There’s no better way to see the impact of global growth on industry supply chains, than from the driver’s seat of a logistics enterprise. Caught between the coal face and exporters, and squeezed into the space between manufacturer and consumer, the heavy rail industry has been in a tough spot.
Transnet Freight Rail’s executive Brian Monakali admits that his view has sparked serious introspection by sector players as to how to remain relevant and competitive.
The bigger challenge for the heavy haul industry lies in its ability to adopt a new mindset – to broaden its view so that it encompasses the entire supply chain – from the customer’s stock yard to the wholesaler’s warehouse.
This is the ultimate innovation that the industry needs to adopt if it is to secure a sustainable future.
Such a transformation is probably more important in a country such as South Africa, where only 15% of the country’s rail-friendly freight is transported by rail. The predominant transportation mode for the bulk of the country’s freight is road haulage, despite the clear cost advantage that rail offers.
Naturally, there are a few challenges to closing the gap between our rail yards and the so-called last mile to customers. But these are not insurmountable, as we could easily create that link through strategic partnerships with existing road freight companies.
The global slowdown, accelerated by China’s cooling economy, has had a noticeable impact across all supply chains and industry sectors. It should be no surprise then that the heavy rail sector has seen declining volumes, income and profits leaving key players finding new ways to improve efficiencies.
This has forced rail operators on a drive to lower operational costs by introducing a variety of innovations. Many of these are of a technological nature, for organisations accustomed to engineering and technology solutions.
All of these interventions are focused on cutting costs as achieving efficiencies can go only so far towards improving the bottom line. For example, the ability to carry more freight in a single load has far reaching financial benefits.
A case in point are innovations by Australian operators that have nearly doubled the carrying capacity of some of their rolling stock. In South Africa, the use of new technologies that allow us to evenly distribute the power of locomotives throughout Transnet’s famously-long iron ore train have helped increase speed, braking and control, while reducing wear and tear on rails and wheels.
“By adopting a more customer-centric approach, we significantly improve our reliability, availability and predictability,” Monakali shares.
“We are already making strides to tighten these types of operational disciplines by using technology to monitor condition of infrastructure and rolling stock, trace and report the whereabouts of assets, such as our rolling stock. In fact, it is difficult to think of an industry riper for the application of Internet of Things solutions to help drive improvements,” he says.
Ironically, one of the challenges that we face with this new technology is finding ways to interpret the data from all the sensors in a fast, efficient and accurate manner..
This transient nature of these challenges is also evident in the fortunes of commodity prices with 2016 seeing the rapid rise in the price of gold, coal and iron ore. The impact of this is the industry has a small window of opportunity to make use of the downturn to squeeze out all possible efficiencies – essentially preparation for the eventual turnaround of local and global economies so that we’re able to meet demand.
A dramatic change to revamping the entire supply chain is possible if efforts are coordinated and heavy rail operators are able to improve collaboration. The alternative is to becoming irrelevant or subservient to other logistics providers due to the lack of transformation.
Incidentally, this will be one of the objectives of the 11th International Heavy Haul Association (IHHA) Conference being hosted in Cape Town in September.
The conference will focus on the theme of ‘Advancing Heavy Haul Technologies and Operations in a Changing World’ as over 1000 industry executives, engineers and rail freight professionals gather for this biennial event.
“The heavy haul rail industry may appear an odd candidate for disruption and innovation, but we recognise that now is not the time for complacency and that we have a unique opportunity to up our game and set out on a path of sustainable growth,” concludes Monakali