SPOORNET HAS A UNIQUE PLAN.

(From Financial Mail)

SPOORNET HAS A UNIQUE PLAN Jane Barrett Spoornet's restructuring has averted the wretched experience of other rail break-ups Jane Barrett is policy research officer, SA Transport & Allied Workers' Union Spoornet's services have been under the spotlight in recent months. Customers have complained that the demand for quantity and quality is not being met. Spoornet has hit back, arguing customers must accept the commercial imperatives that drive the operation. But commentators have left out two important sets of information. The first is the logic of railway economics; the second is the detailed agreement between labour, government and Spoornet management on the growth of our railways, spelling out plans for future investments and efficiency improvements. By avoiding any reference to these, commentators have got away with quick-fix solutions to Spoornet's ills, usually in favour of privatising sections of the railway system. The FM's August 23 cover story is a case in point. Worldwide, freight railways have always relied on economies of scale for their success. They have also relied on a mix of traffic: bulk and general cargo; low and high value. Bulk traffic (such as coal, iron ore, and grains) tends to generate easy profit as it involves large tonnages and no complicated movements between loading and destination. The input costs in moving mixed general cargo (such as manufactured goods) are usually much higher because more complex movements are involved: wagons have to be arranged to take account of varying weights, which requires time and labour-consuming shunting. This means that in general the "user pays" principle is not strictly applied. Cross-subsidisation between bulk and general freight operations is usual in almost every freight railway system, including those in Brazil, Canada, Germany, Italy, India and Japan. Where cross-subsidisation has been stopped through the break-up of the system into a number of (usually private) companies, general freight operations have been all but eliminated. Argentina and Mexico are examples. In both cases, low-volume network routes have been eliminated, as have less-than-full wagon-load services used mainly by small and medium-sized enterprises. In Mexico 70000 jobs were lost in the process, in Argentina 90000. Huge traffic volumes have been shifted to ...