Linking Ports to Railway InfrastructureAfrican Ports and Maritime Conference

10 December 2009Alex Masianoga

Acting General Manager (Office of the C.E)Transnet Freight Rail

2

Presentation Outline

1 Global & Regional Perspective

2 State of Port and Rail Infrastructure

4 Integration Challenges and Intermodalism

5 Transnet’s Approach

6 Conclusions

3

The Competitive Challenge for the Region

Global trade routes

The Relevance factorIntensity of global shipping

PoliticalInstability

Reliance onminerals

Poverty CurrencyInstability

Monopolies

Logistics Infrastructure not

developed and integrated

Tradeinhibitors

Sustained Economic Growth

PoliticalInstability

Reliance onminerals

Poverty CurrencyInstability

Monopolies

Tradeinhibitors

Sustained Economic Growth

4

Trade Agreements: Stimulate Regional Economic Growth and Create a Borderless Region

The region requires integrated transport infrastructure to move the products created by trade agreements

5

Regional Geographical Catchment Areas & Economic Centres

6

Key Drivers of Regional Growth

Commodities

Malaw

i

Zambia

BotswanaNamibia

South Africa

Moca

mbi

que

TanzaniaDemocratic Republic of Congo

Zimbabwe

Angola

Swaziland

Malaw

i

Zambia

BotswanaNamibia

South Africa

Moca

mbi

que

TanzaniaDemocratic Republic of Congo

Zimbabwe

Angola

Swaziland

National Policies (Economic)

‘Chindiafication Factor’ De- / Re-Regulation & Policy

7

Key Drivers of Rail Growth in the Region

Mining sector contributes largest volumes to GDP in Africa/ Region

• Immediate access to road/rail systems• Standard for freight handling (rail and

ports)• Support small and large scale

developments across all economic sectors, incl. mining/ bulk

• Rail preferential access• Higher turnaround • Better asset utilisation

• Condition• Legislative pressure• Costs: 200% more than rest of the world

IntermodalismEconomic Growth Recovery

Port Capacity Road Network

8

Southern Africa Context

Southern AfricaRailway network

Source: Transnet Group Planning

Adequacy of Transport Infrastructure in the Region

The Rail network provides: A vast footprint Strategic lines to landlocked

countries Uni-gauge (1067mm) Links to existing and developing

ports Region benefiting from donor

funding and private investment for infrastructure development

9

Regional Transport Corridors & Ports

10

Regional Logistics Challenges

Transport infrastructure development and investment

Road; Rail; Ports Integrated transport operations

across borders Leadership & expertise Logistics costs Share of world trade Modal imbalance between road

and rail Poor sharing of resources Political and economic

instability directly influence foreign direct investment

Africa lags behind the rest of the world in all aspects of infrastructure development -- quantity, quality, cost and access - a very fragile system

Freight cost as a % of total import value:

8.8% for developing countries, 5.2% for industrial countries (UNCTAD 2002)

At a sub-regional level West Africa: 14% East & Southern Africa: 15.2% North Africa: 11%

In Africa- Rail is a strategic resource

11

State of Transport Infrastructure in the Region

Capacity of the transport system and regional corridors is as good as the weakest link

12

Rail and Port Issues in the Region

1. Road & Rail infrastructure that connects hinterland to the ports

2. Traffic Congestion3. Infrastructure development4. Conversion to

containerisation not complete nor integrated

5. Investment and funding constraints

Main Challenges

13

Status of Intermodalism in the Region

SADC largest contributor to GDP is Mining, suited to rail

Economic growth for SADC requires development of export driven manufacturing sectors

Manufacturers require intermodal connectivity into global markets

Intermodal infrastructure is limited

Containerisation is the preferred mode of transport in international trade

It integrates SADC into global trade It is the foundation of logistics infrastructure

that will support the growth of the manufacturing sector

It creates seamless logistics corridors It provides for productive use of modes and

