1 00:00:00,480 --> 00:00:05,080 Speaker 1: So sad too. Weekend Breakfast the Future. 2 00:00:04,760 --> 00:00:07,280 Speaker 2: Are at eight minutes after nine to oh Clark. Good 3 00:00:07,320 --> 00:00:08,920 Speaker 2: time for us to look ahead to talk about the 4 00:00:08,960 --> 00:00:11,880 Speaker 2: future of and this week we are looking ahead at 5 00:00:11,880 --> 00:00:14,720 Speaker 2: the future of our rail network. Now we know our 6 00:00:14,800 --> 00:00:19,680 Speaker 2: railroad network is beset with multiple challenges. That is why 7 00:00:20,360 --> 00:00:22,959 Speaker 2: we see so many trucks on the road because goods 8 00:00:23,000 --> 00:00:25,640 Speaker 2: that would have been moved by rail have now over 9 00:00:25,680 --> 00:00:28,639 Speaker 2: the last couple of decades moved onto the road. We 10 00:00:28,680 --> 00:00:30,840 Speaker 2: also know there are challenges with regards to the railwork 11 00:00:31,080 --> 00:00:34,800 Speaker 2: to move passengers commuters, and so as a result, households 12 00:00:34,880 --> 00:00:38,839 Speaker 2: have to pay more for taxis, in particular buses, when 13 00:00:38,840 --> 00:00:41,720 Speaker 2: they could travel a lot cheaper with the trains. But 14 00:00:41,800 --> 00:00:45,320 Speaker 2: this week we heard at the investment conference President Silor 15 00:00:45,400 --> 00:00:48,360 Speaker 2: Rama Pasa saying forty one freight rail slots have been 16 00:00:48,400 --> 00:00:52,559 Speaker 2: allocated to private train operating companies and that he expects 17 00:00:52,600 --> 00:00:55,600 Speaker 2: we expect that the first private operator is going to 18 00:00:55,600 --> 00:00:58,560 Speaker 2: commence its operations in twenty twenty seven, so we are 19 00:00:58,720 --> 00:01:03,800 Speaker 2: very close to that commencement. He also added that the 20 00:01:03,840 --> 00:01:08,559 Speaker 2: involvement of these private train operators will end inefficient monopolies 21 00:01:08,600 --> 00:01:12,800 Speaker 2: and introduce competition that will reduce costs over time. So 22 00:01:13,240 --> 00:01:14,960 Speaker 2: is that the case is that the future of rail 23 00:01:15,040 --> 00:01:17,319 Speaker 2: by bringing in the private sector, we are going to 24 00:01:17,319 --> 00:01:20,840 Speaker 2: see an improvement in the sector. Joining us now, we're 25 00:01:20,920 --> 00:01:24,760 Speaker 2: joined by independent transport economist Offenser Madisha. We'd love for 26 00:01:24,800 --> 00:01:26,720 Speaker 2: you to be part of the conversation, so you can 27 00:01:26,800 --> 00:01:28,440 Speaker 2: join us on A one one, eight eight three or 28 00:01:28,480 --> 00:01:30,400 Speaker 2: seven oh two. Send us your what tap so No. 29 00:01:30,520 --> 00:01:33,160 Speaker 2: Seven two seven o two one seven oh two OFFENSEA 30 00:01:33,280 --> 00:01:37,120 Speaker 2: A very good morning to you. Welcome to weekend Breakfast. 31 00:01:36,680 --> 00:01:38,800 Speaker 1: Good morning books, saying good morning to your listeners. 32 00:01:38,840 --> 00:01:41,160 Speaker 2: Thank you for your time. Okay, before we start with 33 00:01:41,520 --> 00:01:44,280 Speaker 2: what we heard from the investment conference via President at 34 00:01:44,480 --> 00:01:46,880 Speaker 2: Rama Pasa, I just want to start with a little 35 00:01:46,880 --> 00:01:49,880 Speaker 2: bit of context to kind of give us a sense 36 00:01:49,920 --> 00:01:53,960 Speaker 2: of why we are here and where we are. How 37 00:01:54,000 --> 00:01:59,360 Speaker 2: would you describe the state of South Africa's rail network 38 00:01:59,640 --> 00:02:03,600 Speaker 2: or our both for the movement of goods but also 39 00:02:03,640 --> 00:02:06,000 Speaker 2: for the movement of people as commuters. 40 00:02:08,280 --> 00:02:13,320 Speaker 1: So to start with how we got here. The rail 41 00:02:13,400 --> 00:02:19,480 Speaker 1: network by design was built within a two sided subsidy model. 42 00:02:20,280 --> 00:02:25,520 Speaker 1: So on one hand, historically it was intended to inhale 43 00:02:25,639 --> 00:02:30,600 Speaker 1: labor from townships into the cities. That that is what 44 00:02:30,680 --> 00:02:33,720 Speaker 1: the railway network was designed for, and that is what 45 00:02:33,800 --> 00:02:38,480 Speaker 1: the subsidy model for passengers was built around, so private 46 00:02:38,520 --> 00:02:45,440 Speaker 1: sector companies would include rail transportation type navies into their 47 00:02:46,560 --> 00:02:50,560 Speaker 1: payment mechanisms for the government. So it was inherently designed 48 00:02:50,600 --> 00:02:54,400 Speaker 1: to do this because it would be inaffordable to have 49 00:02:54,440 --> 00:02:56,200 Speaker 1: a bus or a tax you or any other form 50 00:02:56,240 --> 00:03:00,400 Speaker 1: of transports to move people from low and tome householdships 51 00:03:00,440 --> 00:03:03,720 Speaker 1: that were far from the cities into the CBD. Then 52 00:03:03,800 --> 00:03:07,400 Speaker 1: on the flip side, the freight rail sector was also 53 00:03:07,520 --> 00:03:10,200 