Transnet is targeting rail volumes of 180 million tonnes as it continues to rebuild freight volumes following years of decline, group chief executive Michelle Phillips told delegates at the SAPICS conference in Cape Town this week.
Delivering the keynote address at the annual supply chain event, Phillips said volumes were increasing, although not as quickly as Transnet had hoped.
“We are currently in a closed period, but we are starting to make inroads,” she said, indicating that the recovery plan implemented nearly two years ago was bearing fruit.
“We can see that our volumes are moving in the right direction. Our goal remains to reverse the decline and reach the 180-million-tonne rail target so that we can start making more money.”
Phillips said Transnet was still grappling with significant debt, despite the progress made.
“The guarantees we have received have helped tremendously, allowing us to restructure our loan agreements. We pay R15 billion in interest a year, so we have done a lot of work to renegotiate our terms and agreements. At present, our profits are wiped out by interest costs and depreciation.”
Turning to rail performance, she said the recovery was already under way, with volumes expected to reach around 167.9 million tonnes for the past financial year.
Phillips stressed that the deterioration in rail performance had begun well before the disruptions associated with the Covid-19 pandemic.
“We are addressing a decline in rail volumes that started as far back as 2018. Everyone made a big fuss about 2020, but it started before that.”
She said volumes had climbed steadily since the implementation of the recovery plan, although progress had been slower than Transnet would have liked. The next milestone is to reach 180 million tonnes.
Growth is also being pursued across Transnet’s other operations, with plans to increase petroleum, container and automotive volumes.
“I think the message is that Transnet is working hard to drive change. We have addressed our challenges and now have the right contracts in place. There is accountability across the board and we can see the change happening.”
Phillips said Transnet’s improving performance showed that its recovery strategy was working.
“The recovery we are seeing is real. We understand that we cannot do it alone and we are working very closely with the private sector. Ultimately, we all need to understand that Transnet’s recovery is South Africa’s growth.”
