The Nature of Road/Rail Competition

by Sinethemba Mngqibisa, Director: Freight (2002-2005)

Road and rail freight are the most significant within the South African boarders, catering for more than 96% of goods moved in tons. This is because water transport is only limited to coastal shipping since we do not have navigable rivers. Air transport is costly and is only suitable for commodities of high value and low volume. 

From September 1989 deregulation of the freight transport industry was introduced, meaning that market entry would then be opened to anyone. Deregulation tipped the scale severely against rail because permissible Gross Vehicle Mass and the length of the rigs were progressively increased until what it is today (among the highest in the world). Road Transport Quality System (RTQS) was not effectively implemented, and law enforcement was not stepped up, as it was suppose to have been. This then resulted in increased entry by road hauliers in the freight industry. They were motivated by high payloads, which could afford them competitive rates. This also tempted their customers to shift from rail to road as, apart from competitive rates, they enjoyed door to door delivery which, rail could not match as a result of double handling attributable to the nature of their service. 

Road haulers also enjoyed advantage of being not responsible for their infrastructure whereas, rail has to provide and maintain its own infrastructure. Road infrastructure is the responsibility of the government and is thus funded by taxpayers. Different cost structures from this scenario afforded road haulers high profit margins, which could be passed-on to their customers in the form of low rates. Lack of enforcement further motivated selfish road freight hauliers to overload so as to gain even higher payloads and thus much higher returns. 

The obvious consequence was massive increase in the heavy traffic on our roads. Unfortunately it resulted in all sorts of problems mainly, gross damage to the road infrastructure. There are also a number of negative externalities like air pollution, congestion, accidents and even noise pollution. 

Negative impacts emanating from over utilization and abuse of our roads by heavy vehicles, while railway lines lie underutilized, cannot be overemphasized. The government has to take a firm stand with strong freight transport policy that will achieve optimal road/rail infrastructure utilization. It is not the government alone that must be actively involved in correcting this situation; other role players also should play their roles. For example, Spoornet should endeavor to attract the traffic back from road by setting high service standards including, security system that will eliminate pilferage and damage to the cargo. Road Freight Association and ether similar road based organizations should explore ways of effectively disciplining their members who fail to comply with the expected standards.

We need world-class transport systems in South Africa if we are to become global competitors and achieve high rates of economic growth, serving the country and Southern Africa in the process. I feel that it is important that we avoid a cycle of decay in our freight transport infrastructure-decaying railways and roads. There must be competition between the modes on the basis of economic efficiency, but also appropriate levels of complementarities.

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