Greater collaboration is the way to contain costs within the logistics sector. This was the view of industry experts at a panel discussion on ‘Collaboration or Competition between Road and Rail’ hosted by the Transportation Engineering Division of the South African Institution of Civil Engineering (SAICE).

Cementing on the topic Gerard de Villiers, Senior Consultant, Logistics and Advisory Operations at Arup, noted that supply chains compete, not products, commodities or companies.

“The implication is that the focus should be on integrating all activities in the supply chain and not on individual service providers” he said.

The panel included Gavin Kelly of the Road Freight Association, Laverne Dimitrof of DBSA, Makoma Mabitsela of Transnet and Matlhodi Senyatsi of the DoT.

On opening the discussion, De Villiers, who facilitated the panel discussion, suggested that “Transport modes in general and road and rail in particular, should complement each other and not be seen to compete in the supply chain, to ensure that this integration will be possible. Road and rail have different cost and service characteristics and it is important that road friendly traffic should be on road while rail friendly traffic should be on rail”.

Factors that affect collaboration

The debate by delegates highlighted important factors that currently impact on the ability of the industry to collaborate effectively.

The fact that both the Department of Transport, responsible for road transport, and the Department of Public Enterprises, responsible for rail transport, are independently engaged in transportation issues possibly contributes to some of the challenges of a collaborative integration between transport modes in the supply chain which could be avoided if one department was responsible for both road and rail.

The decision as to which service provider will be used, will always be driven by the market and it will prove difficult to force them to use a specific mode. Low costs will not necessarily attract traffic if the service levels are unacceptable, which is of paramount importance within the logistics industry.

The last mile

The ‘last mile’ in the distribution of products to the market is the most expensive link in the supply chain and the role of the respective modes as well as intermediaries such as intermodal terminals need to be clearly articulated to ensure that appropriate service levels are maintained within reasonable costs.

“With more attention to the optimisation of transportation in this last phase of the supply chain – usually it is smaller trucks with a higher cost factor that are used – costs could be contained” said de Villiers.

In order to improve costs and service levels, intermodal terminals or distribution centres should be localised and be established as close to the customer base as possible.

Whilst the topic was both relevant albeit somewhat controversial, the need for collaboration between road and rail was thought to be the only way forward if South Africa was to reduce the exceptionally high logistics costs in the country.