KEVIN MAYHEW SPOORNET’S DETERMINATION to increase its share of general freight cargo does not make financial sense if measured against the costs and efficiencies of its competitor, road freight. A Road Freight Association (RFA) assessment maintains that the rail giant is constrained by its delivery limitations. It cannot provide a seamless door-to-door service and has ageing rolling stock and locomotives that will require major borrowed capital outlay to either repair or replace. These outlays are difficult to recoup and burden it with an interest load, according to the chief executive of the RFA, Sipho Khumalo. Spoornet has indicated that it wants to increase its general freight share from 180m tons to 234m tons (30%) in five years. “The road freight sector cannot understand why Spoornet is obsessed with increasing its general freight share because, in a competitive environment, it will be very difficult to outperform the service levels and pricing of road freight,” Khumalo said. He said turnaround times for any new rail services – which probably will require new locomotives and wagons – will be too long to create services that are financially viable, and the sums say that Spoornet will find it difficult to even service the interest on this outlay. The alternative is to repair its locos (78% over 20 years old) and wagons that are already 27 years old on average. The age of the wagons to be refurbished makes this a dangerous option as it could impact on the reliability of the service. Introducing new locomotives and wagons would require outlay of anything up to R80m per train set (locos and wagons) which would attract significant interest charges. The RFA presumes that the financing would be acquired from traditional interest charging local or overseas loans, Khumalo said. He added that Spoornet also experienced a lot of negative perception in the market place that would be very difficult to overcome for freight that was suited to road as well. “However, we definitely believe that there are some products that are presently moving by road that should be handled by rail. That is the challenge for Spoornet as far as we are concerned,” Khumalo concluded.
