Transnet Strategy and Infrastructure Plan · Rail 2,4 0,3 Total Investment (Rbn) NPA Total 0.25 0.25 Gauteng-Maputo Volume (mt) Value (Rbn) Road 23,1 4,6 Rail 40,4 Total 27.1 5,0
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Transnet Strategy andInfrastructure Plan
September 2005
Context
Ageing infrastructure: Rail
• 2 360 locomotives and 84 633 wagons• Lifespan of asset 20 to 30 years• Average age of fleet 27 years• Current availability of fleet approximately 64%• Number of derailments increased to 269 against target of 150
CONSTRAINT TO CARRY:27.6mtpa ON OREX
69.2mtpa ON COALLINK80mtpa ON GFB
Ageing infrastructure: Ports
• Depth of Durban Harbour entrance– Single lane with depth of 12m– International norm – double lane with depth of 13,5mCONSTRAINT: SHIPS WITH CAPACITY OF 6000-7000 TEUs CANNOT CALL AT DURBAN
• Durban Container Terminal– Current capacity of 1,4m TEUs– Growth in TEUs 8% paCONSTRAINT: RUN OUT OF CAPACITY BY 2006
• Depth of Cape Town Harbour– Currently 12.8m CONSTRAINT: SHIPS WITH CAPACITY OF 6000-7000 TEUs CANNOT CALL AT CAPE
TOWN
• Cape Town Container Terminal– Current capacity of 510 000TEUs– Terminal running at capacity CONSTRAINT: NO CAPACITY FOR GROWTH
Ageing infrastructure: Pipeline
• DJP pipeline– 40 years old– Running at 90% operating capacity at presentCONSTRAINT: NO CAPACITY FOR GROWTH AND CONSTRAINT BY
LIFESPAN BEYOND 2010
The 745mt results in a total transport cost of R135bn to the South African economy. The biggest portion of this cost is attributable to long haul road transport.
Pipeline & Water
0%
Air9%Rail
9%
Road - Corridor
38%
Road - Metro24%
Road - Rural20%
R11bn
R50bn
R30bn
R11bn
R0.3bn
Rail corridor = R135/tonRoad corridor = R360/ton
R25bn
Understanding the Road / Rail trend over the past decade
60
70
80
90
100
110
120
130
140
150
160
1991
1993
1997
2003
Inde
x 19
91=1
00
Transportable GDP Road ton Rail ton Rail ton excl export coal & ore
Data depicted on an index basis
The last decade has seen growth in road traffic, while rail traffic (excl. the export lines) has declined
Cape Town Port Elizabeth
Durban
Saldanha
Richards Bay
East London
Maputo
Sishen
Beitbridge
Gauteng
There are significant shifts in the SA economy that warrant a closer examination of the supply chains necessary to support the economy.
SA needs to reduce logistics costs by one third to sustain our competitiveness.
Strategic direction
Our Mandate
…the public sector discharges its responsibilities to our people as a critical player in the process of the growth, reconstruction and
development of our country by reducing the cost of doing
business in our countryPresident Thabo Mbeki, State of the Nation address, May 2004
Government’s strategic agenda for economic development:
An Integrated Transport Strategy
Transnet provides efficient, integrated transport services to the bulk and manufacturing sectors.
