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How to cite this thesis

Surname, Initial(s). (2012) Title of the thesis or dissertation. PhD. (Chemistry)/ M.Sc. (Physics)/ M.A. (Philosophy)/M.Com. (Finance) etc. [Unpublished]: University of Johannesburg. Retrieved from: https://ujdigispace.uj.ac.za (Accessed: Date).

A PROJECT REPORT IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE

MASTER’S DEGREE IN OPERATIONS MANAGEMENT

THE FACULTY OF ENGINEERING AND THE BUILT ENVIRONMENT

THE DEPARTMENT OF OPERATIONS MANAGEMENT

EVALUATING THE OPERATIONAL EFFICIENCY OF RAIL FREIGHT OPERATIONS

IN SOUTH AFRICA

Student: Julliet Madubanya

Student No: 200573839

October 2015

Supervisor: Prof. Charles Mbohwa Co-Supervisor: Stephen Akinlabi

AGREEMENT In presenting this report in fulfilment of the requirements for a degree at the University of Johannesburg, I agree that permission for extensive copying of this report for scholarly purposes may be granted by the head of my department, or by his or her representatives. It is understood that copying or publication of this report for financial gain shall not be allowed without my written permission.

Department of Operations Management Faculty of Engineering and the Built Environment The University of Johannesburg, APB Campus P. O. BOX 524 Auckland Park 2006 Johannesburg South Africa

Julliet Madubanya Date: 20 January 2015

DECLARATION I, Julliet Ramokone Madubanya, student number 200573839, hereby declare that this dissertation entitled: ‘Evaluating the operational efficiency of rail-freight volumes’, submitted in accordance with the requirements for the M-Tech degree in the faculty of Engineering and Built Environment, at the University of Johannesburg, is my own original work; and it has not previously been submitted to another institution of higher education. All the sources quoted in this research paper are indicated and acknowledged in the comprehensive list of references.

ACKNOWLEDGMENTS This dissertation would not have been completed without the support, love and dedication of the special people in my life, to whom I would like to extend my gratitude:

I wish to thank God first, for the life he gave me, the opportunity and strength to start and be able to complete this study.

I also extend a big thank you to Professor Mbohwa, my supervisor for all his support, motivation and encouragement in completing the report. In addition, many thanks must go to Mr Stephen Akinlabi, my co-supervisor, for the guidance and continuous encouragement, all the contributions towards completing this program, and for believing in me.

And to Naledi Madubanya, my daughter; it has not been easy to take the time off and do my studies; but I thank you for being a good child and allowing me to do the research - even in my spare time. Thanks also to Thembisile Mabhena, my friend, who always encourages me to do my best.

Lastly, thanks to all the respondents who completed and returned the questionnaires that were shared with them during the data collection. Without your responses, this dissertation would not have been completed.

ABSTRACT South African roads are congested with trucks on every highway in the country, thereby leading to traffic congestion, damage to the roads, and pollution to the environment. Railway transportation could assist in eliminating or reducing these problems on our roads. Rail traffic is decreasing, because of the operational inefficiencies; and for this reason, many customers are unhappy and have resolved to use road transportation for their businesses.

This dissertation reports on how freight volumes are lost from rail to the road transportation system. This was achieved by studying the operational inefficiencies experienced with both rail and road transportation systems in South Africa. Every organization has its own plan or strategy on how to satisfy its customers and achieve its goals; but it is the service that they render to their customers that determines whether the organization reaches its target, while at the same time satisfying its customers.

This research was conducted, in order to compare the rail and road-transportation companies, in order to establish how they differ in terms of rendering their services, as well as the challenges that both companies encounter. The results of the investigation show that those respondents who were not frustrated by their organization, but were happy with the system of transportation are those in the road-transportation sector.

Furthermore, it was found that there were also some inefficiencies experienced by the road organizations; and also there was a need to identify some of the challenges that arise from using the road-transportation system. These would include traffic congestion, pollution, infrastructural damage – resulting in accidents. On the other hand, the rail transportation system was found to be cheaper, safer and easier to maintain, when compared with road-transportation system.

Improving on the rail inefficiencies would eliminate the trucks that are on the road daily, while at the same time satisfying the customers.

TABLE OF CONTENTS

PAGES

TITLE PAGE 01 AGREEMENT 02 DECLARATION 03 ACKNOWLEDGEMENT 04 ABSTRACT 05 LIST OF ABBREVIATIONS 09 LIST OF FIGURES 10 LIST OF TABLES 11 GLOSSARY OF TERMS 12

CHAPTER 1 INTRODUCTION 1.1 BACKGROUND 14 1.2 PROBLEM STATEMENT 16 1.3 RESEARCH QUESTIONS 18 1.4 HYPOTHESIS STATEMENT 18 1.5 DELIMITATION OF THE STUDY 18 1.6 THE ASSUMPTION 19 1.7 THE SIGNIFICANCE OF THE STUDY 19 1.8 THE AIM OF THE STUDY 19 1.9 ORGANIZATION OF THE DISSERTATION 20 1.10 SUMMARY 20

CHAPTER 2 LITERATURE REVIEW 2.1 INTRODUCTION 22 2.2 RAILWAY NETWORK CAPACITY PROBLEM 23 2.3 RAIL FREIGHT TRANSPORTATION SYSTEM GENERALLY 26 2.4 OPERATIONAL EFFICIENCY IN FREIGHT 28 2.5 ESKOM POWER SUPPLY TO TRANSNET 31 2.6 RAIL FREIGHT SYSTEM IN SOUTH AFRICA AND TRANSNET 34 2.7 REGULAR MAINTENANCE OF THE RAILWAY INFRASTRUCTURE 35

2.8 THE IMPACT CABLE THEFT HAS ON THE ECONOMY 41 2.9 THE IMPACT OF ROAD FREIGHT ON THE ROAD PAVEMENT 45 2.10 SUMMARY 52

CHAPTER 3 METHODOLOGY 3.1 INTRODUCTION 54 3.2 RESEARCH METHOD 54 3.3 DATA COLLECTION 54 3.4 QUESTIONNAIRE DESIGN 55 3.5 THE POPULATION 56 3.6 RESEARCH VALIDITY 57 3.7 ANALYSIS OF DATA 57 3.8 SUMMARY 58

CHAPTER 4 RESULTS AND DISCUSSION 4.1 INTRODUCTION 59 4.2 RESPONSE TO QUESTIONNAIRE 59 4.3 DEMOGRAPHIC OF RESPONDENTS 60 4.4 FACTOR ANALYSIS 74 4.5 EMPIRICAL RELIABILITIES 75 4.6 CORRELATION 79 4.7 EXPLORATORY DATA ANALYSIS 80 4.8 REGRESSION ANALYSIS 84

CHAPTER 5 DISCUSSION 5.1 INTRODUCTION 87 5.2 BACKGROUND INFORMATION 87 5.3 ORGANIZATIONAL INFORMATION 87 5.4 CHALLENGES ENCOUNTERED DURING DELIVERY 87 5.5 PERFORMANCE MANAGEMENT 88 5.6 CUSTOMER SATISFACTION 88

CHAPTER 6 CONCLUSION AND RECOMMENDATIONS 6.1 CONCLUSION 89 6.2 RECOMMENDATION 90 REFERENCES 94

APPENDIX I 100

APPENDIX II 101

APPENDIX III 105

LIST OF ABBREVIATIONS  ANN- Annual Annuity  DOT- Department of Transport  DMR- Department of Mineral Resources  EU- European Union  FMCG- Fast Moving Consumer Goods  GDP- Gross Domestic product  GTK- Gross Ton Kilometres  GVW- Gross Vehicle Weight  IRRT- Intermodal Road-Rail Transport  IRR- Initial rate of Return  KM- Kilo meter  KMO- Kaiser-Meyer-Olkin  MAL- maximal Axel Load  MT- Million Tons  MTPA- Million Tons Per Annum  NERSA- National Energy Regulator of South Africa  RSA- Republic of South Africa  RUS- Route Utilisation Strategy  SANRAL- South African National Roads Agency Limited  SAPS- South African Police Service  SIG- Significant  SPSS- Statistical Product and Service Solutions  TFR- Transnet Freight Rail  TPV- Total Present Value  USA-United states of America

LIST OF FIGURES Figure 1.1: Railway production analysis Figure 2.1: Capacity reliability of demand Figure 2.2: South African coal market distribution Figure 2.3: Maintenance planning overview Figure 2.4: Factors influencing the performance of track infrastructure Figure 2.5: Copper theft statistics Figure 2.6: Damaged infrastructure Figure 4.1: Distribution of responses to the questionnaires Figure 4.2: Classification of the organization Figure 4.3: Number of trains and trucks used daily by organizations Figure 4.4: Gender responses Figure 4.5: Ethnic group of respondents Figure 4.6: Level of qualification Figure 4.7: Job level of respondents Figure 4.8: Agreement of roles in operation Figure 4.9: Agreement in program improvement Figure 4.10: Monitoring of performance objectives Figure 4.11: Evaluation of performance objectives Figure 4.12: Level of agreement for management support Figure 4.13: Management encourages better employee performance Figure 4.14: Training and development offered in the organization Figure 4.15: Decrease in number of resource failure Figure 4.16: Regular maintenance of resources Figure 4.17: Delivery of consignments in the right quality Figure 4.18: Maintenance schedule for the resources in the organization Figure 4.19: Maintenance schedule for the infrastructure in the organization Figure 4.20: Total value explained Figure 4.21: T-test of normality for challenges encountered during delivery Figure 4.22: T-test of normality for performance management Figure 4.23: T-test of normality for quality management Figure 4.24: T-test of normality for challenges Figure 4.25: T-test of normality for management of challenges

