AYABONGA CAWE: Transnet has to mull last-mile lines as much as default threat

There was a railway siding where the branch line ended at the cement factory, a street away from where I grew up. I remember the recurring clatter of the “goods trains” that off-ramped from the Queenstown-East London line in the mid-’90s to take the short detour to the cement and later board factory before they reconnected again to the main line. Old, fraying signboards are all that remain to remind one that such a factory existed here. Grass and reeds have grown, as if intentionally watered, over the old Spoornet tracks.

I was reminded of this as I heard the frank remarks before legislators last week by Transnet chair Andile Sangqu. The recovery plan he spoke to would have to contend with whether the branch lines to the old Alpha cement factory would be part of a future Transnet, as much as about the immediate prospects of a default.

There are interesting “overlaps” between the plan and the Freight Logistics Roadmap in the short run. Concerningly, long-term questions posed by the roadmap remain unanswered.

One such question is whether the operational, agrarian and industrial developmental implications of Transnet’s “improved commercial discipline”, will also align to the future spatial distribution of economic activity envisaged by the National Spatial Development Framework. It is a question that the roadmap touches on in recognising that, “[as] the geographic pattern of economic activity changes over time, the needs of the rail network will also change”.

Some of the economic activity that was supported by branch lines is gone. Irreversibly. While in some areas new economic activity has arisen, the general trend has tended towards the hollowing out of rural economic activities that would make a modal choice to use rail instead of road. This can be seen in the trends over the past two decades. The profitable iron ore and coal export lines are carrying similar volumes as they did in about 2004, while dramatic declines have been observed in general freight from about 80-million tonnes in 2004, to about 60-million tonnes in 2022, as much of this general freight headed to the roads.

Inform choices

Assuming such change is a feature of how rail networks and the economy evolve, what future patterns of economic activity are expected to emerge in areas outside Gauteng and the coastal areas that may require cost-effective, reliable freight rail services to gain a competitive edge?

To what degree does this inform the commercial choices by Transnet of which “last mile” branch lines may not now meet the risk-return considerations of private investors but may be desirable to retain in areas where particular spatial and economic change is expected?

This may seem trivial when weighed up against the prospect of an imminent default. However, policy since the SA Act of 1909 created the Union of SA had recognised the uneven spatial distribution of economic activity and sought preferential or “equalising” rail tariffs for producers inland to deal with cost disadvantages arising from being far from ports. The development of rural branch lines was incentivised by, and in some instances responded to, such rises in economic production in rural areas.

Considering the many trucks carrying general cargo on national and other key regional routes, generating significant stress on the road network, the following is apparent:

• Not all economic activity worth pursuing occurs close to the coastal ports or the main consumer markets in Gauteng. It requires a complementary modal interface in planning, demand forecasting and capital investment between road and rail freight.
• The reform of the rail sector (rather than solely that of Transnet) will have to consider to what degree “marginal” rail lines such as that now rusting beneath a bed of grass near Komani Park, are part of the economic story of the future. It is a long-term “public chat” worth having.

• Cawe is chief commissioner at the International Trade Administration Commission. He writes in his personal capacity.