Transnet has announced an ambitious plan to move significant volumes of freight off the road, to rail, and spend R205 billion propelling the rail freight business to being the fifth biggest in the world.
The plan, which will be rolled out over seven years, seeks to ease the gridlock on the N3 between Durban and Joburg caused by trucks.
Addressing a business breakfast in Durban, hosted by the Gordon Institute of Business Science, yesterday, Transnet’s chief executive, Brian Molefe, said the move would see Transnet spending R300bn to execute its “market demand strategy”.
“A total of R205bn of the R300bn is being spent on Transnet Freight Rail as we look to propel our rail freight business. We are going to increase rail volumes from 200 million to 350 million tons over the seven years,” said Molefe.
“Rail is 33 percent cheaper than road, so this will help reduce the cost of doing business, preserve our road infrastructure and limit our carbon footprint.”
Besides rail, Transnet would also expand port and pipeline infrastructure to meet market demand.
“We will be seeking financial stability and strength and we are going to make significant improvements in productivity and operational efficiency,” Molefe said.
“The strategy will enable growth, and position South Africa as a key thermal coal exporter, the fourth-largest exporter of iron ore to China, the world’s leading manganese exporter, the premier logistics hub in sub-Saharan Africa and a global benchmark for container and heavy-haul operations,” he said.
With Africa enjoying unprecedented levels of economic growth, he said, Transnet would play its part in helping to sustain that growth. This would be through enabling regional integration by establishing South Africa as a trans-shipment hub and increasing over-border rail volumes.
The announced investment was welcomed by the Durban Chamber of Commerce which said it would have “a very positive effect” on business and ordinary motorists.
Andrew Layman, the chief executive of the chamber, said too much freight was carried by road, leading to congestion and damaged highways.
“It is also far less cost-effective to use road. The great value of rail lies in the transport of bulk goods and, if the rail infrastructure had the capacity, we could export much greater quantities of some minerals, such as manganese,” he said.
Layman said rail could also be used for containers, but there was less chance of rail replacing road for that.
“Various plans are under discussion as to how best to deal with the distance from the rail terminus to the customer. Road freight can be carried point to point,” he said.
Transnet had the capacity to achieve this objective if it had the money, he said.
“The problem is that while the estimation of cost might be R205bn now, who knows what it might be when the work has to be done. It cannot be achieved overnight.”
However the move was long overdue.
“What was a functional and effective rail service was allowed to lapse into disuse even prior to 1994,” Layman said.
Road Freight Association spokesman Gavin Kelly was not available for comment.