3 minute read
Rail freight
On the right track
With government planning to open the freight rail network to private service providers, RODNEY WEIDEMANN investigates its implications
Traxtion has announced a R1.5-billion initial investment in rail infrastructure upgrades.
When the government’s Economic Reconstruction and Recovery Plan was announced last year, rail was singled out as being at the heart of South Africa’s economic recovery, with a plan outlined to open the freight rail network to private service providers.
According to rail services and solutions company Traxtion’s chief executive offi cer, James Holley, this will be a game changer. “This will offer signifi cant benefi ts to upstream customers and improve the competitiveness of South Africa’s economy by increasing the rail capacity for a large body of freight that moves most effi ciently on rail, but is currently transported by road.”
Holley says that not only will it be a game changer in respect of a reduction of transportation costs for customers, but it should also lead to greater effi ciencies being introduced in the system itself, by virtue of additional users of the rail network generating track access fees. “There are additional impacts in terms of job creation, increased GDP and road safety. With fewer trucks on the road, there will be less maintenance required on the roads themselves, and fewer large vehicles will also make the roads safer.”
On time, every time
Not everyone is as optimistic, however. Gavin Kelly, CEO of the Road Freight Association, believes that the rail network is in a bad state. “Somehow, as a country, we have allowed the network to deteriorate to a point where major rebuilds are required, rather than just needing maintenance. There are horrendous examples of where the infrastructure has been destroyed, lines and power cables stolen, and the basic infrastructure to run a reliable and effi cient rail transport system looted.
“Rail will need to prove that it can deliver on time, every time, that it can reach both customers and manufacturers with ease, that it is actually price effi cient, and can meet the needs and expectations of the customer.”
But Holley points out that the Africa Rail Industry Association has conducted a study on rail infrastructure, fi nding there is signifi cant
“We are more than happy to make significant investments into new train sets in order to work on the existing infrastructure.” – james holley
capacity and that slots are available to put additional trains into the network. This means that investments in infrastructure won’t be needed in order to unlock this capacity. “There have been suggestions that our narrow-gauge rail may be a problem, but we feel a well-maintained narrow gauge will facilitate effi cient logistics in South Africa, and we are more than happy to make signifi cant investments into new train sets in order to work on the existing infrastructure.”
Holley adds that in terms of rolling stock, we will defi nitely need more trains, which will require serious investment. To this end, Traxtion has announced a R1.5-billion initial investment, subject to concluding an access agreement with Transnet. “It is also worth noting that there are workshops in Boksburg that have been manufacturing trains for more than a century, so becoming a manufacturing hub of sorts is a strong possibility.”
In fact, says Holley: “The vast majority of our trains have been assembled locally, so there is already strong IP available. We are confi dent that this will be a big win for us locally, in terms of manufacturing and sub-components supply.”
POLICY GUIDELINES
Key policy guidelines on private participation in the rail sector: • Attract, encourage and regulate private sector participation in respect of investment, operations and maintenance.
Invite private sector participation where the government cannot or should not invest, where it demonstrates superior value for money or where it is quicker to market. • Retain all state-owned railway network and rights of way but make them available to the private sector on mutually agreed terms.
