Bringing in the private sector as a partner for restoring South Africa’s rail network will likely take time, perhaps years, and much negotiation to iron out, Road Freight Association (RFA) chief executive Gavin Kelly said yesterday.
Interviewed on the sidelines of the RFA’s annual conference, held in the Cape over the weekend, he said Transnet’s recent announcements about embracing the private sector as a partner on the rail network had been discussed at the conference.
He said that while there had, so far, been no “watershed” event to mark the implementation of such plans, there was “broad agreement” about the concept as being necessary to restore the viability of South Africa’s degraded rail services.
There was currently about 24 000km of railway line in the country, though in practice only about 12 000km was required for the main transport routes.
Kelly said logistical demand at present was such that even if the rail network was fully restored tomorrow and began taking some of the freight from the road transport sector, it would still not result in less demand for road transport.
He said a changing fast moving consumer goods sector, and the prevalence of online retailing, was also changing the landscape for road transport, and conference delegates heard that in the longer term, while there might be less demand for long distance road transport, there would be increased demand for last and first mile transport services and other shorter routes.
Kelly said some important discussions still needed to be held about private participation in the rail sector.
One of those was who was going to maintain the railway system, and who was going to fix it.
No private operator was going to invest in train sets without being secure about the maintenance of the rail system.
And while it might be relatively easy to put dedicated train routes out for private sector participation, such as the coal line to Richards Bay, how and who was to do the scheduling of routes and freight, and the times between the state-owned rail system and private operators, as there was likely to be conflicting interests in the actual implementation.
There were questions about access, such as which routes might become available for private sector use, and how these would link in with state-owned operations.
There needed to be competition on the railway line, and there would likely need to be regulated access to those lines, he said.
All these additional systems and repairs, and perhaps even regulatory functions, were likely to add substantial additional costs to the rail transportation system, he said.
Stellenbosch University’s Jan Havenga, professor of logistics and supply-chain management, told the conference that rehabilitating the country’s rail system would cost an estimated R190 billion, including R30bn for bulk minerals lines, R80bn on the core railway network, R60bn on the feeder rail network and R20bn on short rail lines.
He said Transnet’s logistical issues during the recent port freight backlogs had cost the South African economy R1.2bn a day, R1bn through the rail service problems and R200m a day through port logistical issues, such as having to wait days for freight to be loaded.
Kelly said the cost of rail transport needed to be sustainable. Conversely, there were also long-term changes in the road freight sector itself, with the ongoing trend towards hydrogen or electric vehicles.
Here too, significant challenges still needed to be faced, such as the need for electricity charging infrastructure along national routes, the ownership of that, and given the hours required to charge vehicles, who would be given access first to the infrastructure.
Kelly said other challenges facing road transport currently was that the election might bring the need for new relationships with key government departments.
Domestic and overseas market confidence needed to improve, as this was affecting the rand-dollar exchange rate and the price of diesel, and the African Continental Free Trade Area should start to facilitate better regional trade.
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