LIST OF TABLES Table 2.1: Coal shipment by Transnet Table 2.2: The monthly coal shipments by TFR Table 2.3: Road maintenance expenditure Table 2.4: Average annual growth rates Table 4.1: Distribution of questionnaires Table 4.2: Percentage of commodities transported Table 4.3: Challenges encountered during delivery Table 4.4: Environment where respondents are based Table 4.5: Challenges experienced Table 4.6: Management challenges Table 4.7: Customer satisfaction in the organization Table 4.8: Factor analysis with KMO values Table 4.9: Item statistics of challenges during delivery Table 4.10: Item statistics of performance management Table 4.11: Item statistics of quality management Table 4.12: Item statistics of quality management Table 4.13: Item statistics of challenges Table 4.14: Item statistics of management of challenges Table 4.15: Item statistics of customer satisfaction Table 4.16: Correlation analysis of the study Table 4.17: Regression analysis Table 4.18: ANOVA analysis Table 4.19: variables contributed to the prediction of the dependent variables

GLOSSARY OF TERMS C Capacity- The maximum amount that something can contain Commodity- Is a marketable item produced to satisfy wants or needs; comprising goods and services. Congestion- To overfill or crowd Consignment- A batch of goods destined for or delivered to someone Customer- A party that receives or consumes products (goods or services) and has the ability to choose between different products and suppliers

D Data- Facts and statistics collected together for reference or analysis Density- A measure of the level of operating activity on a particular line (or a group of lines) expressed as millions of gross or net tons kilometers per route kilometer per year

E Efficiency- A level of performance that describes a process that uses the lowest amount of inputs to create the greatest amount of outputs Employee- An individual who works part-time or full-time under a contract of employment, whether oral or written, express or implied, and has recognized rights and duties

F Freight- Goods transported in bulk by truck, train, ship, or air

I Inefficiencies- The lack of ability to do something or produce something without wasting materials, time, or energy Infrastructure- The basic physical and organizational structures and facilities (e.g. buildings, roads, and power supplies) needed for the operation of a society or enterprise.

L Locomotive- A powered railway vehicle used for pulling trains

M Maintenance- The process of preserving a condition, or situation, or the state of being preserved

Organization- An organized group of people with a particular purpose, such as a business or government department P Performance- The accomplishment of a given task measured against present known standards of accuracy, completeness, cost and speed

Questionnaire- A set of printed or written questions with a choice of answers, devised for the purposes of a survey or statistical study

S Service- The supplying or supplier of utilities or commodities

T Traffic- Vehicles moving on a public highway

Q Quality- The standard of something as measured against other things of a similar kind; the degree of excellence of something

CHAPTER ONE: INTRODUCTION

1.1 BACKGROUND In the 1930s, rail started losing customers to the rapidly developing road transport industry; but the Government intervention, through the controversial motor carrier transportation Act, Act 39 of 1930 (Van der Mescht, 2006), enabled rail to remain dominant over the land transport system until the deregulation of the transport industry began in the mid-1980s. A study of the press reports and articles on transportation journals shows that the road versus rail debate probably reached its peak in South Africa soon after the full deregulation of the transport industry in 1990, (Van der Mescht, 2006).

However, by the year 2000, this rather contentious issue had become less interesting, primarily because of the phenomenal growth in the road transport industry to the detriment of rail (Stander, and Pienaar, 2002).

Now, there is a renewed interest in railways as a means of transport, mainly because of government’s commitment to improve the country’s dilapidated rail infrastructure over the next 5 years. Prior to this, there had been opposing viewpoints by the road transport lobby group on government’s intervention plan to shift freight from the road transportation system back to the rail system. They believe that the deregulation scheme is not appropriate, and that the choice should be determined by the market forces. On the other hand, the advocates of the rail-transport system are supporting government in this initiative, and also calling for drastic intervention to “level the field’ between the rail and the road transport system (Van der Mescht, 2006).

Furthermore, the rail-transportation system has long been playing a critical role in developing different countries’ economies, However, numerous railways have significantly lost business to other modes of transportation system, such as the highway and air freight system, over the past decades (Lewis et al., 2001). Since the appearance of railways in the early 19th century, the railway transportation industry has heavily utilized trains to carry passengers and to move goods.

For ordinary commodities, the measures of technical efficiency (a transformation of outputs from inputs) and technical effectiveness (a transformation of consumption from inputs) are essentially the same; because commodities once produced, can be stockpiled for consumption. In essence, nothing is lost through the transformation from outputs to consumption if one assumes that all the stockpiles are eventually sold (Lan and Lin, 2008).

However, when evaluating the performance of railway systems, it is worth noting that, since the transformation services cannot be stored, the output consumption (such as passengers per km) may be substantially different from the output production (Yu and Lin, 2008). To elucidate the non-storable characteristics, Fielding et al. (1985), introduced three performance indicators for a transit system. These are: Cost efficiency, service effectiveness, and cost effectiveness. On the contrary, the railway transportation process was further divided into the production process (output/input) and the consumption process (consumption / output) (Lan et al., 2008).

This is also graphically illustrated in Figure 1.1 of the railway operation process from the production efficiency stage to the earnings effective process stage. It also shows the three processes included in the production analysis: 1) The production process; 2) the consumption process; and 3) the earnings process.

Figure 1.1: Railway production analysis (Lan and Lin, 2008)

Transnet Freight Rail (TFR) is the largest division of Transnet, with approximately 28000 employees located across the country. The TFR is a world class heavy-haul freight Rail Company that specializes in the transportation of freight; and it maintains an extensive rail network across South Africa. It connects with other rail networks in the sub-Saharan region, with its rail infrastructure representing about 80% of Africa in total.

The company is proud of its reputation for technological leadership – beyond Africa – as well as in Africa, with active operations in 17 countries. The TFR has positioned itself to become a profitable and sustainable freight-railway business, assisting in driving the competitiveness of the South African economy.

With the aim of actualizing the strategic positioning in the African market, the company’s organizational structure is made up of the following six business units: Agriculture and bulk liquids; the coal business; the container and automotive section; iron ore and manganese; mineral mining and chrome; as well as the steel and cement business unit.

Transnet Freight Rail is proudly positioned to dramatically alter the South African rail industry by regularly maintaining their network systems and assets, in order to improve the on-time delivery of customers’ consignments – with the aim of attracting more customers. This enables the company to play a positive and active role in the transformation of the society. In reality however, Transnet Freight rail has lost much of its container traffic and high-value goods traffic to the road- freight sector. This loss of traffic can be attributed to its poor operational performance, which is to some extent caused by the poor condition of its assets (National Freight Logistics Strategy, 2005).

1.2 PROBLEM STATEMENT The regulation of the road and railway transportation system in South Africa is the prerogative of the department of transport – to exercise its right through ownership of the rail systems, and to control the legislation of road passenger transportation, as well as through the regulation of road haulage (Ittmann, 2009). On the other hand, the railways cannot be said to be regulated in the strict meaning of the term; but their development and administration have always been the result of political decisions, so that a considerable degree of constraint has in fact been exerted.

The regulation of road transport began in the 1930s, when hauliers first began to be a threat to the established railway systems (Ittmann, 2009). The government saw the growth of unrestricted competition between the two modes of transportation system as an attack on the financial stability of the railways; and it obviously wanted to protect the railway system from the loss of traffic and the necessary rate reductions caused by an increase in the number of road hauliers.

Furthermore, internal logistical costs in South Africa are deteriorating. Ittmann (2009), stated that the logistical costs in South Africa had reached R317 billion, or 15.9% of Gross Domestic Product (GDP) in 2007, which was a 1% increase compared to the 14.9% recorded in 2006, and 15.2% in 2005. In addition, Havenga et al. (2009) also reported that South Africa’s logistics cost as a percentage of the GDP is high; but when compared to the United States, it was found to be 10.1% of GDP in 2007 (Wilson, 2001), and 10% of GDP when compared with that of Japan (Ittmann, 2009).

Havenga et al. (2009) further reported that the South African transport costs constitute 50% of the country’s total logistical costs. However, Rodrique et al. (2009) found that this is a considerably higher proportion than the world average of 39%. Surprisingly, customers have been willing to pay more by using road transport, in order to receive their goods on time.

However, from a macro-economic perspective, road freight transportation has had a poor effect on the environment. Externalities for South Africa are estimated at R34 billion compared to the total freight bill of R171 billion. Externalities include emissions, congestion, accidents, policing and noise (Havenga et al., 2009:22).

Rail-freight transportation is an extremely capital-intensive business venture, with a high percentage of fixed total costs. The declining tonnages transported have not only resulted in a loss of revenue; but this also implies that the assets are not being optimally utilized.

