Road to rail: a “Holy Grail”
Road to rail: a “Holy Grail”
The often-stated but somewhat nebulous objective of the South African government was to reverse the dramatic shift of long haul freight transport from rail to road in the period 1985 to 2000. What happened? NICK PORÉE reports.
During that period, the railways – having a total monopoly on rail freight transport – withdrew all breakbulk services by closing stations and sidings and reducing locos, wagons and staff. Why? So as to focus on train-load point-to-point bulk cargoes such as coal, iron ore, minerals, fuel and chemicals. The result is that the present total tonnage on-road (outside cities and towns) is about 380 million tonnes per year and total railway bulk haulage is approximately 230 million tonnes.
The railway is burdened with aged locos and rolling stock and responsibility for maintaining about 20 000 km of track network and attendant infrastructure, although 75% of it carries insufficient tonnage to justify its cost. The result is severe deterioration aggravated by criminal looting, even of mainline track equipment.
Much is made of “rail-road competition”, but the real situation is that industrial usage of road freight is the only alternative for all the functions that railways do not, or cannot, currently perform. It is therefore relevant to examine when cargo is not possible via rail-freight. See the accompanying table.
Competitive private train-operating companies are likely to challenge road freight for the abovementioned cargo types, but should not be precluded from challenging current operators for existing rail cargoes by means of legitimate service and pricing efficiencies.
As a step towards achieving better use and management of the national railway assets and encouraging industries to use rail transport, the President recently announced that policy is to be changed to permit the operation of privately owned trains on the national rail network.
In order to encourage private sector participation and achieve effective change, the 120-year total railway monopoly needs to be repealed. This will require extensive restructuring of the institutional and regulatory framework of the railway sector.
Initial discussions appear to be based on the concept of concessions by Transnet as the future “owners” of the system, a situation calculated to block any private sector investment. It must also be recognised that passenger services use the same networks and PRASA must therefore be one of the major train operators within the system.
A future situation of “regulated competition” on the rail network requires track network ownership to be separated from train operations. In addition, all train operating companies should be equitably charged for their use of the national rail network. This implies the creation of a rail track agency along the lines of SANRAL, the national roads agency. The track agency will charge all train operators for use as track access fees, or train-path (slot) fees, based on train characteristics such as tonnage, length, speeds and the duration online. These will be a set of published tariffs approved by the regulator.
The creation of a single transport regulator (STER) and the existing Railway Safety Regulator are necessary institutions for a final railway structure but need to be totally independent of track and train operators. The system requires train planning, slot allocation and control function, which must be independent of train operators but totally integrated with all train company control centres.
Cargo characteristics that favour road haulage
|1||Commodities that are highly seasonal||Fruit, sugarcane|
|2||Origins and/or destinations; off rail||Most urban, agricultural and rural freight, fertiliser, construction materials and most modern distribution centres|
|3||Freight with total movement cheaper on road due to terminal and handling costs for door to door delivery||Most urban and rural freight|
|4||Cargo that is fragile or requires excessive packaging for rail||FMCG, white goods, electronics|
|5||Cargo that is excessively expensive to insure||Electronics, alcohol|
|6||Cargo with high security risks||Copper, cigarettes, electronics|
|7||Short cycle retail deliveries to many points||Fuels, perishables, fresh produce|
|8||Breakbulk loads requiring disaggregated deliveries to several points||Retail distribution|
Bulk commodities ordered in less than train-loads
(min 400 tonnes)
|Coal, foods, feeds, spares, tyres|
|10||Commodities with variable daily volumes||Timber, sugarcane|
|11||Commodities that require precise delivery times||Automotive and other, JIT manufacturers, maritime exports|
|12||Commodities that require guaranteed regular delivery volumes||Foundries, mills, production plants|
|13||Commodities from a central point for dispersed deliveries all over the country||Containers, machines, cars|
|14||Cargo with urgent delivery requirements||Industrial supplies, fresh produce|
|15||Cargo requiring branded delivery to customers||Beverages, foods|
|16||Cargo requiring controlled delivery and proof of delivery documentation||Most retail deliveries|
|17||Cargo requiring carrier responsibility for total delivery||Most retail deliveries|
|18||Cargo which is part of 3Pl/4PL total logistics service||Many modern logistics systems|
|19||Cargo handled by own account in-firm transport||Urban and rural deliveries from distribution centres|
|20||Loads of mixed cargo, tools, machines||Construction materials|
|21||Commodities requiring controlled transport conditions, e.g. refrigeration, cryogenics, heating||Perishables, gases, milk, chemicals, asphalt|
Note 1: Many commodities have one or more of the abovementioned characteristics.
Note 2: Customer choice is based on total logistics costs, including ease of access, terminal, handling, packaging, insurance, risk of delays and other factors.
Note 3: Competition includes issues such as service, performance guarantee, claims settlement and flexibility of supply.
Note 4: Personal contact and customer relations is a key issue in maintaining business.
Note 5: The abovementioned commodity characteristics also apply to about 20 million tonnes a year of bulk on road
This institutional situation is typical of the many countries where railway intermodal logistics are an important part of the overall industrial transport systems. If the South African economy is to develop beyond the current dependence on exported raw materials and imported manufactures, government must promote industrial investment.
This will only happen by reducing the current barriers and restrictions to private sector competitive business creation. It is important that railway policy be changed from SOE mega investments in unwarranted infrastructure to the restructuring of railways to encourage competitive freight operations. But, without serious commitment, the changes to rail may be more “snail” than “grail”.