SPOORNET’S financial results for the year which ended in March show an impressive turnround, with ’net profit’ rising from R84m a year earlier to R605m on turnover of R10bn. Announcing this in late July, Spoornet attributed the improvement to cost savings and better service to customers, with tonnes carried up from 179 to 185 million and no loss of market share.
Market share is of particular significance, as since the deregulation of road transport in 1988 the 1067mm gauge network has had to compete against lorries allowed to load up to a total weight of 56 tonnes compared with 28 tonnes previously - although the limit, as in so many other countries, is not rigorously enforced. With strong support from the Southern Africa Railways Association, Chief Executive Zandile Jakavula has campaigned hard for fairer treatment, the result being a more favourable view of rail at ministerial level. This looks likely to lead in the short term to a clampdown on overloaded lorries, giving Spoornet the opportunity to win back more general freight business.
How successful it will be is not clear. At issue is the much-debated restructuring programme, details of which were to have been released several months ago by the Department of Public Enterprises. Halcrow Rail and Rothschild were appointed to look at ways of improving Spoornet’s profitability, but their proposals for restructuring (RG 4.01 p205) came with an unwelcome political cost. Rothschild’s recommendations included concessioning of the two heavy haul coal businesses, Orex and Coallink, concessioning or abandonment of lightly-used freight lines and long-distance passenger services, plus the sale or concessioning of the luxury Blue Train.
This would have seen the loss of up to 27000 jobs, making the plan anathema to the unions. As the governing African National Congress party has a tripartite alliance with the South African Communist Party and the Congress of South African Trade Unions, implementing such radical change would have been especially embarrassing.
Spoornet management and unions are now of the view that last year’s better financial performance invalidates the need for drastic cuts in the 19756 km network. Jakavula ascribes the turnround to internal restructuring based on Halcrow’s recommendations and warns that Spoornet cannot afford to lose the heavy haul ’cash cows’. Their profits have kept the general freight business going and avoided complete abandonment of the main line passenger services which last year lost R175m. Further improvements under consideration include more block trains and reorganising scrap metal traffic to concentrate loads from 1200 depots at 30 collection hubs linked to the country’s six steel works by scheduled trains. Turning over feeder routes to local operators is still a possibility.
So the Department of Enterprise’s proposals, when they are eventually published, are likely to rule out concessioning of the two heavy haul lines. Just what measure of freedom management will be given is far from clear, although at least rail is now perceived more favourably. This is underlined by Spoornet’s increased capital spending, up in 2000-01 to R981m from under R500m a year earlier. In 2001-02 capital outlay is likely to total around R1bn, allowing further progress to be made in modernising the traction fleet.