Transnet Online Integrated Report 2017
Market Demand Strategy (MDS) themes
  • Financial sustainability
  • Capacity creation and maintenance
  • Market segment competitiveness
  • Operational excellence
  • Human capital
  • Organisational readiness
  • Sound governance and ethics
  • Constructive stakeholder relations
  • Sustainable developmental outcomes
Sustainable Developmental Outcomes (SDOs)
  • Employment
  • Skills development
  • Industrial capability building
  • Investment leveraged
  • Regional integration
  • Transformation
  • Health and safety
  • Community development
  • Environmental stewardship
The Capitals
  • Financial Capital
  • Manufactured Capital
  • Intellectual Capital
  • Human Capital
  • Social and Relationship Capital

Creating value through the six capitals

Manufactured Capital
We have invested R145 billion in key projects in the freight system across the rail, port and pipeline networks over the past five years. Closing the gap between the market demand for cargo transport and handling services, and the capacity to satisfy this demand is the key driver behind the large MDS capital investment programme. Investment in our manufactured assets enables us to generate long-term value for the Company, our Shareholder and the economy. The economic decline has set future growth projections for key commodity customers on a lower growth path, which requires a slower pace of capacity creation from Transnet. Additionally, keystone expansion projects need to balance economic benefits with social and environmental concerns raised by communities in and around our operations. We continue to actively engage project stakeholders to help guide the most responsible and beneficial balance of outcomes for all concerned. Transport operations (in general) have several impacts on the environment through emissions, noise pollution and ecosystems impacts. Transnet plans to bring about a lasting and substantial shift of rail-friendly cargo from road to rail, aligning directly with its strategy to grow rail volumes.
Creating infrastructure value
Enabling infrastructure

Transnet provides critical logistics infrastructure to meet the growth demands of the national economy. Long term, Transnet’s infrastructure development programme will reduce the overall cost of doing business in South Africa and address capacity constraints in mining and other sectors.

Freight Rail runs world-class heavy haul ore export lines and transports a range of general bulk and containerised freight commodities.

Engineering is an Original Equipment Manufacturer (OEM) for wagons and has started the journey to becoming a locomotive OEM. As the backbone of the railway industry, it provides in-service maintenance, repair, upgrade, conversion, design and manufacture of various types of wagons, coaches, locomotives, as well as equipment, machines and services.

Port Terminals operates container terminals at the ports of Durban, Ngqura, Port Elizabeth and Cape Town, as a critical facilitator of cargo trade with the rest of the world, providing cargo-handling services to a range of customers.

Pipelines is strategic in the petroleum products supply chain, ensuring that capacity anticipates demand, thus securing inland product supply.

Technology, information and communication technology (ICT)

As a transportation and logistics company, ICT is moving beyond business enablement and becoming a source of competitive advantage. The integration between modal operators’ operational systems (e.g. port and rail) enables Transnet to improve its asset utilisation and forward planning.

Innovative and disruptive technology is enabling us to create business value, such as 3D printing for rolling stock, electronic enclosures and certain mechanical sub-components. Aerial and underwater drones, as well as track-and-trace technology used to track port assets, such as tugs and dredgers, have been piloted successfully by the National Ports Authority at the Port of Durban.

Forms of waste as outputs of our operations

Transnet’s operations generate a variety of waste materials as by-products and we strive to implement the principles of waste management: avoidance, reduction, recovery, re-use, recycling and disposal, if no other use can be found. In the recovery, re-use and recycling stages, Transnet is pursuing ways to create value from waste generated.

Key manufactured capital inputs at 1 April 2016
  • Property, plant and equipment R302,5 billion
  • Rail track 30 400 km
  • Petroleum and gas pipelines infrastructure 3 800 km
  • Port, rail and pipelines infrastructure Infrastructure
  • ICT systems, digital platforms and ‘cloud services’ Information and communication technology
Approaches to managing manufactured capital outcomes

Introducing a ‘cradle-to-grave’ solutions Specialist Unit (Group Capital) to advise Transnet and clients on capacity solutions through capital planning and advisory services, capacity development, engineering and management services.

Providing an integrated view of the capital portfolio, with transparency of projects in the capital pipeline.

Allocating Transnet’s limited resources to programmes with the greatest alignment with strategic objectives.

Project optimisation through robust business case validation to test viability and ensure strategic alignment.

Implementing the Integrated Capital Projects/Programme Assurance Framework (ICPAF), which augments the assurance and control framework around capital projects, enforcing additional internal controls coverage.

Key factors impacting manufactured capital
Capital projects

Deterioration in the macroeconomic environment due to global economic influences rendered certain infrastructure capital projects unviable. We are currently re-prioritising capital projects to ensure affordability of capital investments.

Delivering MDS rolling stock

Due to market challenges, Freight Rail is reviewing the delivery of the MDS rolling stock in line with the reduced capacity required. Delivery of new locomotives will be adjusted to suit reduced business requirements, allowing the retirement of the current aged fleet, thus reducing locomotive capitalised maintenance.

ICT infrastructure

Transnet is changing the way it thinks and manages its business environment with the rapid advancements in digitalisation. Future security models will require that we secure our own environment while also requiring secured connections to multiple cloud environments globally. Our IT environment will no longer be a ‘closed loop’ system, but interconnect with other cloud data centres.

Key manufactured capital outputs at 31 March 2017
  • 1 064 diesel and electric locomotives for GFB
    359 class 22E electric locomotives
    80 locomotives accepted into operations
  • 233 class 44 diesel locomotives 117 locomotives accepted into operations
  • 232 class 45 diesel locomotives two locomotives delivered and undergoing acceptance testing
  • 240 class 23E electric locomotives first two locomotives delivered and undergoing acceptance testing
  • Port expansion lengthening and deepening of DCT Berths 203 to 205
  • Capacity expansion for manganese expanded beyond 5,5 mt
  • Export coal expansion expanded to 81 mtpa
  • Waterberg upgrade stage II
  • NMPP project the 24” main pipeline and 16” inland pipelines are fully commissioned and operational, and transported 15 billion litres of diesel from Durban to the inland region since commissioning
  • Wagon modernisation plan 100 SCL automotive wagons built by Engineering and delivered to Freight Rail
  •   18 948 wagon maintenance interventions carried out on various rail wagons
Key manufactured capital impacts on the other capitals

Environmental incidents reported 13 significant incidents in 2017

Running line derailments 81 running line derailments

Shunting derailments 159

Total value of revenue generated through waste management initiatives R70,9 million, most of which involved the sale of scrap metal

Future digital technology will require skills that are not present in the organisation today, such as digital architects, data scientists, Rapid App builders, cybersecurity architects and User Interface design experts  

Trade-offs in our use of manufactured capital

Transnet’s operations generate a variety of waste materials as by-products. We have identified contaminated areas throughout our operations, using scientific methods and visual assessments. Management plans have been developed for the asbestos and hydrocarbon contaminated areas, and we work with relevant authorities to ensure appropriate remediation.

Our operations are industrial- and infrastructure-driven, with excellent productivity and safety as primary objectives. Accident avoidance and high productivity are tightly linked. In the short term, however, these systems may operate under tight human resource and time constraints, which may result in trade-offs between immediate productivity and safety. Transnet’s safety management strategies for critical systems involve multiple dimensions, including design philosophy, maintenance policies and operating procedures, procedures for hiring the appropriate staff, occupational training and performance evaluation.