Freight body calls for better service from railways
Emergence of e-commerce coupled with rising demand for alternative energy commodities is lifting demand
The Road Freight Association (RFA) has called for faster progress in turning around railways and ports, saying demand for efficient deliveries outstrips the trucking sector’s capacity.
Unreliable ports and a crumbling railway system have increased available work for the industry, but the sector has been hit by bouts of violence and a spate of road accidents that undermined the trucking sector’s pick-up in demand which, in turn, has been bolstered by the rise of e-commerce and door-to-door deliveries.
The nonprofit organisation representing transport operators and logistics companies and associates said concessioning these operations could improve efficiencies and SA’s competitiveness amid the looming African Continental Free Trade Agreement (AfCFTA) coming into operation soon.
RFA CEO Gavin Kelly said the road freight sector was jolted during Covid-19 by changing consumer patterns towards e-commerce that pushed for more home deliveries and drove express courier demand upward.
While this has driven the increase in logistics activity, Kelly was adamant that “rail needs to play its role; it needs to ensure that it moves what it is best at moving”. He said that mining, particularly of coal for export, is among the sectors desperately in need of an efficiently operating rail system.
“There is going to be a lot of commodities moving in terms of alternative energies and development of new infrastructure, so there will be construction demand,” he said, which translates to demand for transportation as well.
The collapse of SA’s rail transport system, which is facing a multitude of challenges ranging from worn-out rails, poor infrastructure, inadequate funding and a skills shortage, to the absence of a supporting institutional framework, is forcing more trucks onto the roads and damaging them.
Kelly said that in the short term the roads and logistics sector would pick this business up, but “we just can’t get the volumes down there at the right prices and with minimum impact on the roads and communities”.
“In the short term there is far more work, but in the long term it’s not the right thing.”
SA’s rail network capacity has slipped from nearly 230-million tonnes of freight in 2017 to only 179 million in 2021, the lowest volume recorded over the past decade. The downward trend continued into 2022 with rail transported tonnage down 25% from the first quarter five years ago.
The Passenger Rail Agency of SA (Prasa) owns more than 2,200km of SA’s rail network and uses some of the 22,000km of rail track that falls under Transnet’s control.
Kelly said establishing concession routes as the state has done with toll roads needs to be implemented for at least 30 years, with the private sector being allowed to develop and maintain these.
Concessions involve a contractual arrangement between a public authority and the concession holder whereby the private operator provides services or carries out work and is remunerated by being permitted to exploit the work or service.
Similarly, the RFA said by also concessioning port operations, terminals and depots for 30 years, SA can ensure that these crucial logistics operations are as efficient as possible. “Look at the success of the N1, N3 and N4 toll roads,” Kelly said in urging the authorities to act now or the freight will move to ports around SA.
Keegor Group financial director Michelle Austin said many complaints about delays, inefficiency, service delivery and high Transnet costs have been lodged, complicating the relationship between exporters and this vital transport provider.
She said disruption caused by Transnet’s inefficiency were costly for exporters and made it hard for companies to remain competitive in global markets. This could adversely affect export industries around the country and hit economic growth as a whole.
“Any hold-ups can carry serious losses for those involved as late shipments can be costly for SA exporters, potentially resulting in financial losses, damage to reputation and missed opportunities,” Austin said.
Kelly agreed, warning that the country would lose out on cargo docking in SA as companies increasingly opt to dock in neighbouring countries. An urgent intervention was needed to improve the efficiency of SA’s ports and harbours.
“We need to fix this because if we don’t we are going to lose it and then it won’t matter any more whether we have ports or not as they will all go around Beira, Maputo, Walvis Bay or even Dar es Salaam, which we laughed at years ago,” said Kelly. Dar es Salaam port had reduced its waiting times from 21 days to five while SA still struggles with 14 days to get a container out of the ports.
“Our neighbours have watched SA over the last 30-40 years and know the kind of revenues that get driven by development and the economics of all of the supporting industries around the port, including warehousing and maintenance.
“We will lose all the revenue, jobs and all other businesses related to this mode of transport,” Kelly warned.
Austin said that given how reliant exporters are on Transnet to move their goods safely and securely in a timely manner to other countries, it must look towards other countries and their experiences with digitalisation.