Are Gauteng's expansion plans based on flawed data?

The fact that the Gauteng 25-year transport policy is based on volume growth at the existing and future rail-served inland terminals renders it somewhat questionable in an environment where these volumes are actually decreasing and the proposed new terminal is in serious doubt. That was a theory put forward to FTW by Francois Nortje, a Gauteng property developer specialising in logistics developments and reacting to our February 13 article headlined Is TNPA rethinking the dig-out port?” “The context of this is based on the fact that Transnet was too optimistic in its growth projections for container volumes,” he said. “If you think that there is a re-think on the dig-out port due to less containers than anticipated, there must be a massive re-think on inland terminals. This because they are not only affected by the factors that affect the dig-out port, but also extensively by the de-stuffing of containers in Durban for whatever reason.” On this de-stuffing issue, Nortje again referred to an FTW article – this time of November 28 last year and headlined “Interesting transhipment anomaly on Durban-Jo’burg route”. Here we attributed the Transnet Freight Rail (TFR) market share loss to container imbalances, where imports into SA were arriving mostly in 40-foot (12-m) boxes, but exports from Gauteng were mostly in 20-ft (6-m) boxes – and there was, therefore, no use for 40-ft containers in Gauteng, and Durban de-stuffing was the growing preference. But Nortje added to this another reason for increased de-stuffing. In this, he quoted Mitchell Brooke of Citrus Growers' Association (CGA) writing for Fruit SA. The failure to resolve the legality of transporting the high-cube containers (HCCs) to inland destinations on standard semitrailers is likely to promote the development of double handling of boxes from the docks on “container trailers” to warehouses and depots, according to Brooke. “This,” he added, “will lead to further increases in the proportions of containers de-stuffed in the port cities for reloading of sorted goods as break-bulk onto interlinks for long-haul transport.” According to Nortje, it must also be recognised that the more frequent usage of these larger containers will obviously lead to lower numbers of containers entering the country, and proportionally reduce the rail share of box transport. Also, it will be natural to de-stuff these HCCs because of weight issues. “The bottom line is,” he said, “containers are unpacked in Durban and left there and Transnet totally loses its share of that part of the market.” Nortje also highlighted the variable swing in electricity prices versus diesel prices – with diesel having actually dropped in price because of the plunge in crude oil costs. But, with electricity prices being increased by a yearly amount approved by the energy regulator and the budget just having tacked an additional levy on it, this power source is on a steep upward climb. “The Transnet trains use our ever-more-expensive electricity and surely are now uncompetitive compared to the truck on price,” said Nortje. “Transnet had low market share in the past because of the long time delays compared to the truck. Surely it has got much worse for them now? They cannot compete on time or price.” Despite all these factors, Nortje noted that the two neighbouring inland terminals of Kascon and City Deep were having billions spent on them to upgrade their capacity to a total of 700 000 TEUs a year by 2019, according to TFR’s 2014 Rail Development Plan. But the TFR plan stated that, even with upgrades, the forecasted container volumes would exceed the current terminal capacity by 2022 – thus additional terminal capacity would be required in order to meet rail’s desired market share. INSERT Transnet was too optimistic in its growth projections. – Francois Nortje