Durban – Road transport is costing billions of rands annually in South Africa, which is a large part of the reason that improvements in rail infrastructure in the country are being given increased and much needed attention.

Adam Seedat, speaking on behalf of Public Enterprises Minister Malusi Gigaba at the 10th Intermodal Africa Conference in Durban on Thursday, shared the message that road transport is extremely costly to South Africa each year, giving a strong case to improve rail infrastructure.

Seedat said that the trucking industry was costing a staggering R34 billion a year due to traffic congestion and high maintenance costs. This accounted for about 20%of total road freight costs.

Seedat and the Transnet Freight Rail CEO, Siyabonga Gama, both spoke about bringing rail back in a big way to the logistics market and how important it will be in the drive to boost the economy and the competitiveness of the industry.

“In South Africa, given the geographical remoteness of the country and the distance of some of our key industrial centres from the ports, managing the competitiveness and costs of logistics is extremely strategic.

“In 2008, our logistics costs were 14.7% of GDP, in contrast to 10% in the US. Transport costs constitute 50% of total logistics costs, in comparison with the world average of around 40%,” Seedat said.

“Rail, through its implicit economies of scale, has some key advantages over road for the movement of large volume and heavy goods.

“There is a range of good reasons for moving goods by rail versus road. These include the fact that it decreases road congestion and road damage. It increases road safety. It is environmentally less hazardous and produces significantly less carbon emissions… Yet, the last two decades have seen a massive migration of goods off the rail system and on to road. Road transport has doubled in this period, while rail transport has decreased,” he added.

In the past two decades, the state of the rail infrastructure declined due to lack of investment in the industry, but there is now a substantial bid to get it back on track.

Transnet will be spending R300 billion during the next seven years with the majority going to rail infrastructure and about R35 billion used to purchase 1 000 new locomotives.

Gama said that in the next seven years, Transnet’s rail business would increase its capacity from handling 85 million tonnes a year to 170 million tonnes.