SA’s great train robbery

A recent Transport Forum, hosted by the University of Johannesburg, delved into everything rail related. Jaco de Klerk reports that the “Transport Month Celebrations: Rail Day” themed event exposed one of the biggest heists in South Africa’s history…

Jan Havenga, a professor in logistics at Stellenbosch University and director of the GAIN Group (a boutique consultancy that focuses on contract research), delivered a thought-provoking presentation on “South Africa’s Great Train Robbery (GTR): The tough endeavour to get it back” during his opening address. 

Havenga explained that his presentation’s title didn’t refer to state capture. “This train robbery… in South Africa is much older than state capture. We planned this robbery in 1910. Why? Because with the Act of Union, we created the railway as we know it today, as we have created our country with its current borders.” 

Havenga added that the Union of South Africa Act stated that the country’s railway system should be run on business principles: “We never said how. In fact, as the growth (of moving commodities via rail) was quite slow initially, we brought in regulations to protect (the system).” 

The next step was cross-subsidisation. “High value freight had to pay for the low value freight, and this cross-subsidisation was the beginning of this (current) mess,” he noted, explaining that while the railway system was deregulated in 1989, the industry knew this was coming and focused on building export lines as a preemptive measure. “So now we could really cross-subsidise ourselves out of this mess with the export lines,” he elaborated, adding that there was a belief that this could be done instead of fixing the country’s gross domestic product (GDP).

Havenga highlighted that the government refused to invest in the general rail freight business. “We needed new systems and new products, but because we had the export lines, we thought we’d make it work, somehow,” he explained. South Africa started to invest in equipment for road, however, which added injury to insult. “Over time, this investment just went all the way in the wrong direction,” he said. 

“So, a huge number of mistakes were made over the years with good intentions. People really looked after (the rail system). The stewardship was there, but we didn’t do the things that we were supposed to do, and then we did get to a point where, by two bands of merry men and women, the job (of the collapsed rail system) was finished for us in the last 15 years,” he elaborated. 

This stagnation also added to the GDP conundrum, as the lack of rail infrastructure caused South Africa to miss a massive opportunity when coal prices soared nearly three years ago. “When the Ukrainian war escalated, 25 million tonnes of coal – at R5,000 per tonne – didn’t make it to the sea. That is R125 billion of lost income for our country,” stressed Havenga. 

The mining commodities that are being exported, however, travel mostly by road, which is adding to the Great Train Robbery. “One out of every two trucks transporting a mining commodity on rural roads should not have been there,” he said, adding that these commodities should have been on rails: “We’ve never prepared for the fact that we’ll have all of this produce in the rural areas of South Africa, on rural roads. No province is ready for it, and it (is causing) the destruction that we see (in these areas).” 

All of the missed opportunities and road damage quickly add up, and Havenga estimates that we’re bleeding R1 billion out of our economy every day: “Every day a billion is gone, and it’s been going on for a long time now.” 

From an environmental perspective, the Great Train Robbery is also stealing our future. “The 20 billion tonne-km of rail friendly freight on road in 2009 has grown to 65 billion tonne-km. The carbon overspend is 1% of total emissions for the country, 7% of transport emissions, and 17% of freight transport emissions,” Havenga explained. “The offset cost is R4 billion per annum.” 

Things are being done to address these challenges, such as the management restructuring at Transnet. “Last year we had a new Transnet leadership team appointed; they are trying their best to stem the tide of deterioration, but they’ve got nothing to work with. There are no resources,” Havenga said. 

“If you think someone is fixing the network now, or planning how the fix the network, think again,” he added, pointing out while all hands are on deck to try and stop the ship from sinking, the trains cannot run if we don’t fix the networks. 

Havenga further suggested that the Great Train Robbery can only be stopped if the original plan of running the rail system like a business is realised. The network has to be realistically assessed, and a financial model for Transnet has to be developed that looks at ways to both curb losses and make money. “We all want real reform. We all want private sector involvement. There’s nobody that actually disagrees about this. All the parties of the Government of National Unity agree about what should happen here. Let’s get it done,” he urged.