Transport lacking motion: Creecy’s crisis point
Transport lacking motion: Creecy’s crisis point
What should Barbara Creecy, the new Minister of Transport, be focusing on? NICK PORÉE explains…
Transport is all about motion. Policies provide direction, but there is very little evidence of positive corrective policy action in any modes for the past 30-plus years since the deregulation of road freight in 1987, and ossified policies have resulted in the current national logistics crisis.
In 2024, South Africa enters a new era of transport policy, with the 11th new Minster of Transport since 1994. Barbara Creecy takes up the reins in a period of intensely urgent need for rapid redirection of transport policy in all modes. She arrives as head of the Department of Transport (DoT) at a time when there is a need for radical action, shrouded by a plethora of rhetoric about the causes for and solutions to the current situation. Most of the discussions centre on retaining existing structures and building on the salvation of Transnet as a cornerstone of transport in the economy.
Cabinet approved both the Freight Logistics Roadmap and the Rail Private Sector Participation (PSP) Framework in December 2023. The roadmap developed by the DoT reads as a ponderous analysis and apology for the failure of the state-owned corporations (SOCs) in transport. Curiously, it focuses on Transnet whilst ignoring the Passenger Rail Agency of South Africa (PRASA).
It also reveals the intention to provide further massive bailouts to continue the SOCs’ existence. I quote: “A partnership model between the public and private sector must focus on how a bold, capable and well-structured Transnet can unleash the full power of markets and the private sector in building an efficient and effective logistics system that supports an inclusive economy. Transnet’s repositioning to fulfil this mandate will require a number of transformative interventions, including the commercial separation of infrastructure businesses and operations businesses, and a move towards a portfolio-based operating mode.”
The irony of “unleashing the power of markets and the private sector” by pouring massive government funding into a failed and technically bankrupt company that has steadfastly rejected commercial competition should be self-evident. In fact, private sector industry (the market) has abandoned rail for all but captive commodities, opting for the efficiency of road freight.
From her inaugural speech, it is clear that Creecy intends to make some impacts on the defects in the transport sector, with references to a range of current issues, including “key logistics corridors, backlogs and congestion at strategic border crossings, congestion in key national highway corridors, combatting cable theft, and maintenance backlogs at Transnet”.
Furthermore, she maintains that the “transport priority is road safety”. Plus, she believes that “several future transport issues such as digital technology, renewable energy, transition to new energy vehicles (NEVs), and Sustainable Development Goals” are important. Unfortunately, all of these current issues are just symptoms of the fundamental policy defects, which give rise to the inefficiencies. It is to be hoped that the Minister will review the many policy recommendations made to the DoT over the past 20 years (such as the National Transport Master Plan, National Freight Logistics Strategy, Road Freight Strategy, and others).
The National Logistics Crisis Committee (NLCC), Transnet, and other government agencies have defined six proposed key levers to transform the transport and logistics sector. All are non-commercial governmental plans:
- The Transnet Recovery Plan, with PRASA omitted!
- The Freight Logistics Roadmap.
- The Private Sector Rail Participation Framework (which makes some unlikely assumptions).
- Treasury’s conditional, insufficient token hand out of R47 billion to Transnet.
- The Economic Regulation of Transport Bill (this requires further definition for rail operations).
- The draft Network Statement, published by Transnet’s interim infrastructure manager, detailing the Transnet interpretation of the functions of the newly created infrastructure manager. This includes complex provisions for use of the railway infrastructure by private sector operators, scheduling of their rail services, and totally unrealistic proposed train path charges. It excludes PRASA’s rail network and train operator companies (TOCs), although this is impractical for integrated train control.
As all these plans are premised on control of competition by the existing operators (Transnet and PRASA), there is a need for independent transport professionals to examine and report on the current practices, organisational structures, systems, and capacities in the DoT and the rail transport sector. This is essential to provide details of the extent of the deterioration as a verifiable basis for recovery, and to identify and recommend radical corrections to the primary causes of the existing situation. To merely hand over a further R47 billion bailout without detailed analysis would be irresponsible, and preclude private sector investment in TOCs due to skewed competition. There is minimal possibility that the current operators will ever recover their extensive debts via commercial competition with either railway operators or road freight haulage on a level playing field. This implies that there will be many future bailouts to add to the current billions of rands of debts. The NLCC has identified eight workstreams:
- Performance improvement of the freight rail, port systems, and siding operations.
- Sub streams: coal, iron ore, manganese, containers, and chrome.
- Improvement of road transport operations and border transit, security, and congestion.
- Restoring passenger rail including the track, stations, and equipment.
- Structural reform of the freight logistics system, as in the Freight Logistics Roadmap.
- Improving efficiencies in Transnet’s procurement process.
- Railway, port, and pipeline infrastructure security.
- Communication of the strategy to the public.
The NLCC is to “improve road transport operations and borders” (actions unspecified) and the balance of the activities are all designed to recover the disastrous state of the SOCs in order to restore the status quo. All actions are to be authorised by civil servants and none of them appear to contemplate logical commercial decisions or reactions from commerce, industry, or private sector transport operators – truly a case of “doing the same thing over and over and expecting a different result”.
The radical changes which are urgently required have been recommended in past studies. They can be described very simply, are all doable, and all have relevance for creating a truly efficient, commercially competitive, sustainable, multi-modal freight logistics industry in South Africa and the region. Some of the necessary basic policy changes have been recognised and even partially accepted; in order to prepare the transport and logistics sector for some industrial recovery and growth in GDP, we now need bold and decisive action, not talks, at this critical juncture:
- Disaggregate Transnet into corporatised commercial companies.
- Create Transnet train operating companies: COALLINK, OREX, and General Freight.
- Transfer the total railway network and all infrastructure to a new network agency in the DoT.
- Restructure and repurpose the DoT and its agencies to create effective modern management structures for all modes.
- Create and relocate the Rail Economic Regulator and Rail Safety Regulator to the DoT.
- Design and publish plans for real open access for TOCs on the national railway network.
- Disaggregate Transnet Ports Authority into three regional authorities with Ports Boards, which include provinces, cities, and the private industrial users (Ports Act 2005).
- Define and prepare outline requests for proposals for all ports – for total-upgrade and international-level build, operate, and transfer (BOT) contracts.
- Create a national regulatory authority for commercial road freight operations.
- Redefine roles and responsibilities for transport modes between departments and levels of government, and restructure liaisons to include the private sector.
As a freight consultant to the government for 40 years, I believe that the policy inertia is endemic, and it is to be hoped that our new transport minister will indeed be prepared to make changes and introduce revised purpose and modern international best practice into transport policy. It must be free of SOC corporate interests, and focus on logistics effectiveness and international regulatory quality standards. The result will be a vibrant, sustainable, commercially competitive, multi-modal rail- and road-based transport industry, with many TOCs and their logistics providers moving industrial goods and passengers efficiently on level playing fields – without government bailouts.
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