Speaker 1: designed within a similar kind of subsidy model, but the 54 00:03:10,280 --> 00:03:14,600 Speaker 1: difference is that the structure was based on what it's 55 00:03:14,639 --> 00:03:17,760 Speaker 1: called what the traffic can bear, meaning they would only 56 00:03:17,919 --> 00:03:21,639 Speaker 1: charge the market or the corridors were only priced at 57 00:03:21,680 --> 00:03:25,919 Speaker 1: what the confines could afford. So if you're an agricultural producer, 58 00:03:26,200 --> 00:03:29,760 Speaker 1: it would pay what you can afford, right, And this 59 00:03:29,840 --> 00:03:33,279 Speaker 1: is what built out much of the railway network specifically 60 00:03:33,280 --> 00:03:37,920 Speaker 1: designed to export raw minerals out of South Africa, right, 61 00:03:39,360 --> 00:03:42,400 Speaker 1: And that is the fundamental piece. So there was a 62 00:03:42,400 --> 00:03:47,000 Speaker 1: bit of a cross subsidization inherently. First forward to post 63 00:03:47,120 --> 00:03:52,480 Speaker 1: ninety four, the cross subsidization mechanisms just don't make financial 64 00:03:52,520 --> 00:03:56,200 Speaker 1: sense from a physical perspective. Got a new distantation. You've 65 00:03:56,200 --> 00:04:00,000 Speaker 1: got a whole new urban and transport environment, more pre 66 00:04:00,240 --> 00:04:05,320 Speaker 1: owned cars, the trucking industry has exploded, the demand for 67 00:04:05,440 --> 00:04:09,120 Speaker 1: convenience has increased. We've got all forms of passenger transport 68 00:04:09,160 --> 00:04:13,600 Speaker 1: and freight transport now competing for a market that used 69 00:04:13,600 --> 00:04:17,240 Speaker 1: to be protected through subsidies and other forms of regulation. Right. 70 00:04:17,320 --> 00:04:21,880 Speaker 1: So now for the first time, you have monopoly spacing 71 00:04:22,000 --> 00:04:25,480 Speaker 1: private sector competition. And that's how you have the split 72 00:04:25,640 --> 00:04:30,000 Speaker 1: where road freight takes on eighty percent of the freight 73 00:04:30,080 --> 00:04:34,280 Speaker 1: volumes and then rail freight takes on twenty percent. And 74 00:04:34,440 --> 00:04:38,880 Speaker 1: then in the passenger context, just for public transport commuters, 75 00:04:38,920 --> 00:04:43,200 Speaker 1: only about eight to ten percent of passenger transport commuters 76 00:04:43,520 --> 00:04:47,200 Speaker 1: use trains, so use rail, and it's just down from 77 00:04:47,400 --> 00:04:52,159 Speaker 1: twenty to twenty five percent in the mid twenty twenty 78 00:04:52,279 --> 00:04:56,040 Speaker 1: twenty twenty fifteen. Right. So that's that's how we got 79 00:04:56,040 --> 00:04:57,120 Speaker 1: to where we are today. 80 00:04:57,400 --> 00:05:01,120 Speaker 2: Okay, And so what was also the role of So 81 00:05:01,200 --> 00:05:03,039 Speaker 2: we often hear that one of the big challenges of 82 00:05:03,120 --> 00:05:08,520 Speaker 2: the sector is infrastructure, in that there's been damage to infrastructure. 83 00:05:08,600 --> 00:05:11,360 Speaker 2: There's been lots of infrastructure we saw a couple of 84 00:05:11,440 --> 00:05:13,640 Speaker 2: years ago. Was it Prassa who put out quite a 85 00:05:13,640 --> 00:05:19,760 Speaker 2: big tender wanting to I guess modernize, revitalize the infrastructure 86 00:05:19,800 --> 00:05:23,320 Speaker 2: the carriages. But that particular process, that tender was said 87 00:05:23,360 --> 00:05:25,680 Speaker 2: by corruption et cetera, et cetera, we're at the wrong 88 00:05:25,760 --> 00:05:28,440 Speaker 2: trains at some point. So how much of the issue 89 00:05:28,480 --> 00:05:32,680 Speaker 2: around the state of the states of the infrastructure is 90 00:05:32,760 --> 00:05:37,000 Speaker 2: also part of the kind of where we are now? 91 00:05:38,160 --> 00:05:43,000 Speaker 1: Yes, yes, so I wanted to keep the story short 92 00:05:43,040 --> 00:05:46,200 Speaker 1: in terms of context, but there were a lot of 93 00:05:46,320 --> 00:05:53,160 Speaker 1: institutional interruption, ren seeking a ka corruption that diluted a 94 00:05:53,200 --> 00:05:56,920 Speaker 1: lot of the plans that both transmit and process and 95 00:05:57,080 --> 00:06:00,280 Speaker 1: in places the Road Agency Alasica and what this has 96 00:06:00,320 --> 00:06:03,839 Speaker 1: done it basically set us for twenty to twenty five 97 00:06:03,920 --> 00:06:07,760 Speaker 1: years behind our schedule. It's from a development perspective, because 98 00:06:08,040 --> 00:06:11,760 Speaker 1: the infrastructure, just from a railway line perspective, is a 99 00:06:11,880 --> 00:06:16,760 Speaker 1: multi decade investment. The infrastructure for train sets, for example, 100 00:06:17,080 --> 00:06:20,840 Speaker 1: today we're quite fortunate to be able to manufacture our own, 101 00:06:20,960 --> 00:06:25,800 Speaker 1: you know, domestic train set through the Gibella which manufactured 102 00:06:25,800 --> 00:06:28,800 Speaker 1: about two undred ninety seven of those a train set. 103 00:06:29,160 --> 00:06:33,919 