Presentation 1

TRANSNET PORT TERMINALS - Increasing efficiency and integration of activities in Africa

Karl Socikwa, CEO Transnet Port Terminals - 29 January 2014

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TIME FOR AFRICA

TABLE OF CONTENTS

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INDUSTRY TRENDS

INTRA REGIONAL TRADE

INFRASTRUCTURE DEVELOPMENT

POLICIES AND TRADE AGREEMENTS

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TIME FOR AFRICA

delivering freight reliably

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54 COUNTRIES


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COUNTRIES WITH PORTS

delivering freight reliably Algiers (Algeria)

Cape Town (SA)

East London (SA) Ngqura (SA)

Port Elizabeth (SA)

4

Lagos (Nigeria)

Abidjan

(Cte d'Ivoire) Tema, Takoradi (Ghana)

Cotonou (Benin)

Douala

(Cameroon)

Walvis Bay (Namibia)

Libreville

(Gabon)

Pointe Noire

Matadi (Congo)

Lobito

(Angola)

Luanda

(Angola)

Maputo

(Mozambique)

Richards Bay (SA)

Durban (SA)

Dar es Salaam

(Tanzania)

Tanga

(Tanzania)

Mombasa

(Kenya)

Nacala

(Mozambique) Beira

(Mozambique)

Toamasina (Madagascar)

Port Louis (Mauritius)

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GROWTH DRIVEN BY GDP Southern Africa Economic Outlook Source: World Bank Report

Country 2013 2014 2015

Angola 8.2 7.8 7.01

Botswana 5.6 5.5 4.3

DRC 8.2 9.4 20.7

Lesotho 3.9 3.5 3.5

Madagascar 3 4 3.9

Malawi 5.5 6.1 6.5

Mauritius 3.8 4.2 4.7

Mozambique 8.5 8 8

Namibia 4.2 4.3 4.3

Seychelles 3.2 4.3 3.8

South Africa 2.8 3.5 3.4

Swaziland 0.7 1.8 0.32

Tanzania 6.9 7 7.04

Zambia 7.5 7.8 7.7

Zimbabwe 5 5.7 5.4

= Rapid growth areas

AFRICA STRATEGY

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SADC CHALLENGES

The SADC region is regarded as the next growth frontier due to its extensive minerals wealth, growth in consumer populations and relatively good infrastructure, road in particular:-

Key challenges hinders its growth and trade remain strained;

Poor infrastructure, low density across transport networks, inefficient border processes and fragmented regulatory environments continue to dog it;

Much of rail and port infrastructure was built for resource extraction rather than to facilitate trade;

Landlocked countries within the region require efficient transport links to and from the sea in order to enjoy competitive prices for landed goods and exports to global markets;

Most ports within the region currently operate near capacity and experience delays due to poor integration with other transport modes and slow clearance processes; and

The SADC region must attain the goal of becoming a seamless, cost-effective, fully integrated and internationally competitive region with appropriate and substantial investments in road, rail and ports to secure the future of the region.

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KEY INTERVENTIONS REQUIRED

Ports to improve Inter-Regional Trade

Development of SADC ports that connect to the world regions growing maritime trade

Development of ports that are efficient transhipment hubs connected to rail

Terminal and Warehousing facilities

Distribution centres for product to reach markets in the region

Lowering inventory costs

Working together to satisfy

customers to reduce the cost

of doing business to improve

regional competitiveness

RESPONSE TO CHALLENGES

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TIME FOR AFRICA

TABLE OF CONTENTS

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INDUSTRY TRENDS




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Geographical context

9 Transnet Long-term Planning Framework 2012

Global context

SAs distance from international markets results in high maritime transport costs

SA well placed to service Southern African and most BRICS shipping trade routes

Opportunity to position SA as global transshipment hub focusing on selected trade routes

Regional context

SA well positioned to serve African east and west coasts by sea

SAs rail network provides strategic and common-gauge connectivity to neighbouring SADC countries

Regional partnerships will stimulate and sustain regional growth

National context

Gauteng industrial and mining area remains regional production and consumption hub despite distance from nearest ports

Transnets key role is to assist in economic growth through providing appropriate, cost-effective and efficient port, rail and pipeline infrastructure and operations

Continued emphasis on alignment with New Growth Path, management of Carbon footprint, private-sector participation, and job creation

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Industry trends

Globalisation

Increased international freight flows a fundamental component of recent changes in global, regional and local economic transport systems