In an attempt to contain costs, adequate funding is not made available to maintain the infrastructure and rolling stock. It therefore becomes necessary for local authorities to protect the strategic sites for rail-freight terminals in local plans; and the government must retain the national rail network, together with the national operating conditions; and it must cater for rail freight in the National Policy Statements by supporting strategic rail freight interchanges, and ensuring that regional freight depots should be capable of being accessed by rail.

In addition, local Enterprise Partnerships need to recognize that rail freight can contribute to local economic development and identify appropriate sites for terminals – and also support the strategic rail freight network. The efficient distribution of goods and services is critical for all the basic essentials of everyday life, such as food, drink, clothing and fuel. All that we consume, buy, or use, has at some point been part of this system of distribution. It helps to determine the market diversity and consumer choice; and in doing so, it drives the competitiveness, jobs and prosperity of an area or region. However, a balance has to be maintained between the efficient distribution of freight and the effect that this distribution has on the society it serves.

There is a need to maintain economic vibrancy and growth, with the realization that we have to transport customers’ goods and services in the most sustainable way.

1.3 RESEARCH QUESTIONS Customer’s needs can only be met by delivering their products as per the agreement between them and the service provider, in this case the rail freight company. Looking at the challenges that are experienced in the railway transportation, for example, cable theft, failure on the assets, network itself, these cause the delays in transporting the products to customers. The challenges encountered resulting in the delay of the products have an impact on the production of the customer as they have to wait for the products to build their stock.

This research aims to improve the understanding of the value of moving more freight on rail than road by addressing mainly how the freight rail can manage and improve the operations efficiencies in order to satisfy the customer’s needs by rendering a good service at the same time managing the cost of doing business.

1.4 HYPOTHESIS STATEMENT Hypothesis one: There is a major difference in the number of deliveries by rail and road transport systems on a daily and monthly basis. Hypothesis two: Employees in the railway and road companies differ with regard to how they perceive quality and performance management in their organization. Hypothesis three: The Railway Company experiences more operational challenges than the road transportation system. Hypothesis four: Most employees in the road companies are less concerned about the challenges experienced and the management of challenges in the organization when compared with the rail employees. Hypothesis five: There is a relationship between customer satisfaction and the following: a) Challenges encountered during the transportation of products to customers, b) Performance management in the organizations, c) Challenges experienced in organizations, and the management of challenges.

1.5 DELIMITATION OF THE STUDY The study will be conducted on companies that provide road and rail freight services across South Africa, in order to compare and identify the key competencies in both these transport systems. The survey will focus on employees at Transnet, Barloworld and Grindrod – from junior level to management level.

The challenge is that Transnet-Freight rail will be the only railway organization in this research; and it will be compared with two of the road organizations. There is no other railway freight organization in South Africa with which to compare Transnet-Freight Rail.

1.6 THE ASSUMPTIONS The operational inefficiency in the rail transportation system does not only result from the poor planning of the rail system. Customers also contribute to the operational inefficiency; below are the examples:  Wagons get damaged while being offloaded in the customers siding.  There are no drivers to push the offloaded wagons out of the customers’ siding.  Poor management in planning of maintenance, the maintenance schedule of resources and infrastructure should be available at all times and communicated to everyone.  Lack of motivation of employees.

1.7 THE SIGNIFICANCE OF THE STUDY This study is very important; since the information obtained will be used extensively to recommend which mode of transportation system would provide the greatest benefit to the customers. The aim is to provide customers with the good quality service that they deserve; and this can only be achieved by delivering their consignments on time, and in the right quantity and quality. This study is of critical importance to all the stakeholders, i.e. railway companies and customers. The findings of this research will be communicated to the management of Railway Companies; so that informed decisions can be taken, especially on problem areas based on the outcome of the research.

1.8 AIM OF THE STUDY The aim of this study is to help improve the operational efficiencies of the railway company, with the intention of attracting more customers to the railway-transportation system.

1.8.1. Objectives of the study  Analyze the impact of the late delivery of products, and less quantity on the production side of the customers.  Establish the knowledge of different customers’ expectations, in terms of how much (quantity) tonnages they require in a specific period.  Improve on the communication between the Rail Freight Company and customers, and to ensure proactive alignment.  Analyze the impact that the hauling trucks have on the infrastructure and the environment.

1.9 ORGANIZATION OF THE DISSERTATION This dissertation is organized into six chapters; these are as follows: Chapter 1 – Introduction to the research problem; this covers the background of the study, the problem statement, the hypothesis statement, as well as the significance of the research. Chapter 2 – This presents a detailed view of the literature review, focusing on the efficiencies that can be improved in the railway freight, as well as the evaluation of the freight transport systems. Chapter 3 – This chapter presents the research methods, the data collection, and the design of the questionnaires. Chapter 4 – This chapter presents the response obtained from the questionnaire and the analysis and validation of the results. Chapter 5 – This chapter presents the discussion of the results for the dissertation. Chapter 6- This chapter is dedicated to the conclusion and recommendations for the dissertation.

1.10 SUMMARY One of the key driving forces of the status quo is the debilitating modal imbalance; since the majority of dense, long-distance surface freight is transported by road (Havenga et al., 2009). The modal imbalance is the result of a historical railway investment backlog, with related service challenges, and the rapid deregulation of the freight-transport industry in the early 1990s. This resulted in a proliferation of road transport-service providers, further reducing rail density and rail’s ability to invest (Havenga et al., 2009). The challenges were exacerbated by an increased demand for freight logistical services, due to the country’s democratization in the early 1990s. This caused a change in local consumption (Hanival & Maia 2010), as well as trade liberalization, which resulted in both increased imports and exports (Edwards & Lawrence 2006). Railway’s inability to provide services on the basis of the shifting demand patterns led to lower utilization, in turn reducing investment, which led to even poorer service levels. On the other hand, regulated transport industries that favoured railroads (in order to protect public investments) were deregulated; yet the resulting market structure was not really free from institutional support, as modern road hauliers are institutionally supported through enforced cross-subsidies from other road users.

What has actually happened is that the road mode of transportation is supported by regulation, because of its ability to serve the market better. The research will focus on the five hypotheses mentioned. This study is of critical importance to all stakeholders, i.e. railway companies and customers.

The findings of this research will be communicated to the management of Railway Companies; so that informed decisions can be taken, especially on those problem areas identified in the outcome of the research. The objective of this study is to improve the operational efficiencies of the railway company – with the view of being able to attract more customers to the railway-transportation system. The sub-objectives are also listed in the study.

Poor maintenance, or the lack of maintenance of the equipments of the customers, can also contribute to the poor performance of railway organization; wagons get damaged while being offloaded in the customer’s siding, which would lead to longer hours in the repair sidings, thereby affecting the empty wagon supply to other customers or mines. The study will be conducted with the Transnet freight Rail’s employees as well as with the Arcelomittal employees (customers) to get a view on how the poor performance of Transnet would affect their production.

CHAPTER 2: LITERATURE REVIEW

2.1 INTRODUCTION Travelling by road remains the dominant mode of transportation system in urban areas; while the railway system is almost exclusively responsible for the haulage of exported coal and iron ore. Competition between the two modes of transportation for the conveyance of general freight is, therefore, restricted to the major transport corridors and the rural areas. Road and rail transportation systems only compete in the area of the freight transport market (Lawless, 1990). Based on the 2004 statistics, road transportation carried 140 million tons of corridor freight and 210 million tons of rural freight; and the railway only carried 40 million tons of corridor and 30 million tons of rural freight.

According to Van der Mescht (2006), this means that about 82% of general freight was conveyed by road, and only 18 % by the railways.

Similarly, there have been numerous press reports about the South African railway’s poor service record (Van der Mescht 2006), with the primary focus being the frustrations experienced by dissatisfied railway customers. One such was reported in 2004, where several major cities of the rail utility threatened to revert to using the road transportation system if the railways utility did not improve their service level (Van der Mescht, 2006). In view of this, some of the challenges the railway companies face include poor operational performance – caused by the poor condition of the assets, and the technical limitations of the South Africa railway network.

The South African railway network, with the exception of a few narrow-gauge branch lines, uses a rail gauge of 1067 mm, which is less than the international standard gauge of 1435 mm (Van der Mescht, 2006).

The government of India had a strong influence on railways from the beginning, but the government’s role increased over time. Railways were partially nationalized between 1880 and 1908 as the government of India assumed a majority ownership stake in the former guaranteed railway companies. Complete nationalization occurred between 1924 and 1947 as the colonial government assumed full control over operations (Bogart, 2009). South African government can assist railway organization by increasing the rail gauge to close to the international standard gauge, also improving the efficiencies in the railway industry to alleviate the challenges on the road pavement.

According to Hurd (1983), before the arrival of the railways, the Indian transportation network was poor. The initial advocates for developing railways were the mercantile firms in London and Manchester, with trading concerns in India (Lawless, 1990). The expectation was that railways would lower transport costs, and allow English merchants easier access to raw cotton from India. Simultaneously, the railways would open Indian markets to British manufactured products, such as cotton textiles (Lawless, 1990).

