THE IMPACT OF COVID-19 ON FREIGHT & LOGISTICS - A PRESENTATION TO: SOUTH AFRICAN TRANSPORT CONFERENCE WEBINAR PORTIA DERBY - GROUP CHIEF EXECUTIVE ...
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THE IMPACT OF COVID-19 ON FREIGHT & LOGISTICS A PRESENTATION TO: SOUTH AFRICAN TRANSPORT CONFERENCE WEBINAR PORTIA DERBY – GROUP CHIEF EXECUTIVE 12 AUGUST 2020
CONTENTS 1.TRANSNET SOC LTD OVERVIEW • WHO ARE WE • OPERATIONAL FOCUS AREAS • FINANCIAL STATISTICS 2. ECONOMIC OVERVIEW • SHIFT IN GLOBAL TRADE PATTERNS • COMMODITY PRICES • MUTED DOMESTIC GROWTH 3. TRANSNET COVID19 JOURNEY • INITATIVES • CASE STUDIES: TPT 4. CONCLUSION
TRANSNET SOC LTD OVERVIEW
WHO ARE WE
Transnet SOC Ltd is a custodian of rail, ports and pipelines
Transnet Freight Transnet Transnet National Transnet Port Transnet Pipelines Transnet Property
Rail Engineering Ports Authority Terminals • Transports 100% • Manages 13% of
• 30 400 km of • Support TFR for • 8 Commercial • 16 Cargo Terminals of South Africa’s Transnet’s total
railway track (80% rolling stock and ports along 2 798 (68 berths) bulk pertroleum property portfolio of
of Africa’s total TPT for lifting km of coastline operating across 7 products commercial and
rail) equipment • Plan, provide, ports • 18 billion litres of residential properties
• 1,500km dedicated maintenance maintain and • Containers, mineral petroleum products • One of South Africa’s
heavy haul • Eight product- improve port bulk and and gas through 3 most significant
• Operates 1200 focused business, infrastructure agricultural bulk 800 km of property owners.
trains per day 143 depots, six • Providing marine- and Ro-Ro (roll pipelines. • Provides specialised
factories. related services, on/roll off) property services
including including valuations,
dredging, aids to municipal valuation
navigation, ship roll analysis, land
repairs and marine surveys, drawing of
operations plans and deeds
4 management.
Source: Transnet Internal, 2020TRANSNET KEY PILLARS
OPERATIONAL FOCUS AREAS
02 03 04 05
People Asset Safety Cost Control
Utilisation
1 2 3 4 5
5
Source: Transnet Internal, 2020TRANSNET SOC LTD FINANCIAL STATISTICS
2019 REPORTING PERIOD
Revenue R75bn Operating cost R40bn EBITDA R35bn Employees 55,000
Transnet revenue contribution by Operating Net operating expenses contribution by cost
Division (%) element (%)
6%
16%
16%
8%
51% 57%
8%
15%
11%
12%
TFR TE TNPA TPT TPL Personnel costs Material and maintenance
Electricity costs Other operating expenses
Fuel costs
6 Annual Financial Statements for year ended March 2020 due for release in August 2020
Source: Transnet Integrated Report, 2019TRANSNET INVESTMENTS ON THE CONTINENT MUST BE
ALIGNED WITH TARGETS TO INCREASE INTER-REGIONAL TRADE
Nigeria
Benin
Senegal
Ghana
Kenya
Togo
DRC
Tanzania
GEOGRAPHICAL LOCATION Angola
Mozambique
Zambia
Where we operate Zimbabwe
Botswana
Potential projects
Joint Operations Center
7
Source: Transnet Internal, 2020ECONOMIC OVERVIEW
THE GREAT LOCKDOWN: AN ECONOMIC ANOMALY
Figure 1: Real GDP, annual percent change, 2020 -2021 Figure 2: Low global growth as a result of COVID-19 pandemic,2020
Real annual % change 2019
Actual
2020
Forecast
2021
Forecast US: Nearly 30 million ASIA: Reduced working hours will
negatively impact the economy. Economic
World output 2.9 -4.9 5.4 jobs are expected to be output relies on the demand of raw
lost. Economists estimate material and intermediate goods. This
Advanced economies 1.7 -8.0 4.8 that 30% of the population growth is expected to remain significantly
will be unemployed in the muted in the long-term.
United States 2.3 -8.0 4.5
long-term.
Euro Area 1.2 -10.2 6.0
Japan 0.7 -5.8 2.4
United Kingdom 1.4 -10.2 6.3
Emerging and developing economies 3.7 -3.0 5.9
China 6.1 1.0 8.2
India 4.2 -4.5 6.0
Russia 1.3 -6.6 4.1
Brazil 1.1 -9.1 3.6
South Africa 0.2 -8.0 3.5
TRADE
World trade volumes 0.9 -11.9 8.0
- Advanced economies 1.5 -13.4 7.2
VOLUMES:
expected to decline by -
- Emerging and developing economies 0.1 -9.4 9.4 11.9% in 2020
9 Sources: International Monetary Fund: World Economic Outlook, 2020; US Bureau of Labour Statistics, 2020; International Labour Organisation, 2020.COMMODITY PRICES HAVE BEEN NEGATIVELY AFFECTED
Figure 3: Commodity prices have been negatively affected, 2020
200
150
100
50
0
1/19 2/19 3/19 4/19 5/19 6/19 7/19 8/19 9/19 10/19 11/19 12/19 1/20 2/20 3/20 4/20 5/20 6/20
Crude oil, Brent ($/bbl) Coal, South African ($/mt) Maize ($/mt)
10 Source: Transnet internal, 2020
Coal, Australian ($/mt) Natural gas index Iron ore, CFR spot ($/dmtu)PRE-COVID19 SA’S ECONOMY WAS DECLINING. THIS WILL BE
FURTHER EXACERBATED BY THE CURRENT ECONOMIC SLOWDOWN
The country was expected to grow by 0,9% for 2020. Due to the impact of COVID-19 virus this figure has
been revised and is expected to contract by 9,5% in 2020.
