The migration of timber from rail to road over the past five years is a symptom of rising freight tariffs, the closure of branch lines and poor service. The consequences for timber growers and processors are increasing transport costs and the marginalisation of timber growing areas situated far from the mills. The consequences for the country as a whole are increasing road damage from heavy trucks, increasing road maintenance costs, emissions and road congestion.

Railroad in SA
Under-utilised rail transport in South Africa.

 

But an efficient freight rail service designed to move high volume commodities like timber should be a national asset and resource that contributes to the competitiveness of our home grown industries. What’s going on?

Transnet Freight Rail has issued a notice through the media requesting private companies to register their interest in operating 7 300 kms of branch lines around the country. This move has been welcomed by forestry industry stakeholders who for years have been tearing their hair out over Transnet’s apparent indifference to the eroding competitiveness of South Africa’s freight rail service.

The decline of freight rail over the past few years has been fuelled by high rail tariff increases, poor service, collapsing infrastructure and the closure of some branch lines. The combined effect of this scenario is that more and more timber is being transported by road.

This has contributed to a sharp rise in transport costs and a huge increase in the number of heavy vehicles on the national and provincial roads network, which has a negative impact on road conditions, the environment and public safety.

A recent survey by Forestry South Africa into the mode of transport used to move timber among eight leading growers (Mondi/Siyaqhubeka, Mondi Shanduka, Sappi, Merensky, Masonite, York, NCT and TWK) confirms that there has been a dramatic shift from road to rail over the past five years.

Although the total tonnage transported by the respondents in 2005 was almost identical to the tonnage transported in 2010 (six million tons), the total tonnage transported by rail dropped from 3.5 m tons in 2005 to 2.1 m tons in 2010. This is a 40% drop.

By comparison, the tonnage transported by road over the same five-year period increased from 2.5 m tons to 3.9 m tons – a 56% increase. This increased tonnage represents an additional 37 500 truck loads clogging up our roads (calculated at 38-ton loads per truck).

The roads most affected by increased number of timber truck loads, according to the survey, are the N2, R33, R603, R612, R74 and R622.

Survey respondents gave a variety of reasons for switching over from rail to road. These can be summarised as follows:

  • High tariffs and exorbitant tariff increases
  • Inefficient service rendered (eg. non-availability of trucks)
  • Branch line closures (Cape to KZN, Harding, Richmond and Graskop)
  • Customers’ operational changes.

The experience of NCT, which is the third biggest mover of timber in the country, provides a case in point. NCT delivers around 2.5 million tons of timber a year to their three mills, Bay Fibre and Shincel (Richards Bay) and NCT Durban Woodchips.

According to NCT’s commercial manager James van Zyl, a few years ago, transporting timber by road was cheaper for up to 140 kms – thereafter rail was more cost-effective. Now, he says, hauling timber by road is still cheaper than rail for up to 350 kms. Considering that most of NCT’s timber is situated 250 to 350 kms from their mills, it’s easy to understand their concern.

“Timber is a low value, high volume bulk commodity and it should be on rail. But since 2002, rail tariffs have more than doubled, so it’s just not viable anymore,” said James.

NCT is not the only organisation being severely challenged by the rail crisis. Most of the growers who have to move timber over long distances to the processing mills are in the same boat. Other bulk commodities, like maize and sugar, are also affected.

So what is the solution?

“We need index-related tariff increases, improved reliability and infrastructure and decentralised decision-making that allows for locally designed rail solutions,” said James.

He welcomed the news that Transnet has called for expressions of interest from the private sector to operate branch lines, but fears that it may be too little too late as the infrastructure has been allowed to deteriorate to the point where it will cost a lot of money just to get it back up to operating standard. Who’s going to pay for that?

Also, operating a viable branch line depends on the volumes being transported, and over the past few years the volumes of timber have been migrating steadily from rail to road.

“By the time we get there, there may be no volume left,” said James.

“We need the political will and the administrative capacity to rejuvenate the rail infrastructure and allow new commercial branch line operators. And we need freight tariffs to be reduced to more realistic levels to retain the current volumes,” he said.

Impact

Technical Innovation Freight Passenger
High speed rail Reduces freight/passenger congestion when new HSR tracks are built Reduced weight, better aerodynamics; speed increase from 200 to 350 km/hr
Information technology Cargo management vastly improved. Costing systems permit better pricing. Digital communications. Automatic equipment identification (AEI) Efficient ticketing and reservations. Digital communications. Permits revenue maximisation
Intermodal Rails fully participate in containerisation trends Better connections to air and bus
Energy efficiency US energy intensity reduced by half. AC traction on diesel locomotives AC traction, solid state controls. Shinkansen energy intensity cut by half
Heavy haul/better infrastructure Higher axle loads, longer trains, larger locomotives, rail metallurgy. US operating cost/tonne-km reduced by 59% 1978 to 2007 Continuous welded rail reduces maintenance and energy
Signalling Higher traffic density and improved safety: accident rates down by 2/3 Improved capacity and safety, especially with mixed freight and passenger traffic
Policy/Managerial Freight Passenger
Structure: monolith to owner-tenant or separation US/Canada approach: freight dominant, passenger pays as tenant. EU freight operators can serve Europe-wide EU model of intra-separation permits franchising and cross-border operation. Introduces competition for markets as well as in markets
Private sector Privatisation of CN, concessioning in Latin America, privatisation in UK and EU Franchising in EU, privatisation of JNR
Deregulation Staggers Act in US: tariffs fell in real terms by half. Permits contract tariffs and customer investments Amtrak and VIA deregulated

Published in August 2010



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