According to Beck (2011), railway efficiency is an important topic worldwide for transportation ministers of fiscally constrained governments and railway managers operating in competitive markets. The railways are under pressure to keep cost low, often because of market pressures or because of the unavailability of public funds, as a result of competing national priorities. Increases in railway usage for passenger and freight have occurred after decades of decline, which necessitates additional investment in track infrastructure and rolling stock.

Under pressure to reduce costs, while improving the level of service and expanding rail capacity, rail companies and governments continue to look for ways to improve efficiency (Sanchez, 2000).

In recent years, the financial and economic performance of the railway system has attracted a great deal of attention – primarily because of mounting subsidies and inefficiencies embedded in the system. The economic efficiency of railways is believed to be influenced heavily by the degree of government intervention and subsidization (taxation), and the institutional and regulatory setting within which the railways operate. The productive efficiency measured from the observable data is also heavily influenced by the market and operating environments, to which the railways are subjected.

These include various factors that are largely beyond managerial control, such as the topography and the climate of the region, the extent of development of other transport modes, traffic density, average load, and the average distance of haul, as well as the economic development stage of the nation (Charnes et al., 1978).

The differences in policy adopted by different countries provide an excellent opportunity to investigate the effects of policy choices on the economic efficiency of the industry. Nash (1981) sought to discover how much of the variation in the performance of Western European railways, measured by market share, traffic trends and support (subsidy) requirement, could be accountable for government policies.

2.2 RAILWAY NETWORK CAPACITY PROBLEM There is currently no consensus of definition on the railways network capacity; but the railway network is targeted to meet the transportation demands as regards service. The railway network carrying capacity reliability refers to the carrying capacity meeting the origin-destination demand which consciously changed with random and irresistible factors under prescribed conditions and stated time (Chen, et al. 1999).

The Chinese railway network has increasingly attracted global attention; because it seems to be a miracle by running a quarter of the world’s railway traffic with only 6% of the world’s railway mileage. However, the Chinese railway system is still finding it very difficult to satisfy the enormous social demand derived from the rapid economic development. Against the background of globalization, the inadequate railway transport capacity is becoming a key obstacle to Chinese economic development. A well-known reason for this insufficient railway transport capacity is the low railway density, which needs huge investment to improve.

In 2008, the Chinese railway mileage per square kilometre was 83.1 km, equating to only 9% of the German railway density (Caves,1981).

In order to effectively improve railway transport productivity, the Chinese railway management mechanism achieved an historical breakthrough in 2005 with the repeal of all railway branches; the four-level management system constituted by the ministry of railways, railway bureaus, railway branches and railway sections was abandoned (Swanson, 1981).

It was noted that train lengthening has been identified as one potential way in which growth can be accommodated; and indeed, this features as the most important capacity-enhancing measure for container trains recommended in the Rail Freight Route Utilisation Strategy (RUS). The contention is that an increase in train length from the typical 24 wagons at present to 30 wagons would be possible in the longer term, provided certain infrastructural improvements were to take place (Network rail, 2007).

In its response to the RUS consultation phase, however, Freightliner (2006), the biggest of the container train operators, argued that train lengthening would be a visible solution in some situations; but it is not a universal capacity-enhancing measure.

The company argues that even if route and terminal infrastructure were enhanced, commercial considerations are in some cases likely to limit the desirability of longer trains, due to insufficient volumes; while in other instances, factors such as maximum trailing weights have already been

24 reached, given the currently available motive power (Iida,1999). Travel time reliability is concerned with the probability that a trip (Origin-Destination) would be made successfully within a specified time period. The definition of travel time reliability and connectivity reliability are the same in essence; the connectivity reliability is a special case of the travel time reliability.

Network reserve capacity estimates the maximum flow capacity of a transportation network with route choice by applying the largest multiplier to an existing origin-destination demand. They define capacity reliability as the probability that a network will accommodate a certain level of traffic demand.

The capacity reliability of railway networks can be divided into the following groups:

2.2.1 Uncertainty analysis of railway networks A traffic network system usually consists of uncertainty elements, which fall into two types. One type is due to the internal system being inherently random; while the other is due to the calculated error or evaluated error. The former is related closely to the properties of network systems, so it cannot be avoided. The latter could be reduced by raising the accuracy of the calculation and evaluation model. These two kinds of uncertainty elements in networks result in the uncertainty of the network system (Zhou, 2009).

2.2.2 Reliability evaluation procedure The reliability of a railway network is the probability that the railway network system will satisfy the traffic demand under certain conditions.

Below is a graphic example that shows the capacity reliability for various levels of demand (Asakura, 1991). Figure 2.1 show the capacity for various levels of demand.

Figure 2.1: Capacity reliability of demand (Lida, 1999).

From the above figure, it may be seen that when the level of transport demand is less than 1.2, the reliability is 100%; but if the level rises, the reliability will descend quickly; so when the transport demand level reaches 1.2 times the origin-destination, the demand will be considered to extend the capacity of the railway network. The reason is that as the demand level rises, the reliability would be descending sharply. According to the contrast of the demand 2-4 reliability curves, this shows that with the demand fluctuating slowly, the network should satisfy the transport demand quickly, as the demand level increases.

It also shows that the stable source of demand should be emphasized in the railway network service; since this would favour the development of the transport capacity in the network (Lida, 1999).

2.3 RAIL FREIGHT TRANSPORTATION SYSTEM GENERALLY Railway systems can be categorised as either public or private systems. Private railway systems are owned by private companies; and there are a few expectations exclusively planned, built, and operated by this single owner. Prominent examples are the railway systems in Japan and the US (Gorman et al., 2009). In the past an integrated railway company was usually appointed to plan, build, and operate the railway system.

Now, the efforts of the European Commission to segregate the integrated railway companies into a railway infrastructure manager (network provider) and railway undertakings (train operating companies) should ensure open access to railway capacity for any licensed railway undertaking. The idea is that competition leads to a more efficient use of the railway infrastructural capacity,

26 which in the long run would increase the share of railway transportation within the European member states. However, even in the case of an absolute monopoly, the planning of railway systems is very complex because of the technicalities and operational rules. This complexity is further increased by the varying requirements and objectives of different participating railway undertakings in public systems (Gorman, 2009).

Railway transportation services require very accurate planning of their operations in contrast to other modes. This is due to the fact that railway undertakings have to promote their railway transportation services for passengers, prior to the actual railway operation. A published (and only rarely annually changed) train timetable allows the customer to use railway transportation services efficiently. Moreover, an uncontrolled railway operation is particularly prone to deadlocks. Train drivers need to obtain the moving authority for a certain part of the railway infrastructure from a centrally authorized control centre, which assures a high level of safety.

An annual initial schedule helps to control railway operation; since it reduces the vast complexity of real operational planning. Nevertheless, the liberalization and introduction of competition in the European railway system would break down these old established and rigid structures in the near future. However, in comparison to airline transportation and urban bus transport, the railway system is very rigid and hardly innovative.

Furthermore, the railway systems consist of very expensive assets. In order to make the best use of these valuable infrastructures and to ensure economic operations, efficient planning of the railway operation is indispensable (Salim, 2003). In 2009, there were 300 railway undertakings operating in the German secondary railway market, 60 of them were for passenger trains. From an economic perspective, railway undertakings offer transportation services on the primary railway market. Thus, the market where railway capacity is traded is called the secondary railway market (Salim, 2003).

Economic transformation, together with the development of any country, is hardly possible without an efficient transport system (Salim, 2003). This is because goods should be transported from origin to destination at minimal costs and within a particular time-frame. Although, a few studies have considered port-hinterland transport within the country, most of these have largely focused on consolidation rather than distribution patterns, especially at the regional level (Salim, 2003). Indian railways are the third largest railway network in the world in terms of size and the fourth largest rail-freight carriers (Salim, 2003).

However, there are many critical and important issues that need to be looked into:

1. Signalling and control systems are vulnerable; and accidents rates are high. 2. There is a requirement for capacity enhancement in the railway network. 3. Technological upgrading is necessary for better maintenance of railway assets. 4. There is a need for the enhancement of good services and safety, and the upgrading of the railway production units for improved efficiency and productivity.

These shortfalls in the Indian Railway system have a significantly negative economic impact; and they need immediate attention from the authorities. The railway transportation system has to integrate the latest developments of science and technologies (Petit, 2009).

Many developed prototype systems include positive train control (Jia, et al. 2008), such as in North America and in Australia, using the concept of a communication-based train-control network-centric system (Petit, 2009), advanced train-management system with the aim of safety and increasing efficiency. An efficient and intelligent railway-transportation system could then be designed.

An efficient and intelligent transport system will enable railways to detect terrorist attacks, notify appropriate authorities, and recover more rapidly from such incidents. Railways should have continuous, real-time information, whereby they can manage their operations (Petit, 2009),

2.4 OPERATIONAL EFFICIENCY IN FREIGHT Increasing awareness that globalization and information technology affect the patterns of transport and logistics activities has increased interest in the integration of intermodal transport resources. A global reduction in the cost of transportation is a key to the rapid growth of global trade in the past two decades. The term “intermodal” has been used in many applications that include passenger and freight transportation (McKinnon, 2003).

