SABOA Conference a treat for bus and coach operators
SABOA Conference a treat for bus and coach operators
This year’s SABOA Conference was superb – a well-organised event that offered a great deal to the many bus and coach operators who attended. CHARLEEN CLARKE joined the delegates in attendance.
Minister of Transport Fikile Mbalula’s keynote speech acknowledged the Covid-19 pandemic’s devastating impact on the economy. “The transport sector was not spared. The travel restrictions we introduced during various Alert levels had a direct impact on your operations and revenue streams. Since the outbreak of this pandemic, most countries experienced an acute decline in the demand for public transport. Studies indicate that, as we learn to live with Covid-19, mobility patterns and customer expectations are likely to be different,” he noted.
“As countries work to rebuild economies in the aftermath of the Covid-19 devastation and deal with the uncertainties of how the recovery will unfold, they also have an opportunity to reposition public transport as a key driver of the new economy.”
Dire situation nothing new
Mbalula pointed out that public transport in South Africa was already in a dire situation when the pandemic was declared. The vast majority of South Africans rely on public transport for their transport needs and livelihoods.
Over the years, as private vehicle ownership increased, so did investment programmes that focused largely on expanding road networks. Bus and rail services became increasingly tailored towards providing commuter transport for the low-income segments of our population, forced to live in dormitory townships away from centres of economic activity. Meanwhile, public transport capital investment for renewal, improvement, and system extensions essentially dried up.
Furthermore, he noted that over the last three decades the minibus-taxi industry has grown exponentially while operating on the fringes of the formal economy. “The 2020 National Travel Household Survey reflects that in 2020, only 9,4% of South African households selected travelling by bus as their usual mode of travel, compared to 10,2% in 2013. The growth of minibus-taxis was a consequence of increasing urbanisation, decentralisation, and poor regulation of public transport. The combination of apartheid spatial planning, transport policies skewed towards road-based mobility, uncontrolled development, and an absence of effective public transport planning has exacerbated urban sprawl and decentralisation.”
Mbalula also tackled the thorny issue of the Public Transport Operations Grant (PTOG). “Public transport funding is an important tenet in the transformation of public transport and positioning the same as an enabler of mobility. In 2019, the National Treasury announced that significant reductions will be made to planned expenditure over the 2020 MTEF due to the overall economic downturn and the associated pressure on the fiscus. Almost all conditional grants have been reduced, with large reductions effected on grants with a history of poor performance. Unfortunately, the PTOG was also affected with a 0,4% reduction in the 2022/23 financial year,” he conceded.
Some public transport successes
But Mbalula said it wasn’t all a case of bad news on the public transport front. “Despite all the challenges experienced in the public transport space, we must recognise the strides we have made, and the successes recorded. The rollout of the Bus Rapid Transit system and its associated infrastructure has been the most visible progress we have made. We must continue to build on this progress to deliver an integrated transport system that is responsive to the Integrated Transport Plans of our cities,” he noted.
Shireen Darmalingam, Standard Bank economist, gave a fascinating insight into the economy, predicting GPD growth of 2,2% for 2022 and 2% for next year. “Many sectors – transport and construction, for instance – are still below pre-pandemic growth levels,” she noted.
Darmalingam said that there is concern about the fact that consumer confidence has remained very fragile, continuing, “As we started to see lockdown levels being used, we saw consumer confidence picking up. But then, in the first quarter of 2022, we saw consumer confidence declining again as a result of the war.”
According to Darmalingam, the Reserve Bank expects inflation of 5,9% in 2022. “We see it dropping back to 4,4% in 2023. We see the rand ending the year at about R15,20 to the dollar. However, this could be impacted by a surge in Covid infections and deaths. Long term, we see the rand trading at R15,40 – but this does depend on the war in Ukraine,” she told delegates.
Bazil Govender, executive manager of SABOA, gave delegates an analysis of the PTOG funding and also revealed the results of an industry survey on the impact of cost pressures.
Dire situation for bus and coach operators
You can read all about the survey on page two of this issue of FOCUS. When it comes to the PTOG, Govender noted that the situation is dire. “In 1997, Interim contracts (ICs) were concluded with all subsidised bus operators as a transitional measure to full contracting within three years. The subsidy was based on a passenger subsidy linked to distance travelled and socio-economic circumstances of passengers. Approximately 120 Tendered Contracts (TCs) and Negotiated Contracts (NCs) were concluded between 1997 and 2001, after which the system came to a halt mainly due to funding issues. These are all kilometre-based contracts,” he explained.
