Rail still a hart sell - but innovation yields solutions

Since signing its

memorandum of

understanding

(MoU) with

Transnet Freight Rail

(TFR) in late 2013,

Barloworld

Logistics has

made “a lot

of progress”,

particularly

around

intermodal

terminal

developments

– including

participation

in the tender

for the

Grootvlei

Coal

Terminal

near Balfour

in Mpumalanga.

“We are close to

concluding certain

developments, although we

are not ready to disclose

specific details yet,” said

Barloworld Logistics

marketing executive Kate

Stubbs. She told FTW that

the partnership was going

well – although there were

certain aspects that needed

to be ironed out – and that

the two entities had learnt

to work well with each

other.

“We have been fortunate

to continue to work

with the same team we

negotiated the deal with

and so we’ve had a lot of

policy and developmental

consistency,” Stubbs said.

According to her, there

are “pockets of excellence”

within TFR and this has

created good synergies.

“Our partnership mandate

is to build skills and

capacity,

invest in

assets –

including

managing

and

developing

intermodal

terminals

– and to

provide

innovative

technology

solutions

to improve

end-to-end

supply chain

visibility,” said Stubbs,

noting that Barloworld

Logistics had always

been more focused on

finding the right end-toend

solutions at the right

service and cost, regardless

of the mode of transport.

“We do have a large

f leet of vehicles but we’ve

never been road transportdriven

and we understand

the need for a land-based

intermodal solution that

best meets our customers’

needs for efficiency and

cost-effectiveness.”

That being said, Stubbs

noted that in some

cases rail, as part of an

intermodal solution, had

not proven to be the most

cost-effective solution,

nor the most operationally

efficient, in some cases.

“We have found that the

need for handling – loading

containers on and off

road to rail – has doubled,

tripled or even quadrupled.

This ups the logistics costs

and adds security and

cargo quality risks,” she

pointed out, adding that

these were some of the

challenges being ironed out

between the partners.

“It takes a lot of

negotiation between

private sector partners

(PSPs) and state-owned

enterprises to ensure

all needs are met, the

right changes are made

and proper capacity and

efficiency is built up. It is

not a quick solution, but

we are getting there,” said

Stubbs.

Some of the issues that

contribute to operational

inefficiencies and higher

costs include the fact

that the current rail

infrastructure is not as

f lexible as the road – but

Stubbs pointed out that

this was being addressed

through the development

of intermodal terminals.

“We are moving towards

a solution that sees road

transport being the first

and last leg of the journey

and rail transport being

used for the longer trip.”

While Stubbs said there

had been queries and

interest from clients for the

addition of rail as part of

the supply chain solution,

she acknowledged that it

was a challenge to convince

a number of customers

about the reliability of

rail and to prove the

intermodal business model

was a viable one. “There

is still a poor perception

out there about the

reliability and

capacity of rail

and we know

it will take

some time

for some

of our

customers to come round,”

she said.

Stubbs pointed to

TFR’s innovation in

addressing challenges as

one of the ways in which

customer perceptions

could be changed for the

better. “For example,

TFR has been developing

specialised containers

for bulk and general

cargo. This especially in

light of demand for

bulk commodity

transport

dropping as

the global

price slump

continues,” she

said.

INSERT & CAPTION

We are close to

concluding certain

developments,

although we are not

ready to disclose

specific details yet.

– Kate Stubbs