Freight and logistics group Transnet is pushing to reduce the cost of transporting goods on its vast rail network as it prepares to give third parties access to the network.
To this end the cash-strapped state-owned group has gone to market in search of private sector players to lease its siding facilities and invest in and develop container rail terminals to serve the industry.
Sidings are critical in rail operations, since if operated efficiently they are key to migrating heavy freight from road to rail.
Transnet Rail Infrastructure Manager (Trim), which was separated from Transnet Freight Rail (TFR) last week, has issued 12 siding lease requests for proposals (RFPs) in three of its key regions, inviting the private sector to unlock value within its vast rail portfolio, which is indispensable to SA’s economy and trade.
The RFPs for the western, eastern and central regions are complementary to the recently concluded process to appoint 11 train operating companies, which were selected from among 25 companies that applied to operate on Transnet’s freight rail network.
The operators are expected to carry 20-million tonnes of freight annually, easing pressure on Transnet. The group is aiming to move 250-million tonnes by 2030, from 160-million tonnes at present.
According to the tender documents, the process to allocate rail capacity forms part of the slot allocation process and is done independently from the sidings lease process.
The bid documents also state that Trim reserves the right to prescribe which train operating companies should stockpile and rail from a specific siding, in line with the Trim slot allocation process.
The successful bidders will lease the sidings from Trim and pay a monthly fee, while also being expected to invest in the maintenance of the infrastructure for at least 10 years.
A rail siding places the freight train in easily accessible proximity to the warehouse, eliminating the need for additional transportation.
The RFP demands that potential bidders outline plans on how they are going to reduce costs and investment in the sidings, with maintenance plans on the rail line expected to form part of the bidder’s business case submission.
“The operational model used in the siding to deliver on the throughput volume should align to the investment proposed, design layout, equipment deployed and operational methodology.
“The bidder has to provide a high-level simulation of the operational model. The purpose of this is to articulate/confirm how the volume throughput will be achieved,” the bid document reads.
“The winning bidder needs to implement initiatives to reduce the cost of logistics. A plan with the initiatives aimed at achieving cost reduction needs to be included in the bid. This plan will form part of the contracting process.”
The RFP relates to Lutzville Station, Worcester, Bellville and Orchard in the Western Cape. Siding stations in Mpumalanga are also up for grabs: Carolina, Blinkpan, Panbult, Blackhill, Vandyksdrift, Voorslag, Rietkuil and Hlobale.
Bidders will have to outline a detailed investment plan, which should distinguish between fixed and movable assets. The investment plan needs to include all planned investment (fixed and movable assets), with its scoring only to be considered on fixed items that will revert to Trim at the end of the lease period.
Rail line refurbishment and maintenance
The investment plan will have to cover rail line refurbishment and maintenance of the siding, and how the loading area surface to accommodate loading equipment will be maintained.
“The sidings portfolio is a key enabler to connect to the core network from road to rail and a strategic and productive asset. It is a vehicle for economic development, service delivery and transformation,” the FRP reads.
“Trim... set out to review the processes for leasing/letting Trim sidings/facilities to ensure the effective utilisation of these properties as strategic enablers. Trim has also implemented the necessary policies and governance structures to ensure sidings are awarded in line with the Trim strategy.”
SA’s 21,323km railway network needs about R14bn a year of investment in its six corridors, which have been plagued by theft, vandalism and outdated systems.
In December, transport minister Barbara Creecy approved the publication of the Transnet Network Statement, a major step in facilitating open access to the country’s rail network by third-party operators.
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