In 2009, with the introduction of the PTOG, all remaining ICs were converted to kilometre-based contracts and the contract kilometres “capped”. All tendered and negotiated contracts were also capped and contract expenses were not allowed to exceed the annual PTOG determined by National Treasury. Since 2009, the industry cost escalation has been “de-linked” and the result has been devastating. “It is estimated by SABOA that, since 2009, the cumulative deficit of the PTOG compared to the expected increase in the subsidy amount – when using the interim contract escalation formula as a proxy for the three types of contracts – is in the order of R3,6 billion,” Govender revealed.
“Since November 2020, the price of diesel has significantly increased. It is now flying through the roof. The wholesale price of diesel increased by 43,7% (Dec ’21 year-on-year) resulting in an operating cost increase for diesel alone of 13,1% (The PTOG increased by 5,5% in 2021/22). The citizens of South Africa cannot tolerate more travel costs being passed onto them,” he pointed out.
E-mobility enters the fray
Hiten Parmar, director of the uYilo Electric Mobility Programme, spoke about the electric mobility landscape, noting that government has a role to play when it comes to e-mobility. “The taxation on importation of built-up electric units is one of the challenges we face. We have been engaging government in this regard and we will continue these engagements,” he said.
On a positive note, Parmar revealed that lightweight material and composites are reducing the overall weight of electric vehicles, while range and technology are no longer problems when it comes to e-mobility.
Kevin Short, consultant to Optibus Africa, delivered a really interesting presentation on the Greater Kampala Transit project, noting that integrated transport has come a long way in Uganda. “South Africa can achieve something similar to what we have achieved in Uganda. Buses, taxis, and light rail can live together. We’re training 12 000 drivers and conductors alongside hundreds of engineers. We’re creating upwards of 15 000 jobs in two years and, in Africa, that is a wonderful story,” he noted.
The Cross Border Road Transport Agency’s Sibulele Dyodo also told some wonderful stories, maintaining that there were considerable moves afoot to improve the efficiencies at border posts.
However, the story of the day went to Kathy Bell, transport industry risk specialist at Standard Bank. She told the story of a company called Africa Link Transport, which is owned by Sunshine Bennett. It’s a real success story and the implementation of the Road Transport Management System (RTMS) is one of the reasons why.
“Since the introduction of RTMS, the business has gone from running entrepreneurially to running in a far more efficient and safe way. Fatalities, crashes, and incidents have dropped dramatically, as has speeding. Fuel consumption has improved, as has revenue,” she revealed. There are now about 280 RTMS-certified operators in South Africa.
Daily deaths
Oliver Naidoo, managing director of JC Auditors, tackled the grizzly subject of road safety, saying that it’s a problem that we don’t get excited about road safety. “We get excited about innovation, e-mobility and things like that. As a country, we have become desensitised to the reality that people are dying every day. We have a crisis on our roads. We can put our heads in the sand and say that we’re just another African country, or we can admit that we have missed the boat,” he noted.
Kaine Monyepao, deputy registrar: strategy development and research at the Road Traffic Infringement Agency, concurred. “Road fatalities in South Africa are seven times higher than the international average,” he revealed.
The South African Police Services’ Colonel Freddie Booysen painted a similar picture, saying, “South Africa currently is continuously experiencing increased levels of lawlessness, intolerance, and disregard for the rule of law, and more than often with impunity.”
Naidoo noted that there are many challenges when it comes to road safety. “We have increasing traffic volumes; we have around 11 million vehicles on our roads. The roads have not expanded in line with the increasing volumes. Secondly, there is an increasing culture of non-compliance. You will see a CEO of a company in a normal setting who behaves in a reckless and non-compliant fashion when out on the roads.”
Alas, there is no quick fix. “There is no silver bullet to our road safety challenges. It will take concerted, sustained, disciplined, and innovative approaches involving all stakeholders to make a tangible road safety impact over the long term,” he noted.
So, there you have it. The SABOA Conference revealed that many challenges lie ahead – but the bus and coach sector appears set to tackle those challenges head-on.
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