Transnet Freight Rail (TFR) and Toyota SA Motors (TSAM) have concluded an agreement in which the Container and Automotive Business Unit of Transnet Freight Rail will directly handle the transportation of certain locally manufactured and imported Toyota vehicles.
The contract was officially signed on Wednesday 14 December 2011, Prospecton, Durban by Dr Johan van Zyl, President and CEO of TSAM, and Mr Siyabonga Gama, Chief Executive of TFR.
This contract is in line with TFR Container and Automotive Business Unit’s (CAB) strategy to offer an end-to-end supply chain solution to cargo owners. In doing this CAB has increased its value proposition to customers in this arena, which also includes several value additions such as vehicle loading and yard management.
Under the previous arrangement the commercial relationship was through a logistics service provider which optimised fleet of road carriers and thereafter considered rail for surplus only. With this new contract CAB will now have a direct relationship with a strategic and leading Original Equipment Manufacturer (OEM), Toyota SA Motors and a direct influence in the logistic chain. This will inevitably increase the rail market share, volumes and revenue.
Toyota SA Motors will in turn benefit from the significant bulk carrying capacity offered by TFR. This will translate into long term savings on vehicle movement and general logistics overhead costs and will help reduce the congestion on South African roads. This is further in support of concerns raised by the State on the road traffic congestion with associated road accidents.
The decision to transport vehicles by rail is also in keeping with Toyota’s publically stated intention of reducing its carbon footprint. Adding rail transport to the transport mix offers significant benefits in this regard as one consignment of vehicles per rail is equivalent to 10 vehicle carriers on road.
The contract execution will be in three phases, namely:
Phase 1 Transportation of domestic cars from Isipingo to Kaalfontein (Johannesburg);
Phase 2 Transportation of import cars from Durban to Kaalfontein (Johannesburg); and
Phase 3 Transportation of import and export cars between Isipingo and Durban.
Phase1 commenced as a pilot project on 17 October 2011 when the first cars were loaded onto the train at the Isipingo Terminal to Kaalfontein Terminal. This will be followed very soon by the Phase 2. The third and the last phase will be implemented later as special flat and open wagons are currently being designed.
TFR views this deal as a major breakthrough considering that TSAM is the leading car manufacturer and vehicle exporter in South Africa.