Speaker 1: But previously it was a quasmire of tenders and proturement 104 00:06:34,000 --> 00:06:38,599 Speaker 1: issues and incorrect suppliers, incorrect specifications for passenger rail. In 105 00:06:38,640 --> 00:06:42,599 Speaker 1: the freight rail context, we had aging locomotives, right, so 106 00:06:42,760 --> 00:06:46,400 Speaker 1: the average age at some point I think was twenty 107 00:06:46,520 --> 00:06:50,080 Speaker 1: nineteen because I was forty eight years right, So we 108 00:06:50,160 --> 00:06:54,279 Speaker 1: had very old locomotives on average. And now we're getting 109 00:06:54,320 --> 00:06:56,760 Speaker 1: into the space where we've ratified what is called the 110 00:06:56,839 --> 00:07:02,279 Speaker 1: Listenberg Rail Protocol, which basically standard US assets across the 111 00:07:02,360 --> 00:07:04,880 Speaker 1: railway market, which means that you can track almost like 112 00:07:04,880 --> 00:07:07,400 Speaker 1: a bar code system, where you can track and trade 113 00:07:07,680 --> 00:07:11,440 Speaker 1: at different assets based on the age, quality and configuration. 114 00:07:11,800 --> 00:07:14,800 Speaker 1: And that sets us up for a very interesting future 115 00:07:14,800 --> 00:07:18,800 Speaker 1: from a freight rail perspective asset wise, and also from 116 00:07:18,920 --> 00:07:23,000 Speaker 1: a from a passenger rail perspective asset wise. The infrastructure 117 00:07:23,000 --> 00:07:26,720 Speaker 1: you're talking about, just simply speaking, if you look at 118 00:07:26,920 --> 00:07:31,040 Speaker 1: the how train how train line versus the cape gauge 119 00:07:31,040 --> 00:07:35,240 Speaker 1: lines which we have most of South Africa. These cape 120 00:07:35,240 --> 00:07:39,840 Speaker 1: gage lines are relatively narrower, they accommodate relatively lower speeds, 121 00:07:40,040 --> 00:07:43,040 Speaker 1: so you need train sets that can actually pop up 122 00:07:43,080 --> 00:07:45,320 Speaker 1: at about eighty kilometers an hour in order for you 123 00:07:45,360 --> 00:07:48,200 Speaker 1: to get a high ritual investment. But with the cape 124 00:07:48,200 --> 00:07:51,360 Speaker 1: gauge type, with the standard gage type lines, from a 125 00:07:51,400 --> 00:07:54,960 Speaker 1: culturing perspective, you can move into much higher speed one 126 00:07:55,000 --> 00:07:58,600 Speaker 1: hundred and twenty kilometers an hour, longer distance commutes and 127 00:07:58,680 --> 00:08:01,400 Speaker 1: therefore you have a much more diversified sort of use 128 00:08:01,440 --> 00:08:04,559 Speaker 1: cakes But to build that kind of line it will 129 00:08:04,600 --> 00:08:07,720 Speaker 1: take two three decades, you know, just to get to 130 00:08:07,720 --> 00:08:09,960 Speaker 1: the other side of South Africa. 131 00:08:10,040 --> 00:08:13,640 Speaker 2: Yeah, and just a question on that because obviously when 132 00:08:13,640 --> 00:08:16,720 Speaker 2: we're talking about rail often we're thinking about sort of 133 00:08:16,760 --> 00:08:22,160 Speaker 2: the trains operated by you know, Transnent, by Prossa, the 134 00:08:22,160 --> 00:08:24,040 Speaker 2: commuter trains, so it is all them. We're thinking of 135 00:08:24,080 --> 00:08:27,440 Speaker 2: the how train. We've heard from the Houting government saying, 136 00:08:27,440 --> 00:08:30,000 Speaker 2: you know, they are keen to extend it. There were 137 00:08:30,080 --> 00:08:32,760 Speaker 2: discussions even at the very inception of the building of 138 00:08:32,800 --> 00:08:37,040 Speaker 2: the how train about it being expanded. Is it the 139 00:08:38,120 --> 00:08:40,480 Speaker 2: is it the kind of transport that makes the most 140 00:08:40,520 --> 00:08:45,360 Speaker 2: sense for our particular needs? So the how train model 141 00:08:45,440 --> 00:08:47,480 Speaker 2: as it is, is it the one that makes the 142 00:08:47,559 --> 00:08:50,720 Speaker 2: most sense or in what ways does it make sense? 143 00:08:50,760 --> 00:08:53,360 Speaker 2: In what ways does it not? Because we have particular 144 00:08:53,440 --> 00:08:56,520 Speaker 2: challenges in the country for instant that spatial planning. You 145 00:08:56,559 --> 00:08:59,200 Speaker 2: were talking about where you know, trains were bringing in 146 00:08:59,240 --> 00:09:03,359 Speaker 2: people from out flying peri urban township areas that persists, 147 00:09:03,880 --> 00:09:05,880 Speaker 2: and so that's one of our challenges. Does the how 148 00:09:05,960 --> 00:09:08,760 Speaker 2: train help us with that, for instance, or does it 149 00:09:08,800 --> 00:09:10,280 Speaker 2: serve a completely different function. 