For the purpose of this study, intermodal freight transport is defined as the use of two or more modes to move a shipment from origin to destination. This would involve the physical infrastructure, goods movement and transfer, and other relevant activities under a single freight bill (McKinnon, 2003). Each nation and its railways are subject to unique characteristics that would undoubtedly impact the efficiency. A nation’s history shapes the organizational structure of the railway, as well as the physical network. Subsidies for rail and annual deficits may be acceptable in some nations, but not in others.

Detailed official statistics relating to rail-freight service provision and train load factors are not published in Great Britain, or indeed elsewhere within the European Union (McKinnon, 2003). Despite this, there is a considerable body of literature focusing on rail freight efficiency, particularly for intermodal flows; although much of it relates to service quality and/or customer- service issues, rather than service provision and load factors.

For example, Rigo et al. (2007) emphasized the importance of considering the performance and efficiency of intermodal supply chains to make them more attractive to shippers.

Much attention has been focused on the influence of intermodal-network design on mode choice decision-making (Woxenius, 2007); and there is a relatively long and informative history of investigating railway efficiency (Gathon and Perelman, 1992), largely by using econometric techniques at a national level. Interest in the topic has grown as the deregulation of rail systems has spread from North America to Europe. Chapin and Schmidt (1999) considered the effects on technical and scale efficiencies resulting from rail freight-industry consolidation in the US, but did not consider any operational capacity-related issues.

Freight transport is a vital component for the generation of welfare. It facilitates the movement of goods along a supply chain; and therefore it is indispensable for the supply of goods and directly influences the efficiency of the economy. As a result, transport demand is closely linked to economic development. Between 1995 and 2008 the average annual growth of intra-European Union (EU-27) freight transport was 2%; and hence freight transport grew as fast as the economy; and during the economic downturn (2008-2009), when the GDP in EU-27 decreased by 4.2%, freight transport likewise dropped by 11.2% (McKinnon, 2003) .

The amount and character of freight transport demand is determined by logistical decisions, which aim to move products efficiently along a supply chain. Changing logistical structures, e.g. decisions, to centralise warehousing, and more just-in-time replenishment, have led to an increasing demand for the delivery of smaller units in higher frequency, and an increasing awareness of the importance of time, reliability and speed (McKinnon, 2003). The increasing demand for small volume goods has limited the scope of rail to maintain market shares (Woodburn, 2003). Consequently, many industries have increased their reliance on road transport. Thus, the growing demand for freight is mainly by road; while the market share of rail fell from 21% of total EU-27 inland freight transport in 1995 to 17% in 2008 (McKinnon, 2003). The development in the freight-transport sector has created a growing concern for sustainability; since road freight is responsible for a number of negative impacts (Quak, 2007).

These include impacts on the environment (e.g. atmospheric emissions, use of non-renewable fuels, waste and loss of ecosystems), on society (e.g. public health, accidents, noise and reduction of quality of life) and on the economy (e.g. waste of resources and congestion resulting in decreasing journey reliability and city accessibility).

Freight transport, therefore, finds itself in constant tension between efficient logistics and sustainable development. On the one hand, narrow delivery time windows and smaller consignments make it more difficult to achieve economies of scale in transport operations; while, on the other hand, there is increasing pressure to significantly reduce the environmental impact. This challenge is most significant in urban areas. Urban freight transport serves industry and trade, which are essential wealth-generating activities (Anderson et al., 2005).

For people, urban freight ensures the supply of goods in stores; while for firms, it forms a vital link between suppliers and customers. However, the urban environment is characterized by a scarcity off access, e.g. congested roads, space constraints and limitations of infrastructure. These constraints restrict the efficiency and quality of freight operations (Hesse and Rodrique, 2004). Urban areas constitute the living environment for the majority of the population in Europe; while the citizens’ demand for a high quality of life increases (Anderson et al., 2005).

Although freight transport operations in cities represent only 20% to 30% of road traffic, they account for up to 50% of the emission of air pollutants (depending on the pollutant considered) by transport activities in a city (Dablanc, 2007).

Although a modal shift from road to railway is desirable, there are also studies which are more pessimistic about its potential contribution to sustainable development in the freight transport sector (McKinnon, 2003). The first argument often stated against the usefulness of rail freight is its limited modal-shift potential. Since the extension of the railway network is limited and shunting wagons into private sidings is very costly, railways transport is not accessible to a substantial share of the transport market. Consequently, intermodal road-rail transport (IRRT), the subsequent use of roads and railways for moving goods stowed in unit loads, is a logical step for maintaining flexibility, yet decreasing the external effects (Woxenius, 2007).

By far the biggest distance is performed by the railways; where the units are consolidated with other shipments and economies-of-scale are being achieved; while road transport is assigned to the short-haul, or the collection and distribution of freight (Bontekoning et al., 2004).

2.5 ESKOM POWER SUPPLY TO TRANSNET Transnet Freight Rail transports coal from various mines to Eskom’s power supply, with the coal that has been transported, Eskom is then able to produce electricity. Without the coal then the country faces a major electricity blackout.

Since the last quarter of 2007, South Africa has been experiencing a shortage of electrical power (Nyanjowa, 2009). Eskom holdings is the sole distributor of electrical power in South Africa. The resultant power outages have adversely affected the whole country; and the mining sector has been forced to operate at the level of 10% below capacity, in an effort to conserve power. Through the National Energy Regulator of South Africa (NERSA), the government initiated an investigation into the entire electricity crisis.

The investigation revealed that the problem could be mainly attributed to poor planning in the coal mining industry (Nyanjowa, 2009). However, Nyanjowa (2009) offers a different perspective, arguing that South Africa’s coal mining industry remains unbalanced with the rising coal demand on the one hand, and constrained supply sources on the other. The freight system in South Africa is believed to be weighed down with inefficiencies at system and firm levels. This may be as a result of infrastructural shortfalls and mismatches, the institutional structure of the freight system is inappropriate, and there is lack of integrated planning.

In addition, information gaps and asymmetries abound; the skills base is deficient and the regulatory frameworks are incapable of resolving problems in the industry (Department of Transport, 2005).

Furter (2005) suggests that improving collaboration in the supply chain would enhance responsiveness and flexibility. As such, companies can gain competitive advantages through implementing strategies that allow for collaboration, integration and the sharing of information needs.

The need for an efficient and a more collaborative supply chain in the coal industry is accentuated by the extensive capital investments that are currently being implemented. These include the Eskom Development Programme, which will require the establishment of an additional 40 coal mines, the Transnet Rail Expansion Programme, and the expansion of the Richards Bay Coal Terminal, as well as the introduction of independent power producers, and Sasol’s capacity expansion, among others.

Coal is an important energy source, which contributes approximately 41% of the total world electricity generation (Smuts, 2010). Coal presently fuels about 39% of the world’s electricity; and about 56% of the global consumption is in Asia (Abbott, et al., 2009). It is estimated that in the next decade, while South Africa will increase the annual production by 75 Mt, at some point, coal production will stagnate and will not be able to meet the energy demand (Lok, 2009). Hartnady (2011) contends that this is mainly due to the lack of reinvestment by the main producers – to the extent that most of the large collieries with an output of 10Mt per year will probably close down; or their reserves will be near exhaustion by the year 2020. Nevertheless, Eskom’s coal consumption has not changed much in the last ten years, which is one of the reasons why the country has been experiencing power shortages. The South African coal market distribution is presented in Figure 2.2.

Electricity generator Export

Synthetic fuels (Sasol) Merchants

Industries

Metallurgical

Figure 2.2: South African coal market distribution (DOT, 2005)

Transnet Freight Rail (TFR) is responsible for rail freight with the main focus of transporting bulk and containerized freight. During the 2007/2008 period, the division transported 179.9 mt of freight for export and domestic customers (Transnet, 2008:10). This figure went down to about 177Mt between 2008 and 2009 (Transnet, 2009:2).

The total coal transported in 2008 was 67 Mt (Transnet, 2008:97). Other coal shipments by Transnet were 71.4 Mt in 2005, 68.7 Mt in 2006, and 67.7 Mt in 2007 (DMR, 2009:46). The coal shipment by Transnet is presented in Table 2.1 Table 2.1: Coal shipment by Transnet (Transnet Annual Report, 2005-2008) Year Freight (Mt) 2005 71.4 2006 68.7 2007 67.7 2008 67.0 2009 61.0 2010 62.9

Table 2.1 shows a decline in coal shipments by Transnet between 2005 and 2010. According to Prevost (2009), coal exports in 2009 dropped to 61.1 Mt per annum, as a result of Transnet’s decreased capacity, which was below that of Richards Bay coal terminal (RBCT). However, Transnet has belatedly launched the ‘Quantum Leap Project’ to raise railway capacity to 81 Mt per annum; while plans are already underway to improve the capacity ‘beyond the 81 Mt per annum’.

This positive development was motivated by the prediction that India is expected to import 110 Mt of coal from 2012, of which 25 Mt will come from South Africa. Similarly, the monthly coal shipment by Transnet is presented in Table 2.2.

