South Africa's freight rail reform : a demand-driven perspective

Havenga, Jan H. ; Simpson, Zane P. ; De Bod, Anneke (2014-11)

Havenga, J.H., Simpson, Z.P. & De Bod, A. 2014. South Africa’s freight rail reform: A demand-driven perspective. Journal of Transport and Supply Chain Management, 8(1):1-7 (Art. #153), doi:10.4102/jtscm.v8i1.153.

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During the 20th century, freight transport in South Africa was employed to attain politicoeconomic ideals, resulting in the overprotection of rail and overregulation of road transport. Increasing industry pressure, combined with the international deregulation trend, led to deregulation in 1988. Myopia resulted in a rail investment hiatus and exponential growth in high-value, long-distance road transport, causing excessive logistics and externality costs for the country. The aim of this study was to propose a freight rail reform agenda based on, (1) lessons from past freight transport policy efforts and (2) the results of freight transport market segmentation driven by models developed over the past two decades. For the study, freight flows were modelled by disaggregating the national input–output model into 372 origin–destination pairs and 71 commodity groups, followed by distance decay gravitymodelling. Logistics costs were calculated by relating commodity-level freight flows to the costs of fulfilling associated logistical functions. The standard management approach of founding strategy development on market-driven segmentation provides a neutral input to steer rail reform discussions in South Africa. Market segmentation points to a dualistic rail reform agenda, enabling both a profit-driven core and a development-driven branch line network. Freight flow insights are steering the policy reform debate towards long-term freight strategy development and optimal freight logistics network design.

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