150 00:09:11,880 --> 00:09:15,040 Speaker 1: Yeah, So there are a couple of ways to think 151 00:09:15,040 --> 00:09:20,400 Speaker 1: about commuter rail, and the ideal way to think through 152 00:09:20,400 --> 00:09:23,280 Speaker 1: it is about use case. So what is it that 153 00:09:24,040 --> 00:09:28,720 Speaker 1: a customer or consumer actually wants, right, and what are 154 00:09:28,760 --> 00:09:32,120 Speaker 1: they willing to pay for what they want? And then 155 00:09:32,160 --> 00:09:34,000 Speaker 1: what is it that they need and what are they 156 00:09:34,040 --> 00:09:38,199 Speaker 1: willing to pay for what they need? So with that framework, 157 00:09:38,360 --> 00:09:42,720 Speaker 1: you have the passenger of old agency services. They're servicing 158 00:09:42,800 --> 00:09:47,840 Speaker 1: a specific mood. They're servicing low income households that require 159 00:09:47,840 --> 00:09:53,079 Speaker 1: affordable transport over long distances. Right, that is the segment 160 00:09:53,160 --> 00:09:56,760 Speaker 1: that they're serving that they were serving historically. Wow with 161 00:09:56,880 --> 00:10:01,760 Speaker 1: the new train sets with relatively higher speed, better quality stations, 162 00:10:01,920 --> 00:10:07,280 Speaker 1: diversified investment packet. I mean, PASA now is expanding the 163 00:10:07,360 --> 00:10:11,240 Speaker 1: intersite portfolio so that private sector can start investing in 164 00:10:11,559 --> 00:10:14,440 Speaker 1: the areas around the train stations. As you know, most 165 00:10:14,440 --> 00:10:18,120 Speaker 1: of the train stations are very inaccessible. You have to 166 00:10:18,200 --> 00:10:20,560 Speaker 1: catch two or three technies to get to the train station, 167 00:10:20,920 --> 00:10:23,440 Speaker 1: and of course then your total cost as a low 168 00:10:23,480 --> 00:10:26,800 Speaker 1: income household for transport has already increased, even though the 169 00:10:26,840 --> 00:10:30,640 Speaker 1: longest distance leg is affordable. I'm saying this because how 170 00:10:30,720 --> 00:10:35,959 Speaker 1: Train is built on a land used development model. But 171 00:10:36,040 --> 00:10:39,400 Speaker 1: the while Train has done is that it's more than 172 00:10:39,520 --> 00:10:43,200 Speaker 1: just a passenger rail service. It's more of a real 173 00:10:43,320 --> 00:10:48,480 Speaker 1: estate investment project where you're attracting investment around in and 174 00:10:48,520 --> 00:10:53,240 Speaker 1: around key stations so that they can justify people using 175 00:10:53,280 --> 00:10:57,439 Speaker 1: the railway networks. So what record it. It's called articulated density. 176 00:10:57,640 --> 00:10:59,800 Speaker 1: So you want to bring density in and around the 177 00:10:59,800 --> 00:11:03,480 Speaker 1: state so that people can move between the stations. That's 178 00:11:03,600 --> 00:11:07,960 Speaker 1: an take a couple of decades to realize. They've already started. Now. 179 00:11:08,480 --> 00:11:11,760 Speaker 1: The interesting bit is that the current sect market segment 180 00:11:11,840 --> 00:11:15,360 Speaker 1: for the how trade perception from a perception perspective, looks 181 00:11:15,440 --> 00:11:18,080 Speaker 1: like the car owner or the car user or the 182 00:11:18,120 --> 00:11:21,079 Speaker 1: person who does have access to a vehicle as a 183 00:11:21,120 --> 00:11:25,239 Speaker 1: passenger can afford, you know, to rent a vehicle or 184 00:11:25,240 --> 00:11:29,360 Speaker 1: find another means of transport. But what they're doing is 185 00:11:29,400 --> 00:11:32,360 Speaker 1: they're choosing to then spend a little bit more on 186 00:11:32,400 --> 00:11:35,440 Speaker 1: the how train right for the for the use case 187 00:11:35,440 --> 00:11:37,440 Speaker 1: and the areas that they want to connect to the 188 00:11:37,480 --> 00:11:40,680 Speaker 1: future state of the how train is interesting because they 189 00:11:40,760 --> 00:11:45,079 Speaker 1: want to target the middle to high income households right 190 00:11:45,120 --> 00:11:49,480 Speaker 1: who own vehicles, live in townships, are building multi story 191 00:11:49,520 --> 00:11:54,000 Speaker 1: homes like. They want to target those individuals off the freeways, 192 00:11:54,080 --> 00:11:57,280 Speaker 1: off the R eighties and bring them into the mainline 193 00:11:58,400 --> 00:12:01,120 Speaker 1: co a door system from a railway. What does this 194 00:12:01,200 --> 00:12:05,679 Speaker 1: do is introducing households that would typically not consider public 195 00:12:05,720 --> 00:12:09,440 Speaker 1: transport as an option right for their income, for their status, 196 00:12:09,480 --> 00:12:12,920 Speaker 1: for what they believe, what they believe in, and bring 197 00:12:12,960 --> 00:12:16,720 Speaker 1: them into the mainline public transportation ecosystem. And that is 198 00:12:17,040 --> 00:12:19,079 Speaker 1: undermentedly what the how chain is Prime Rouchie. 199 00:12:19,800 --> 00:12:24,240 Speaker 2: So when we hear this kind of this plan to 200 00:12:24,520 --> 00:12:27,959 Speaker 2: expand the how chain to I think it's over the 201 00:12:27,960 --> 00:12:32,959 Speaker 2: next couple of years, quite a big budget of I 202 00:12:32,960 --> 00:12:35,640 Speaker 2: think it's about one hundred and twenty billion RAND. It's 203 00:12:35,640 --> 00:12:40,200 Speaker 2: looking to expand to Cosmo City. So we're too randburg Landsia. 