While Africa’s locomotive leasing market was still in the early stages of development, it had the potential to become as large as those in the US and Europe, Grindrod Rail divisional CE James Holley has argued.
Speaking at the Africa Rail 2014 conference, in Sandton, Holley said Grindrod had found that one of the reasons why the leasing of loco- motives was not yet as prominent in Africa was political agendas, as there was an understanding that a country could gain more from owning its locomotives.
However, this was not the case, he argued.
“Actually you need the most effective solution to make your country most efficient,” he said.
Further, he noted that leasing companies could provide a call option, enabling the country leasing the locomotives to buy them at a later stage.
This provided flexibility, which Holley said was one of the main mechanisms that could be used to increase the rail leasing market in Africa.
Other aspects that leasing companies would also have to be willing to be flexible on included the length of the leasing agreement, maintenance agreements and additional services.
In this regard, he noted that Grindrod was looking to establish maintenance hubs in all the key regions of Africa.
This would mean that locomotives could be maintained and repaired in the country where they are operated, eliminating delays which would have occurred if those locomotives were sent back to South Africa to repair.
Holley further pointed out that the average length of a locomotive lease agreement in Africa was three to five years.
It was preferable to enter into longer-term leases, as these were less expensive than shorter-term leases.