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Friday Sep 07, 2012

Billions to be spent on Durban to Gauteng railway corridor

Transport goods by road costs billions of rand annually, which made a strong case for SA to improve the quality of its rail infrastructure which was a critical element of building a globally competitive transport system.

That was the message from Adam Seedat, the acting deputy director general of transport, who addressed the 10th Intermodal Africa Conference in Durban yesterday on behalf of Public Enterprises Minister, Malusi Gigaba.

Seedat said it was estimated that "road externalities" such as delays caused by traffic congestion and high maintenance costs for the trucking industry were costing the economy R34 billion a year. This accounted for about 20 percent of total road freight costs.

Logistics costs in SA are among the highest in the world.

Both Seedat and Transnet Freight Rail CEO, Siyabonga Gama, spoke of rail recapturing the logistics market and being essential for economic growth and competitiveness.

"In SA, given the geographical remoteness of the country and the distance of some of our key industrial centres from the ports, managing the competitiveness and costs of logistics is extremely strategic.

"In 2008, our logistics costs were 14.7 percent of GDP, in contrast to 10 percent in the USA. Transport costs constitute 50 percent of total logistics costs, in comparison with the world average of around 40 percent," Seedat said.

"Rail, through its implicit economies of scale, has some key advantages over road for the movement of large volume and heavy goods.

"There is a range of good reasons for moving goods by rail versus road. These include the fact that it decreases road congestion and road damage. It increases road safety. It is environmentally less hazardous and produces significantly less carbon emissions... Yet, the last two decades have seen a massive migration of goods off the rail system and on to road. Road transport has doubled in this period, while rail transport has decreased," he said.

A dearth of investment in rail during the last two decades had led to the poor state of SA's rail infrastructure and unreliable services. But, the country was embarking on a massive rail infrastructure revolution.

Seedat said that two thirds of the R300bn Transnet would be spending during the next seven years would be spent on rail infrastructure - mostly on the Durban to Gauteng corridor - and R35bn would spent on acquiring more than 1 000 new locomotives.

He said road freight would still have an important role to play and the industry needed to collaborate with Transnet to establish a competitive intermodal transport network.

"A principal tenet of the government's road freight strategy is to facilitate an optimum split of cargo between road and rail," said Seedat.

Gama said that in the next seven years Transnet's rail business would increase its capacity from handling 85 million tons a year to 170 million tons.

That excluded bulk cargo transportation, he said.

The Mercury

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