State-owned freight logistics group Transnet says it will begin executing its ‘Africa Strategy’ during the current financial year, having already grown cross-border revenues from R1.5-billion in 2013/14 to R2.6-billion in 2014/15.

The company last week distributed its integrated annual and sustainability reports, together with financial statements, showing that cross-border revenues remained only a modest contributor to overall group revenues, which rose 8% to R61.2-billion in 2014/15. Transnet’s profits for the year increased to R5.3-billion from R5.1-billion.

As a percentage of revenue, the contribution of cross-border activities grew from 2.6% in 2014 to 4.2% in 2015.

The intention, however, is to continue to extend the activities of the business beyond South Africa and to emerge as a “leading logistics service provider in sub-Saharan Africa”, in line with a strategy adopted by the group’s board in March 2014.

The South African group has identified four revenue drivers arising from regional integration, including:

• increased rail volumes on the Maputo, East–West and North–South corridors;
• the extension of transshipment hub services to East and West Africa;
• increased sales of rolling stock and associated rail maintenance services; and
• a geographic expansion of port, rail and pipeline operations through concession agreements and management contracts.

By 2030, the group plans to increase its number of satellite offices in the region from 4 to 11, as well as its rail-corridor coverage and shipping feeder network.

“Transnet has positioned the ports of Durban and Ngqura as transshipment hubs servicing East and West Africa,” the report states, noting that transshipment containers already account for 22% of total container throughput at its South African port terminals. Total container volumes grew by 1.5% to 4.6-million twenty-foot equivalent units in 2014/15.

Transnet will pursue further transshipment opportunities with ports in Angola, Namibia, Mozambique, Mauritius, Tanzania and Kenya, while its freight railways unit, which has already established joint operation centres in Mozambique, Botswana and Zimbabwe, will seek to grow cross-border volumes and facilitate further regional rail integration.

“Transnet’s Africa Strategy is being implemented from 2016,” the report states.