Following over four years of engagement between Transnet Freight Rail (TFR) and Imperial Logistics, the freight and logistics firms on Friday finally put pen to paper, ratifying a memorandum of understanding (MoU) that will divert freight that is currently transported by road to a multimodal transport combination and amplify the use of rail in long-haul transportation.

The breakthrough partnership would facilitate the joint development of multimodal logistics services in support of Transnet’s road-to-rail strategy, which aims to reduce the volume of rail-friendly freight transported on national road infrastructure.

The two companies – one a division of parastatal Transnet and the other a division of logistics firm, the Imperial Group – intended to target existing volumes within their respective groups and across various industries.

The initiative would marry TFR’s long-haul transportation capacity with Imperial’s road freight logistics, distribution and end-to-end value-chain management experience.

While Imperial Logistics chief integration officer Cobus Rossouw said the two companies had been informally “doing this for years”, the MoU would enable an official structuring of this collaboration.

“While these are two companies that would traditionally have competed, this agreement is significant as it prevents Imperial from putting the wrong product on rail and enables our respective services to complement one another,” he said.

TFR CEO Siyabonga Gama added that the collaboration would benefit the wider economy by “resolving” competitive obstacles" and trimming user transport costs.

“We are currently cooperating across several projects with a view to reducing the cost of doing business in South African by diverting goods to cheaper rail transport and developing mutually beneficial logistics hubs,” he commented.

Gama noted that the agreement would further enable Imperial access to Transnet-held property close to major rail hubs on which the logistics group would be able to develop the required warehousing infrastructure.

He further alluded to the possibility of developing large-scale intermodal hubs at transport cores such as Durban, Cape Town and Port Elizabeth.

Imperial Logistics CEO Marius Swanepoel noted that the intermodal transport strategy would concentrate chiefly on bulk commodities, which was a market in which Imperial has, thus far, been conspicuously absent.

“We’ve never played in bulk commodities because we’ve always believed that they should be on rail,” he said, admitting that it had emerged as a “massive market” that the group could no longer exclude.

Gama emphasised that the planned integration of road and rail capacity would not culminate in the long-term exclusion of road as a viable freight medium.

“We are not trying to make road transport extinct, but we are trying to increase freight volumes and decrease the volumes of good carried on our roads. Having said that, there are certain things that rail will never be able to do,” he commented.

The MoU announcement came a day after University of Johannesburg Department of Transport and Supply Chain Management head Professor Jackie Walters asserted that the country required a new freight railway line between Durban and Gauteng, citing statistics which showed that the N3 highway between the two provinces was under such pressure from trucks that there were only three hours a day when the number of cars exceeded the number of trucks on this road.

Engineering News Online reported that Walters had advocated the construction of a new standard gauge dedicated freight railway line between these provinces that was able to handle train wagons with two containers stacked on top of each other.

“We need to get containers off the road. We need to move them back to rail. The speed of the entire N3 system is slowing. We also have to secure the economic stature of the Gauteng province, which is responsible for 33.7% of the country's gross domestic product," he commented.

The Transnet/Imperial MoU was in line with Transnet’s Market Demand Strategy and Imperial’s multimodal logistics strategy, both of which were aimed at improving national logistics efficiencies.