Even though it will be a case of “all hands on deck to do more with less”, everything is on track at Transnet ahead of a challenging 2016, said Transnet Port Terminals (TPT) CEO Karl Socikwa during a year-end business-to-business breakfast discussion in Durban earlier this week.

Highlighting the success of Transnet’s Market Demand Strategy (MDS), which had seen an investment commitment of more than R302-billion over seven years, Socikwa noted that there were stringent criteria for obtaining the necessary funding for the State-owned rail utility to roll out its infrastructure plans.

“We have to make sure that we are running a financially sustainable company. You don’t want to run a State enterprise that has to beg for assistance from the State. The State needs to spend on service delivery and not shore up badly run State enterprises,” he stated.

To do that, he said it was necessary to keep an eye on the business fundamentals and ensure that performance and return on assets were acceptable in the marketplace.

“It is extremely important that, when running a business – and particularly a capital-intensive one such as ours – that you able to [generate] confidence in the market. We are finding a number of companies’ shareholders going back to the State for assistance.”

Socikwa added that when it comes to fundamental things that the investment community is looking for, “it all comes down to not taking your eye off the ball”.

“If you do [the fundamental] things well, you can guarantee yourself as an [investment] option. It’s all about being out there. Funders have a number of different places where they can put their funds. They can put it in your business if they believe you are doing a good job and [producing] the returns,” he noted.

Socikwa said he was aware of the impact TPT had on the cost and ease of doing business in South Africa and said it was important to partner with customers to structure packages that would keep volumes flowing through South African ports.

“Everyone is touched by what we do. We have to [do business] with a sense of responsibility and accountability to the country and to the economy,” he said.

When asked about TPT’s stance on doing business with China, Socikwa replied that, because China was a major economy and a big player in the global market, “anyone who doesn’t take a relationship with China seriously is not being too smart.”

He added that, as TPT was a freight and logistics company, a large portion of minerals passing through TPT terminals were destined for China, which made both a direct and an indirect relationship essential. Socikwa said he hoped that the latest agreements with the Chinese would open up volume streams and new avenues for local businesses in South Africa that were using the ports.

However, Socikwa also cautioned that it was necessary to build relationships with “your eyes wide open” and said it was essential that participants across the South African value chain were smart and astute dealmakers who went after deals that worked for them. 

Meanwhile, Socikwa admitted that TPT has seen “some softening” in terms of material volumes at South African ports, especially when it came to bulk exports such as iron-ore, manganese and granite. 

He said TPT was looking to reverse that trend and identify inefficiencies that could create bottlenecks. He added that there was excess container capacity, which required TPT to do “things more innovatively”.