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Volkswagen says carmakers seek to revive key South African rail line

VW vehicles on the assembly line in South Africa

Photo by Bloomberg

13th June 2024

By: Bloomberg

  

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Volkswagen and other automakers operating in South Africa are in talks with the state logistics company to revive a dilapidated rail line between the country’s commercial hub and a car export terminal 700 miles away.

The companies, which include Isuzu Motors, would like to hire a private operator to run trains on the line between the Gauteng province and the city of Gqeberha, which would transport vehicles in both directions.

Companies such as Volkswagen and Isuzu currently rely almost entirely on trucks to get their vehicles from their plants near Gqeberha to Gauteng, South Africa’s biggest car market. The line would also benefit those with plants in Gauteng, such as Ford Motor Company and BMW, which could use it to move cars to the port in the coastal city as an alternative to the congested terminal in the city of Durban.

“The majority of the domestic market sits in Gauteng province,” said Martina Biene, chairwoman and managing director of Volkswagen South Africa, in an interview. The company currently transports all its cars on trucks, which take eight vehicles at a time, and that adds to road disasters and carbon dioxide, which adds costs, she said.

Automakers are the latest industry to seek a solution to the collapsing freight-rail service offered by Transnet, which has reduced coal and iron-ore exports to multi-decade lows. The state firm in March published a document that lays out proposed terms and conditions for private trains to operate on its tracks for the first time.

“They are open to public-private partnerships,” Biene said. “They will start selling the first slots in general for rail operators. But you’ll have to find somebody who can do that and who can make a profitable business out of that.”

Transnet didn’t respond to a request for comment.

While the company does offer a car transport service the terms it offers are not competitive and it’s inefficient, said Billy Tom, the chief executive officer of Isuzu’s South African unit.

On a train “it takes about 84 hours to move vehicles from here to Johannesburg. On the truck, in 12 to 16 hours, they are already there,” Tom said in an interview in Gqeberha last week. “We’re not happy with that because if we were to put these on the wagon, there would be less carbon footprint. There’s more carbon footprint now. But we’ve got no option.”

Edited by Bloomberg

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