funds It provides ease of operational

integration with ports It will contribute to reducing the cost of doing

business

Status Response

It is the bridge between 3rd and 1st world competitiveness

14

Connection

InterchangeComposition Decomposition

Local DistributionNational/ Regional ‘Superhighways’Intermodal Terminals

Trans-Kalahari Logistics Corridor

Maputo Logistics Corridor

Freight

Modal Co-operation to create ‘Superhighways’ in the Region

Rail provides access to multi-country long haul routes

Road must create efficient local/ in-country networks

Ports are the global gateways

15

Weste

rn

Saha

ra

Mali NigerChad

BurkinaFaso

Central African Republic

Sierra LeoneLiberia

Democratic Republic of Congo

Tanzania

RwandaBurundi

Angola

Zambia

Malawi

Moza

mbiqu

e

Mada

gasc

ar

ZimbabweNamibia

Botswana

South AfricaSwaziland

Lesotho

Tunisia

Algeria

Morocco

BeninGhana

TogoIvoryCoast

CongoGabon

Equatorial Guinea

Nigeria

Cameroon

Libya Egypt

Mauritania

Sudan EritreaSenegal

Ethiopia

DjiboutiGuinea

Somalia

KenyaUganda

Weste

rn

Saha

ra

Mali NigerChad

BurkinaFaso

Central African Republic

Sierra LeoneLiberia

Democratic Republi

Algeria

BeninGhana

TogoIvoryCoast

CongoGabon

Equatorial Guinea

Nigeria

Cameroon

Libya

Mauritania

Senegal

Guinea

Central African Republic

Democratic Republic of Congo

Tanzania

RwandaBurundi

Angola

Zambia

Malawi

Moza

mbiqu

e

ZimbabweNamibia

Botswana

South AfricaSwaziland

Lesotho

ogo

CongoGabon

Equatorial Guinea

Nigeria

Cameroon

Ethiopia

So

KenyaUganda

Maputo

WalvisBay

SA TFR strategy to develop and optimise rail corridors with SADC partners

NamibiaTranshipment hub & Feeder for West AfricaTranshipment hub & Feeder Port for SADCEmerging contender for Feeder services

Competitive Port Strategies

Dar es Salaam

• Transhipment hub & Feeder Port for East Africa

• Transhipment hub & Feeder Port for SADC

Illustrative Competitor StrategiesStrategic position of LogisticsCompanies via (Commodity Trading, Shipping, Terminals, Rail, Road & Logistics Services)

Competitive Challenges: Conflicting Interests

Country Competitive Strategies

focus on lock-out through port and rail links into key

markets

International Consortiums

focus on lock-in strategies through

concession and funding

mechanisms

Angola

16

Strategic Approach to Regional Integration

Corridor Approach to Economic Growth Economic Development Nodes Transport Corridors Policy and Regulatory Implementation and Enforcement

Infrastructure Planning System wide Supply chain focus in support of Transport Corridors Holistic Approach, sum is greater than the individual parts

1

2

3 Funding

Corridor logic (address weakest link first) Optimal mix of private and public sector funding Shared benefits

Transnet Approach

18

Metamorphosis of Ports and Rail

Public Agencies

Independent Competing Businesses

Elements in a Logistics

System

Trade Enablers

•Central control•Publicly owned•Harbour Boards/ Authorities

•Autonomous ports

•Privatised/ quasi-privatised• Internal KPI’s

•Planning focus•Vertical & horizontal integration

Focus on improving

internalefficiencies

Focus on achieving network

efficiencies

Shifts in the role of Ports : From Traditional to Knowledge / Global Economy

Mid 80’s

Focus on achieving

global performance

•Economic performance

•Global competition

Late 90’s Current

Shifts in the role of Rail :

Rail is integral to the total ‘supply chain promise’PortRail MaritimeCustomer/

Terminal

From Stand Alone ConnectorsFrom Agriculture & Mining IntermodalFrom Engineering Run Customer Service Focus

19

Rail and Port as Integrated Systems

Infrastructure

RailService

Assets & Resources• Rolling Stock• People

Assets & Resources:Terminal Equipment

People

Terminal Service

Infrastructure

Rail – Port Corridor

NorthcorCapecorSouthcorNatalcorR.BaycorN.WestcorEastcorN.EastcorSishen-SaldanhaSentracorSouth East CorWestcorFreestateNamibia

