Revitalising Railways Through A New Corridor Approach - North-South Corridor
Ensuring the sustainability of freight transport especially by rail should be one of the key objectives of governments of SADC. Integral to this is to maximize the proportion of freight transported by rail as opposed to road. In the last 15 years, rail freight km’s have only grown by 15%, coupled to this and directly impacting this is the unacceptable high costs of logistics as a percentage of sales.
The North-South Corridor is one of the key import and export routes for trade moving in and out of Southern Africa and parts of East and Central Africa. Key commodities include bulk and break bulk cargo, liquid and general freight. This corridor is of significant importance for economic reasons including intra-Africa trade between Southern Africa, most importantly the landlocked countries and the rest of the continent.
Intra-African trade costs are significantly higher, by more than half, than trade among countries in East Asia and other developing regions, resulting in Africa integrating with the rest of the world at a faster pace than its own regional integration. This high cost of trade is mostly associated with logistics.
Ensuring the sustainability of freight transport especially by rail should be one of the key objectives of governments of SADC. Integral to this is to maximize the proportion of freight transported by rail as opposed to road. In the last 15 years, rail freight km’s have only grown by 15%, coupled to this and directly impacting this is the unacceptable high costs of logistics as a percentage of sales.
As with many rail logistics companies, there is concern regarding the dominance of road freight at the expense of rail transport, as road transportation infrastructure is continually abused by overloading of road vehicles and in some cases damaging of roads beyond repair, at the expense of taxpayers.
Bigen And Musina Intermodal Terminal - MIT Dry Port
Bigen and Musina Intermodal Terminal (MIT) joined forces in an incorporated joint venture called BMITCo JV, to offer a rail service from Ndola in Zambia to Durban in South Africa. This natural development and coming together of the two companies evolved of the unique position of each company to add value to the potential Shippers, not only in Zambia and the DRC, but also in Zimbabwe.
The MIT Dry Port has been operating since 2017 and has already achieved major success in migrating export citrus – grown in the Limpopo River area as well in Southern Zimbabwe – from road to rail.
This terminal is also integrally linked with MIT’s Beitbridge Intermodal Terminal. On the back of this ‘regional’ success with delivering an integrated rail-based supply chain solution to Growers and Shippers, the MIT Board was convinced that with similar operating processes, relationships with Shippers, railways, shipping companies, and with judicious asset investment (wagons/containers) the challenges of the NSC could be overcome.
Through this facility in Musina, block trains are received from the north, re-stacked into shipping containers and thus maximising higher axle loads and thus payloads, and shipped via rail to Durban with full view of shipping line schedules, thus minimising costly “stockpiling” and demurrage. From MIT, BMITCo is able to rail directly to ship stack in Durban.
Bigen As An Infrastructure Development Company
Bigen as an infrastructure development company, is uniquely placed in terms of rail engineering services and rail service design. With its in-house rail expertise and past involvement in this specific corridor, the company will be responsible for the design and oversight of rail refurbishment and upgrading work on the Zambia rail system as well as the complete rail service design and logistics oversight from Ndola to Beitbridge.
In designing the rail service offering from Ndola to Durban, BMITCo realised that historical rail performances could not be ignored and various differentiators had to be considered to make this work!
These included innovative ideas around security, cost, reliability, predictability, turn-around times and to some extent tracking, factors that will be as important as tariffs going forward.
Of course this project is much more than a development scheme, it re-ignites growth, by boosting the regional freight volumes to unprecedented levels.
It was essential that the three Operating Railways, namely ZRL, National Railways of Zimbabwe (NRZ) through Beitbridge Bulawayo Railways (BBR) and Transnet Freight Rail are key to the solution and a “buy in” of the solution offered was critical to the success. For this reason various engagements took place with specifically Zambia Railway Limited (ZRL) as the Ndola to Livingstone section was identified as having the most challenges on the total corridor in terms of infrastructure condition and average train speeds.
A resolution was signed between ZRL and BMITCo whereby, through agreement between parties, funds will be re-invested into the railways for improvements & upgrading to sustainably increase train speeds over time, new rolling stock will be procured for the section Beitbridge to Ndola and some sort of independent engineering oversight and procurement will be maintained by the team in conjunction with the railways.
In listening to customers about past performance of rail, having private involvement and a sort of independent “watchdog” will be key to ensure key performance indicators are managed in a transparent manner. Importantly service level agreements will be based on train turn-around times and punctuality, which ultimately relates to rolling stock and condition of the infrastructure.
Lessons from the past clearly indicate key considerations for corridor success should include:
Private sector involvement Long term sustainability through economic corridors rather than transport corridors Elimination of costly and non-value add barriers
Service Offering Specifics
The specific service offering entails a 40 wagon block train between Ndola and Musina, where containers will be re-packed and using the established Transnet Freight Rail service south of Musina to Durban.
This service was carefully designed, as indicated with a focus to optimise costs, ensure reliability and with decreased turn-around times over time, a benefit that will materialise into re-investment into the infrastructure to revitalise sustainability and predictability. The MIT Dry Port is therefore pivotal to this proposal, and its existence strategic on the NSC, as it removes the necessity for rolling stock operated by TFR to leave South Africa and to stay out of circulation for extended periods of time.
Cargo will be transhipped at MIT between TFR and the northern system railways (BBR/NRZ/ZRL). The solution further entails splitting or disconnecting the service north and south of Beitbridge at MIT thereby ensuring the two are not directly dependent on each other in terms of train slot arrival and departure times.
As part of the project plan, BMITCo offers to immediately make available on an incremental basis, 40 flat-bed container wagons per block-load set which will be dedicated to the project. In addition to the wagon initiative, arrangements have been concluded with a major container leasing company as well as with affected shipping lines, to ensure containers are available when required for both land based and international shipping of commodities.
The block trains will have an initial 7 day turn-around time between Ndola and Musina, a route distance of approximately 1600km, thereby ensuring at least three round trips per month. Noteworthy is that train transit times from Ndola to Durban will also be 7 days. Through maximising the payloads with modern low tare container type wagons, 15,000 tons per month (both directions) will be achievable at reasonably low average speeds which will increase approaching 18,000 tons over time as average train speeds increase and cross border and terminal activities are smoothed to improve train turn-around times.
By strategically aligning and partnering with BMITCo, the railways (TFR, ZRL and NRZ/BBR) will benefit in that exports/imports can be seamlessly handled on rail from origin to destination, rather than being road hauled, thereby increasing rail throughput on the corridor.
Current volumes handled by the railways is <1 Million Tonnes Per Annum (MTPA) and BMITCo’s is projecting an incremental increase to >2 MTPA over the next 4 -5 years.
BMITCo’s market scan and Customer engagements contemplates a graduated approach to volumes to be migrated to rail, initially commencing with 2 or 3 trains sets, operating bi-directionally (North-South and South-North) with a short term targeted volume of ~500,000 tons.
In essence this approach will ensure a demand driven supply network, with enhanced visibility, sustainability in terms of costs and efficiency and risk management through private company involvement and independent overview. Risk management strategies through service level agreements will ensure mitigation and response levels acceptable to shippers.
This will substantially increase the current traffic on the ZRL portion of the line particularly from the current ~300,000 tons per annum. This will allow for an immediate re-calculation of the fixed-cost component per ton, leading to more aggressive pricing to Shippers.
For more information on the project contact Henk Bester - Henk.Bester@bigengroup.com
