It could take Transnet 10 years to fix service delivery issues, reduce number of trucks transporting coal: analyst

It could take about 10 years for Transnet Freight Rail to effectively fix service delivery challenges and smoothly export most mining products again as trucks take over the business.

This is according to transport analyst and Heavy Vehicle Transport Technology Africa director Dr Paul Nordengen.

Transnet has been experiencing service delivery problems for years, including cable theft that leads to temporary halts of operations. According to the Transnet Freight Rail 2022 report, cable theft caused major setbacks for the entity and more than 1,500km of cable was stolen over five years. This cost R4.1bn.

The rail service transports mining products to harbours for exporting, but service delivery and infrastructure and logistics challenges have opened up a growing business opportunity for truck companies to take over.

Speaking to TimesLIVE, Nordengen said it would not be an easy fix to get mining commodities such as magnesium, coal and iron ore fully back on trains despite being a cheaper alternative. 

“In the past year-and-a-half, there was huge demand internationally for coal, partly because of the Ukraine/Russia war. Transnet could not deal with the demand for export coal and there was increase in trucks exporting coal and other bulk mining commodities,” he said.

“Transnet Freight Rail has a critical role to play. About 85% of freight is on road at the moment. To go from 85% to 75% — in other words increasing rail freight — is not something you can do in a year or two. It will take a decade — if Transnet does well over the next 10 years and gets delivery service going on the main corridors, especially the mining side.”

Nordengen said transporting mining products by truck was costly to companies as the vehicles spend days queuing on roads. 

“The mining products are low value, so to move them on road is much more expensive than rail, and you get additional road damage and congestion. If you look at trucks at Richards Bay, for example, those are all the negative signs of relying on roads to transport coal, manganese and iron ore.” 

Pushing up the costs of mining products because of logistic challenges was not much of a choice for South Africa, Nordengen said.

“We are competing internationally with other countries in terms of export of coal and manganese and if prices go up then we will not become competitive. If Transnet can provide the service, it is cheaper, more environmentally friendly and more sustainable than moving it by road.” 

Business Day reported one of South Africa's largest coal miners, Exxaro, said a plunge in coal prices over the past 10 months made it difficult to transport its products by road and it battled with the rail system.

“We were transporting by truck until the economics deteriorated to the extent where it just didn’t make sense to us, specifically at prices below $100/tonne,” said group manager of marketing and logistics Sakkie Swanepoel.

Nordengen said the timber business is also affected by the logistics dilemma.  

“The timber industry and paper industry desperately want to keep timber on rail for cost reasons but they are battling with Transnet to keep trains running. In the past 10 years they have gradually been moving more timber to the road because they are not getting the service they want. The ball is in Transnet’s court.”

In June, Transnet suspended services on the iron ore line after copper cable theft led to a power failure.

The government has a partnership with business associations and established a national logistics crisis committee with the aim of improving services in the sector.

In August, the Presidency, in a joint statement with businesses, announced the establishment of a team which will focus on improving performance constraints in commodity export supply chains in coal, iron ore, manganese, chrome and magnetite.    

TimesLIVE