Transport Solution

26 /10 / 2010

www.nepadbusinessfoundation.org

Presentation Layout

• Global overview

• Infrastructure & Transport Challenges

• Elements of Vision 2025

• Investment option

• Strategy Benefit

• Critical Success factor

• Conclusion

Global Customer Requirements for Rail/Road

• Heightened pressure for world-class competitiveness

• Efficient rail is a competitive advantage for customers to get product to market – 5 “R’s” of Rail:

– Right Place

– Right Time

– Right Quantity

– Right Cost

– Right Condition

Rail/Road is an integral part of the total supply ch ainrail operators in Africa must think outside the box

• Traffic Congestion around ports• Missing links or connectivity• Poor trade partnership• Lack of Connectivity and integration with Ports• Lack of funds in financing • Poor infrastructure and Rolling stock• Lack of human development

Rail / Road and Port Issues

AFRICAKm railway lines per country

Total: 82.991 km. (35 countries - September 2007)

0

5 000

10 000

15 000

20 000

25 000SO

UTH

AFR

ICA

SUD

AN

D.R

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NG

O (Z

AIR

E)EG

YPT

ALG

ERIA

NIG

ERIA

MO

ZAM

BIQ

UE

TAN

ZAN

IAZI

MB

AB

WE

AN

GO

LAN

AM

IBIA

TUN

ISIA

K

ENYA

ZAM

BIA

MO

RO

CC

OU

GA

ND

AC

AM

ERO

ON

GH

AN

ASE

NEG

AL

R.O

.CO

NG

OB

OTS

WA

NA

MA

DA

GA

SCA

RG

UIN

EAM

ALA

WI

MA

UR

ITA

NIA

ETH

IOPI

A

CO

TE D

'IVO

IRE

GA

BO

NM

ALI

BU

RK

INA

FA

SOTO

GO

BEN

INER

ITR

EASW

AZI

LAN

DD

JIB

OU

TI

Km

The railways

• 35 railway countries• 7,5% of the world total railway network

– 38% of narrow gauge

• China: 87.000• Russia: 75.000• India: 63.000

The world and the African market

• 20.4% of the total land area • 14% of the world population• Half of the worlds landlocked countries• More than 50 countries and several

regional organizations• Not homogenous

(development levels, opportunities etc)

Key Drivers Transportable GDP Growth

Economic Growth

Shifts in market flow

patterns

Containerisation

MarketLiberalisation

However, road has been the main beneficiaries of this growth

MarketAdaptation

MarketMarketAdaptationAdaptation

SkillsDevelopment

SkillsSkillsDevelopmentDevelopment

Policy Frameworks

Policy Policy FrameworksFrameworks

Private sectorparticipation

Private sectorPrivate sectorparticipationparticipation

Modal Co-operation

Modal Modal CoCo--operationoperation

OperationalEfficiency

OperationalOperationalEfficiencyEfficiency

RegionalInter-

connectivity

RegionalRegionalInterInter --

connectivityconnectivity

InvestmentInvestmentInvestment

Vision2025

Elements of an Africa 2025 Transport Vision:‘More Rail for Africa’

Focus area: Projects

1. Operations and Information Technology

2. Human Resources

3. Infrastructure and Equipment

4. Marketing

Private sector participation

• Socio-economic• Long term• ROI not purely financial• National / Strategic

Development• Funding and affordability

will always be a challenge

• Capacity typically lags demand

• Often lack skills

• Purely commercial• Reliance on anchor

commodities• Shorter term• Integrated rail system

sustainability not primary imperative

• Access to funds• Rapid development• Attracts skills and talent

PPP Strategic Issues to be considered by Vision 202 5• Impact of Rail Concessionning – future sustainability; corridor management; rail system integration;

need to separate infrastructure and operations• Pursue Opportunities for PPP’s - Wagon investment schemes, Intermodal Terminals, Outsourcing

non-core activities, Advanced Train Technology, Major Infrastructure Development

Strategic Benefits of PPP’s

Railways can achieve the following

• Re-investment in infrastructure and equipment

• Integration of activities and services

• Cooperation between railway companies

• Establishment of multi-modal supply chains and trans-

national railway corridors

Elements of Rail / Road Investment

Collaboration• Share real-time data with key customers,

suppliers and partners• Align individuals and organizations• Standardize processes and practices