Table 2.2: Monthly coal shipments by TFR (DMR, 2009). Date TFR railings (Mt) Year-to-date (Mt) Annual rate (Mtpa) Number of trains March 2010 5.9 15.6 66.8 811 April 2010 5.6 21.2 67.1 755 May 2010 1.9 23.1 58.0 201 June 2010 5.2 28.3 58.7 638 July 2010 5.8 34.1 60.1 772 August 2010 6.0 40.1 61.4 725 September 2010 6.1 46.2 62.7 735 October 2010 5.9 52.1 63.3 739 November 2010 5.4 57.5 63.5 641 December 2010 4.5 62.0 62.9 586 January 2011 4.7 4.7 55.4 597 February 2011 5.5 10.2 63.1 705 TOTAL 62.5 7905

From the above Table 2.2, it can be seen that the total freight for that period was 62.5 Mt. And the year-to-date column shows the cumulative freight after each month. The annual monthly rate shows the freight for one year at the given month of 2010. The last column shows the cumulative train shipments per month from March 2010 to February 2011.

At that rate of transportation, it was predicted that the outcome for 2009 would be much lower than the figures for 2008, which stood at 76 Mt (DMR, 2009).

This can be attributed to the impact of the global economic slowdown in 2009, and other supply- chain constraints. Hence, freight rail is totally dependent on the availability of the Eskom power supply.

During 2007/08, approximately 171billion GrossTonKilometres (GTK) were conveyed; and electric traction accounted for approximately 91% (Transnet Limited, 2010).The nature of Freight rail’s operations also militates against short-term alternative arrangements; because the duration of the power outage, which is normally between 4-6 hours, is not sufficient to support railway operations. Furthermore, despite all the efforts directed at proactively planning of power outages, this has not always been actualized in practice; and the unplanned load shedding still persisted.

The distributed nature of the railway network and the manner in which its traction power feeder lines connect to the Eskom grid also shows that it cannot be isolated from South Africa’s load shedding arrangements, (Transnet Limited, 2010).

2.6 RAIL FREIGHT SYSTEM IN SOUTH AFRICA AND TRANSNET The revival of South Africa’s freight-rail system has been advocated in key research projects (DoT 1998), and put forward in national policy frameworks (RSA Presidency, 2010) for almost two decades. The key indicators pointing to the imperative for rail’s revival are that 13.5% (Havenga et al. 2009) of South Africa’s 2009 freight logistics cost 35% of GDP, which is higher than first- world figures of around 10% (Bowersox and Closs 1996; United Nations 2002; Havenga, 2009), and also South Africa’s freight transport contribution to total freight logistics costs is significantly higher than the world average of 39% (Rodrique, Comtois and Slack 2009).

One of the key driving forces of the status quo is the debilitating modal imbalance, since the majority of dense, long-distance surface freight is transported by road (Havenga, 2009). The modal imbalance is the result of a historical rail-investment backlog, with related service challenges, and the rapid deregulation of the freight transport industry in the early 1990s.

This resulted in a proliferation of road transport service providers, further reducing rail density and rail’s ability to invest (Havenga 2007). The challenges were exacerbated by an increased demand for freight logistical services, due to the country’s democratization in the early 1990s.

This caused a step-change in local consumption (Hanival and Maia 2010), as well as trade liberation, which resulted in both increased imports and exports (Edwards and Lawrence 2006).

According to Pietrantonio and Pelkmans (2004), Europe experienced a similar decline in rail transport, while the highways were being developed and markets were liberalized. The decline in the rail market share has, however, not been evident in the USA (Rennicke and Kaulbach 1998: 6). Hilmola (2006: 6) maintains that the reasons are simply the privatized nature of USA railroads.

2.7 REGULAR MAINTENANCE OF THE RAILWAY INFRASTRUCTURE The non-stationary business environment of the railway transport requires continuous improvement of the maintenance process from the strategic point-of-view to the operational perspective. The demand for more effective maintenance is increasing, due to the changing structure and demands of the stakeholders, complex technology, legislation, and also business goal – to optimally utilize the existing railway infrastructure capacity – as well as to create more capacity. The aggregation of all these factors indicates that there is an obvious demand for a dependable asset, which consequently requires an effective maintenance.

This challenge could be approached by taking advantage of the possibility of outsourcing due to its potential benefits (Campbell, 1995).

According to Campbell (1995), the outsourcing of maintenance, in whatsoever level, should not be seen as an automatic strategy for achieving the maintenance objectives. The outsourcing of specific or general functions, maintenance services in packages, or full service is not an undisputed path to the maintenance of excellence. Although it could have the potential to cut costs, and make the maintenance more effective by improving the quality and quantity of service by means of reducing failure interruption of traffic.

Martin (1997) explored all the viable options of contracting out maintenance activities, as well as the consequences of transferring the maintenance-management function to the contractor. Espling (2007) has also studied the different railway infrastructural maintenance contracts in the Swedish transport administration pertaining to scope, objectives, forms and outcome. The result of her gap analysis indicated the improvement areas and also the risk areas.

Infrastructural managers are facing increasing demands from traffic operators, as well as passengers – in order to ensure a safe, reliable and comfortable railway service. To achieve these objectives, the quality of the infrastructure needs to be improved and maintained.

The maintenance activities of the railway infrastructure have certain maintenance goals, which are linked to the organizational goals and objectives, and which help in achieving the overall objectives of the infrastructure.

Karlsson (2005) presented the Swedish National Rail Administrator vision for maintenance activities, based on the overall goals for securing safety, reliability, comfort and cost- effectiveness.

Maintenance can, therefore, be defined as the combination of all the technical and administrative actions, including supervisory actions, intended to retain an item, or restore it, to a state where it can perform a required function (Cannon, 2003). Maintenance has long been considered as a reactive, “fire-fighting” approach. However, as the dependability targets for assets have become increasingly important, several proactive maintenance approaches and methods are currently being developed.

All the decisions related to rail infrastructure maintenance must be taken, in order to keep a balance between economic and safety aspects. The goal is to find an effective maintenance procedure to optimize the track-possession period and the train speed-restriction regime, and ultimately, to increase the track availability (McKinnon, 2003).

The different components of the railway asset are structurally and economically interdependent. Scale efforts are involved in their maintenance and renewal, while their degradation is often structurally related. As operations have to be continued on the railway network and budgets are often restricted, all kinds of constraints have to be considered in the planning of infrastructural maintenance. The components of the maintenance-planning process are developed, according to the following steps (Zoeteman, 2006):

1. Generation of maintenance strategies for individual assets (e.g. corrective or preventive, time-based or condition-based, strategies are distinguished based on the criticality of the individual asset for the entire production system). 2. Definition of clustering rules, which optimise the frequencies of activities on the basis of scale or scope effects. 3. Definition of rules for assigning time windows to maintain packages on the basis of opportunities that occur in the middle or short term. The initial analytical work for track maintenance was carried out in the early 1980s. Fazio and Zarembski (1998) pointed out a number of prerequisites for planning track maintenance.

Track-quality measures and track-deterioration models are highlighted as key areas for structured planning processes to be established. Zarembski (1998) described three tools, which railway organizations could use, to improve the efficiency of their maintenance operations: automated inspection systems, databases, and maintenance-planning systems. The lack of integration between these tools has prevented railway organizations from taking full advantage of their potential.

Figure 2.3: Maintenance planning overview (Zarembski, 1998)

These different data sources need to be linked to a general database for planning purposes. By adding models for track-deterioration relationships, the state of the infrastructure can be assessed over time. The planning of specific maintenance activities would be affected by the conditions of the track. This requires a detailed knowledge of each component of the track, and its relationship with the other components of the track, as well as the degradation pattern of each component. See above figure 2.3.

In many countries, the restructuring of railways and increasing efficiency and effectiveness requirements are causing a changing environment for infrastructural management. The responsibility for parts of the railway system is often handed over to different actors.

In order to guarantee optimal long-term results for the railway systems, the effects of decisions should be systematically evaluated (Zoeteman, 2006). McKinnon, (2003) states the three parameters that influence the performance of track infrastructure: capacity, substance and quality. The capacity of the infrastructure may be expressed in terms of usable train paths during a certain time span. The substance of the infrastructure refers to the average remaining useful lifetime of its components. Finally, the quality of the infrastructure represents the quality of the track’s geometry and components. Managing the infrastructure comes down to setting those three parameters at their most appropriate level, in order to maximize efficiency (Zoeteman, 2006).

In order to be able to estimate the life-cycle costs of the rail infrastructure, the factors influencing the performance of the railway infrastructure and their relationships need to be identified. The driving factor that causes failures and the ongoing need for maintenance is the degradation of the asset. Track degradation depends on many factors, such as the initial quality of the construction, the quality of the substructure, and the loads on the track. The infrastructural manager can control some of these factors directly (e.g. the maintenance strategy), or with the co-operation of the transport operators (e.g. the quality of the rolling stock) and the government (Zoeteman, 2006).

The performance of the railway infrastructure is influenced by factors, such as the level of safety, riding comfort, noise, vibrations, reliability, availability, and the costs of ownership. Safety and noise standards indirectly influence the life-cycle costs; since they determine the tolerances and thresholds for the design and maintenance parameters. The physical design influences the assets’ degradation, together with other conditions, such as the traffic intensities and axle loads, the quality of the substructure and the effectiveness of the performed maintenance. The quality of the geometric structure determines the required volume of maintenance and renewal. The chosen maintenance strategy also influences the amount of maintenance and renewal (Zoeteman, 2006).