204 00:12:40,760 --> 00:12:44,000 Speaker 2: Is that what you're kind of is that is that 205 00:12:44,080 --> 00:12:47,840 Speaker 2: what you're kind of describing this kind of this the 206 00:12:47,960 --> 00:12:51,720 Speaker 2: rapid rail integrated network expansion correct? 207 00:12:51,800 --> 00:12:55,000 Speaker 1: Correct? And so you should have think of it as 208 00:12:55,160 --> 00:12:59,880 Speaker 1: as a separate exercise from so prosa how trade text 209 00:13:00,040 --> 00:13:04,400 Speaker 1: the buses, bust up a transit, et cetera. What's happening 210 00:13:04,480 --> 00:13:07,960 Speaker 1: is that the portfolio of options for the average South 211 00:13:07,960 --> 00:13:12,240 Speaker 1: African commuter is expanding, is becoming wider, which means that 212 00:13:13,080 --> 00:13:16,440 Speaker 1: for every rand of government spending or public sector investment 213 00:13:16,679 --> 00:13:21,240 Speaker 1: in public transport, you should get a higher return, right 214 00:13:21,280 --> 00:13:24,440 Speaker 1: from an option value perspective. And even as a car owner, 215 00:13:24,720 --> 00:13:26,480 Speaker 1: can I say, in fact, I don't need to buy 216 00:13:26,600 --> 00:13:29,400 Speaker 1: a very big vehicle. I can commute to work on 217 00:13:29,440 --> 00:13:32,400 Speaker 1: a daily basis. I can use Houltering for this part, 218 00:13:32,480 --> 00:13:34,560 Speaker 1: past for that part, and use a bus or a 219 00:13:34,600 --> 00:13:37,680 Speaker 1: taxi for the remainder. Right. So that is essentially what 220 00:13:37,800 --> 00:13:41,680 Speaker 1: the configuration looks like. Something similar is happening in the 221 00:13:41,679 --> 00:13:44,200 Speaker 1: freight rail context as well, which we can talk about, 222 00:13:44,800 --> 00:13:53,800 Speaker 1: you know, Athensic, I'm just going to say we can 223 00:13:53,840 --> 00:13:56,160 Speaker 1: talk about the freight rail dynamics as well from a 224 00:13:56,240 --> 00:14:00,240 Speaker 1: user centric perspective because the model is becoming very similar 225 00:14:00,520 --> 00:14:06,200 Speaker 1: where the involvement of private sector operators is. It's not 226 00:14:06,400 --> 00:14:10,959 Speaker 1: unique to the passage to the passenger side of things, 227 00:14:11,040 --> 00:14:14,200 Speaker 1: because we've seen it mostly with fastest texts, et cetera. Now, 228 00:14:14,200 --> 00:14:17,800 Speaker 1: with the railway spread grow in particular, we're seeing companies 229 00:14:17,800 --> 00:14:20,840 Speaker 1: that have been doing this for decades are now finding 230 00:14:20,840 --> 00:14:22,960 Speaker 1: a path to do it in the h in a 231 00:14:23,000 --> 00:14:26,080 Speaker 1: fragial context. And what doesn't mean. It means that a 232 00:14:26,160 --> 00:14:29,400 Speaker 1: customer in a freight space is essentially someone who wants 233 00:14:29,440 --> 00:14:33,840 Speaker 1: something to be transported, typically high volume, low top values, 234 00:14:33,880 --> 00:14:37,560 Speaker 1: so that value per time is relatively low. It's not 235 00:14:37,600 --> 00:14:41,600 Speaker 1: a complete product. And obviously down the line, with better 236 00:14:41,680 --> 00:14:45,840 Speaker 1: quality services, you could be transporting ultimately complete products. But 237 00:14:46,080 --> 00:14:49,880 Speaker 1: essentially what the consumer, based from a freight perspective, was 238 00:14:49,880 --> 00:14:53,400 Speaker 1: trying to achieve. They want to leverage on convenience. They 239 00:14:53,480 --> 00:14:56,680 Speaker 1: want an efficient service that is accessible and now to 240 00:14:56,720 --> 00:15:00,000 Speaker 1: do that, transit cannot be the only operator using user 241 00:15:00,080 --> 00:15:04,920 Speaker 1: the lines. The rail lines themselves need to be absolutely 242 00:15:05,400 --> 00:15:09,600 Speaker 1: more competitive, and that's what this train slot market is 243 00:15:09,960 --> 00:15:13,840 Speaker 1: actually about. So what they're selling is like space. It's 244 00:15:13,840 --> 00:15:16,840 Speaker 1: like space in a slot machine. The only difference is 245 00:15:16,840 --> 00:15:20,560 Speaker 1: that you pay per You pay for the size of 246 00:15:20,600 --> 00:15:23,040 Speaker 1: your of your train in terms of weight, but also 247 00:15:23,320 --> 00:15:26,920 Speaker 1: you pay for the frequency of utilization, right and I 248 00:15:27,400 --> 00:15:30,320 Speaker 1: design What that does is it forces the train operators 249 00:15:30,560 --> 00:15:34,320 Speaker 1: to optimize how they design their services. It also forces 250 00:15:34,320 --> 00:15:37,800 Speaker 1: the confined, the people who want these items to be 251 00:15:37,840 --> 00:15:41,600 Speaker 1: transported to think about a competitive pricing mechanism or model 252 00:15:41,800 --> 00:15:45,320 Speaker 1: that attracts the right players. So that's what's happening in 253 00:15:45,400 --> 00:15:45,840 Speaker 1: this space. 