Springfontein

Klerksdorp

Estcourt

Bethlehem

Volksrust

MakwassieOrkney

Welverdiend

Theunisen

Richmond

Uitenhage

Thabazimbi

WitbankRayton

Port Shepstone

Oudtshoorn

Postmasburg

Bethal

Roossenekal

Polokwane

Cato Ridge

Touwsrivier

Naboomspruit

Sishen

Saldanha

Cape Town

East London

Port ElizabethMosselbaai

Bitterfontein

Kraaifontein

Knysna

Patensie

Klipplaat

Rosmead

New Brighton Port Alfred

Somerset East

Noupoort

De Aar

Prieska

Upington

Kakamas

Worcester

Hutchinson

Beaufort West

Belmont

Hotazel

Warrenton

Pudimoe

Mafikeng

Coligny

Bloemfontein

Aliwal North

Dreunberg

Koffiefontein

Stormberg

Barkly East

Blaney

Umtata

Fort Beaufort

Maseru

Sasolburg

Lichtenburg

Harrismith

Bergville

Harding

Durban

UnderbergStanger

Richards Bay

Vryheid

Ladysmith

Graskop

MachadodorpBelfast Komatipoort

Phalaborwa

Musina

MakhadotSoekmekaar

Nylstroom

Pretoria

Ellisras

Northam

EmpangeniKimberley

Copperton

Beit Bridge

Pietermaritzburg

Nakop

Erts

Rustenburg

Hoedspruit

Dundee

OgiesKrugersdorp

Golela

Queenstown

KroonstadNewcastle

Sentrarand

Bellville

Liebendal

Kalbaskraal

Boksputs

Calvinia

Vryburg

Ottosdal

VermaasErmelo

Atlantis

George

Avontuur

Sannaspos

Pyramid South

Marble HallPienaarsrivierSteelpoort

Vereeniging

Danskraal

Cedara

Kokstad

Piet Retief

DelmasKaydale

NelspruitKaapmuiden

Tzaneen

Pretoria-North

PendoringMacmullinsMagaliesburg

Marseilles

Gunhill

Burgersdorp

Sterkstroom

Stutterheim

Maclear

CradockCookhouse

AlicedaleDal Josafat

J’burg

Bredasdorp

Overborder corridors

Strategic corridors linking ports, the hinterland and SADC routes, benefiting from integration and intermodalism

21

Creating Integrated Rail/ Port Freight Corridors

Fit-for-purpose, efficient Transport Linkages Integrate Operations, Planning, and Resource utilisation

of Ports and Rail Macro and Micro Interface Port / Rail structures for

operations and infrastructure maintenance Integrated Port/ Rail Expansion and Investment

Programmes In-port Rail Enhancement Projects i.e. Kingsrest rail

stack in Durban Joint Industry and Customer Consultation Joint Benefits and Performance tracking No “Us and Them” – Teamwork is the key

22

Critical Success Factors for Rail/Port Integration

Services• Joint Customer/ Industry strategies• Preferential access for Rail into terminals• Information sharing and planningAssets and Resources• Quick turnaround of rolling stock• Joint efficiency targets • Joint investment planning

1

2

3Infrastructure• Modernised, well maintained rail infrastructure• Joint developmental objectives incl. spatial development • Integrated investment cases

23

Africa: Strategic Approach

ProtectCorridors

GrowVolumes

Reduce the cost of logistics(20-25%) for SADC

countriesInfluenced by global trade flows and industry developments

•Uniformity of Service – Reliability & Predictability

•Corridor throughput optimisation and management

– Migrate to block trains– Load consolidation at Ndola and Lusaka– Manage wagon turnaround– Make services customer friendly

