Transnet Freight Rail (TFR) has attempted to put a positive gloss on its recent attempt to sell 16 slots on its Cape and Container corridors that resulted in only one applicant emerging as a potential third-party operator.
In reality, it is not a positive outcome, particularly in light of the fact that third-party access has been identified as one of the main reforms to be implemented under government’s Operation Vulindlela initiative.
It would be harsh to describe the process as a total failure, given that it was always held up to be a pilot project, as well as the reality that it proceeded in the absence of the policy certainty that a finalised National Rail Policy could eventually provide.
Nevertheless, the fact that only two companies made formal applications – two for the Container Corridor and one for the Cape Corridor – by the August 31 submission deadline is disappointing, doubly so given the high-level support provided by the Presidency and the National Treasury.
It is even more discouraging in light of the fact that the domestic rail industry is in dire need of new investment, innovation, and skills, with several corridors, especially the Container Corridor, operating at levels that bear little resemblance to their original nameplates.
Thankfully, truck hauliers have stepped in to fill the freight- logistics gap that has been left by rail’s underperformance, but that too has come at a cost.
Besides the country’s dismal road-safety record, congestion and maintenance are real problems on key corridors. In addition, the economic-lifeblood corridor between Durban and Johannesburg has become a target for mafia-style extortion, which has the potential to seriously hobble the economy unless it is decisively tackled.
The slot-sale outcome is also disappointing given that the process initially generated significant enthusiasm, evidenced by the fact that 90 people participated in a stakeholder session held at Esselen Park in April to outline the process.
That enthusiasm was immediately dampened, however, when it became clear that TFR was not willing to budge on some of the key impediments to uptake, including limiting the slot contracts to two years, which was seen as too short to ensure that returns could be made on what could involve significant capital investments in light of limited rolling-stock leasing options.
Likewise, the sale of the slots on a ‘Voetstoots’ basis raised some concern given the risk of disruption, owing to ongoing theft and vandalism on the rail network, including large-scale cable theft.
Because TFR was entering new terrain, prudence was only natural, with no deal better than a bad one. However, it could be argued that conservatism rather than prudence emerged as the overarching theme.
Hopefully, the utility will do precisely what it says it intends to do: draw key lessons from this process to settle on a third-party access model that is more suitable. The current one, which is based on market reforms undertaken by Deutsche Bahn, does not seem immediately fit for purpose.