South Africa’s road-torail strategy is key to reducing logistics costs but there are some key concerns around its successful implementation. According to Nadia Viljoen, scientific editor of the recently released State of Logistics Survey published by the CSIR in conjunction with Imperial Logistics and Stellenbosch University, the private sector has raised some concerns around Transnet’s Market Demand Strategy (MDS). “There should be no doubt that this capital investment programme by Transnet must succeed to enhance the country’s competitiveness,” said Viljoen. “During our research for the annual survey it became very clear that there were concerns around the MDS and that the private sector still remained quite sceptical of the investment.” The first and foremost concern is around the quantitative basis of the MDS, with questions being raised around the volume projections on which Transnet has based its investment programme. “Has Transnet asked its customers which volumes need to be moved, at what cost and service expectations is a question the private sector asks.” A second concern is the expected cost of the required investment and specifically the amount of capital that needs to be spent to catch up and provide for future growth, while the third question relates to the operating capability of Transnet. According to Viljoen, it is clear that the private sector feels they cannot merely trust that capital investment will rectify Transnet’s poor reliability record and cannot commit to long-term conversion to rail transport without a more transparent and predictable pricing structure being in place. “It is clear that Transnet going forward is going to have to engage far more closely with its customers,” she said. In response Transnet Freight Rail chief executive, Siyabonga Gama, said the rail operator had achieved significant efficiency improvements where it had invested in new rolling stock and infrastructure. “The MDS is a partial response to a scientific freight f low model that Transnet has developed and is the most comprehensive freight demand model in South Africa. Modelling is done at a very detailed level,” he said. INSERT & CAPTION It is clear that Transnet going forward is going to have to engage far more closely with its customers. – Nadia Viljoen
