ON THE TRACKS The success of Transnet’s road-to-rail programme has been confirmed by the company’s growth in revenue and profit
State-owned logistics and rail company Transnet has increased its capital investment by 66.8% to R18.7-billion in its road-to-rail programme aimed at transferring the bulk of the country’s cargo from the road network to the rail network.
The success of the road-to-rail programme has been confirmed by the company’s growth in revenue and profit over the six months to September 30, driven by the growth in volumes of automotives and containers on rail.
Revenue for the period increased by 6.4% to R30.3-billion. The biggest driver was a 14.3% increase in automotive and container volumes on rail and a 13.2% rise in minerals and chrome volumes.
The increase in containers on rail signals rail track arm Transnet Freight Rail’s (TFR’s) success in migrating rail-friendly cargo off the country’s roads.
Containers on rail have grown 109% over the period, which took about 525 000 trucks off the country’s roads per year, as well as recording 127 000 t in carbon emission reduction. The focus is on efficiency improvements, joint planning, better communication with customers and proper focus by TFR on the segment through the creation of a business unit to be called Containers & Automotive.
The coal line increased volumes by 4.3% to 43.7-million tonnes, thanks to improved wagon cycle time and other efficiency improvement initiatives, while iron-ore and manganese exports rose 4.8% to 32.9-million tonnes.
At the ports, Transnet Port Terminals continued to record steady improvements in productivity with ship working hours (SWH) improving from 49 hours to 50 hours at the Cape Town container terminal and 40 hours to 42 hours at the Port of Ngqura.
SWH is a key consideration for shipping lines and measures the number of moves on a vessel per hour. The moves per hour determine ship turnaround time.
The additional volumes across the business drove Transnet’s key measure of profitability, earnings before interest, taxes, depreciation and amortisation, 6% higher, to R12.8-billion. The growth was achieved despite a 6.7% rise in operating costs to R17.5-billion, driven by higher electricity and fuel prices. However, the impact of the rising costs was mitigated by numerous companywide cost management initiatives that yielded R1.3-billion in savings.
Transnet’s unprecedented programme to expand and revamp South Africa’s port and rail infrastructure continues to break records, with spending increasing to R18.7-billion and taking the total spend to R77.9-billion over the last three years. The rise in capital expenditure was mainly the result of the investment in locomotives to be used in the export coal line and general freight business.