• Ensure that Transnet provides an efficient transport platform that facilitates trade growth in SA
• Transnet is the custodian of Port, Rail and Pipeline Infrastructure Transnet serves specific industries to leverage its strength in assets
• Transnet collaborates with Customers to jointly design services and invest in areas that improves the performance of all parties
Our vision is to become an efficient freight transport company in Southern Africa
Key pillars of the Turnaround Strategy
• Redirect the business
• Restructure the balance sheet
• Implement strict corporate governance principles
and adhering to vigilant risk management processes
• Build Human Resources capabilities
Provide efficient, integrated
transport to the bulk and
manufacturing sectors
Implementation plan
Lower cost ofdoing business
Targeted sectors
4 Point Turnaround
Plan
Redirect and re-engineer
the business
Balance Sheet restructuring
Human capital development
• Reengineer core business • Corporate HO restructure• Operational synergies• Customer focus• Infrastructure development
• Pension fund deficit• Transfer SAA to govt• Disposal of non-core businesses
• Skills audit and matching • Recruitment and retention• Skills and training• Performance Management• Career management• Succession planning
• Shareholders compact• Memo and articles of assoc• IFRS • Legal review• EWRMF
Economic development
Corporate governance and risk management
One company, one vision
Implementation programme overview
Transport Portfolio
PipelineNetwork
PipelineOperations
Transnet Business Portfolio
RailInfrastructure
RailOperations
Port Infrastructure
Port Operations
HoldingCo
Investment Portfolio
Aviation
Other
Independent Regulators
PETRONETPETRONETTRANSNETTRANSNETHOUSINGHOUSING
Pty (Ltd) 26%
Pty (Ltd) 100%
Pty (Ltd) 100%
Pty (Ltd) 100%
Pty (Ltd) 35%
Pty (Ltd) 100%
Pty (Ltd) 49%
Holdings Pty (Ltd) 100%Pty (Ltd) 95%
100%
(SNO)
TransportTelecomms
PROPNETPROPNET
Core Businesses Non - Core Businesses
The strategic direction of Transnet requires separation between core and non-core businesses
Infrastructure plan
PortElizabeth
East London
Maputo
Gauteng Mega
Industrial Zone
Sishen
Beit Bridge
RichardsBay
DurbanSaldanha
Volumes and Investment per Corridor
Gauteng-Cape Town
Volume (mt) Value (Rbn)Road 16,6 13,3Rail 2,7 0,7Total 19,3 14,0
Investment (Rbn)
NPASAPOSpoornetTotal
1.260.790.102.14
Gauteng-Durban
Volume (mt) Value (Rbn)Road 44,7 16,1Rail 9,7 1,9Total 53,4 18,0
Investment (Rbn)NPASAPOSpoornetPetronetTotal
2.51
6.201.900.40
11.01
Sishen-Saldanha
Volume (mt) Value (Rbn)RoadRail 27,0 0,8Total 27,0 0,8
Investment (Rbn)NPASAPOSpoornetTotal
0.381.101.83
0.35
Gauteng-Beit Bridge
Volume (mt) Value (Rbn)Road 29,5 8,5Rail 3,2 0,6Total 32,7 9,1
Gauteng-Richardsbay
Volume (mt) Value (Rbn)RoadRail 74,0 3,8Total 74,0 3,8
Investment (Rbn)NPASAPOSpoornetTotal
1.172.704.79
0.92
Gauteng-PE/East London
Volume (mt) Value (Rbn)Road 9,1 5,2Rail 0,7 0,3Total 9,8 5,5
Investment (Rbn)
NPASAPOSpoornetTotal 3.98
2.760.201.02
Sishen-PE
Volume (mt) Value (Rbn)RoadRail 2,4 0,3Total
Investment (Rbn)NPATotal 0.25
0.25
Gauteng-Maputo
Volume (mt) Value (Rbn)Road 23,1 4,6Rail 4 0,4Total 27.1 5,0
Investment (Rbn)SpoornetPetronetTotal
0.920.27
1.19
Spoornet - Other
Investment (Rbn)
BranchlinesOtherTotal
0.1816.8016.98
Coega
Investment (Rbn)NPASpoornetTotal
2.171.023.20
Cape Town
Gauteng Mega Domestic Zone
Volume (mt)
Value (Rbn)
33417.8
19.50.6
RoadRail
Improved profitability, efficiency & safety;Increase coal capacity from 71mta to 86mta by 2007/08;Increase general freight capacity from 14mta to 19mta;Further investment of R9bn required to sustain this capacity;Investment by NPA for additional berth 306 at a cost of R443m
Optimize scarce resources and to capture market demandAffords sustainable profitability and increased productivity;Recover the cost of the investment over the period;Rand based tariff for the remaining period of contract ;
Coal line capacity expansion
(R2.5bn)
Iron Ore line capacity expansion
(R2.8bn)
Upgrade of 200 18E
Locomotives
(R1.2bn)
Wagon Fleet Renewal &
modernization
(R4.1bn)
Upgrading and over hauling the 6EI’s to 18E’s; improvements in reliability and traction;Reduced repair and maintenance costs.
Upgrade of the wagon fleet; Extend the life
of wagonsSpoornet
major projectsSpoornet
major projects
Major Rail Projects
Durban Port Investments
(R4.5bn)
Cape Town Container Terminal
expansion
(R1.9bn)
Port of Ngqura
(R4.1bn)
Alignment with govt objective to foster economic development;The port expected to be operational by Oct 2005;
Increase in stacking capacity by 226k TEU by 2008 and to 1.6m TEU by 2017;To meet productivity expectations of customers;
Ports (NPA & SAPO) major
projects
• Durban 2005 expansion program• Widening of the entrance channel• Pier no 1 container terminal • Deepening of Berths
Major Port Projects
MAJOR PROJECT: PETRONET
• New Multi-purpose pipeline (R3bn)
– Replacement of ageing asset;
– Addresses the high risks of failure on the environment;
– Provide additional capacity to meet the expected capacity constraints;
– Alignment with govt.’s objective of economic growth and a supply of
environmentally safe transport mode for petroleum products.
