TFR calls for co-investment by customers

As Transnet Freight Rail ramps up efficiency through its Market Demand Strategy, SA Inc has equal responsibility to do the same. “Customers too need to come to the party in terms of infrastructure investment.,” TFR CEO Siyabonga Gama told delegates at a Johannesburg Chamber of Commerce and Industry breakfast in Johannesburg last week as he updated industry on the R201-billion MDS. “We have to ensure that the customer does not become the bottleneck – and for that there needs to be co-investment.” Gama pulled no punches about TFR’s legacy of nonperformance, but in his view investment in infrastructure and development is beginning to pay dividends in improved efficiency and predictability – and consequently increased market share. The scene was set for the rail utility’s battle with inadequate and ageing assets in the 80s when declining volumes in sanctionshit South Africa led to a deceleration in investment. “In 1994 when the wheel turned there was a lot of congestion in the ports. Suddenly overnight people started trading with us and we had to wake up quickly. But you don’t wake up quickly from a deep sleep,” said Gama. Loss of market share was the logical consequence and that’s the battle that TFR is determined to win through its investment in equipment, skills training and the creation of a new culture of performance excellence. Historically, container business has not been a focus, said Gama. “While the port authorities were investing in containers, the railways were investing in the iron ore and coal lines so there was no convergence in the types of investment.” TFR has now adjusted its focus and GFB, which peaked in the 80s at 94mt and has been declining ever since, is a key focus.” “We’ve now realised that rail is a volume business and that you need to be able to grow volumes to reduce unit costs and make a contribution to fixed costs “We realised that there was 40% of untapped GFB market potential because we had not invested in assets, rolling stock or people. We had 11% market share and we knew we could lift that to 25-30%. “We told Transnet that we shouldn’t run the business on the basis of how much you are able to finance. If you look at the opportunities and you are able to grow volumes, we believed we should change the philosophy around infrastructure – and as a result the MDS was born. “But as we begin to invest in railway infrastructure, SA Inc needs to do the same. Ultimately our customers too need to invest in loading sites, plant and equipment to create an enabling logistics value chain. “We want to invest in primary infrastructure to run a railway and ports – and that leaves plenty of ancillary opportunity for the private sector.” CAPTION Siyabonga Gama … ‘We must ensure that the customer does not become the bottleneck.’