A presentation done by Mr Elvin Harris (Executive Manager: Strategic Knowledge: TFR) at the Transport Forum SIG 4 June 2015 hosted by University of Johannesburg. The theme for the event was: "Back to Rail - a Critical Analysis" and the topic for the presentation was: "Rail, the track to efficiency"

1. Rail : The Track to Efficiency
Transport Forum
Special Interest Group : 4 June 2015

2. PAGE
Contribute to RSA Competitiveness by Reducing the
Cost of Logistics
Deregulated Freight Transport and
Logistics Industry – Modal Imbalance
: Focus
 Road to Rail shift – Efficient Operations
 Modal Collaboration and Intermodalism
 Enabling the shift from a mining-based
to a networked economy
 Enabling global competitiveness of
shippers and downstream industries
 Preparing for mineral beneficiation
development
 Providing capacity against long-term
investment returns
Rail Turnaround on Track
Total logistics cost (2012)* = 12.8% of GDP
Transport costs are high – driven by high fuel
prices. Rail contributes only ~11% to the
transport costs
Inventory Carrying Cost
12%
Mngmnt & Admin
12%
Warehousing
15%
Transport
61%
* 9th Annual State of Logistics Survey

3. PAGE
MDS – Turnaround driving volumes back to rail
60
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68
70
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86
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1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
 1986 : Decline in volumes following
deregulation
 1990s : Lack of investment compromises
service and leads to less utilisation of Rail -
loss of market share to Road
 Business in decline – loss of skills and market
reputation
 2000s : Inadequate and ageing capacity.
Unable to capitalise on economic growth and
commodity boom
 2005 : Re-engineering Programmes to
improve efficiencies and refocus the business
 2009 : Economic Recession interrupts growth
path – Affordability constrains capacity
creation
 2012 : Market Demand Strategy
2012 : Market Demand
Strategy
Decisive action leads to Rail
Turnaround
Road to Rail shift through General Freight growth
General Freight Million Tons

4. PAGE 3
 To create
capacity
ahead of
demand
 To maintain,
upgrade and
modernise
the rail
system
Market Demand Strategy
Market
Development
 To improve
performance
productivity
and
operational
efficiency
 To contribute
to a reduction
in the cost of
logistics
Operational
Efficiency
Capital
Investment
 To develop
skills
 To create
sustainable
employment
opportunities
 To transform
the business
to a high
performance
culture
People
 To build
market
reputation &
credibility
 To increase
market
share
 To develop a
customer
centric
culture
 To build and
maintain a
healthy and
safe working
and
operations
environment
Safety
 To develop an
integrated
Regional rail
system with
economic
growth
opportunities
Regional
Integration
Goal : Top 5 Railway - Financially sustainable, Integrated Logistics Service Provider, Innovative,
Employer of Choice, World Class Customer Service, Gold Standard Operations and Capital Execution
Core Strategies and Objectives
Core Strategies
Objectives

5. PAGE
Growth through investment and efficiencies
Back to Rail - Capturing
Growth Opportunities
Operational Efficiency Capital Investment
 Improved Operations and
Train Planning
 Bimodal Technology
 Standardise systems
 Entrench operational
discipline and adherence to
operating procedure
 Develop rail operational
skills
Operations philosophy to
optimise existing assets
 Detailed capacity planning:
 Wagons
 Locomotives
 Network slots
 New rail technologies &
modernisation of Locos,
Wagons and Network
 Strategic Expansion
 Develop Engineering &
Project Management Skills
Invest to maintain the system
and create new capacity
Market
Responsiveness
Reliability
On Time In Full
Productivity Partnerships for
logistics solutions
Superior
Customer Service

6. PAGE
Capital investment analysis
5,7%+11,8%
2015
33,6
2014
31,8
2013
27,5
2012
22,3
2011
21,5
Port
containers 9%
Export
iron ore
1%
Bulk 3%
Export coal
12%
GFB
60%
Other
Piped products
8%
5%
43%
57%
Expansion vs replacement
Capital investment by commodityR billion
Replacement: R19,0 billion
Expansion: R14,6 billion

7. PAGE
Efficiencies achieved since start of Locomotive
Modernisation Programme
6
Loco
Type
Corridor / Flow Key Commodities Efficiency Improvements
19E Export Coal heavy haul line Coal Locomotives cycle time improved from
58 to 41 hours
15E Export Iron ore heavy haul
line
Iron Ore Improved number of locomotives per
342 wagon train from 9 to 6
locomotives per train with better
energy usage
50 “Like
New”
Steelpoort – Ermelo
Lephalale - Thabazimbi
Chrome / Ferrochrome
Coal
Sustained current flows with better
delivery rate
43D
Phalaborwa – Richards Bay Magnetite; Rock
Phosphate
Wagon cycle time improved from 84
to 56 hours
Eskom Power Stations Coal Ensured Camden, Thuthuka and
Grootvlei power stations are provided
with uninterrupted train service
Sishen – Saldanha Iron Ore Reduction in diesel fuel consumption
20E Hotazel – Port Elizabeth Manganese Wagon cycle time improved from 90
to 65 hours
AMSA Flows (ex-Sishen) Iron Ore Sustain AMSA Iron Ore flows
Reliable locomotives – a primary element in the system - contribute to improved
cycle times. This in turn raises service reliability and market capture prospects

8. PAGE
Improved Cycle Times
7
Corridor Locomotives Wagons
Previous
hours
Achieved
hours
%
Improvement
Previous
hours
Achieved
hours
%
Improvement
Phalaborwa – Richards Bay 96 56 42 142 96 32
Coal RBCT 58 41 29 65 48 26
Manganese PE 90 66 27 120 90 25
North - South Corridor 160 72 55 720 336 53
Efficiencies achieved on key corridors

9. PAGE
A railway fit for the future is a responsive railway
A responsive railway meets the unique logistics
needs of the economy
▪ Optimally maintains, utilises and densifies
existing infrastructure
▪ Invests to create capacity ahead of demand
▪ Reduces the cost of logistics
▪ Reduces the cost of externalities to the
economy
▪ Strives for regional connectivity
▪ Attracts and retains rail friendly traffic on rail
▪ Collaborates for intermodal solutions 8
A sustainable railway contributes to the
competitiveness of a developing nation

10. PAGE 9
“The recent upswing in the rail
share has occurred more rapidly
than anticipated. The modal
shift objectives of increasing
bulk exports of coal and iron
ore; recapturing both export and
domestic bulk markets for other
ores; and making first
attempts to increase the high-
value and corridor market
shares are beginning to bear
fruit. The modal shift strategy of
increased rail investment and
improved service levels should
receive further support”
Source: 9th Annual State of Logistics Survey for South Africa 2012
Conclusion
Accelerating Rail Market Share Growth

11. 20 Thank You