compared to road services makes it difficult for rail to attract customers. One solution would be to attract the customers to relocate to within or adjacent to the rail freight terminals, thus minimizing additional handling and travel.

An integrated rail freight terminal is being planned in the East Rand to serve Gauteng. The planned Tambo Springs logistics hub, in conjunction with the upgrading and expansion of City Deep, is a step in the right direction: a modern intermodal hub which is intended to attract private sector importers, exporters and logistics operators to rail. However, Tambo Springs is being planned and developed by Transnet and the Gauteng provincial government to serve the private sector, rather than jointly with private sector investors and partners. Because the success of Tambo Springs depends on its ability to attract private sector customers, private sector participation is crucial.

# <u>Operational solutions to improve efficiency</u>

A number of efficiency improvements can be made to intermodal operations to provide a lower cost and more efficient total logistics service that operates door‐to‐door. These improvements can occur regardless of whether the public or private sector operates the terminals.

Operational solutions should focus on the terminal operations, both port and inland, and the distribution and consolidation services by road. Terminal turn‐around time should be the focus for rail – as it is for any service controlled by fixed costs. Further capacity can be gained by operating directly into the terminals (which would require a switch from electric to diesel<sup>25</sup> ) thus shortening the turn‐ around time to a few hours, and by shortening the time for free storage in the terminal.<sup>26</sup> Rail needs to market itself as a one stop shop through formal arrangements with road transporters, ICD operators, and logistics companies. To deliver this, the location, planning, financing, development and operation of intermodal freight terminals should be conducted jointly by private sector logistics companies and the rail operator.

## **Box 12: Improving the efficiency of intermodal terminals: lessons from the EU**

Recent evidence from several research projects carried out by the EU suggest that the following areas are key to improve the efficiency of intermodal terminals:

**1. Quantitative tools for decision making**

- a. Analyzing major door‐to‐door corridors allows for the identification of major cost items. After identifying terminal and transhipment operations as one of the major cost drivers, the EU implemented a package of reforms that reduced total resource costs by 6 percent on average for the three corridors analyzed.

- b. The EU also developed a Terminal Simulation System, which is a valuable planning tool for terminal managers and for planners and designers of ports and terminals. It provides support in establishing the most suitable terminal layout, and allocates resources for changed operational requirements.

**2. Financing intermodal freight terminals**

- a. Since there is not a common financing scheme for the freight terminals in the EU, an example of best practice is the PPP scheme adopted in Germany. In this case, financial incentives are given to either the national railways <u>(Deutsche Bundesbahn) or to private companies. The financial aid</u>

> 25 A shift to diesel is required within container terminals because electric locomotives are powered through high current overhead electric catenaries that cannot be extended into the terminals because it will conflict with the container handling operations (normally done with overhead rail gantries at City Deep and most other major terminals). Switching from electric to diesel and back again is time consuming and expensive. It has been suggested that trains are lengthened up to 100 wagons (requiring some terminal infrastructure investments), and that the traction be provided by 3 electric and 1 diesel locomotives, so that no switching or train separation is required. This would give much improved terminal turnaround times and consequently lower costs.

> 26 The same operating principles apply to the port terminals, but with the additional requirement that the quayside be kept clear at all times to allow for high ship‐to‐shore crane productivity – delays can cost US$1 per tonne per day, or US$10 to US$20 per TEU per day, which are added to the shipping costs.

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