recently been launched, servicing traffic from the East, South America and West African markets. Recently, Ngqura was earmarked to receive an additional R2 billion in funding to deepen several ship berths and procure a raft of technical equipment in order to expand operational capacity. Equipment procured included 18 rubber tyred gantries, 48 bathtub trailers, two megamax ship-to shore cranes, and 48 haulers.
The coal and minerals bulk terminal at Richards Bay has received numerous funding packages across its four decades of service, and now has capacity to process 20 million tonnes per annum, with a berth capacity of 13. Billions of rand have been set aside to fund further capacity which will see growth in this area between 2013 and 2019 to keep up with increased demand.
In January, it was announced that the Transnet port at Saldanha Bay would receive R9.65 billion to boost its ability to provide crucial services to the nation’s oil and gas industry. This spend is part of President Zuma’s “blue economy” drive targeting infrastructure inefficiencies in order to streamline the South African economy for future growth. A completely new rig repair quay will be constructed, alongside the building of an offshore supply base.
The ro ro (roll-on, roll-off) port at Durban also received funding, to the tune of R438 million, in order to increase its Twenty-foot Equivalent Unit (TEU) handling capacity to 230,000. Earlier this year, it was announced that German crane operator Liebherr would be opening a dedicated hub, in cooperation with Transnet, at Durban to ensure that the company’s African customers received a level of quality service worthy of their global standards. The hub will contain a specialised spare parts service, alongside sales and customer service departments; it will meet the specific needs entailed by the mining industry; namely specially trained personnel and dedicated infrastructure.
Transnet’s pipeline operations have been fuelling the growth of the economy since 1965, supplying crude oil in addition to petrol, diesel, and aviation fuels; in total, they process 100 percent of South Africa’s bulk petroleum products. Their pipelines handle an annual average throughput of roughly 16 billion litres of liquid fuel and upwards of 450 million cubic metres of gases. The division facilitates many of the major oil companies in South Africa, including Shell, Chevron, British Petroleum, and Sasol.
The most recent project in the pipelines division has been the construction of the R11.2 billion New Multi-Product Pipeline (NMPP) that spans 715 kilometres between Durban and Gauteng and has been recognised as the largest of its kind in the world. It will play a crucial role, providing fuel for countless businesses, and is also responsible for lowering emissions through decreasing the number of freight trucks on the road by up to 60 percent. The NMPP can transport over a thousand cubic metres of fuel per hour which means that domestic and commercial demands can be swiftly met. Constructing the pipeline represents a massive logistical achievement for Transnet and its partners, who delivered it on time and on budget.
The project facilities will support a 4.2 percent annual growth in refined products along the Transnet Pipelines delivery region which will inevitably have a knock-on effect on the local and national economies. The project employed over 12,000 people, drawing significant numbers from the local areas it passed through, evidencing Transnet’s commitment to improving the lot of the communities it affects. Perhaps the greatest challenge that the Transnet team overcame was safely constructing the pipeline across almost 100 kilometres of wetland, without causing any environmental damage.
Corporate Social Responsibility:
Mr Pita admits: “Every day, our employees, contractors, suppliers and customers have an impact on the natural environment and depend on it for their livelihoods.” In an effort to reduce the effects of an energy hungry industry, Transnet developed its Energy Security and Carbon Mitigation Strategy which looks at operations across a 25 year period.
The initiative is currently being implemented throughout the organisation, aiming to minimise security of energy supply risks, energy costs and emissions from energy use. This will be harmonised with the overarching business strategy and will be included in the Supply Chain Management Strategy, which incorporates the Procurement, Governance and Enterprise and Development Strategies.
Transnet recognises that its remit extends far beyond simply providing a service, and has to embrace responsibility for the development of the communities it comes into contact with. The Transnet Foundation (which has so far received R160 million of funding) is the realisation of the company’s commitment to communities with the goal of: “Uplifting and empowering communities through health interventions, promoting education, enabling effective asset utilisation to provide much needed infrastructure solutions, developing rural sports and deploying its employees’ skills.”
Over the past 20 years, the Transnet Foundation has taken the noble challenge of “nation building” to the core of its operations, using a plethora of initiatives.
Perhaps the best-known is the Phelophepa health train, which, since its inception in 1994 has reached almost 24 million people. The name ‘Phelophepa’ combines elements of Sotho and Tswana dialects and means ‘good, clean health’ which is the precise purpose of using the train network to deliver healthcare.
The ‘train of hope’ offers medical and psychological aid to the most needy, in addition to education programmes. It also won the United Nations Public Service Award in the ‘Improving Service Delivery’ category in 2008 in recognition of the beneficial effect it has on the communities it serves. The Transnet Foundation also supports education and sport in rural schools, in addition to the allocation of various funds and grants for those most in need.
Planning a successful future for all:
Transnet is ambitious about its role in the future of South Africa and, given that it holds a critically influential position as a state-run entity, these objectives seem highly feasible. Transnet is seeking to lead the way in exporting both thermal coal and manganese, as well as retaining important iron ore supply links with China. Committing to developing the best business possible, it is looking to become the leading logistics hub in sub-Saharan Africa, while leading the field globally by becoming an internationally recognised benchmark for container and heavy haul operations.
Transnet has recognised that, alongside its ability to facilitate large-scale growth in the South African economy, it also has the potential to use technology and financial power to lift citizens out of poverty and develop communities using education and training. The scale of investments the company has made and has earmarked for the future is substantial. It is increasingly showing that economic growth can improve the lot of society through developing communities and investing in projects that will contribute to social as well as economic well-being.