A presentation by Andrew Marsay, an independent transport economist, delivered during the South African launch of Shell Rimula.

1. Andrew Marsay Transport Economist
"Aligning financial cost with real economic
value"
“Is a 20% reduction in land
transport costs achievable?”
Shell Rimula launch event; Maslow Hotel, Sandton
29th June 2016

2. Shell’s R & D commitment . . .
We’ve just heard that Shell spends $1.5bn p.a. on R & D alone.
Why? To keep ahead of their competitors, of course. But How?
By always making products that increase client’s commercial
productivity AND decrease their environmental externalities:
– ‘cleaner’, gas-based hydrocarbon product + cleaner engines
– +/- 50% reduction in oil costs
– 5% reduction in VOCs via mechanical & combustion efficiency
– 2.5% (??) reduction of all-in fleet operating costs
Apply these savings to the commercial automotive sector in
South Africa and we are talking big savings R500m

3. Understanding sustainability . . .
What Shell is doing is applying principles of sustainability to
their design of lubricants. A good defintion of sustainability is:
– Increasing commercial productivity
– Reducing environmental impacts, and
– Improving socio-economic opportunities
But, I’m a transport economist, not a commercial lubricants
specialist like Anton. My work is about transport infrastructure
Although I share Shell’s interest in sustainability principles; my
big question is: what is sustainable transport infrastructure?

4. A short history of transport infrastructure . . .
To understand how sustainability principles can be applied to
transport infrastructure some historical perspective is needed

5. Before the wheel, we had subsistence economies

6. Subsistence economy: Economic score = ‘1’

7. The ox wagon facilitated settled agriculture
( . . in South Africa, say, 1675 – 1875)

8. Ox wagon based economy: Economic score = ‘10’

9. Railways then opened up mining, forestry & industry
(the dominant mode in SA from 1875 – +/- 1955)

10. Railway based economy: Economic score = ‘100’

11. And then came the ‘big bad wolf’ - road transport!

12. Road based economy: Economic score = ‘1000’

13. Lessons from this historical review . . .
New transport technologies allow new types of economic
activity to take place develop that weren’t possible before
Manufacturing & commercial revolutions follow transport
revolutions, leading to social and economic development
But, these ‘positive social and economic externalities’ need to
be balanced against often increased environmental impact
Sustainable transport infrastructure is about optimising the
balance between the positive impacts and negative impacts

14. How to optimise road freight transport . . .
Identify its strengths:
– Any where, any time, (almost!) any size service
– Continuous control of consignee / agent
– Distributional flexibility / minimal depot dwell time
Identify its weaknesses:
– Inflicts more damage on the road than it pays for
– Leads to 4-5 times more harmful emissions/tkm than rail
– Danger to other traffic on the road, especially passengers
A sustainable road freight transport solution will seek to retain
these strengths and mitigate these weaknesses

15. Precedents? . . .
‘Bus Rapid Transit’ is being marketed throughout South
Africa as ‘trains on rubber wheels’ because ‘BRT’ combines:
– train-like capacity
– road-based flexibility
– much lower infrastructure costs
– enhanced road safety via traffic segregation
And the key to realising the efficiency of the concept is
dedicated infrastructure

16. What about ‘Truck Rapid Transit? . . .
Isn’t it time for similar technological innovation in the freight
sector? I call it ‘Truck Rapid Transit’ or…‘TRT’, combining:
– lower aggregate infrastructure costs [if rail investment is curbed]
– greater economic viability via higher payloads
– scheduling reliability and distributional flexibility
– enhanced road safety via traffic segregation
And the key to realising the efficiency of the concept is
dedicated infrastructure for road freight

17. Lower infrastructure costs . . .
At present huge investment is going into rail; the majority is
focused on winning container market share from roads
This is only fundable because of cross subsidisation from our
very high priced container / automotive sectors in our ports
If rail investment focused more on dry and liquid bulks, rail
could increase rail its volumes rapidly, at much lower cost
Leaving higher value / container freights to an optimised road
transport infrastructure, at potentially lower costs than now

18. Greater efficiency via higher payloads . . .
At present road transport operating costs are very sensitive to
the payload carried. (This is why so much overloading happens)
Payload is limited by truck configuration regulations that
assume shared freight & passenger use of the infrastructure
Regulatory / safety considerations prevent optimisation of truck
design, with trucking costs higher than they could otherwise be
Separate freight roads with larger rigs and higher payloads could
reduce operating costs AND allow funding via tolling

19. Op’ cost savings – even at higher tolls . . .

20. Implementation could be in stages . . .
Develop (20km shorter) De Beers Pass between Warden and
Ladysmith, bypassing van Reenens with easier grades for trucks
Extend this northwards to Heidelberg either by upgrading ‘old
N3’ to dual-2 standard or add freight lanes parallel to main N3
Commit to an already proposed new, mandatory freight route
from Cato Ridge, grade separated, directly into Durban Port
Town Hill (PMB) bypass; Tambo Springs freight centre to cater
for interchange from double interlinks to distribution vehicles

21. Fundable at not unreasonable tolls . . .
Current N3TC tolls, @ R1.50/km, generate R1.25bn p.a. for the
maintenance and upgrade of the N3, including ‘De Beers Pass’
With tolls of R3.00/km for trucks, it would be possible to fund a
dedicated freight roadway without recourse to the fiscus
Benefits would include:
– Much improved safety on segregated passenger carriageway
– Reduced maintenance costs on passenger carriageway
– Environmental savings via more efficient driving patterns
– Big capex and opex savings to Transnet - if it revises its MDS

22. Conclusions
Shell is showing how to innovate with regard to its lubricant
products for the automotive and other transport sectors
leading to economic gain for Shell and its customers, social gain
via higher economic and jobs growth; and environmental gain.
Applying the same mindset to the transport industry at large
could lead to order of magnitude greater savings than Rimula!
A dedicated freight road between Gauteng and Durban is both
fundable and could yield a 20% reduction in land transport costs