South African state-owned logistics group Transnet has announced it is spending R900m ($114m) on vehicle rail wagons in an effort to raise the number of vehicles transported by rail to 45% by 2015. Currently around 30% of vehicles are shipped by rail in the country.
Besides the investment, the government’s public enterprises minister, Malusi Gigaba, has encouraged the development of additional initiatives to support the shift from road to rail, to be taken up by a joint working group between Transnet and the National Association of Automotive Manufacturers of South Africa (NAAMSA).
“I would like to challenge the working group to think outside the box to see how we can radically support the shift from road,” Gigaba said at a roundtable meeting organised by Volkswagen SA last week, adding that he was also keen to see how the industry could help with the funding and procurement of the specialised wagons.
The government is considering the creation of special funding initiatives to channel private sector resources into the wagons as well as into programmes designed to revitalise and expand the country’s rail network. GM South Africa’s logistics manager, Sean Bricknell, who is also vice chairman of the NAAMSA Supply Chain Committee, said that while carmakers are less likely to make this sort of investment, logistics service providers have been expressing interest, and that carmakers believed such public-private partnerships would be beneificial.
Bricknell told Automotive Logistics that LSPs have shown an interest, not only from a funding perspective, but also in terms of “a 4PL initiative where they could participate in the operation”.
The other initiatives include development of capacity at port terminals and developing alternative routes to the often-congested Durban to Johannesburg rail route.
Bricknell said that from a long-term perspective there was room for expansion in the car terminals at the port of Port Elizabeth on the Eastern Cape where both GM and VW have facilities.
For example, according to Bricknell, the rail link between the port and Gauteng province, of which Johannesburg is the provincial capital, is underused in comparison with the Johannesburg-Durban link.
“We would be interested to explore balancing traffic on those two corridors because that would ease some of the congestion and at the same time make more efficient use of the assets on the Eastern Cape-Gauteng corridor,” he said. “It is important, however, that Transnet divisions (including ports and rail) work together to create an integrated solution.”
He went on to say that GM was pleased with the openness that Transnet and the government had shown in working with the company. He said it showed a willingness to gain a deeper understanding of the automotive industry, something that was key to the correct use of the investment being made and crucial for the future of the automotive business in South Africa.
“We welcome this initiative and we welcome Transnet’s invitation to the automotive industry to be involved in these initiatives, and we’ll be stepping up to it,” he said.