The realized maintenance and the renewal volume cause expenditure and planned possessions. The maintenance strategy also has a direct impact on the life-cycle cost (Zoeteman, 2006).

The incident-management organization, the realized maintenance, and the renewal volume and the transport concept determine the train delay minutes caused by the infrastructure; and these train delay minutes can be converted into penalties for the infrastructural managers (Zoeteman, 2006).

The cost model used in the decision-support systems or maintenance-management systems should be able to provide means to evaluate and compare the costs and benefits of different maintenance strategies and options. In order to carry out an economic analysis, it is necessary to make adjustments to the costs, to ensure that they are all measured in the same units and represent the real costs of resources (Zoeteman, 2006).

According to Zoeteman (2006), the life-cycle cost can be represented in three different ways: i) The total present value (TPV); ii) the initial rate of return (IRR); and iii) the annual equivalent or annuity (ANN). Figure 2.4 shows the factors influencing the performance of the track infrastructure.

Figure 2.4: Performance of track infrastructure (Zoeteman, 2006)

The asset strategy is the maintenance approach and plan developed for each item of the system. This strategy determines what planned and programmed maintenance work should be carried out; and it considers what potential problems may require an unplanned, reactive response (Wilson, 2001). The approach to be taken in developing the maintenance activities – and on the basis of these – the asset strategies that need to be understood before the maintenance management strategy is completed. This is because, until it is known how much maintenance activity will be required, who will carry this out, and what spare parts will be used, the approach to the organization of maintenance activity cannot be finalized (Wilson, 2001).

Regular maintenance of the railway infrastructure can also alleviate the traffic loss to road, trains derailments because of the worn-out or broken rail resulting in customer’s consignments not being delivered, and the company’s assets being damaged as well. It is, therefore, imperative that these assets be continuously inspected and maintained to ensure that they function at optimum levels throughout their life cycle. The duty of the maintenance team is to ensure that the required availability and performance capability of the company’s assets can be achieved of an effective inspection and maintenance-management regime that is integrated in the management structure.

One of the reasons why customers prefer the road transportation system is because of the unreliability of railway companies in delivering the products on schedule. Over the past decade, the port industry has seen significant growth in operations (Brown and Hamilton, 2005). Brown and Hamilton (2005) found that the effectiveness of the maintenance performed at many ports has lagged behind that of its operations. In spite of its apparent importance, inspection and maintenance are frequently not given the attention and priority they deserves as an effective tool to manage assets, (Brown and Hamilton, 2005).

This shows that attention to the infrastructure will only be given when there has been an incident reported.

The following priorities represent the thrusts of the new strategic direction of Transnet (Transnet Annual Report 2004): 1) Improving the overall financial health and profitability of Transnet by shedding loss- making, non-core operations. 2) Restructuring the balance sheet to support the raising of new capital. 3) Improving operational efficiencies in their core operations, and modernising the rail infrastructure, enhancing capacity and reducing bottlenecks within the transport infrastructure and at ports.

4) Enhancing the company’s customer orientation by raising service levels, offering fair and competitive pricing, and rolling out a relationship-management plan. 5) Creating an integrated rail and port infrastructure with a logistical overlay.

South Africa has a relatively good core network of national economic infrastructure; and the challenge is to maintain and expand it to address the demands of the growing economy. In the transport and energy sectors, dominated by State-owned enterprises, the economy has already been constrained by inadequate investment and ineffective operation and maintenance of the existing infrastructure.

There is some concern that the State does not have the institutional or financial capacity to implement the investment plans needed to finance the requisite infrastructure. Other issues include the increasing cost of electricity, the roll-out of infrastructure to rural areas, the probable introduction of a carbon tax, and the poor performance of some State-owned enterprises (Venter, 2008).

2.8 THE IMPACT CABLE THEFT HAS ON THE ECONOMY Cable theft is one of the problematic challenges that railway companies are currently facing. Cable theft is estimated to cost the South African economy about R5 billion a year (Sapa, 2012). Most people who steal the cables target the cables with low kv power, i.e. 3 kv which is the voltage at which most of the network is operating. It has been proposed that this challenge can be solved by increasing the security at the hot-spot areas (Sapa, 2012).

One of the consequences of cable theft is that trains get delayed where there is a cable theft and can only resume when the cable has been replaced. In most cases, many trains will be staged at a certain station as a result of the cable theft; and the crew/personnel would have to leave the train there until the cables have been replaced. This consequently leads to the late delivery of the consignment.

Decisive action needs to be taken to deal with the theft of non-ferrous metal. Unless proper steps are taken, the continuing theft of copper cable will continue to undermine the economic growth and development in South Africa (Van Dalen, 2009). He further emphasized the fact that these non-ferrous metals are necessary for the provision of essential services, such as transport, communication, water and electricity. Since 1993, the theft of non-ferrous metals in South Africa has escalated to unprecedented levels – with the annual losses running into billions of rands (Venter, 2008).

In 2007, Coetzee (2008) a Member of Parliament, requested ‘non-ferrous metal theft’ to be classified as a terrorist act, with the consequent penalties; because this phenomenon has become a matter of urgency. Geldenhuys (2008) supported this request, with a warning that copper theft would cripple the cities in South Africa, especially when power outages, communication cuts, and the diminishing railway infrastructure are taken into consideration.

Furthermore, Transnet has also faced a similar challenge in securing about 23 000 km of rail track (News24.com, 2007). Interestingly, what is not regularly reported is the theft of non-ferrous metals. This theft severely affects the mining industry, municipalities, and metropolitan electricity departments (Fin24.com, 2006). The threat to municipalities is real; and this is substantiated by the crippling effect it has on the municipalities, such as the eThekwini Municipality where the perpetual service delivery interruptions are costing industries millions of rand in financial losses. The theft of overhead cables on railway lines has reached unprecedented levels, resulting in an average of 20 trains being cancelled per day (TFR, 2010:1).

According to Morwe (TFR 2010), cable theft remains a chronic problem, as it still contributes about 70% of the incidents of theft and vandalism across its network. It has experienced a total of 1 506 incidents of theft and vandalism in 2009/10, and was consistently losing more than 20km of copper cable to criminal syndicates each month (Creamer, 2010). Cable theft has become one of the main reasons why South Africa could not export coal to its full capacity. This consequently has had a serious impact on South Africa’s ability to be competitive in the International platform (Dlamini, 2010).

Diesel locomotives arrangements could not be considered as an alternative; because there are insufficient diesel locomotives to adequately replace electric traction; and furthermore, these diesel locomotives are not necessarily located where the power outages occur: and if there are, the electric locomotives and their loads have to be cleared first from the lines before diesel locomotives can operate on the same line. Further delays will be experienced while still waiting for the power to be restored and/or waiting for the diesel locomotives. In comparison with the road-transportation system, railway lines require flatter gradients and a larger radius for horizontal and vertical curves to overcome any topographical constraints.

Many railway links between major cities and towns in South Africa are considerably longer than the equivalent distances by road. This, however, does not stop customers doing business with the railways; as thereby they get more tonnage compared with the road transportation system. In comparison, one truck or lorry load is equivalent to one wagon on a 40-wagon train.

This means that the railway system of transportation would be economical even if the distance by train is longer than by road; because the road would be more expensive; since it would require more trucks; whereas the rail would only require one train with more tonnage.

At this stage, most customers are very dependent on the road freight – even though it has a negative impact on the economy and the environment. Rail freight, on the other hand, creates 70% less carbon dioxide than the road freight, making the railway system more energy-efficient than the road transportation system (Transnet Limited, 2010). When the train is hauled by power units it yields a corresponding exponential economy in relation to the amount of energy expended. It is important to know that a locomotive uses a great deal less fuel per ton of freight carried than does a truck; this leads to lower emissions; since both modes of transport burn fossil fuel, thereby using up non-renewable resources (Transnet Limited, 2010).

According to allafrica.com (2012), Transnet’s losses comprise: copper-replacement costs and the cost of increased security measures. Those incurred for 2006/7 and January 2012 amounted to 856.71 million rand.

This included a sum of 80.9 million rand spent by Transnet on increased security costs in 2011/12 alone. During the period of 2008/09, Transnet suffered losses of 12 million rand to stolen materials, 30.1 million rand in replacement of the infrastructure, and 116 million rand for security services. Similarly, for 2007/2008, 8.9 million rand, 22.2 million rand, and 91.9 million rand were expended, respectively.

Peggy Drodskie, the executive advisor to the South African Chamber of Commerce and Industry, indicated that there seems to be a definite link between the international price of copper and copper theft (Arendse, 2011). John Cross, chairman of the Copper Producers’ Association, stated that the consistently high price of copper makes it a valuable commodity for illicit business; and what drives the price up is the massive demand from China and India, whose urbanizing economies are voracious consumers of copper (Planting 2011).

In addition, according to Leedy (2011), South Africa had no choice but to confront the problem head on. Geldenhuys (2010) elaborated on this point, stating that massive increases in cable theft in the past years were mostly due to the fact that the price of copper had tripled in recent years. Jones (2010) stated that; while the global recession continued, the value and the shortage of copper would remain the same for the next few years. But before 2007, the copper price was reasonably low.