Optimization• Implement new tools and processes

• Eliminate inefficiencies• Leverage cost savings across communities

Connectivity• Standardize applications and platforms

• Foster many-to-many collaboration• Enable trade exchange

Execution• Improve transportation, distribution,

inventory, and order management• Expedite financial settlements• Measure performance results

Speed• Increase responsiveness• Improve adaptability• Access information in real time

Visibility• Track inventory flow• Update order status in real time• Manage incidents

Freight Growth

Rail/Road has a role in Creating a ‘Seamless’ Supply Chain

A system of integrating logistics players and customers through a seamless process supported by a common technology platform

Rail

EmptyTruck

Port

LoadedTruck

Customer

TruckDepot

Offloads

Goods Loadedon Wagons &

Departs

Train Offloads at

port

Rail Terminal

Cargo on Vessel

Seamless process

Common Technology Platform

Customs

SADAC Benefit from Vision 2025

•Reliable, Safe, Sustainable Scheduled Railway

•Point to Point Service Delivery

•No frills, Low Cost and Efficient

•Focus on chosen corridors (SA and SADC)

•Enable Multiple Rail Operators

• Enable Feeder Line Concessions

• Relinquish marginal lines

Rail Industry Environment

Efficiency Performance

Mad

agas

car

Strategic Rail corridors in SADC

Strategic Corridors

East-WestConnectivity

Mal aw

i

Zambia

BotswanaNamibia

South Africa

Moz

ambi

que

United Republic of Tanzania

Democratic Republic of Congo

Zimbabwe

Angola

Swaziland

SADAC must focuses on integration of strategic

corridors through integrated rail operations with Southern African Railways to maximise

Infrastructure

SADAC must focuses on integration of strategic

corridors through integrated rail operations with Southern African Railways to maximise

Infrastructure

60% of Mineral Deposits in Southern Africa

60% of Mineral Deposits in Southern Africa

Ma la w

i

Zambia

Botswana

Namibia

South Africa

Moc

ambi

que

United Republic of Tanzania

Democratic Republic of Congo

Zimbabwe

Angola

Swaziland

Ma la w

i

Zambia

Botswana

Namibia

South Africa

Moc

ambi

que

United Republic of Tanzania

Democratic Republic of Congo

Zimbabwe

Angola

Swaziland

Mauritius

SADC Growth

GDP Growth2005 – 4.8; 2006 –

5.10Corridor Market

GDP Growth2005 – 7.0; 2006 – 7.0

Corridor MarketCopper, Sulphur &

Diesel

GDP Growth2005 - 6.5; 2006 – 7.0

Corridor MarketContainers

GDP Growth2005 – 7.3; 2006 – 6.5

Corridor MarketCoal, Sugar & Maize

GDP Growth2005 – 2.0; 2006 – 1.7

Corridor MarketAnthracite, Pulpwood

GDP Growth2005 – 5.0; 2006 – 5.0

Corridor MarketSulphuric Acid, Diesel,

Copper & Sugar

GDP Growth2005 – 4.2; 2006 – 3.5

Corridor MarketCement, Petrol,

Diesel, & Sodium Carbonite

GDP Growth2005 – -1.6; 2006 – 0

Corridor MarketFerrochrome, Coke,

granite, Petrol & Diesel

GDP Growth2005 – 13.5;2006 –

24.5Corridor Market

GDP Growth2005 – 3.6; 2006 – 3.8

Corridor MarketZinc, Cement & Maize

GDP Growth2005 – 4.0; 2006 – 3.5

Systemic Cost Reduction Model

CorridorDensity

CorridorDensityImproved Market

ShareImproved Market

Share

Efficient RailTrans. SystemEfficient Rail

Trans. System

Low operatingcost

Low operatingcost

Increased Traffic

Increased Traffic

Critical Success Factors

• Relationships with transport partners

• Readiness to form joint venture

• Involvement all key stakeholders

• Communication and sharing of

information

• Joint opportunity identification

• Dedicated project and team members.

Conclusion

• African Railways must have a commonvision to implement vision 2025

• Integrated and coordinated development

• Development, Attraction and Retention of Skills

• Infrastructure investment

• Rail resources are strategic – need to be nurtured to be sustainable

Thank you.Thank you.

Stanley MkokoStanley Mkoko

Transport Sector HeadTransport Sector Head

NEPAD Business FoundationNEPAD Business Foundation