Re-engineering begins to bear fruit – Ramos

JOY ORLEK
AS TRANSNET continues to focus squarely on its core business of freight and freight transport, and as the disposal of non-core assets gains pace, CEO Maria Ramos is confident that its turnaround strategy is on track. Providing a broad outline of the progress so far and the challenges ahead, Ramos acknowledged that there were many mountains still to climb. “The re-engineering is happening at a time when our economy is growing fast and that puts all sorts of pressures on all kinds of things – power, transport infrastructure, communication and human capital,” she told guests at a Safmarine business breakfast in Johannesburg last week. “These challenges are domestic as well as global, and issues like the oil price, over which we have no control, have a significant impact on our economy. But Transnet has an obligation to deliver,” she said. “Transport is the key to economic development. If we are not efficient and effective we will constrain imports and exports.” Dwelling in some detail on one of the major culprits in terms of failure to deliver, she said that so far the Spoornet re-engineering project had focused on the coal line where she believes good results have been achieved. “At the moment coal producers don’t have enough coal for us to transport.” But the biggest challenge lies in general freight business with particular focus on containerised cargo, where Spoornet's share of freight revenue amounts to just 10% of the total. And price is only part of the equation. “It’s not only about rate per ton. It’s about increasing volumes and efficiency which will bring down costs. If we are cheaper but less efficient than road, there’s no benefit to the customer.” The lack of investment in rolling stock, infrastructure and maintenance is well documented, and a serious concern. “The locomotive fleet is on average 27 years old and poorly maintained,” she said. A wagon refurbishment programme is however under way. “But this means you have to take equipment out of use which causes logistical headaches. We are also starting to see wagons parked at many sites because we have a shortage of wheels. We don’t manufacture the wheels ourselves and are working closely with local suppliers.” Equipment, however, is simple to address. It’s the human capital side that is far more challenging. “You can order equipment and you know that a lead time for a locomotive is 18-24 months - it’s a given. “But in terms of human capital, we have a shortage of train drivers, for example. The equipment coming into the supply chain now is far more sophisticated. It is computer-driven and demands skilled staff with a 5-year training requirement. The challenge is to attract the right staff.” But on the positive side, the business has been stabilised from a financial point of view. “You can’t focus on operations if you don’t know if the business is solvent from day to day. “We have also embarked on a large capex programme, and within two to three years we will start to see the benefits of our investment. “It can’t happen overnight, but clearly we have to think, behave and do things differently to make things work,” she said.