Searching for rail market spaces in the high-value good market
Research note - 19 February 2025
Research by GAIN Group
Jan Havenga, Zane Simpson, Anneke de Bod, Stefaan Swarts, Henk Neethling, John Paul Kulumba, Werner van Greuning
In 2008, GAIN Group analysed the link (or missing link) between freight on rail and the value of freight on rail (see Figure 1).
Figure 1: Original view of rail volume and value in 2008
It should be widely known that railways mostly still compete in the low-value market only. While Transnet moved large volumes of freight in tonnage terms, the relative value of this freight is low, and the market share of valuable cargo, needed for the economy to grow most, is not utilising or being serviced by rail
This view was updated in 2011 (see Figure 2).
Figure 2: Revised view of rail volume and value in 2011
This story was presented to many audiences, including:
- Stellenbosch University students in 2018,
- the chief operating officer (COO) of Transnet Freight Rail (TFR) and its executive committee in 2018,
- attendees at the World Conference on Transport Research (WCTR 2019) held in Mumbai, India between the 26th and 31st of May 2019,
- the Government of China (during a keynote address) in 2019, and
- the National Department of Transport's executive committee in 2019.
As of 2022, the 2008 and 2011 views remain largely unchanged, with Figure 3 providing an almost timeless representation of rail in South Africa.
Figure 3: Latest view of rail volume and value – effectively unchanged
While Transnet has historically not operated in the space of high-value goods, there is most definitely a space for rail to service high-value goods. Utilising the Freight Demand Model™, the view of shiftable freight for tonnes, tonne-km and value, clearly shows this. Figure 4 provides an overview of the tonnage gap between current and target market shares for rail-friendly freight, not only highlighting what road freight volumes should be on rail but also what freight volumes should remain on road.
Figure 4: Rail’s current and potential tonnes for each segmentation type (FDM™ 2022)
Figure 5 provides this gap in tonne-kilometres, while Figure 6 provides this gap in Rand value terms.
Figure 5: Rail’s current and potential tonne-kilometres for each segmentation type (FDM™ 2022)
Figure 6: Rail’s current and potential value for each segmentation type (FDM™ 2022)
Note that the value graph excludes the value of precious minerals and precious ore. Within this space of freight value that should shift to rail, a large portion of the valuable goods are motor vehicles, as well as goods which are handled in containers.