•Integrated planning and operations with Ports•Alliances

– Operator focus for joint planning and execution •Supply of Resources

• SADC– SARA alignment on marketing

strategy– Bilateral and Interface

Agreements with overborder railways

– Similar Operating model on all corridors

– Position SARA in the SADC trade protocol

– Joint alignment at CEO level• Beyond SADC– Selective involvement

augment to SA/ SADC business

Weste

rn

Saha

ra

Mali NigerChad

BurkinaFaso

CentralAfricanRepublic

SierraLeoneLiberia

DemocraticRepublicofCongo

Tanzania

RwandaBurundi

Angola

Zambia

Malawi

Moza

mbiqu

e

Mada

gasc

ar

ZimbabweNamibia

Botswana

SouthAfricaSwaziland

Lesotho

Tunisia

Algeria

Morocco

BeninGhana

TogoIvoryCoast

CongoGabon

EquatorialGuinea

Nigeria

Cameroon

Libya Egypt

Mauritania

Sudan EritreaSenegal

Ethiopia

DjiboutiGuinea

Somalia

KenyaUganda

Weste

rn

Saha

ra

Mali NigerChad

BurkinaFaso

CentralAfricanR e p u b l i c

SierraLeoneLiberia

D e m o c r a t i c R e p u b l i

Algeria

BeninGhana

TogoIvoryCoast

C o n g o

G a b o n

E q u a t o r i a l G u i n e a

Nigeria

C a m e r o o n

Libya

Mauritania

Senegal

Guinea

CentralAfricanR e p u b l i c

D e m o c r a t i c R e p u b l i c

o f C o n g o

T a n z a n i a

R w a n d a

B u r u n d i

A n g o l a

Z a m b i a

M

ala

w

i

Mo

za

m

biq

ue

Z i m b a b w e

N a m i b i a

B o t s w a n a

S o u t h A f r i c a

S w a z i l a n d

L e s o t h o

ogo

C o n g o

G a b o n

E q u a t o r i a l G u i n e a

Nigeria

C a m e r o o n

Ethiopia

S o

K e n y aU g a n d a

Weste

rn

Saha

ra

Mali NigerChad

BurkinaFaso

CentralAfricanRepublic

SierraLeoneLiberia

DemocraticRepublicofCongo

Tanzania

RwandaBurundi

Angola

Zambia

Malawi

Moza

mbiqu

e

Mada

gasc

ar

ZimbabweNamibia

Botswana

SouthAfricaSwaziland

Lesotho

Tunisia

Algeria

Morocco

BeninGhana

TogoIvoryCoast

CongoGabon

EquatorialGuinea

Nigeria

Cameroon

Libya Egypt

Mauritania

Sudan EritreaSenegal

Ethiopia

DjiboutiGuinea

Somalia

KenyaUganda

Weste

rn

Saha

raWe

stern

Weste

rn

Saha

ra

Saha

ra

Mali NigerChad

BurkinaFaso

CentralAfricanRepublic

SierraLeoneSierraLeoneLiberiaLiberia

DemocraticRepublicofCongo

Tanzania

RwandaBurundi

Angola

Zambia

Malawi

Malawi

Moza

mbiqu

e

Moza

mbiqu

e

Mada

gasc

arMa

daga

scar

ZimbabweNamibia

Botswana

SouthAfricaSwaziland

Lesotho

Tunisia

Algeria

Morocco

BeninGhana

TogoIvoryCoast

CongoGabon

EquatorialGuinea

Nigeria

Cameroon

Libya Egypt

Mauritania

Sudan EritreaSenegal

Ethiopia

DjiboutiGuinea

Somalia

KenyaUganda

Weste

rn

Saha

raWe

stern

Weste

rn

Saha

ra

Saha

ra

Mali NigerChad

BurkinaFaso

CentralAfricanR e p u b l i c

SierraLeoneSierraLeoneLiberiaLiberia

D e m o c r a t i c R e p u b l i

Algeria

BeninGhana

TogoIvoryCoast

C o n g o

G a b o n

E q u a t o r i a l G u i n e a

Nigeria

C a m e r o o n

Libya

Mauritania

Senegal

Guinea

CentralAfricanR e p u b l i c

D e m o c r a t i c R e p u b l i c

o f C o n g o

T a n z a n i a

R w a n d a

B u r u n d i

A n g o l a

Z a m b i a

M

ala

w

i

M

ala

w

i

Mo

za

m

biq

ue

Mo

za

m

biq

ue

Z i m b a b w e

N a m i b i a

B o t s w a n a

S o u t h A f r i c a

S w a z i l a n d

L e s o t h o

ogo

C o n g o

G a b o n

E q u a t o r i a l G u i n e a

Nigeria

C a m e r o o n

Ethiopia

S o

K e n y aU g a n d a

Infrastructure

TFR Rail Service

Rolling Stock & Equipment

Infrastructure

Railway 1 Service

Rolling Stock & Equipment

Infrastructure

Railway 2 Rail

ServiceRolling Stock & Equipment

Infrastructure

TFR Rail Service

Rolling Stock & Equipment

Infrastructure

Railway 1 Service

Rolling Stock & Equipment

Infrastructure

Railway 2 Rail

ServiceRolling Stock & Equipment

Service Focus Geographic Focus

Objectives

24

Mala w

iZambia

BotswanaNamibia

South AfricaM

ocam

biqu

e

United Republic of Tanzania

Democratic Republic of Congo

Zimbabwe

Angola

Swaziland

•80% of rail freight in SADC is northbound

• 70% of these flows return empty

• Rail has SARA ‘corridor’ agreements

• TFR focuses on integration of strategic corridors through integrated rail operations with SARA and Concessionaires