254 00:15:46,320 --> 00:15:48,760 Speaker 2: So you say, in this instance, so they would be 255 00:15:48,800 --> 00:15:52,440 Speaker 2: these private players, they would be paying the operator. Who 256 00:15:52,560 --> 00:15:53,280 Speaker 2: is the operator? 257 00:15:53,320 --> 00:15:53,520 Speaker 3: Yeah? 258 00:15:53,560 --> 00:15:54,200 Speaker 2: Is that prosa? 259 00:15:55,520 --> 00:16:01,560 Speaker 1: Ah? So the across the board, there's not one operator. Right. 260 00:16:02,040 --> 00:16:07,080 Speaker 1: Once you open the market up for slots, any any 261 00:16:07,120 --> 00:16:09,800 Speaker 1: person who meet the appropriate requirements and as a right 262 00:16:09,880 --> 00:16:12,720 Speaker 1: plus structure and has access to the properate efforts and 263 00:16:12,880 --> 00:16:16,800 Speaker 1: meet guidelines, will be able to access space on the 264 00:16:16,880 --> 00:16:20,280 Speaker 1: railway line. Think of it as a schedule, and everyone 265 00:16:20,360 --> 00:16:22,320 Speaker 1: has a time slot. They are high value time slot 266 00:16:22,440 --> 00:16:24,960 Speaker 1: and a low value time slot. And what you want 267 00:16:25,000 --> 00:16:27,080 Speaker 1: to buy is a space in that slot. As a 268 00:16:27,080 --> 00:16:31,560 Speaker 1: private sector plane company, that's essentially what's being put on 269 00:16:31,560 --> 00:16:31,960 Speaker 1: the table. 270 00:16:32,120 --> 00:16:37,640 Speaker 2: Okay, yeah, and so how does how does that then 271 00:16:37,760 --> 00:16:42,560 Speaker 2: improve kind of where we are both from I guess 272 00:16:42,720 --> 00:16:47,080 Speaker 2: a passenger commuter perspective, but also from a freight perspective. 273 00:16:47,520 --> 00:16:50,640 Speaker 2: And then what does that mean? For instance, the trucking industry, 274 00:16:50,720 --> 00:16:55,000 Speaker 2: because of course they've become their impact, their scale, the 275 00:16:55,120 --> 00:16:58,000 Speaker 2: size of the pie has grown over the last twenty 276 00:16:58,120 --> 00:17:00,760 Speaker 2: or so years because so much of our goods are 277 00:17:00,800 --> 00:17:03,640 Speaker 2: now being moved by a road. If we then fits 278 00:17:03,760 --> 00:17:07,119 Speaker 2: the freight the freight side of things, that's not great 279 00:17:07,119 --> 00:17:11,919 Speaker 2: for the trucks because while that's currently their share of 280 00:17:11,960 --> 00:17:12,560 Speaker 2: the business. 281 00:17:12,600 --> 00:17:18,359 Speaker 1: No, it's again correct, correct, So let's start with Let's 282 00:17:18,359 --> 00:17:24,159 Speaker 1: start with the freight side of things. So introducing private 283 00:17:24,200 --> 00:17:29,960 Speaker 1: operators involves to about two two three important dynamics. So 284 00:17:30,280 --> 00:17:34,960 Speaker 1: the first one is that you get about eleven qualified 285 00:17:35,000 --> 00:17:38,960 Speaker 1: operators will get plugged in to the sector, to the 286 00:17:39,040 --> 00:17:44,600 Speaker 1: railway lines by the first quote of twenty twenty seven, right, 287 00:17:44,760 --> 00:17:48,520 Speaker 1: these are basically forty one routes. Now, what do we 288 00:17:48,600 --> 00:17:52,840 Speaker 1: gain from that. The expectation is that we'll get an 289 00:17:52,880 --> 00:17:58,119 Speaker 1: additional twenty million times in capacity, so that is capacity 290 00:17:58,200 --> 00:18:02,639 Speaker 1: from the private sector, right, And what that does is 291 00:18:02,720 --> 00:18:07,000 Speaker 1: that it helps us closer to our hundred and fifty 292 00:18:07,160 --> 00:18:11,280 Speaker 1: million time target, whereas we're currently we're currently sitting at 293 00:18:11,280 --> 00:18:13,679 Speaker 1: about from a mistaking about one hundred and forty one 294 00:18:13,720 --> 00:18:17,040 Speaker 1: hundred and fifty million times at the moment, right, So 295 00:18:17,280 --> 00:18:21,480 Speaker 1: it's about increasing our capacity this point, and we want 296 00:18:21,520 --> 00:18:24,919 Speaker 1: to do that at the lowest possible cost. From a 297 00:18:24,960 --> 00:18:28,800 Speaker 1: public sector perspective, you know, we're physically constraints. So when 298 00:18:28,840 --> 00:18:32,640 Speaker 1: you increase your capacity through the through the public, through 299 00:18:32,640 --> 00:18:36,320 Speaker 1: the private sector, you then get more value for the 300 00:18:36,680 --> 00:18:39,440 Speaker 1: for the text of revenue base. So the first called 301 00:18:39,520 --> 00:18:42,520 Speaker 1: dollar is called rand in the market. That's essentially what 302 00:18:42,520 --> 00:18:46,400 Speaker 1: we're getting. So the second piece is that, yes, indeed 303 00:18:46,840 --> 00:18:51,400 Speaker 1: the freight industry road freight industry is going to experience 304 00:18:51,480 --> 00:18:54,800 Speaker 1: a degree of disruption. It might not be it might 305 00:18:54,840 --> 00:18:58,840 Speaker 1: not be massive disruption because there's still the world of 306 00:18:58,880 --> 00:19:02,560 Speaker 1: e commerce. They still the world of first last male logistics. 