Human Capital Development Strategy
The strategic context for HR
1. Redirect the Business
2. Restructure the Balance Sheet
HR capacityHR capacity
HR EnablersTurnaround Strategy
3. Implementation of Governance Principles
4. Promote Skills Development
The Four PointTurnaround Plan
Leadership & culture
Performance and reward
Capability building
Talent management
Transformation & change
Employee relations
HR systems & measures
Business Results
Business that is:Growing
ProductiveProfitable
SustainableRe-engineered
Achieves the strategy
Business that is:Growing
ProductiveProfitable
SustainableRe-engineered
Achieves the strategy
Transnet Leadership Competency Model
Transformational Leadership ensuring
Business Success
Anchoring the Transnet Way
Redirecting the business
Building capability
Restructuring the
balance sheet
Institutionalisingcorporate governance
& risk mgt
Sustaining the Transnet WayDeveloping Others
Self Development
Manages and shares information
Role models the culture and values
Embraces diversity
Professional Expertise
Managing the Transnet WayOptimizes business performance
Manages finances
Manages people & teams
Delights customers
Manages programs, projects & contracts
Manages risk and compliance
Is resilientIs emotionally intelligentIs an excellent communicator
Is a conceptual and analytical thinkerIs results focused Is courageous
4 pillars of transformation
Competencies required to achieve transformation
and business success
Foundation competencies for personal effectiveness
6
Leading the Transnet WayIs visionary and inspiring
Is strategic
Is collaborative
Is innovative and entrepreneurial
Has impact and influence
Is a change agent
1 2 3
4
An integrated talent management framework
Talent Management
STRATEGY
Vision
Mission
Values
Talent MgtValue
propositionSt
rate
gic
HR
pl
anni
ng
Sour
cing
&
Pla
cing
Cap
acity
build
ing
Perf
orm
ance
Man
agem
ent
Rew
ard
Rel
ease
TM strategy & position paper
- principles- definitions- framework- outcomes- benefits
- CSFs
Attraction and sourcing of key
talentEmployment
brandingCompetency frameworkPlacement
On-boarding
Monitoring and measuring talent management
IndividualPersonal
Development plans
- Career plans- Mentoring- Key talent programs &
opportunities- Leadership development
Performance based reward
-Guaranteed pay- Incentive pay
- Retention strategies
- Benchmarking
Strategic people planning – Dept/BU
- future business environment, org
design, skills- Gap analysis
- plans to close gap- succession
planning
PromotionsMaintaining
relationshipsExit interviews
Company- Career ladders- Departmental and BU skills
plans- Succession
plans
Attraction and retention of key talent to ensure:
- continuity- productivity- profitability
- Customer growth & retention- Employee
engagement & retention
MeasurementEngagement
surveyExit interviewsTurnover rates
Cost of replacementTime to fillFirst time
acceptance
-Performance Contracts
- Feedback and coaching
- Performance reviews
Strategic people planning - Group
ExcoTalent Review & Staff movements
Integrated performance management cycle Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Strategic Review
People & Performance Mgt Training
- setting targets & coaching
Mid-term review
Performance Coaching and Optimisation
Performance Contracting
People & Performance Mgt Training- reviewing
performance
Development Contracting
Development Review
Strategic Review
Business Planning & Budgeting
Business Planning &
Budgeting & LEReview
ExcoQuarterly business
performance reviews
ExcoTalent Review
& Staff movements
ExcoSPO
measures & incentives
Guaranteed Pay
Incentive Pay (bonus)
ExcoQuarterly business
performance reviews
•Operating profit margin•CFROI•Capex delivery
4 Point Turnaround
Plan
Redirect and re-engineer
the business
Balance Sheet restructuring
Human capital development
• Reengineer core business • Corporate HO restructure• Operational synergies• Customer focus• Infrastructure development
• Pension fund deficit• Transfer SAA to govt• Disposal of non-core businesses
• Skills audit and matching • Recruitment and retention• Skills and training• Performance Management• Career management• Succession planning
• Shareholders compact• Memo and articles of assoc• IFRS • Legal review• EWRMF
Economic development
Corporate governance and risk management
Change rail share of Transport GDP from 11% to 20%
•Gearing ratio•Talent management•Leadership pipeline
Outputs and outcomes
•BEE spend•SME spend
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