Road to Rail: The Elusive Holy Grail?

Once again, we’re hearing that South Africa needs to move freight from road to rail. NICK PORÉE reiterates that this strategy is severely flawed…

It is apparent that the railway strategy is now being driven by the Department of Transport (DoT), although that department has yet to be formally given responsibility for Transnet. The DoT has issued a Draft Rail Private Sector Participation Framework (PSPF) in an attempt to attract private investment to rescue the deteriorating Transnet Freight Rail (TFR). In the DoT’s White Paper on Rail Policy, the PSPF notes on page 72 that the department must create a strategy to move about 30 million tonnes of freight from road to rail within two years. This presumably does not include recovery of the lost capacity to service the existing mining industry.

The DoT also commissioned a project in February 2023 for a consultant to develop a strategy to move freight from road to rail. This is concurrent with efforts to resolve the China loco dilemma in order to recover capacity to service existing industrial clients. The 500-vehicle queues at Richards Bay and Lebombo border post, as well as the scramble to handle bulk exports through the port of Durban, are sufficient evidence of the crisis in railways. The decreasing efficiency of the railway’s flagship operations in coal and iron ore is costing South Africa billions of rands in lost market share. The number of heavy goods vehicles (HGVs) on the N3 at Mooi River rose to 11 000 per day (50% of total vehicles) in November 2022, and continues to rise as road haulage tries to compensate for the collapse of railways. The private sector, meanwhile, is waiting to hear some sensible responses to their proposals for a workable restructuring framework to enable open access for train operations.

The White Paper on Rail Policy, which is the basis for the DoT PSPF strategy, contains several impracticalities. The assertion that “Rail transport should be repositioned as the preferred land transport mode and backbone with which all other transport modes integrate,” ignores the fact that road freight amounts to 82% of land freight, while railway only hauls bulk to and from a limited number of load points. “Traffic demand measures will be introduced in order to reduce freight volumes on the road,” appears to assume that someone intends to control demand for road freight transport to force the use of the railways. Does this mean that we are going back to the permit system?

With no historical authority over railways, maybe the DoT does not know – or chooses to ignore the fact – that the railway deliberately closed all services for breakbulk traffic 20 years ago because it was the loss-making part of the business. That action included the abandonment of 3 000 stations and access points. Since then, TFR’s corporate strategy has focused on contract trainload transport of bulk commodities and has divested all breakbulk equipment and access points. The captive bulk market segments are now suffering from the steady deterioration of services, as equipment and infrastructure collapse from age, deferred maintenance, inefficiency, and criminal looting.

Modern intermodal road-rail logistics are a far cry from the old-fashioned goods wagons and guard’s van transport of packaged freight. Internationally, intermodal freight is generally containerised, or involves various options for rapid transfer materials handling systems and rail transport of loaded vehicles. The systems are expensive, but very efficient and cost effective. Needless to say, we do not have these systems. Neither is it certain that we have the volumes in two directions to use them in competition with direct road freight.

The rail white paper also repeats the mantra about the cost of roads, mentioning “the introduction of a heavy vehicle fee to cover the true cost of the environmental and road infrastructure deterioration associated with road haulage”. In fact, less than 50% of road freight vehicles are loaded to capacity; empty vehicles on the main corridors account for over 40% of traffic, while 67% of modern industrial and consumer freight “cubes out” before reaching gross combination mass (GCM). Most containers from inland are returned empty. Some 80% of import containers are destuffed in Durban to avoid the cost of hauling the boxes to inland destinations, and the cost of handing in empty returns at depots in Durban. Most of the depots are off-rail, so there is a cross-haul from rail to depot.

There is also a repeat of the nonsense about overloading in the paper, which states: “The road-to-rail movement of the appropriate freight must be supported through more stringent overloading control of heavy vehicles.” Load capacity is irrelevant, as there is no competition between road and rail. Road freight is all about breakbulk logistics, which are not handled by railways. Bulk freight by road is always the second (more expensive) choice, and only used for off-rail destinations (which includes all urban and most rural destinations), small consignments, or when railway service is too complicated or expensive to switch modes, or is unavailable. These are all economic consequences of the inherent disadvantages of rail and will not change. Regulation 236 of the National Road Traffic Act (NRTA) should be amended to permit full legal axle mass loads on interlinks. This would reduce the amount of “overloading”, the number of vehicles, and road wear without any other effect – barring a much-welcomed cost saving for customers.

Current attempts at attracting funding by PSPF – public-private partnerships (PPPs), borrowing, or Treasury spend – will come at an additional cost, which will be reflected in tariffs. The mantra that rail is cheaper does not apply to breakbulk, due to the costs of terminals, cross-haul, material handling, warehousing, packaging, pilferage, insurance, and inventory delay in receipt of goods. Attempting to manipulate the relative cost structures of rail and road will have severely negative impacts on domestic, regional, and global transport costs and competitiveness. Long-haul road freight costs are already too high, due to the officially administered pricing of inputs and the diversion of road funding to other activities.