Real GDP
Figure 4: SA GDP growth, 2020
2,5 3,1
1,8
1,2 1,4 1,4 -2,0%
0,8
0,4 0,2
In Q1: 2020
(quarter-on-quarter)
Seasonally adjusted and annualised
Real GDP
-0,1%
-9,5
In Q1: 2020
(year-on-year)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Unadjusted
11 Sources: Bureau for Economic Research; 2020, StatsSA; 2020.TRANSNET COVID19 JOURNEY
THE TRANSNET COVID-19 JOURNEY
Creating the “New Normal”
EXTERNAL RISK TRIGGERS
• Lessons have been learned Transnet insights
15 Mar 2020
RSA declares State • Strengths & weakness are visible
• Latent vulnerabilities are exposed
of Disaster
• New ways of working have evolved
23 Mar 2020 30 April 2020 • How do we re-imagine our new world
RSA National Lockdown National Lockdown
effective 26 March 2020 Level 3 Level 2 Level 1 Creating a
Introduced an extreme Level 4
future resilient
change from business as Transnet
11 Mar 2020 usual!
WHO declares
Global Pandemic Immediate Impact Horizon Tactical Horizon Strategic Horizon
Brace Period Embedding the “New Normal” Optimisation &
C19
Durability
BCM Risk 24 Mar 2020
assessment Transnet COVID-19 response escalated.
TRANSNET RISK REPONSE
COVID-19 COMMAND CENTRE (CCC) established to:
Jan 2020 • Create a structure to centralise and
COVID Task Team coordinate Transnet’s response
established & war room set up • Direct and integrate initiatives, budgets
and supplement execution capacity
Initial focus on • Enable rapid decision-making within
communication, education, governance frameworks
risk assessments and • Create delivery accountability for all
readiness plans aspects related to Employee and
Operational Health
13
• Create an integrated reporting framework
Source: Transnet internal, 2020COVID-19 RISK MITIGATION AND READINESS:
CASE STUDY – IMPACT DELAYS IN CAPE TOWN
Transnet Port Terminals operates a complimentary port system as a value proposition for shipping lines, planning the visits of multi-port
calls as part of an integrated berthing window system as per the CTOC agreements. A typical liner service is used as an example below
to illustrate multi-port calls.
Additional
Transships
6
Reefers
left behind
1 2 3
5
4
1 Vessel arrives from Europe and discharges Delayed at CTCT but continues to NCT & DCT Delayed again at CTCT on return leg
2 Vessel sails to NCT and discharges Vessel bypasses NCT & CTCT on return leg leaving Vessel forced to speed on return journey to catch
up delays @ fuel cost of $750/ton x 150 ton/day
3 Vessel sails to DCT: discharges and loads Export boxes to make slot @ European Terminals
Vessel could still miss slots @ European ports
4 Vessel returns to NCT to loads thereby resulting in boxes having to be
transshipped with feeder vessels @ cost of $40k
5 Vessel returns to CTCT to load
per day plus fuel
14
6 Vessel departs for Europe
Source: Transnet internal, 2020THE RACE FOR NEW ROUTES FOR ECONOMIC ZONES, HUBS AND “SINGLE STOPS” IS ON AND THE SOUTH NEEDS TO RESPOND. 15 Source: Transnet internal, 2020
LOOKING AHEAD
Economy
The African continent looks set to suffer its largest ever recession in 2020 but like much of the world.
The rebound will be modest across the world, and most countries will emerge from the crisis with heavy baggage in the form of large
budget deficits, weak currencies and worryingly large stocks of debt.
The recovery across Africa in 2021 will be tempered by the lingering effects of the still-subdued commodity prices and volatility in
financial markets.
UNCTAD expects the pandemic to reduce global Foreign Direct Investment (FDI) flows by about 40% in 2020-21, a slightly deeper
contraction than the 35% recorded during the global financial crisis in 2008-09.
South Africa will be burdened by tight credit markets, low levels of private investment, high unemployment and growing levels of
poverty - if we do nothing.
The challenge for SA – how to change the risk/reward perception
Supply Chains
As focus is shifted from short-term damage control to longer-term
resilience, supply chains are likely to move in new and more
geographically dispersed directions.
The following trends are anticipated in response to the pandemic:
o Homeward bound – Some reshoring and stockpiling.
o Regionalisation – Offering nearshoring opportunities.
o Globalisation – A mixed approach by diversifying supply chains away
from a single country to a region.
16 Source: The Economist Intelligence Unit, 2020THANK YOU, NGIYABONGA Transnet SOC Ltd 9 Country Estate Drive Waterfall Business Estate Midrand, 1662 + 27 (11) 308 2313 Portia.Derby@Transnet.net 17
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