aims to address these imbalances. For example the revenue generation will be shifted away from cargo owners (from 60 percent to about 35 percent), onto shipping lines (from 18 percent to roughly 36 percent) over a ten‐year period.<sup>14</sup>

# _3.3 Reliability constraints_

Setting aside access and pricing issues, of much bigger concern to users of the freight transport network is the reliability of the service. This is increasingly important in a world of global value chains, where firms are part of international production networks and must slot into tightly defined delivery schedules. In this respect, performance of the rail service – including the rail and intermodal terminal infrastructure – and ports falls far short of what is needed to facilitate export competitiveness.

<u>Reliability concerns can trump price advantages of rail</u> It is important to distinguish between the heavy haul lines – which are considered world class – and the remainder of the system which is in relatively poor condition. The lack of reliability of rail transport was consistently mentioned by firms as the main reason for using road transport. Frequent train delays and cancellations prompted customers to switch to road haulage, especially for transportation of high‐ value goods, and when timing is important. This shift puts severe pressure on the road network. A recent survey of logistics professionals found that the competence and quality of rail services are much poorer in South Africa compared to Australia, Canada, India, China, Germany, the United States and Russia (World Bank, 2014a).<sup>15</sup> <mark>An analysis of the train transit and turnaround times indicates that the main problem remains with the operation of the intermodal rail freight terminals, both at the port and inland. This includes both the long time it takes for customers to receive goods by rail as well as poor tracking and information systems. Customers demand to know exactly where their goods are at any time, and most road haulers offer this service. There is also anecdotal evidence from company interviews that TFR’s customer interface for unscheduled service is much poorer than the road freight industry – not only are there faster turnaround times for road freight quotes, but the overall levels of service and client engagement is superior to that provided by TFR’s sales agents.</mark> The extract below<sup>16</sup> highlights the challenges of moving freight by container and by rail: _<mark>“...it took between six and nine days on average to transport containers by rail from the Durban port to Johannesburg’s City Deep depot. It took two days to get the container out of the Durban container terminal, two to three days for the train to be dispatched to City Deep and 27 hours in transit. After that, it took anything up to four days before the containers were unloaded at the City Deep depot. The problems have largely been the capacity of terminals to handle containers. By road, it still took two days to get the container out of the Durban terminal but only one day for a truck to deliver it directly to the owner. A third option, which has become the most preferred, was to empty the container as soon as it arrived at Durban port and transport its contents as break bulk by truck. This took four days overall</mark>_ <mark>.”</mark> <mark>Reliability concerns often trump any price advantages that rail may have, even for long haul. This is particularly important for exporters, which need to get their goods onto a designated ship in order to meet deadlines. Export firms, particularly those plugged into global value chains, can face large penalties for missed delivery deadlines. The risk of these penalties generally outweigh any price advantage that rail may have. As a result, even when investment in improved infrastructure and operations yield reliability improvements, it may still take time to repair the reputational damage before customers change their logistics decisions.</mark>

> 14 Tenants will account for slightly more revenue, from 22 percent to 29 percent.

> 15 Data available at: http://lpi.worldbank.org/international/scorecard/radar/254/C/ZAF/2014#chartarea

> 16 Source: Business Report, 19 March, 2014

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