Durban -Transnet says a number of steps are being taken to stabilise operations in Transnet Freight Rail after a recent report said inefficiencies had resulted in an estimated economic loss of about R1 billion a day.
The report by the GAIN Group, a boutique consultancy, said that inefficiencies at Transnet Freight Rail had resulted in a negative effect on the economy with the projected loss for this year at R353bn, equivalent to 4.9% of GDP.
Professor Jan Havenga, a director at GAIN Group, said that co-operative forums created between the Minerals Council, mining houses and Transnet, were expected to improve the performance of Transnet Freight Rail this year.
“This improvement did not materialise. Throughput has instead worsened, the anticipated positive impact of the co-operative forums did not materialise as intended, and the exchange rate deteriorated.”
Dr Zane Simpson, another director at GAIN Group, said the calculation of the loss to the economy, quantifies:
- The failure to achieve potential exports (predominant losses of coal and iron ore).
- The economic cost of Transnet’s performance, resulting in inefficient logistics combined with higher transport costs incurred by companies needing to shift cargo to more expensive road haulage (this includes both general freight and minerals on road that should have been on rail).
- The resulting indirect impacts that these direct losses have on the economy.
Havenga said the establishment of a National Logistics Crisis Committee (NLCC) after a request from the business sector was a positive move.
Asked about the issues with Transnet Freight Rail, Transnet said the challenges were being addressed.
It said it was working to see the return of China Railway Rolling Stock Corporation locomotives that needed repairs or parts.
“Locomotives are the primary unit of production for our operations. We have gone to market to source local Original Equipment Manufacturers (OEMs) that can re-engineer the parts that we require to bring back long-standing locomotives. It is to be noted that the biggest impact on the improvement of service will come from the return of the long-standing locomotives.”
Transnet added that in order to tackle criminality, vandalism and sabotage that are the “single biggest threat to rail operations throughout the country”, it had announced their Outcomes-Based Security (OBS) solutions across five corridors, including the export coal (North Corridor) on August 1.
“From inception, the respective service providers, working with a range of law-enforcement agencies, have made hundreds of arrests, including on the North Corridor.”
Transnet said that OBS was a significant departure from the conventional, defensive and reactive security approach that is traditionally offered in South Africa, and was seen as the best chance to deal with criminality.
It said it had had seen a decrease in the number of speed restrictions on the North Corridor as a result of the work done by its maintenance team in upgrading a section of the infrastructure.
Transnet also said as part of its turn-around/transformation strategy that it was busy with an RFI (request for information) for a digital partner. “We are also at an advanced stage with the RFP (request for proposal) for our Integrated Train Plan, the benefits of which will be seen in the next 6-8 months.”
Regarding the sale of slots on the rail networks, it said: “We initiated a pilot project to sell 16 slots on the Cape and Container corridors, which resulted in only one applicant emerging as a potential operator of slots on the Cape Corridor between Kroonstad and East London. The project is a precursor to the National Rail Policy that is expected to be finalised in 2024.”
Juanita Maree, CEO of the SA Association of Freight Forwarders (SAAFF), said: “Some important developments continue to take place, among them the NLCC partnership between the SA government and business, which is key and must continue.
“But according to excellent research by the GAIN Group, many loose ends remain, which continue to inhibit even average operational performance from any network segments.”