Transnet’s four-point growth strategy
Having completed our four-point turnaround strategy, Transnet has just embarked on a similar process aimed at taking the next step – a four-point growth strategy. During the turnaround strategy, our intention was to ensure our foundations were well set. Now, we want to build on those foundations.
The headline feature of our growth strategy is to invest R80 billion on revitalizing and extending our infrastructure over the next five years. But in order to do so we need to ensure that we not only spend, but spend wisely. Consequently, our growth strategy is focused on the following four aims:
1: Re-engineer integration, productivity and efficiency
The pillar seeks to develop cross-divisional operational integration to ensure a more seamless freight management system. In order to do so, we have developed priority corridors which are geographical regions, each with their own specific needs and special requirements. This heading also includes more efficient asset utilisation and better maintenance of existing assets.
2: Ensure capital optimisation and effective financial management
This pillar is aimed at developing our financial “growth” expertise, through developing a effective funding strategy and capital portfolio optimisation. We also intend integrating capital, operations and financial customer planning.
3: Developing our risk management systems, including safety and governance
A growth strategy entails increased risks, and this pillar is aimed at addressing these risks on all levels from the personal to the operational. We aim to improve our safety performance, comply with the highest standards of corporate government, extend our enterprise risk management and embark on an enterprise performance management system
4: extending our human capital execution.
During our turnaround phase, human capital development was emphasised, and this continues during our growth phase. We intend to accelerate the implementation of our Human Capital strategy, including the creation of a talent management system. We intend to develop a remuneration system which is based on performance against strategic outcomes and develop a culture of value creation.
Our five year capital investment plan breaks down into three major investment areas.
Rail: We intend spending R40,3bn. The major expenditure items will be:
· The combined acquisition of 405 locomotives for coal, iron ore, and general freight lines to improve the reliability of service,
· Increase current capacity from approximately 80 million tons per annum (mtpa) to 105 mtpa. This will include increasing the coal line capacity expansion to 78mtpa and the iron ore line 3 phase capacity expansion from 41mtpa – 47mtpa.
Ports: We intend spending R26bn. The major expenditure items will be:
· Increase container capacity by 3.8 million TEUs, or normal sized containers, per annum
· Additional bulk and break-bulk capacity – 6mtpa and 4.35mtpa respectively.
· Increase automotive capacity for additional 180 000 units per annum.
· Durban Entrance Channel Widening, ship to shore crane replacements and the reconstruction of Quay walls at Maydon Wharf.
· Saldanha iron ore terminal capacity expansion to 47mpta.
Pipelines: We intend spending R12bn.
· The major project will be the expansion of Multi- Products Pipeline (NMPP) from Durban to Gauteng to provide a capacity of 8,7 billion litres per annum from 2010.
Our growth strategy is driven not only by our own desire to grow, but also by an expectation of growth that emanates from Transnet’s major customers. Notwithstanding a possible downturn over the next few years, all of Transnet’s major operation division anticipate major growth over the longer term. Container usage and ore exports are among the major areas were significant growth is anticipated, but pipeline usage and domestic transport of minerals and finished goods are also currently on an upward trend.
A major part of our growth strategy exists in the Vulindlela re-engineering initiative. The aim of this programme is to reduce transport costs associated with doing business from the current 14% of gross domestic product to 8% of GDP.