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Rail : The Track to Efficiency
Transport Forum
Special Interest Group : 4 June 2015
PAGE
Contribute to RSA Competitiveness by Reducing the Cost of Logistics
Deregulated Freight Transport and
Logistics Industry – Modal Imbalance
: Focus
Road to Rail shift – Efficient Operations
Modal Collaboration and Intermodalism
Enabling the shift from a mining-based
to a networked economy
Enabling global competitiveness of
shippers and downstream industries
Preparing for mineral beneficiation
development
Providing capacity against long-term
investment returns
Rail Turnaround on Track
Total logistics cost (2012)* = 12.8% of GDP
Transport costs are high – driven by high fuel
prices. Rail contributes only ~11% to the
transport costs
Inventory Carrying Cost
12%
Mngmnt & Admin 12%
Warehousing 15%
Transport
61%
* 9th Annual State of Logistics Survey
PAGE
MDS – Turnaround driving volumes back to rail
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1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
1986 : Decline in volumes following deregulation
1990s : Lack of investment compromises service and leads to less utilisation of Rail - loss of market share to Road
Business in decline – loss of skills and market reputation
2000s : Inadequate and ageing capacity. Unable to capitalise on economic growth and commodity boom
2005 : Re-engineering Programmes to improve efficiencies and refocus the business
2009 : Economic Recession interrupts growth path – Affordability constrains capacity creation
2012 : Market Demand Strategy
2012 : Market Demand Strategy
Decisive action leads to Rail Turnaround
Road to Rail shift through General Freight growth
General Freight Million Tons
PAGE 3
To create capacity ahead of demand
To maintain, upgrade and modernise the rail system
Market Demand Strategy
Market Development
To improve performance productivity and operational efficiency
To contribute to a reduction in the cost of logistics
Operational Efficiency
Capital Investment
To develop skills
To create sustainable employment opportunities
To transform the business to a high performance culture
People
To build market reputation & credibility
To increase market share
To develop a customer centric culture
To build and maintain a healthy and safe working and operations environment
Safety
To develop an integrated Regional rail system with economic growth opportunities
Regional Integration
Goal : Top 5 Railway - Financially sustainable, Integrated Logistics Service Provider, Innovative, Employer of Choice, World Class Customer Service, Gold Standard Operations and Capital Execution
Core Strategies and Objectives
Core Strategies
Objectives
PAGE
Growth through investment and efficiencies
Back to Rail - Capturing Growth Opportunities
Operational Efficiency Capital Investment
Improved Operations and Train Planning
Bimodal Technology Standardise systems Entrench operational
discipline and adherence to operating procedure
Develop rail operational skills
Operations philosophy to optimise existing assets
Detailed capacity planning: Wagons Locomotives Network slots
New rail technologies & modernisation of Locos, Wagons and Network
Strategic Expansion Develop Engineering &
Project Management Skills
Invest to maintain the system and create new capacity
Market Responsiveness
Reliability On Time In Full
Productivity Partnerships for logistics solutions
Superior Customer Service
PAGE
Capital investment analysis
5,7% +11,8%
2015
33,6
2014
31,8
2013
27,5
2012
22,3
2011
21,5
Port
containers 9%
Export
iron ore 1%
Bulk 3%
Export coal
12%
GFB 60%
Other
Piped products
8% 5%
43%
57%
Expansion vs replacement
Capital investment by commodity R billion
Replacement: R19,0 billion
Expansion: R14,6 billion
PAGE
Efficiencies achieved since start of Locomotive Modernisation Programme
6
Loco Type
Corridor / Flow Key Commodities Efficiency Improvements
19E Export Coal heavy haul line Coal Locomotives cycle time improved from 58 to 41 hours
15E Export Iron ore heavy haul line
Iron Ore Improved number of locomotives per 342 wagon train from 9 to 6 locomotives per train with better energy usage
50 “Like New”
Steelpoort – Ermelo Lephalale - Thabazimbi
Chrome / Ferrochrome Coal
Sustained current flows with better delivery rate
43D
Phalaborwa – Richards Bay Magnetite; Rock Phosphate
Wagon cycle time improved from 84 to 56 hours
Eskom Power Stations
Coal
Ensured Camden, Thuthuka and Grootvlei power stations are provided with uninterrupted train service
Sishen – Saldanha Iron Ore Reduction in diesel fuel consumption
20E Hotazel – Port Elizabeth Manganese Wagon cycle time improved from 90 to 65 hours
AMSA Flows (ex-Sishen) Iron Ore Sustain AMSA Iron Ore flows
Reliable locomotives – a primary element in the system - contribute to improved cycle times. This in turn raises service reliability and market capture prospects
PAGE
Improved Cycle Times
7
Corridor
Locomotives Wagons
Previous hours
Achieved hours
% Improvement
Previous hours
Achieved hours
% Improvement
Phalaborwa – Richards Bay 96 56 42 142 96 32
Coal RBCT 58 41 29 65 48 26
Manganese PE 90 66 27 120 90 25
North - South Corridor 160 72 55 720 336 53
Efficiencies achieved on key corridors
PAGE
A railway fit for the future is a responsive railway
A responsive railway meets the unique logistics
needs of the economy
▪ Optimally maintains, utilises and densifies
existing infrastructure
▪ Invests to create capacity ahead of demand
▪ Reduces the cost of logistics
▪ Reduces the cost of externalities to the
economy
▪ Strives for regional connectivity
▪ Attracts and retains rail friendly traffic on rail
▪ Collaborates for intermodal solutions 8
A sustainable railway contributes to the competitiveness of a developing nation
PAGE 9
“The recent upswing in the rail
share has occurred more rapidly
than anticipated. The modal
shift objectives of increasing
bulk exports of coal and iron
ore; recapturing both export and
domestic bulk markets for other
ores; and making first
attempts to increase the high-
value and corridor market
shares are beginning to bear
fruit. The modal shift strategy of
increased rail investment and
improved service levels should
receive further support”
Source: 9th Annual State of Logistics Survey for South Africa 2012
Conclusion Accelerating Rail Market Share Growth
20 Thank You
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