Transnet National Ports Authority is the custodian of the ports, rail and pipeline infrastructure in South Africa. Krish Reddy (General Manager – Group Planning) from Transnet explains the role of this crucial parastatal in the port and corridor development, the cooperation with the Netherlands and the South African inclusion of the BRICS. Enjoy reading this interview.
What is the current positioning of Transnet and what are your core tasks?
Transnet is the custodian of the ports, rail and pipeline infrastructure in South Africa. Our core task is to provide freight handling capacity ahead of demand and reduce the cost of business in South Africa, by reducing logistics costs. If costs of transport are reduced, it makes South Africa more competitive, it stimulates economic growth for job creation, poverty reduction, which are the core objectives of the government.
Transnet has undergone a major transformation over the past years. What will be the focus for the foreseeable future?
Our main focus now is our market demand strategy, which is the strategy covering the next seven years and is focused on major capital investment in the freight network in the port, rail and pipe line of over 300 billion ZAR worth of investment. Over the next seven years this is going to be funded from Transnet’s balance sheet as well as from the private sector.
Firstly, the focus of this is to create network capacity in order to stimulate economic growth. It is to create general freight capacity which is the part of our business that supports the manufacturing sector. We want to grow this sector as this is the part of the economy that creates the most jobs.
The other major objective is to get a modal shift from road to rail; this is the way forward. This is better for the environment and more cost beneficial. This is also very important, as we have been losing market share in the manufacturing sector, and now more is transported over road than rail. Our major problem is that we do not have enough capacity, not so much on infrastructure, but rather on the rolling stock.
Transnet is responsible for many transport links such as road, rail, air and ports. How do you optimalise and integrate connections between these modalities?
Transnet is not so much involved in road and air transport, however we do cooperate a lot with road logistics companies. Obviously our focus is on rail and ports. In terms of working together, integrating, optimizing, we work on a common basis in terms of demand so we all agree on the outlook.
By looking at this, we take a corridor approach, whereby we look at the full logistics chain from port right to the customer. We try to integrate our planning with that of the road authorities and as a result of that, optimize the entire corridor.
On the Transnet side, we offer customers a rail and ports one-stop-package service in one commercial contract. So, from the ports the goods will be handled over to rail and then delivered to for instance to a hub in Gauteng. From there, collaboration is required still with the road carriers to deliver to the customers. This is especially a challenge when it comes to manufacturing goods, as road plays a role for short haul distances.
When it comes to bulk, it is much easier, as the rail network transports the cargo right to the customer and we manage the entire logistics link. Especially in the transport of manufacturing goods, there is a lot of room for optimization and integration in terms of communication and management systems, such as the development of a single portal for customers.
You have been working closely with the Dutch government and companies, many of which have joined the 2g@there Port & Corridor Cooperation, to exchange knowledge and explore mutual business opportunities. What possibilities do you see with regards the cooperation with the Netherlands?
Opportunities for Dutch businesses will be in a number of areas. Firstly, on the port infrastructure development side. When it comes to the development of new technologies, with a significant focus on green technologies, there is an opportunity for Dutch companies to make ports more self-sustainable.
Secondly, there is room for opportunity in the development of corridors. For instance, the Port of Amsterdam has great experience in linking the port with the inland logistics network. In the third place, we can learn a lot in the area of integration and bringing all stakeholders together, working towards a common goal together and putting the necessary management systems in place. For instance, in terms of Special Economic Zones development. As SEZ’s form part of the DTI, and Transnet governs the ports, optimization of the cooperation between these entities would very much improve the performance of these SEZ’s.
What, in your eyes, is the most exiting business development in the field of port and hinterland, which both South Africa and the Netherlands should focus on?
I believe that would be the Durban-Gauteng corridor. Over a trillion Rand is required over the next twenty years to invest, including expanding the Durban port, building a new port and significant expansions in the rail corridor and obviously optimizing. Besides the capital investment, over 800 hectares is needed for the back-of-port activities, where we can do all the logistics in assistance of the Port of Durban.
Another interesting opportunity would be the development of short sea shipping in Africa. Big vessels from for instance Europe and Asia, ideally want to stop at one port in southern Africa. However, on the African continent, we only have a few lines shipping from one port to another along the coast-line to distribute goods. This is huge opportunity for shipping lines.
Last but not least, how is Transnet leveraging of the inclusion of South Africa to the BRICS countries? Did this open up a new window of opportunities?
Yes. South Africa has indeed improved the level of cooperation and increased the trade with the other BRICS countries. From a logistics perspective, we see a large opportunity for South Africa to be the intercontinental trans-shipment hub and a hub for southern Africa for the other BRICS countries, as South Africa is geographically situated in between them. For instance, looking at the link of trade between Brazil and South East Asia, South Africa is well located in the middle of this trade route.