The rail parastatal, Spoornet, could not become just a “two-commodity business” — focusing on its iron and coal lines — and that was why it was focusing a lot of money on the general freight business, Transnet group chief executive Maria Ramos said on Tuesday.
Speaking to the National Assembly public enterprises portfolio committee — which was considering the annual report of Transnet — she said there had been a lack of investment over a 20-year period in the rail business and locomotives were now an average of somewhere between 27 and 30 years old.
While the iron and coal business was good, it had to be borne in mind that there was such a thing as a commodity cycle. “We all know that those commodity cycles are going to turn,” she warned members of the committee.
Freight haulage was the business being focused on and Transnet had only about 10% of that business but it was determined to compete for this business “and get it back”.
It had been agreed by her board to order 212 locomotives which were going to cost about R6-billion, she said, noting that the gap between ordering and delivery meant that only a small proportion of them would arrive in the next two years.
Nevertheless, she said that it was about efficiency and reliability.
“If we had more locomotives, we could do a lot more business,” she said.
She noted that capex spending by Spoornet would amount to R31,5-billion over the next five years — of the R64,5-billion which would be spent by Transnet as a whole.
The coal line to Richards Bay would see an investment of R8-billion in this period and the Transnet board had approved the expansion of the coal capacity to 86-million tonnes.
The iron ore line from Sishen to Saldahna would see an injection of about R2,7-billion, she reported, noting that the board had approved the expansion of the ore line to 47-million tonnes.
A total of R10,8-billion would be spent on general freight and R8,1-billion on maintenance capitalisation of Spoornet.
A Transnet official noted that there were now five trains a day carrying containers from Johannesburg to the Durban port — up from just one a few years ago. This would be up to eleven by the end of this year.
Ramos, meanwhile, said the low levels of business in freight had little to do with tariffs. It was cheaper per kilometre to send goods by rail.
“The difference is efficiencies and time,” she noted, acknowledging that if one put a container on a truck from Johannesburg to Durban by road it was likely to get there “much more quickly than on rail”.
“For us to deal with the road to rail transition … it requires the kinds of investments we are beginning to make now on the general freight business.”
She noted that the freight service from City Deep to Durban ran regularly irrespective of whether it was “full”. Client confidence in the service needed to be garnered, she said. ‒ I-Net Bridge