by Frank Beeton
M
oving
atters
Frank Beeton scans the transport world for news pertinent to the Logistics Sector.
Locomotives for
Africa!
On Monday, March 17th, Transnet announced the awarding of orders for the supply of 1 064 new locomotives, at
a total cost of R 50-billion, to its Transnet Freight Rail division. This reportedly represents the largest contract ever
concluded by the State-owned utility, and is the result of an open tender process. Initial deliveries of completed units
are expected within 15 months, with full execution of the contracts due during 2019.
The contract was divided among four suppliers, as detailed in the following table:
Country of
Origin
Model
Description
Volume
Total Contract
Value
Approximate
Unit Price*
Bombardier
Transportation
SA
moving matters
Contractor
Canada/
Germany
Traxx Africa
Dual Voltage
Electric
240 units
R10,4 billion
R 43,3 million
CSR Zhuzhou
Electric
Locomotive
China
Dual Voltage
Electric Six Axle
359 units
R14,6 billion
R 40,7 million
General Electric
SA Technologies
USA
Diesel Electric
233 units
R7,1 billion
R 30,5 million
CNR Rolling
Stock SA
China
3,3MW Six-Axle
Diesel Electric
AC Traction
232 units
R7,8 billion
R 33,6 million
ES40Aci
Evolution
* Total Contract Value divided by number of units.
C
onsiderable local input is envisaged for this
contract, and after the initial delivery of 70 built-up
units, assembly of the balance will take place at
Transnet Engineering facilities in Pretoria and Durban. These
operations will receive a collective investment of R300 million
in preparation for this task. Minimum local content levels of
55% and 60% have been set for the diesel-electric and allelectric locomotives, respectively, and it has been estimated
that the contract will create approximately 30 000 direct
and indirect jobs in South Africa. Transnet Engineering has
aspirations to become an Original Equipment supplier to rail
operations throughout Africa, and much of the expertise and
equipment associated with the execution of these orders is
likely to be beneficial to that objective.
However, questions are sure to arise regarding the high
percentage of orders allocated to suppliers of Chinese origin,
despite relatively small apparent differences in unit pricing.
Transnet management reportedly holds the view that the
selection of multiple suppliers was prudent in assuring
delivery within the required timescale. They have also gone to
considerable lengths to confirm the legitimacy of the tendering
process, assuring that “all governance and procurement
procedures were followed to the letter”.
Notwithstanding the foregoing, Transnet’s new locomotive
fleet needs to play a pivotal role in the carrier’s strategic
intent to double its general freight tonnage by 2019. In doing
this, Transnet Freight Rail aims to improve its share of the
“transportable gross domestic product” from the current level
of 15%, to between 25 and 30% by 2022. Watch this space!
| logistics in action
94
As we have reported before, locomotives from that country
have experienced serviceability difficulties under African
conditions, and it could be argued that the risk element
inherent in this Transnet order allocation appears to be high.
While we do not argue against China’s emergence as a great
global industrial power, it is usually prudent to limit exposure
to a new, and relatively inexperienced supplier, until they
have built up a satisfactory track record. In Africa, with its
demanding operating, geographic and climatic conditions, this
strategy has proved to be highly appropriate, many times over.
may 2014