Evidence of recession in small reduction in freight tonnage handled

Some evidence of recovery from the debilitating effects of the past few difficult years (from an economic and trade point of view

Trade Patterns

2007: Industrial and Commercial Bank of China buys 20% stake in Standard Bank (US$5,4 billion) - Chinas largest-ever foreign investment

2009: China-South Africa trade reaches $17,9 billion - China becomes South Africas largest trading partner

2010: India-South Africa trade reaches US$11,1 billion - increases to US$15 billion by 2015

2014: 26 African countries create a US$1 trillion Southern/Eastern/Central African free trade area

Road/Rail

Road/rail tonnage split almost static

Only profitable rail infrastructure being investing in - large components, notably rural branch lines, not used and becoming increasingly dilapidated

Worldwide trend toward road reversing as rail becomes more competitive as a sustainable transportation mode

Single wagon business being replaced by hub-to-hub

Intermodal solutions becoming increasingly important (especially in manufacturing sector)

Ports

Worldwide trend towards greater specialisation, centralisation, economies of scale, larger vessels and larger parcel sizes

Current upward trend in average size of container-carriers (40 000 DWT) and bulkers (65 000 DWT)

Growing international over-ocean trade to 11 billion tones pa by 2020 at 3% pa year-on-year growth rate

International shipbuilding peaked in 2010 at 96 million tons (previous peak in 1975 at 36 million tons)

Sustainability

Supply-chains used to develop and sustain competitive advantage

Increasing pressure to transform logistics to meet greening the requirements

Impact of logistics on climate change more topical because of realisation of immediacy and magnitude of global warming

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TRENDS IN THE SHIPPING INDUSTRY - 10 New 18,000 TEU ships ordered by Maersk

11 Source: Nick Souza Photography Marine Traffic

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If all the 20 Foot Equivalent Unit (TEU) sized Containers from the world's largest container ship, the Emma Maersk were to be put on one train, the train would be more than 70 km long.

VESSEL SIZES

Generation Years

Produced Capacity

(TEUs) Length

(m) Draft (m)

1st Early Containership 1956-1970

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SOUTHERN HUB FOR WORLD SHIPPING ROUTES

The position of South Africas ports system enables it to access to South-South trade, Far East trade, Europe & USA, East & West Africa regional trade

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Shortest Trade Route between Shangai and Santos is via South Africa 11,270nm = 22 days @ 21 knots

via Panama Canal13,130nm = 26 days + transit fee

via Suez Canal 13,590nm = 27 days + transit fee

GREATER COLLABORATION NEEDED BETWEEN AFRICAN PORTS

Monrovia (Liberia)

Lome (Togo)

Port Louis (Mauritius)

Toamasina (Madagascar)


Cape Town (SA)

Dar es Salaam

(Tanzania)

Tanga

(Tanzania)

Mombasa

(Kenya)

Nacala

(Mozambique) Beira

(Mozambique)

Maputo

(Mozambique)

Richards Bay (SA)

Durban (SA)

East London (SA) Ngqura (SA)

Libreville

(Gabon)

Pointe Noire

Matadi (Congo)

Source: Team analysis

Port Elizabeth (SA)

Lobito

(Angola)

Luanda

(Angola)

Dakar (Senegal)

Algiers (Algeria)

Port Said

(Egypt)

Lagos (Nigeria)

Abidjan

(Cte d'Ivoire) Tema, Takoradi (Ghana)

Cotonou (Benin)

Douala

(Cameroon)

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ROLE OF GOVERNMENTS IN TRADE GROWTH


Lobito

(Angola)

Luanda

(Angola)


Dar es Salaam

(Tanzania)

Mombasa

(Kenya)

Maputo

(Mozambique)

Lagos (Nigeria)

Dakar (Senegal)

Abidjan

(Cte d'Ivoire)

Port Said

(Egypt)

Cape Town (SA)

Richards Bay (SA)

Durban (SA)

Ngqura (SA)

Tema, Takoradi (Ghana)

Cotonou (Benin)

Douala

(Cameroon)

Algiers (Algeria)

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POLITICAL WILL - The AU has identified 14 corridors for development

