TFR to release tender in April for take-or-pay access to container corridors

28th February 2022 By: Terence Creamer - Creamer Media Editor

TFR to release tender in April for take-or-pay access to container corridors

The City Deep terminal

Transnet Freight Rail (TFR) will release a request for proposals (RFP) on April 1 for the sale of slots to private operators on the key container corridor linking Gauteng and Durban, as well as parts of the Cape corridor.

The State-owned utility tells Engineering News that it is in the process of finalising the number of slots to be made available during the first phase of the initiative, which is designed to arrest what has been a steady decline over several years, but which worsened considerably during the Covid lockdowns.

The initial focus will be on mainline slots, but some of the feeder lines connecting into the container corridor could be considered subject to the completion of an analysis of what the network is able to accommodate.

TFR says the slots will be sold through an open-market process, on a take-or-pay basis, and will be awarded to operators deemed to be “operationally ready or operators who can start operating within a month of the award process”.

Allocations will also favour operators that best utilise the maximum train configuration, with the current train carrying capacity being 100 TEUs, or twenty-foot equivalent units.

TFR’s current infrastructure mainly accommodates electric locomotives on the mainline, but the use of diesel locomotives is being investigated in light of high levels of cable theft.

The use of diesel locomotives is largely dependent on the tunnels and ventilation.

“TFR will release the RFP on 1 April 2022 and thereafter the normal open-market process will follow,” the utility said in response to questions posed by Engineering News after President Cyril Ramaphosa announced in his State of the Nation Address that Transnet would make slots available on the container corridor between Durban and City Deep.

The corridor is currently running at a loss, while on-time arrival of trains averages 20% and train running time averages 36 hours against an 18-hour design.

The unpredictability of service is undercutting TFR’s revenue and also negatively affecting the port system with containers arriving outside of the three-day stack window.

“The overall competitiveness remains a challenge hence we believe that the introduction of private operators will strengthen and densify the corridor, enhance efficiencies and contribute to growth in key sectors of the economy,” TFR explains.

As part of the initial roll-out to third-party operators, slots will be sold for a fixed period of a year, but TFR says it is still in the process of finalising the pricing and commercial access framework.

The policy for rail access is currently being finalised by the Department of Transport and Transnet reports that it is making its submissions and input through "set governance channels”.

The utility stresses that the slot sales do not represent a concession and that payments will most likely be on a monthly basis, similar to current commercial arrangements with RovosRail, which already uses the network.

TFR, thus, intends to continue funding the infrastructure maintenance requirements from its operating budget.

“However, where we are unable to meet the obligations due to funding, we will explore alternative funding mechanisms and options.”

Based on TFR’s analysis of current and projected volumes, the City Deep terminal is deemed to have adequate capacity for any additional volumes that could arise as a result of the initial slot sales.

In time, however, the existing terminal capacity may become inadequate and further inland terminal capacity may be required.

Transnet has pulled back from any immediate involvement in the Tambo-Springs inland terminal, which suffered a setback in February when the High Court interdicted, based on environmental concerns, the construction of the K148 road, a key access road for the project.

Transnet tells Engineering News that the contract with the Tambo Springs Consortium was terminated on contractual terms and that it also referred the matter to the Special Investigating Unit for investigation.

However, Tambo Springs Logistics Gateway insists that the project is proceeding, arguing that the existing D817 road gives direct access to the site and is sufficient for the volumes envisaged for the first phase of the initiative.

Meanwhile, Transnet told lawmakers in February that it is aiming to introduce a partner at the City Deep Container Terminal.

“The scope of the partnership includes operations and investments to improve efficiencies, modernise terminal operations and increase capacity in the City Deep Container Terminal, working in concert with other current and planned inland terminals.”