307 00:19:02,680 --> 00:19:06,720 Speaker 1: And the value of the last one hundred meters in 308 00:19:06,760 --> 00:19:10,080 Speaker 1: the supply chain is actually the most expensive, the longest part, 309 00:19:11,119 --> 00:19:14,200 Speaker 1: the longest part of the journey is actually not really 310 00:19:14,240 --> 00:19:17,240 Speaker 1: a big component of the supply chain costs. What suppliers 311 00:19:17,240 --> 00:19:19,560 Speaker 1: are trying to solve for is that just get the 312 00:19:19,600 --> 00:19:23,679 Speaker 1: items too from one shore to the city, so we 313 00:19:23,720 --> 00:19:26,679 Speaker 1: can break the bulk and use road freight for the 314 00:19:26,720 --> 00:19:31,840 Speaker 1: remainder of the journey. Now down the line, if private 315 00:19:31,880 --> 00:19:36,600 Speaker 1: sector participation follows the trajectory that follows. In other countries, 316 00:19:37,000 --> 00:19:41,560 Speaker 1: you see emerging real estate developments such as these break 317 00:19:41,600 --> 00:19:48,359 Speaker 1: balk facilities, these intermodal intermodal facilities, but most importantly what 318 00:19:48,560 --> 00:19:54,120 Speaker 1: is called logistics hotels. These are essentially infrastructure or buildings 319 00:19:54,200 --> 00:19:58,520 Speaker 1: that make you know, especial economic zone, a break balk facility, 320 00:19:58,800 --> 00:20:03,680 Speaker 1: a distribution center, an integrated space for both straight road 321 00:20:03,680 --> 00:20:08,560 Speaker 1: freight and rail freight into one space. Right. We've not 322 00:20:08,640 --> 00:20:12,160 Speaker 1: seen these developments in the Africa or African context at 323 00:20:12,200 --> 00:20:17,960 Speaker 1: the scale, but that's essentially the expected outcome from this 324 00:20:18,080 --> 00:20:21,040 Speaker 1: kind of from this kind of ecosystem. This will be 325 00:20:21,040 --> 00:20:23,320 Speaker 1: funded by private sector fundamentally. 326 00:20:23,680 --> 00:20:26,679 Speaker 2: Right, Okay, I want to just pose yeah, because we 327 00:20:26,680 --> 00:20:28,680 Speaker 2: did receive a WhatsApp voice note for the question that's 328 00:20:28,720 --> 00:20:31,240 Speaker 2: come through on seven seven two one seven two. 329 00:20:32,520 --> 00:20:36,840 Speaker 3: Good morning books. Please ask your guests what is going 330 00:20:36,880 --> 00:20:43,600 Speaker 3: to happen with the railway coaches that they bought erroneously 331 00:20:43,840 --> 00:20:51,119 Speaker 3: and that are standing and rusting away at the Johannesburg station. 332 00:20:52,640 --> 00:20:55,919 Speaker 3: Couldn't they donate them to schools that has a shortage 333 00:20:55,960 --> 00:21:03,240 Speaker 3: of classrooms or squatter camps to be used as toilets, 334 00:21:03,400 --> 00:21:09,200 Speaker 3: or use the scrap metal or something. It is heartbreaking 335 00:21:09,280 --> 00:21:15,040 Speaker 3: to go past the station to see all those railway 336 00:21:15,880 --> 00:21:19,880 Speaker 3: coaches just standing there. Thank you, Opendze. 337 00:21:21,920 --> 00:21:25,880 Speaker 1: Yeah, and that's an interesting question, and you know, I've 338 00:21:25,920 --> 00:21:28,520 Speaker 1: always I've always seen this, especially when you're going over 339 00:21:28,640 --> 00:21:33,800 Speaker 1: Bosma Station, you sort of see all these locomotives, and 340 00:21:34,119 --> 00:21:37,479 Speaker 1: fundamentally that is that is just part of the clearing 341 00:21:37,520 --> 00:21:41,840 Speaker 1: process for process, and it depends on what they choose 342 00:21:41,840 --> 00:21:45,240 Speaker 1: to do. I would highly recommend the listener to to 343 00:21:45,280 --> 00:21:49,080 Speaker 1: obviously like reach out to the office and share these proposals, right, 344 00:21:49,119 --> 00:21:53,399 Speaker 1: because I'm not sure if the process is in a 345 00:21:53,400 --> 00:21:57,040 Speaker 1: position to refurbish these assets, and if refurbishing the assets 346 00:21:57,040 --> 00:21:59,679 Speaker 1: are an option, I would I would go as fy 347 00:21:59,680 --> 00:22:03,480 Speaker 1: as say, the best way to actually handle these kinds 348 00:22:03,520 --> 00:22:06,720 Speaker 1: of assets, because I they could be used for all 349 00:22:06,800 --> 00:22:10,320 Speaker 1: kinds of things, is to make them available to the market. 350 00:22:11,400 --> 00:22:13,159 Speaker 1: But not all of them, of course, but most of 351 00:22:13,160 --> 00:22:14,840 Speaker 1: them would probably need to be recycled. 