‘Price cuts are only way to win cargo from road’ – industry source

ALAN PEAT THE ONLY way Spoornet can win back any business from road is by cutting prices, according to several sources in the industry. “They want to target cargo going on the road,” said one source. “To do that they need to price the market. “They want to maximise the capacity. They won’t do it unless they reduce the rates. “It’s as simple as that.” The evidence is that people with cargo on the move in the export chain look for the most cost-efficient way of doing this. And, with the landside handling and transport leg being such a significant proportion of the export cost, it’s that “cost” part of cost-efficiency that bears the most importance. If the cargoes get there safely and in time for the ship, that’s efficiency enough, said an industry commentator. So the cheaper the landside handling and transport cost the better. “For example, it’s cheaper to breakbulk by road down to Durban, and warehouse and pack the containers down there.” The result of this, he added, is that the trains are just not fully utilised, and are not running full in either direction. “So, they (Spoornet) need to do something. “Their service and their train availability have improved dramatically. All they need now is to be competitively priced.” Our source also felt that Spoornet’s latest proposal – to fiddle around with the top weights of what constitute “light” and “heavy” containers – is not enough. “A three-tier system – with “super-light”, “light” and “heavy” containers should only be seen as Spoornet getting on the starting blocks. But what they really have to aim for is reducing the rates.” However, that simple solution is not on the cards, according to the railways Spoornet spokesman, Molatwane Likhete.