Title Road vs Rail A shift towards rail

Title: Road vs. Rail… A shift towards rail Date: 16 Nov 2015

About Us Mehleketo Resources an EOH company is: • A black owned and managed company specializing in the rail industry • The only turnkey company in SA that provides the following services in the rail industry: – – – – – • • Civil and Track Signalling Structural Electrical Telecommunications and Rolling stock services Buildings Turnkey Command & Control centres Roads The only local based company in SA that offers both engineering (consultancy) and construction services within the railway industry in all the aforementioned disciplines. Equipped with a good mix of local and international expertise to provide ‘fit for purpose’ solutions for the African market

Introduction • Logistic costs account for approximately 12. 5% of the total GDP of South Africa (2014: +-R 450 bn) • Transportation costs represent the biggest portion of the logistic costs. Volatility of the cost drivers of these transportation costs (e. g. fuel), requires that South Africa seek more efficient methods of transportation. • Intermodal transportation systems are required with a focus of shifting more freight from road to rail • Rail Transportation also includes the movement of passengers which is vital to ensure ease of access between metropolitan areas and is vital to promote business Intermodal Transport: The act of using more than one transport modes without changing the loading unit

Why the need for more efficient transport • Transportation costs account for largest portion of Total National Logistic costs. Averaging 60%, +- R 250 bn in 2014 • Fuel is the most volatile of cost drivers. An increase of 15% from 2013 to 2014 meant an increase of R 14 bn in Transportation costs However if the transportation costs grow proportionally to the GDP then it could be considered that the transportation has contributed to the total GDP. Therefore one should investigate the transportation costs vs. total Transportation GDP

Why the need for more efficient transport • Logistics costs as a percentage of transportable GDP have grown significantly over the past four years. • Therefore logistics are becoming less efficient, or that the same number of tonne-km are required but the cost drivers are growing faster than the commensurate growth in the value of the goods. A more efficient transport system is therefore required to balance the volatile transport cost drivers (e. g. fuel prices) and value of goods

Road vs. Rail: A Shift to Rail Even though there are more challenges facing rail transport in South Africa, it is still preferred as a more efficient form of freight transportation • • Although the rail industry has its challenges. Rail Transport still remains more efficient than Road Transport According to Transnet Freight Rail in South Africa: “Rail transport is 75% cheaper than road. ” 1 However of the 590 -million tonnes of railfriendly cargo transported at present, only 210 million tonnes Lack of reliable passenger transportation system and the supporting systems discourage rail transport via train Challenges facing rail Limitation of inte roperability Lack of flexibilit y in service offering Lack of reliabilit y and customer focus So what do we have to do to shift from road to rail? 1 http: //www. bdlive. co. za/business/transport/2015/01/27/road-is-still-king-of-freight Ageing and lack of rail infrastructure Challenges facing road Accidents caused Ro ad Traffic Pollution and Accid ents caused by road traffi c High fuel prices (less efficient than rail) Deterioration of ro ad infrastructure and consequential high maintenance costs

Road vs. Rail: A Shift to Rail • A need to expedite the implementation of the rail revitalization programme to address the inherent inefficiencies in Rail Transport; • Promotion of Rail Transport as a mode of choice for passenger and freight transportation and implementation of a strategy to move certain current road cargo back to rail; • Active state involvement in the facilitation of investment and private sector participation; • A need for a national programme of recruitment, training and skills development in the rail industry • Implementation of a strategy to create an intermodal transportation system e. g. Port (Dry and Wet) to Rail to Road. This strategy may include the following: – – Develop rail brachlines Establish new ports (Dry and Wet) Mass and Light transport systems Supporting transportation systems e. g. bus and taxi systems to support rail network • Implementation of a comprehensive strategy for safety and security

Contact Details: Name : Lucien Peters Email : lucienp@mehleketo. com Cell : +2784 552 2728