352 00:22:15,720 --> 00:22:17,720 Speaker 2: Right, we're going to run out of time. I did 353 00:22:17,840 --> 00:22:19,960 Speaker 2: want to touch on the issue of public trust, which 354 00:22:20,240 --> 00:22:23,080 Speaker 2: the German Nature Mine is also dealing with, so maybe 355 00:22:23,080 --> 00:22:25,920 Speaker 2: it's another conversation, but with regards to what we heard 356 00:22:25,920 --> 00:22:28,919 Speaker 2: from the President this week, these forty one operators, some 357 00:22:29,040 --> 00:22:33,600 Speaker 2: of them are you know, being are being added to 358 00:22:33,680 --> 00:22:36,600 Speaker 2: the network as early as twenty twenty seven. Is that 359 00:22:36,720 --> 00:22:39,640 Speaker 2: a thing we should be excited about, even if it's 360 00:22:39,760 --> 00:22:44,800 Speaker 2: cautiously optimistic about just giving the challenges in the railway 361 00:22:44,840 --> 00:22:47,800 Speaker 2: sector both on a fright and a passenger commuter side. 362 00:22:49,320 --> 00:22:51,680 Speaker 1: Yeah, yes, so I think there's a lot of positivity 363 00:22:52,600 --> 00:22:56,399 Speaker 1: and also cauestion. Right, we used to be in a 364 00:22:56,440 --> 00:22:59,800 Speaker 1: country where the logistics costs, logistics inefficiencies cost us a 365 00:22:59,800 --> 00:23:01,720 Speaker 1: lot of billion rand a day. Now we're at seven 366 00:23:01,760 --> 00:23:04,920 Speaker 1: hundred million a day, right, And this is it's a 367 00:23:05,080 --> 00:23:09,760 Speaker 1: it's a stock inclibe just because of improved deficiencies. But 368 00:23:09,840 --> 00:23:12,240 Speaker 1: it's taken almost ten years to get to this point. 369 00:23:13,240 --> 00:23:16,440 Speaker 1: So even with the new private text to operators coming 370 00:23:16,480 --> 00:23:21,840 Speaker 1: online as early as one twenty twenty seven, we should 371 00:23:21,960 --> 00:23:28,000 Speaker 1: anticipate the returns of their participation a year, two, three 372 00:23:28,080 --> 00:23:31,520 Speaker 1: years down the line. Just because of the lag effects 373 00:23:31,960 --> 00:23:34,800 Speaker 1: of logistics equiciencies, it just takes a while for us 374 00:23:34,840 --> 00:23:38,800 Speaker 1: to receive the return on investment. Similarly, with the passenger 375 00:23:38,880 --> 00:23:43,240 Speaker 1: rail services. Of passenger rail operations, it's it's going to 376 00:23:43,320 --> 00:23:45,359 Speaker 1: take quite a bit of time for us to see 377 00:23:45,520 --> 00:23:48,640 Speaker 1: the return on investment. It could take about a decade 378 00:23:48,920 --> 00:23:53,280 Speaker 1: before you and I see the actual benefits of the 379 00:23:53,359 --> 00:23:56,879 Speaker 1: investments that are being made in twenty twenty six. So 380 00:23:56,960 --> 00:23:58,720 Speaker 1: that is the challenge that I think we need to 381 00:23:58,760 --> 00:24:01,240 Speaker 1: manage from a sentiment of space, because that's what drive 382 00:24:01,680 --> 00:24:04,200 Speaker 1: that's what drives question make an announcement today. I want 383 00:24:04,200 --> 00:24:07,199 Speaker 1: to see results tomorrow, whereas in reality it's going to 384 00:24:07,240 --> 00:24:11,600 Speaker 1: take twenty years for the tree to grow and pay foods. 385 00:24:11,640 --> 00:24:15,000 Speaker 1: And this is why when we start our conversation, a 386 00:24:15,160 --> 00:24:19,439 Speaker 1: point was that we lost about two decades of momentum, 387 00:24:20,200 --> 00:24:22,280 Speaker 1: and that's what we're paying for at the moment. 388 00:24:23,600 --> 00:24:26,840 Speaker 2: Right, this feels like we've just begun this conversation actually, 389 00:24:26,960 --> 00:24:29,359 Speaker 2: even though we've had about twenty minutes of it. So 390 00:24:29,400 --> 00:24:32,199 Speaker 2: I suspect we may need to have you back to 391 00:24:32,240 --> 00:24:34,320 Speaker 2: discuss some of the other issues. But Offend, I must 392 00:24:34,320 --> 00:24:35,840 Speaker 2: thank you so so much for giving us your time 393 00:24:35,880 --> 00:24:36,320 Speaker 2: this morning. 394 00:24:37,640 --> 00:24:38,879 Speaker 1: Thank you really appreciate it. 395 00:24:38,920 --> 00:24:41,520 Speaker 2: Thank you so much. That is independent transport Economist, Offense 396 00:24:41,560 --> 00:24:44,399 Speaker 2: and Madsha joining us for our future of conversation. I 397 00:24:44,480 --> 00:24:48,800 Speaker 2: definitely smile. A part two of this particular conversation coming 398 00:24:48,880 --> 00:24:51,359 Speaker 2: up we're in the show. In the literature corner, we 399 00:24:51,359 --> 00:24:54,359 Speaker 2: speak to multi award winning South African journalist. She's also 400 00:24:54,359 --> 00:24:57,880 Speaker 2: a publisher and a writer. She's just written a new book. 401 00:24:57,920 --> 00:25:00,800 Speaker 2: It's called Swift and it is a book dealing with 402 00:25:00,840 --> 00:25:04,159 Speaker 2: the death of her partner, Matt and she writes it 403 00:25:04,280 --> 00:25:07,600 Speaker 2: in the six weeks following the sudden death of her partner. 404 00:25:07,640 --> 00:25:10,359 Speaker 2: Melinda Ferguson is the author and she will join us 405 00:25:10,359 --> 00:25:14,480 Speaker 2: in the Literature Corner to speak to us about Swift 406 00:25:14,640 --> 00:25:19,240 Speaker 2: and navigating shock and grief following the passing of her partner. 407 00:25:19,320 --> 00:25:22,760 Speaker 2: But first it is twenty seven minutes before nine o'clock. 408 00:25:22,960 --> 00:25:24,800 Speaker 2: They's check in with you. Later's Eye Witness New Sport 409 00:25:24,840 --> 00:25:25,800 Speaker 2: with Anthony Schada.