It sounds so simple: move freight and heavy trucks off our roads and back onto our underutilised railway network.
Save the roads, enable increased export volumes, and reap the economic benefits of a more efficient, more wellconnected logistics network.
Unfortunately, nothing is that simple, and SA achieving this positive scenario lies largely in the hands of stateowned Transnet inefficient, indebted, embattled on multiple fronts including the huge scourge of cable theft and vandalism of infrastructure.
It is also not just about getting rail working efficiently again, but about the vital interchange and links between rail and harbours.
The weakness of these links leads to some ports being congested, causing delays that discourage shipping lines from calling at SA ports, while other ports are not optimally used to their capacity.
Shipping, of both incoming and outgoing raw materials and goods, needs good rail linkages; and rail needs the volume generated by shipping to be viable. It’s all interconnected, and not that simple.
Miners, automotive and other manufacturers, the agricultural sector, importers and exporters of products are all on the back foot as a result.
The mining sector estimates that R50 billion in export opportunities were lost last year, mainly due to their inability to get the likes of iron ore and coal onto a train and to a port to be loaded onto a vessel.
Auto manufacturers locally and inland have similar challenges of moving vehicles and components via rail to ports to meet export orders, and the Eastern Cape’s key agricultural sectors of citrus and wool can also talk about the challenges presented by inefficient transport linkages, especially for perishable goods.
The lack of efficient rail connections is also partly the reason for the Bay’s manganese ore problem, with the ore moved by truck from the mines into the metro, having to be staged somewhere outside the port, such as Markman, due to delays in accessing the port.
And meanwhile, the heavy trucks are taking a huge toll on our roads not designed for such traffic.
The private sector thus has a vested interest in achieving a more efficient and effective logistics network, particularly the upgrading of rail, and a rail network better connected to back-of-port terminals and into the ports themselves.
Business wants to get involved in running the country’s key freight rail corridors and terminals, to more efficiently enable exports and take advantage of global opportunities, both import and export.
Various role players have called for privatisation and/or some type of public-private partnership that can do a better job than is now being done, but the opportunities offered thus far have not made business sense.
Transnet Freight Rail’s issuing of a request for qualification (RFQ) last month, calling for private sector interest in bidding for a 20-year lease to operate the vital Johannesburg-Durban rail container corridor, is a positive step.
The RFQ came as a surprise to the markets, since a much longer “back to the drawing board” window was expected after the failure late last year of Transnet’s attempt at offering two-year leases to operate selected slots on the north-south and Jo’burg-Durban corridors.
Clearly, a 20-year lease presents a much more attractive business opportunity, though there are still flaws in Transnet’s proposed model together with the hurdle of an anticipated at least R5.5 billion investment required to operate the corridor as well as rehabilitate, upgrade and maintain the infrastructure, and secure it against an estimated five “security incidents” per day.
Transnet Freight Rail had to cancel over 1 100 trains in 2021, mainly due to cable theft, representing lost export opportunities and, for a future private operator, lost business - so security is going to be a vital element, and huge cost, for that operator.
Business in Nelson Mandela Bay will be watching these developments with interest because we believe the next step is for a similar undertaking on the north-south corridor connecting Gauteng with Eastern Cape ports, as well as privatisation opportunities in port operations.
While the Jo’burg-Durban corridor is working reasonably well, though not optimally and not well-managed, the Gauteng-Eastern Cape link is not working nearly as well, and is neither reliable nor efficient.
Previous feasibility studies on this corridor have looked at pockets of cargo in isolation supporting the automotive sector, for instance but a solid investment case needs to be based on an integrated approach, looking at all commodities that are moved between the Eastern Cape and
Gauteng, and that can be converted from road back to rail.
Such an integrated approach also needs to incorporate the Eastern Cape’s three ports, both in terms of operating efficiency and improving their port-rail links.
Without an efficient rail link to Gauteng, the Eastern Cape ports cannot offer a viable alternative for shipping lines to the congestion of the port of Durban they would rather wait for a berth in Durban, or skip South African ports altogether, further hampering exports.
Offering shipping lines a viable alternative in Eastern Cape ports will undoubtedly improve overall economic opportunities in the province.
The mechanics of making this a viable investment and business opportunity for the private sector, in partnership with Transnet and other public sector players, are still not clear.
It might not be simple to do, but it has to be done.