SOUTH AFRICA – Transnet, the often-troubled state-owned South African logistics company, is showing signs of a positive shift according to a recent report by Moneyweb.
The report reveals that different sectors including the coal sector, the Northern Corridor, the primary rail link from Mpumalanga’s coal fields to the Richards Bay Coal Terminal (RBCT), have experienced a notable boost.
Coal exports surged by over 10% in the December 2023 quarter, averaging an impressive 1.1 million tons per week. This corridor, a critical part of Transnet Freight Rail’s operations, accounts for about 41% of total volumes. Overall shipments to RBCT also saw a rise of nearly 4%, reaching 48.74 million tons between September and December.
Moreover, Transnet, in a recent statement, expressed optimism about railing 49 million tons of export coal to RBCT by March 2024, despite a declared capacity of 60 million tons.
This marks a significant improvement compared to the 35.8 million tons delivered in the first three quarters. The turnaround in rail performance aims to recover a substantial chunk of the estimated R150 billion lost due to Transnet inefficiencies in 2022.
RBCT, with a design capacity of 90 million tons per year, has been operating far below its potential due to Transnet’s historical struggles in transporting adequate volumes to the port.
There’s a ray of hope at Transnet Ports too, with vessel backlogs outside the Durban Container Port dwindling to single digits from around 20 in December. The Cape Town Container Terminal, addressing a 14% drop in deciduous fruit exports, has bolstered its capacity with additional personnel.
Revamping leadership for a new era
The driving force behind this transformative phase at Transnet is a significant shake-up in leadership, as highlighted by Jan Havenga, a logistics professor at Stellenbosch University.
He attributes Transnet’s historical challenges to state capture, outdated infrastructure, and a detrimental organizational culture.
In response to mounting pressure from the mining and business sectors, the South African government, in collaboration with Business for South Africa, set up the National Logistics Crisis Committee (NLCC). The NLCC aimed to tackle bottlenecks and inefficiencies at Transnet, triggering a revamp.
Andile Sangqu, Vice-President of the Minerals Council SA, assumed the role of Transnet’s chair, bringing industry expertise and representing the company’s largest customer base—the mining sector.
The overhaul also saw the departure of CEO Portia Derby and Sizakele Mzimela, replaced by Michelle Phillips and Russell Baatjies, respectively.
Former Transnet executives, including Lloyd Tobias, Hendrik Coetzee, and Corli van Rensburg, returned to contribute to the recovery plan. This reshuffle has not only transformed Transnet’s operational efficiency but also its organizational culture.
While improvements have been commendable, it’s noteworthy that they were achieved without massive investments in locomotives and wagons. The focus has been on operating smarter, with a keen eye on optimizing key rail routes, such as the Sishen-Saldanha Bay railway line, to enhance turnaround times.
The positive momentum at Transnet offers a glimmer of hope, underscoring the potential for transformation when industry specialists replace political appointees.
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