1 Kenitra-Casablanca Corridor

2 Greater Cairo Region

3 The Dakar-Touba corridor (Touba-Mback)

4 The Greater Ibadan-Lagos-Accra (GILA) urban corridor

5 The great Haoussa-Yoruba-Anshanti city triangle (GHAYA-CT)

6 The Emerging Luanda-NDjamena corridor

7 The Kampala-Entebbe corridor

8 Nairobi metropolitan region

9 Walvis Bay corridor

10 North South corridor (Cape Town-Johannesburg-Harare-Lusaka-Dar es Salaam)

11 The Maputo-Gauteng development corridor

12 Durban development corridor

13 Beira corridor

14 Maputo-Limpopo corridor

Source:E&Y Report Time for Africa

3

4

2

13

10

12

11 14

9

6

5

7

8 6

6

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TRENDS IN ROAD TRANSPORT - EXISTING ROAD NETWORK

Algiers (Algeria)

Port Said

(Egypt)

Dakar (Senegal)

Lobito

(Angola)

Luanda

(Angola)


Dar es Salaam

(Tanzania)

Mombasa

(Kenya)

Maputo

(Mozambique)

Lagos (Nigeria)

Dakar (Senegal)

Abidjan

(Cte d'Ivoire)

Port Said

(Egypt)

Richards Bay (SA)

Durban (SA)


Cotonou (Benin) Douala

(Cameroon)

Algiers (Algeria)

17 Source: Joost Bonsen http://www.maximizingprogress.org/ Cape Town

(SA)

Ngqura (SA)


Dakar (Senegal)

Port Said

(Egypt) Algiers (Algeria)

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TRENDS IN RAIL TRANSPORT - EXISTING RAILWAY LINES

Source: http://www.schillerinstitute.org

Lobito

(Angola)

Luanda

(Angola)


Dar es Salaam

(Tanzania)

Mombasa

(Kenya)

Maputo

(Mozambique)

Lagos (Nigeria)

Abidjan

(Cte d'Ivoire)

Cape Town (SA)

Richards Bay (SA)

Durban (SA)

Ngqura (SA)


Cotonou (Benin)

Douala

(Cameroon)

Corridor effect Concentrated corridors attract

more traffic

Market share rail alignment process

What is suitable freight for rail?

Setting the ideal rail vs road market share split is a fundamental driver for future rail demand

Road friendly Rail friendly Road or rail

Longer distances

Short-haul distribution is more efficient on road

High volumes

Rail is a bulk mover Big parcels in a single move

Commodity type

Typically bulk minerals/heavy goods/containers

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TIME FOR AFRICA

TABLE OF CONTENTS

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INDUSTRY TRENDS




WHAT ARE THE CHALLENGES TO TRADE?


12%

21

22 PAGE

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

2011 2016 2021 2026 2031 2036 2041

Na

tio

na

l Fre

igh

t D

em

an

d (

Su

rfa

ce

Fre

igh

t Flo

ws)

(mtp

a)

Mining dry bulk

Light break bulk

Ro-ro-Tons

Refrigerated

Container-Tons

Palletized

Agricultural dry bulk

Heavy break bulk

Liquid bulk

Open Skip bulk

National freight demand projection

781,5

918,2

1 095,0

1 225,3

1 945,8

1 404,2

2011 2041 149% increase in surface freight flows Major shift from road to rail transport Significant impact on surface transport infrastructure capacity

1 637,1

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Transportation Model flow results

All traffic road, rail, pipe and air

49,4 4,9

5,4 77,6

2011

Medium high volumes

Low medium volumes

High volumes

Low volumes

23


61,1 5,0

5,8 90,6

2018


Medium high volumes

Low medium volumes

High volumes

Low volumes

24


119,5 5,5

8,6 132,2

2041


Medium high volumes

Low medium volumes

High volumes

Low volumes

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TRANSNET PORT TERMINALS #1 Terminal Operator in Africa

Company 2011 Total Throughput

000 TEU

2011 Equity Throughput (000 TEU)

Equity TEU as % of Regional

Throughput

1 Transnet Port Terminals 4,403 4,403 18.07%

2 APM Terminals 7,640 4,236 17.39%

3 Bollor Africa Logistics 3,348 1,671 6.86%

4 DP World 2,094 1,193 4.89%

5 Port Said CCHC 922 922 3.79%

6 Damietta CCHC 809 809 3.32%

7 CMA CGM/Terminal Link 1,218 661 2.71%

8 Cosco Pacific 3,247 649 2.67%

9 Hutchison Port Holdings 949 548 2.25%

10 Alexandria CHC 517 506 2.08%

Source: Drewry on Africa

Transnets hold on the top ranking for terminal owning/operating companies in Africa will make them an ideal partner.