Forecast Rail and Corridor Growth in SADC (mt)

Key opportunities:

• Intermodal• Fuel• Sulphuric Acid• Maize

ZIMBABWE 2009/ 2010 2010/ 2011 2014/ 2015Fwd 0.029 0.015 0.020Rec 0.227 0.119 0.203

SWAZILAND 2009/ 2010 2010/ 2011 2014/ 2015Fwd 0.095 0.093 0.113Rec 0.222 0.155 0.203

NAMIBIA 2009/ 2010 2010/ 2011 2014/ 2015Fwd 0.101 0.048 0.070Rec 0.411 0.174 0.221

BOTSWANA 2009/ 2010 2010/ 2011 2014/ 2015Fwd 0.490 0.272 0.384Rec 0.641 0.872 1.447

ZAMBIA 2009/ 2010 2010/ 2011 2014/ 2015Fwd 0.028 0.001 0.001Rec 0.208 0.096 0.141

DRC 2009/ 2010 2010/ 2011 2014/ 2015Fwd 0.028 0.001 0.001Rec 0.028 0.000 0.000

MOZAMBIQUE 2009/2010 2010/2011 2014/2015Fwd 0.083 0.114 0.078Rec 2.884 3.983 10.000

Africa TFR (Mt)

’09/10

’10/11

’11/12

Forwarded

1.03 0.6 0.8

Received 4.7 5.4 6.7

25

Transnet participation in mechanisms to promote Regional Integration between Rail and Ports

National Infrastructure PlanNational Infrastructure Plan

National Ports PlanNational Ports Plan National Rail PlanNational Rail Plan National Pipeline PlanNational Pipeline Plan

Methane-rich GasMethane-rich Gas

Crude OilCrude Oil

Aviation Turbine FuelAviation Turbine Fuel

Refined Productsincl. NMPP

Refined Productsincl. NMPP

Gauteng Freight RingGauteng Freight Ring

Central Freight RingCentral Freight Ring

Inland CorridorsInland Corridors

Port CorridorsPort Corridors

Hubs and TerminalsHubs and Terminals

Rolling StockRolling Stock

Saldanha BaySaldanha Bay

Cape TownCape Town

Port ElizabethPort Elizabeth

NgquraNgqura

East LondonEast London

DurbanDurban

Richards BayRichards Bay

Mossel BayMossel Bay

Inter-operabilityInitiatives30 year Infrastructure Plan SADC Initiatives

SARA

UAR

UIC

Operations & Information Technology

Human Resources

Infrastructure & Equipment

Marketing

Includes SADC

corridors

26Source : Transnet Corporate Plan

Rail and Ports: Integrated Capital Investments

11/ 12

3,892

13,331

12/ 131,762

9,480

13/ 14

12,841

21,912

09/ 10

11,321

19,442

10/ 11

9,156

16,336

Annual Capex (Rbn)

Sustaining vs Expansion (3yrs)

58%42%

SustainingExpansion

9,0718,121

7,180

9,4397,718

54%

TFRR43.5bn

3%

TRER2.1bn

20%

TNPAR16.3bn

8%TPTR6.3bn

14%

TPLR11.1bn

1%

OtherR1.2bn

Capex per Division

27

Conclusions

1. High potential growth in the Region2. Region has to promote Intermodalism 3. Rail and Port Infrastructure developed, and

developing to enable trade flows, however not in a co-ordinated manner

4. Rail and Ports not managed as strategic resources within a broader logistics system

5. Aligned Public and Private partnerships 6. Regional development requires:

Joint Planning, Investment and Funding Integrated Operating Systems The “Will to make it Work”

Thank You