The grain handling sector has wasted no time in taking advantage of the deregulation of the countrys freight rail sector.
Industry bodies Sacota South African Cereals and Oilseeds Trade Association, the agricultural business chamber Agbiz, and Agbiz Grain, have already met with the new CEO of Transnet Rail Infrastructure Manager TRIM, Moshe Motlohi, and are looking at forming a consortium to utilise rail capacity to ship maize and soybeans to Durban via rail.
Dr Andr van der Vyver, CEO of Sacota, explains that much of the viability of grain shipping by rail utilising private operators will depend on announcements made in coming weeks and the willingness of the selected private operators to accommodate the unique requirements of the industry.
TRIM has divided the existing rail network into an A- and B-network, with the A-network being the core main lines such as the KwaZuku-Natal container line from Gauteng to Durban and the mineral line to Richards Bay.
This network will, for the most part, remain fully under TRIMs control, with slots being allocated to private network operators, including the new TFR, at a fee, says Van der Vyver.
He explains that the slots refer to the number of trains permitted to run per day or per week on a given route.
Most of the rural branch lines that service grain silos in the summer grain-producing parts of the country fall in the B-network, for which TRIM currently has neither the funds nor the capacity to maintain.
For the grain industry to benefit from deregulated rail freight, however, a licensed network operator must show interest to allocate several locomotives and wagons to service these five branch lines, says Van der Vyver.
He adds that there must be commitment from one or more private entities to maintain these branch lines. Storage operators will maintain their own rail sidings.
Given the relative low volumes of grain transported compared, for example, with minerals, the seasonality of the grain export season, and the variability from year to year, it is unlikely that any Sacota members have the risk appetite to embark on a venture of securing one or more branch lines for their exclusive use.
It is more feasible that Sacota members, together with a network operator and Agbiz Grain members storage operators form a consortium to engage with TRIM. The TRIM licensees announcement is an important step, as without knowledge of who the successful licensees are, and what their strategy will be, not much progress can be made.
The three years before last years drought showed that the Port of Durban can export about 350 000 tonnes of grain per month.
Of this, rail export capacity is approximately 175 000 tonnes per month or 50, meaning that the basic rail infrastructure is in place, although a portion of it may require maintenance.
Towards the tail-end of the export programme, rail volumes dropped to approximately 10 000-12 000 tonnes per month or about 6 of rail export capacity. Globally, rail is much cheaper than road. In South Africa the cost of rail is approximately two-thirds of the cost of road transport, Van der Vyver says.
This potential saving often means the difference between whether South Africa is competitive in the grain export market or not. It is crucial that selective rail corridors and supply lines are revived.
Motlohi indicated that the successful applicants for network operating licences would be announced by the end of August.