TRANSNET PORT TERMINALS

How to develop a successful strategy to enable more efficient port operations - Willie Coetsee, Senior Strategist, Transnet Port Terminals

25 June 2013

TABLE OF CONTENTS

• BRICS

• Transnet State Owned Company Limited

• Africa Strategy

• New Strategic Direction

Source of picture: www.newstimeafrica.com

• Market Demand Strategy

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Supporting

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Capital Projects Transnet

Foundation Property

Transnet Pipelines

(TPL)

Transnet Engineering

(TE)

Transnet Freight Rail

(TFR)

Transnet Port

Terminals (TPT)

Transnet National

Ports Authority

(TNPA)

Pipelines Rail Ports

• 16 Cargo Terminals operating across 7 SA ports

• Revenue 7 bn

• Assets R13.5 bn

• 6 324 employees

• 8 Commercial ports along 2943km of coastline

• Revenue R8.4bn

• Assets R56 bn

• 3558 employees

• 20 500 km of railway track

• 182 million tons of freight

• General freight & 2 heavy haul export lines

• Revenue 22.2 bn

• Assets R54.7 bn

• 24 177 employees

• Support TFR for rolling stock and TPT for lifting equipment maintenance

• Revenue 9.8 bn

• Assets R8.6 bn

• 13 020 employees

• 18 billion litres of petroleum products and gas through 3 000 km of pipelines, mainly to Gauteng

• Revenue 1.3 bn

• Assets R20.1 bn

• 600 employees

• R300 billion of capital investments over next 6 years

• CSI in Education, Health, Sport, Arts & Agriculture

• Property Management

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Shortest Trade Route between Shanghai and Santos is via South Africa 10,972nm = 21 days @ 21 knots via Panama Canal12,967nm = 26 days + transit fee via Suez Canal 13,544nm = 28 days + transit fee Source: http://www.searates.com/reference/portdistance/

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Lome (Togo)

Port Louis (Mauritius)

Toamasina (Madagascar)

Lagos (Nigeria)

Cotonou (Benin)

Walvis Bay (Namibia)

Tema (Ghana)

Cape Town (SA)

Dar es Salaam (Tanzania)

Tanga (Tanzania)

Mombasa (Kenya)

Nacala (Mozambique)

Beira (Mozambique)

Maputo (Mozambique)

Richards Bay (SA)

Durban (SA)

East London (SA) Ngqura (SA)

Pointe Noire (Congo)

Douala (Cameroon)

Source: Team analysis

Port Elizabeth (SA)

Lobito (Angola)

Luanda (Angola)

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Matadi (DRC)

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Transnet Strategy - Journey to Date

Pre 4-point Turnaround Plan

▪ Financial instability ▪ Volatile earnings

and cash flows ▪ Declining

operational performance

▪ Possibility of Concessioning

Pre 2005 ▪ Laying foundations for operational performance through investment and efficiency improvements

▪ Robust governance and supporting environment

• Disposal of non core assets

• Reignite investment

4-point Turnaround Plan

2005 - 2007 ▪ Strong financial results

▪ Focused investment to eliminate backlog; investment lagging volumes

▪ Operational stability ▪ Effective cost

control and reduction of cost base

▪ Integrated commercial management

▪ Strategic asset/ liability management

▪ Sound funding strategy

Quantum Leap Strategy

2008-2011

Market Demand Strategy (MDS)

2012-2019

▪ Continued financial performance

▪ Investment focus on expanding capacity to meet market demand

▪ Capture operational efficiencies

▪ Expand funding sources

▪ Accelerate South Africa’s economic transformation by support of the NGP

Financial stability Operational stability

Growth Source: Transnet Corporate Plan

•Unconstrained Customer demand

•Improved Vessel turnaround time

•Process improvement

•Potential identification •Understanding the

customers’ business •Customer Interaction

•Personal Visits •3rd Party

Interviews •Focus Groups •B2B Inter-action •CLOF, SAASOA,

SAAFF

•Collaborate with the Customer

•Market Demand Strategy •Focus on new

capacity •New Methodology - ECICS

•Communicate with the Customer

•Infrastructure Investment

•People development •Business Process

Improvement

Idea

Diagnostic

Strategy Formulation

Roll out

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9 Source: Africa Team analysis

Market Demand Strategy - 2012 to 2019

• R300bn Transnet-wide capital investment

programme over next 7-years

• Expanding rail, port and pipeline infrastructure

• Increase in capacity to meet market demand

• Continued financial stability and strength

• Significant productivity and operational efficiency

improvements

• Shift from road to rail – reducing the cost of

doing business and carbon emissions

• Enabling economic growth

• Job creation, skills development, localisation,

empowerment and transformation opportunities

• TPT will invest R33bn

Divisional split (Rbn)

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33

47

4

201 4

Other

TPL

TPT

TNPA

TRE

TFR

Other

29% Maintain

71%

Expand

Change in emphasis

10 Source: Africa Team analysis

New Strategic Direction - Supply Chain Integration & Global Expansion

Integration

into the

Supply

Chain

Global

Operations

Terminal

Operations

Efficient

Operations

Innovative

Value Adding

Services

Expanding the

Horizon

11 Source: Africa Team analysis

Defend & Grow - Strategic Interventions in 4 Areas

Terminal

Operations

Customer Service

Grow and

defend local turf

Expand into

logistics services

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TPT could expand its active role by forward and backwards integration into the transportation value chain

Potential businesses areas to support a fully integrated supply chain solution are:

1) Inland depots/external distribution warehouses (Value Adding Services)

2) Container lifecycle management (Pre Trip Inspection, Repairs, Modifications)

3) Cargo support (Logistics, SEZ’s)

4) Equipment Maintenance (In-sourcing, Outsourcing to other clients/countries)

5) Private Sector Participation

6) Short Sea Shipping

Integration into the Supply Chain - Forwards & Backwards Integration

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Africa Strategy - The AU has Identified 14 Corridors as the Main African Corridors that Needs Development

1 Kenitra-Casablanca Corridor

2 Greater Cairo Region

3 The Dakar-Touba corridor (Touba-Mbackѐ)

4 The Greater Ibadan-Lagos-Accra (GILA) urban corridor

5 The great Haoussa-Yoruba-Anshanti city triangle (GHAYA-CT)

6 The Emerging Luanda-N’Djamena corridor

7 The Kampala-Entebbe corridor

8 Nairobi metropolitan region

9 Walvis Bay corridor

10 North South corridor (Cape Town-Johannesburg-Harare-Lusaka-Dar es Salaam)

11 The Maputo-Gauteng development corridor

12 Durban development corridor

13 Beira corridor

14 Maputo-Limpopo corridor

Source:E&Y Report – Time for Africa

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11 14

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