‘Benefits of investment in road far exceed rail’

The economic argument of road versus rail has little to do with the transport cost of moving goods from A to B. The positive externalities of road far exceed the transport costs – and that’s where the debate needs to take place, in the view of transport economics adviser at Arup Transport Planning, Andrew Marsay. There’s no doubt that the environmental benefits of rail far outweigh road, but what hasn’t been adequately quantified is the positive economic benefits of road. Road has enabled manufacturing to take place in more locations than was ever possible with rail, says Marsay. “In addition, there’s the manufacturing optimisation. You can offer small amounts of goods frequently throughout the day in many locations. “The final manufacturing location is often a very small part of the total manufacturing process with many ‘feeder’ manufacturing locations able to locate remotely in places more economic for their purposes. By facilitating the disaggregation of production processes in this way, efficient road transport technology has brought massive efficiencies to the manufacturing sector over the past few decades.” A research project undertaken for the Department of Transport in 2008 examined how to increase investment in transport infrastructure in a sustainable manner. “We had to review the relationship between transport infrastructure and economic development over a long period. “The research showed that investment in paved roads pushes GDP and enhances it whereas investment in additional railway capacity follows GDP.” There’s no question that rail does some things best – bulk coal and bulk rail over long distances, for example. “But Transnet doesn’t tend to prioritise these to the extent is warranted by the viability of their successful bulk haulage businesses. “They want to target general freight business because the revenue on a container is very high. But international evidence as well as history here in South Africa indicates there is simply not a good economic case for general freight rail investment.” In revenue terms, Transnet’s strategy may appear rational – but the true costs involved in achieving these revenues are artificially hidden. “Transnet’s privileged position as the monopoly owner and operator of the country’s ports and pipelines gives it an artificially protected cash flow that enables it to raise capital and put it into whichever area of freight rail it thinks is a good thing. In Marsay’s view, billions are being invested in rail on the basis of the true, but only partial analysis, that when rail is efficient it can have a much lower cost per kilometre on long hauls than road transport. “But most of the value is not in the transport cost but in the economic externalities.” If it were purely down to transport costs rail should have 60-70% of the market but it doesn’t. “It has only 15% even on the Gauteng-Durban corridor – which is clear evidence that there’s something other than transport costs at work.”