The Past and Future of Freight Rail in South Africa

The Past and Future of Freight Rail in South Africa

The historical development of freight transport in South Africa has been similar to the developments in other countries. Initially, the centres of commerce and industry were the port cities. With the discovery of gold and diamonds the distribution of economic activity became heavily concentrated in the mining areas of the Transvaal and Free State, some 400-500kms from the coast. This meant that transport linkages to those areas were the freight transport priority. Natal, Cape, and Transvaal governments recognised the severe limitations of ox-wagon transport and the need to encourage the private development of railways. When these faltered the governments took them over and completed them by about 1890. At the time of Union in 1910, the government created one single system for ports, railways, road freight and airways called South African Railways and Harbours (SAR&H).

Although the entity was given monopoly status in those modes, it was continually harassed by private sector farmers, and businesses which provided own road transport. By 1930 it was considered necessary to protect the railways against road competition and the Road Transportation Act No 39 of 1930 was promulgated, administered by Road Transportation Boards with a brief to suppress unauthorised long-haul road freight competition. After World War 2, the industrialisation of the country saw increasing conflicts between industry and government regarding the railway monopoly on inter-city freight, which was restricting industrial logistics options.

The Schumann Commission into Railway Rating Policy (1964), concluded with the recommendation that the Minister of Transport (DOT) “institute a thorough study of the machinery and measures required to ensure the efficient coordination of transport in South Africa”. As the result of continuing pressures from industry, the Marais Commission in 1969 addressed the “Coordination of Transport in South Africa. The commissioners made the following observations 294(i) an increasing growth in road transport must be expected and encouraged and that a continuation of the policy of granting greater freedom for the road transport user, especially over short distances, is indicated. (ii) control of road transport in South Africa will remain necessary, in order to ensure that it does not grow beyond the carrying capacity of the roads and that road transport services do not develop in a manner resulting in excessive and wasteful competition.

In all of the foregoing internal SAR&H recommendations there is an underlying assumption that that the State will regulate the supply of transport services (in all modes) with minimal reference to quality, efficiency, or the satisfaction of user demand. The centralist monopoly perspective was reiterated in the publication “This is SAR” in 1978 which refers to “placing the various competitive modes on a competitive footing with regard to infrastructure”, (and that mantra is still quoted today). The de facto situation is that the railway has protected its monopoly, and does not share the tracks, and therefore bears the entire costs, unlike road freight where 380,000 freight vehicles pay handsomely for the proportion of the road network that they share with 11.0 million other vehicles.

By 1980 the conflict over supply side regulation of freight transport resulted in the National Transport Policy Study (NTPS) commissioned by the Department of Transport and performed by private sector consultants. The recommendations in1986 were to de-regulate the supply of road freight transport, (but to improve the regulation of operating quality by means of a Road Traffic Quality System (RTQS). They included the deregulation of the railways (then SA Transport Services (SATS) from social passenger service obligations (to be paid by government) and gave freedom of control from tariff regulations with the mandate to become sustainable and self-sufficient from state assistance.

As predicted, road freight competition surged as hauliers cherrypicked all the high value cargoes, underquoting railways, and offering door to door services. The railway management then initiated the very expensive PX & CX container system for handling breakbulk distribution to and from the major centres. When the Autosort consignment handling and cargo tracking system failed to attract sufficient customer support it was scrapped. Transnet Freight Rail (TFR) then extricated itself completely from breakbulk cargoes by closing thousands of stations and sidings and focusing on the less complex and more profitable contract haulage of bulk commodities of coal, iron ore, other minerals, fuel, chemicals, and some timber. This also now includes about 12% of containers and some vehicles to and from ports. The limitations of the rail services supplied, means however that the vast majority of industrial freight transport demand can only be done by road.

This has implications for the future of rail as the bulk export of minerals may have less than a 30-year horizon, and despite the adumbrations and omissions of the National Rail Policy White Paper, future industrial growth will require efficient breakbulk logistics. The railway corporate decisions to withdraw from the breakbulk market, therefore makes any resistance to participation by private train operators somewhat illogical.

This is in stark contrast to the rest of the world where integrated private freight rail and multimodal services are an important part of the logistics options for almost all commodities.

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Original Article:

By:  Nick Porée



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