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TABLE OF CONTENTS

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INDUSTRY TRENDS




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DURBAN

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DURBAN CONTAINER TERMINALS

29 29 29

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DURBAN MPT TERMINALS POINT RORO

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DURBAN MPT TERMINALS POINT RORO DURBAN MPT TERMINALS MAYDON WHARF, AGRI

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RICHARDS BAY DURBAN MPT TERMINALS POINT RORO RICHARDS BAY TERMINALS

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RICHARDS BAY DRY BULK TERMINALS

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PORT ELIZABETH

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DURBAN MPT TERMINALS POINT RORO PORT ELIZABETH

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PORT OF NGQURA

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DURBAN MPT TERMINALS POINT RORO PORT OF NGQURA

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PORT OF EAST LONDON

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PORT OF CAPE TOWN

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SALDANHA BAY

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MDS - PORT EXPANSION PLANS Port of Ngqura

AFTER: 2010

Ngqura Container

Terminal

BEFORE:

Coega River mouth

Nov-2002

Futuristic

Expansion Options

current: 2013

Ngqura Container

Terminal

NGQURA CONTAINER TERMINAL - EVOLUTION OVER 10 YEARS

DCT Reconfiguration Study 2011

DCT Pier 1

DCT Pier 2

Salisbury Island Navy Base

PORT OF NGQURA DURBAN MPT TERMINALS POINT RORO DURBAN CONTAINERS - CURRENT LAYOUT

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Pier 1 with new Salisbury Island infill and deep-water berths

Total cost: R 6.3b

Pier 2 with deepened berths 203-205 and new tandem cranes Total cost: R 5.6b

Consolidated Salisbury

Island Navy Base

Interim upgrade of Pier 1 + 2 Rail

Terminals

PORT OF NGQURA DURBAN MPT TERMINALS POINT RORO DURBAN CONTAINERS - POSSIBLE FUTURE LAYOUT - 2019

41


Infill between Pier 1 and Pier 2. Durban Container Terminal

reconfigured to RMG operation

New rail terminals and back-of-port

facilities

PORT OF NGQURA DURBAN MPT TERMINALS POINT RORO DURBAN CONTAINERS LONG TERM POTENTIAL LAYOUT

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Port of Durban

Isipingo

Sapref Refinery

Old Durban Airport

Toyota Factory

N2 Freeway

Mondi

Umlazi

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PORT OF NGQURA DURBAN MPT TERMINALS POINT RORO FUTURE EXPANSION PLANS FOR DURBAN - Ex Durban International Airport (DIA) Site

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Port of Durban

Container Terminals

New Dig-Out Port

Automotive Terminal

Liquid Bulk Terminal

Breakwater and Entrance Channel

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PORT OF NGQURA DURBAN MPT TERMINALS POINT RORO FUTURE PLANS FOR DURBAN - Artists View of the new Dig-Out Port at ex-DIA Site

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TIME FOR AFRICA

TABLE OF CONTENTS

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INDUSTRY TRENDS




THE AU HAS IDENTIFIED 14 CORRIDORS FOR DEVELOPMENT

1 Kenitra-Casablanca Corridor

2 Greater Cairo Region

3 The Dakar-Touba corridor (Touba-Mback)

4 The Greater Ibadan-Lagos-Accra (GILA) urban corridor

5 The great Haoussa-Yoruba-Anshanti city triangle (GHAYA-CT)

6 The Emerging Luanda-NDjamena corridor

7 The Kampala-Entebbe corridor

8 Nairobi metropolitan region

9 Walvis Bay corridor

10 North South corridor (Cape Town-Johannesburg-Harare-Lusaka-Dar es Salaam)

11 The Maputo-Gauteng development corridor

12 Durban development corridor

13 Beira corridor

14 Maputo-Limpopo corridor

Source:E&Y Report Time for Africa

3

4

2

13

10

12

11 14

9

6

5

7

8 6

6

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PAGE

Railway , Ports & Terminal Infrastructure require deliberate intervention

Political Stability and

Will

Skills Development

Sustainable Economic

Growth

Infrastructure

Development

Funding Framework

(Local and international

ventures)

Southern African

countries working

together for regional

growth and

development

Policy & Legislation

ENABLING ENVIRONMENT REGIONAL INTEGRATION

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IMPACT OF BRICS

Documents

Presentation 1