Shift to rail could reduce transport costs by 27% - Molefe

Transnet’s R300-billion investment in rail and port infrastructure should see a reduction of up to 27% in South Africa’s logistics costs, according to Transnet group chief executive Brian Molefe. Speaking to the Nelson Mandela Bay Business Chamber in Port Elizabeth last week, Molefe said Transnet’s market demand strategy would lower the cost of doing business in South Africa by an equivalent of 0.5% of the gross domestic product. According to Molefe, the total supply cost of rail is 23% less than that of road. Freight that has already been moved off road includes coal for Eskom’s power stations, liquids being carried on the multi-product pipeline, and a shift of containers onto rail. In 2011, Transnet increased the number of trains it ran a day from 700 at the start of the year to 1 200 by the end of the year. “There will be an additional reduction in logistics costs through efficiency improvements and coast transhipments,” he says. Molefe urged business to see short service shipping operations between the South African ports as an opportunity. “There has to be greater connectivity by sea for freight and passengers,” he said. Moving containers off the road between the ports along the east coast would take pressure off the roads and fill in for rail. CAPTION: Brian Molefe ... ‘There has to be greater connectivity by sea.’