On the other hand, in 2008 the price sky-rocketed to $8685 per metric ton, thus boosting the black market value. In 2009, the price of copper nearly doubled; thereafter, the increase remained steady. Jones also indicated that global analysts predicted a shortage of copper in the immediate future. Arendse (2011) also mentioned that up to five new cities, the size of London would be built in China in the near future. Xstrata Copper predicted that the demand for copper would rise by 3.1% in 2012, boosted by China’s continued investment in housing and infrastructure that would drive up the demand. This was regarded as being significant, since China’s demand constitutes 40% of the global demand (SAPA, 2012).

Figure 2.5 shows the copper theft statistics related costs (in millions of rands) from April 2009 – March 2011.

50 45 40 35 30 25 20 15 10 5 0

Figure 2.5: Copper theft Statistics (SAPA, 2012)

There are very few publications concerning the current role of law enforcement in combating copper cable theft in Gauteng, let alone in South Africa as a whole. Business Hi-Light (2009) reported that the South African Police Service (SAPS) has identified non-ferrous metal theft as a priority crime.

2.9 THE IMPACT OF ROAD FREIGHT ON THE ROAD PAVEMENT The road freight industry has shown unparalleled growth since the full deregulation of transportation in 1990. Its success in capturing the majority share of the overland transport market in less than 10 years is well documented (Van der Mescht, 2006). It can be argued that the maintenance and upgrading of national road is keeping pace with the traffic growth. However, the stark reality is that the life cycles of provincial roads have been significantly shortened by this increasing number of heavy freight, whose damaging effect on the road pavement layers thus increases exponentially. While most of the national roads agencies, managed by the South African National Roads Agency Limited (SANRAL) are still in a serviceable condition, many provincial roads are in a serious state of disrepair.

In the Eastern Cape; potholes, deep ruts and edge-breaks along most of the secondary roads are visible indicators of serious deterioration in the road layers.

There are more than 650 trucks, which are utilised on South African roads each day. Customers complain about not receiving their products on time, and with lesser tonnages, trucks are restricted to a certain capacity of which – when compared with the railway system – railways deliver more tonnages at a lower cost (Van der Mescht, 2006).

The South African National Roads Agency (SANRA) has estimated that overloading causes R600 millions of damage to South Africa’s paved roads annually. The financing of road maintenance and development is a key concern, according to SANRA, The Department of Transport (1998), whose 2002 annual report (Chairman’s report: 3) stated that limited financial resources were a major challenge, and could adversely affect the condition of the road network.

The Department of Transport (1998) estimated that investment in roads in the late 1990s met approximately 75 per cent of long-term capital requirements; but that only 35 per cent of the needs for long distance roads were adequately funded (1998: 79). It found that 30 to 40 per cent of South Africa’s trucks were overloaded, causing 60 per cent of the damage to the road network (1998: 82).

In recent years, national and provincial spending rose strongly from R3.7bn in 2000/01 to an estimated R6.4bn in 2003/04, an average annual growth rate of 20 per cent (Houghton, 1976). This can be seen in Figure 2.6 below:

350

300

250 Paved roads 200 passenger 150 vehicles 100

0 1940 1950 1960 1970 1980 1990 2000

Figure 2.6: Damaged infrastructure (Van der Mescht, 2006).

Presented in the table 2.3 below is the illustration that shows some indication of the variation of road maintenance expenditure amongst the different road authorities in the financial year of 2000/01

Table 2.3: Road maintenance expenditure 2001, Annual Transport Statistics [2002] Road Authority Rural road network (KM) Expenditure in 2000/2001 Comparative cost fiscal year (values in allocation per km Rand) (Values in Rand) Northern Cape 71 378 91 622 1284 Free State 49 116 155 749 3171 Northwest 35 901 270 134 7524 Eastern Cape 48 582 383 455 7893 Western Cape 39 985 415 924 8561 Mpumalanga 25 058 216 482 8639 Kwazulu Natal 50 883 720 351 14 157 Limpopo 28 847 586 706 20 339 Gauteng 7 668 343 468 44 792 SANRAL 6 713 708 488 105 540

The above statistics shows that in the year 2000/01 total road construction and maintenance expenditure for the 357 688km provincial rural network was R3.184 billion, which equates to R8908 per kilometre. This is about 8% of SANRAL’s equivalent allocation of R105 540/km for the national road network; and it provides some insight as to why many provincial roads are crumbling, in contrast to national roads, which are generally still in a good condition.

South Africa’s early roads began as footpaths and wagon tracks; and these were subsequently developed into earth roads, and then gravelled roads (Geldenhuys, 2008). Time series are available for national and provincial roads; urban roads and minor rural roads are excluded from the analysis. Growth rates for roads and road traffic are shown in table 2.4 below:

Table 2.4: Average annual growth rates on roads (Transnet Annual Report, 2004) 1920-1940 1940-1956 1957-1993 1993-2001 Total national and 2.1 0.5 0.04 - provincial roads (paved & unpaved) Paved national and - 11.6 3.9 1.3 provincial roads Passenger vehicles 11.4 4.3 4.8 1.0 Goods vehicles 22.1 8.3 5.6 1.7 Real GDP 5.6 4.1 3.2 2.8

Apart from a structural data break between 1956 and 1957, the roads essentially display a plateau effect after 1940. In 1938, the National Road Board decided that all national roads should be paved, rather than 25 per cent as had been previously planned. Prior to 1940, the development of South Africa’s national and provincial road network is best measured by total roads (most of which were unpaved), whereas after 1940 road development is best measured by the paved roads. Between 1940 and 2001, South Africa’s national and provincial paved roads increased from around 2 000km to around 63 000km. The declining growth rates for paved roads may indicate that a plateau effect is developing; but one caveat in this regard is that improvements, such as the addition of extra road lanes are not reflected in the measured distances (Barro, 1990).

An unacceptably high number of road freight vehicles are overloaded beyond the legal limit, increasing the magnitude of imposed loads on road pavements, bridges and culverts. Freight-rail market share growth and volume opportunities are limited to the traditional commodities that the business has moved over the years given the inherent risks associated with slow economic recovery. The market share for general freight has been stagnant in the past by an approximately 13% share of the gross domestic product – due to ongoing competition (Brown and Hamilton, 2005).

The challenge is to capture a greater share of the forecast GDP growth from road through improved operational efficiencies and service delivery. In 2007, the total transportable GDP amounted to 1578Mt (million-tons), of which the railways transported approximately 205Mt, representing a rail market share of 13%. The bulk of the transportable GDP is transported within metropolitan areas and rural areas.

Where rail cannot compete with road, due to the length of the average haul, which is less than 150 km, and the lack of sidings to load and offload traffic onto rail. If metropolitan and rural areas are excluded, the freight rail-market share of the rail-friendly market is approximately between 25% and 30% (Transnet Annual Report, 2004).

The technical management of the national road networks is expected to be able to improve regional accessibility and inter-node population mobility (Mulyono et al., 2007). The national road network connects provinces and regions/cities. The management of the national road network, therefore, cannot be separated from the application of quality standards to achieve a serviceable road-pavement quality (Ma’soem, 2006) and a maximal axle load (MAL) control for freight vehicles (Mulyono, 2007).

Currently, the problems of fund inadequacy and overloading are considered as the main reasons for road distress; as these two factors can be easily proved by directly testing the real MAL compared to the permissible maximal axle load (MAL). The phenomena sufficiently indicate that the decrease of road construction quality is caused by internal and external factors, which contribute 45% and 55%, respectively, to the road pavement-structural distress in Indonesia (Mulyono, 2008). The external factors are destructive variables outside the road construction, such as the repetition of vehicle loads and water puddles from spatial floods. The condition causes distress for the traffic user; for example in the Trans-North Coast of Java where water puddles from spatial floods frequently happen; while at the same time, there are many overloaded freight vehicles. The load repetition and overloading of heavy vehicles have an impact on the acceleration of road distress, meaning that the real service lifetime will be shorter than the design lifetime – although the same quality standard is used during the road network construction related to freight transport distribution.

Consequently, it is necessary to develop a model to analyze the impact of overloaded freight transportation on level of the road distress.

Rahim (2000) conducted an analysis of damage factors and the deficit design life of road pavement – due to overloading in several national road sections of Riau Province. The road sections are part of Asia-ASEAN Highway. Meanwhile, Mulyono (2002) had analyzed the structural distress improvement on the Manado-Bitung road section of North Sulawesi Province. He concluded that the width area of rutting was more than sixty per cent of the total distress width. This condition indicated that overloading had already happened. However, the two studies did not analyze the loss cost of road pavement distress resulting from such overloading.

Different types of vehicles cause different types of damage to pavements. Vehicle loading on highway pavements corresponds closely to axle weight and configuration. Sebaaly et al. (2002) evaluated the impact of agricultural equipment on the response of low-volume roads in the field. Because heavy trucks cause more damage to highways, it is of interest to federal and State legislatures whether the current permitted weight limit reflects the best trade-off between trucking productivity and highway maintenance cost.

A study by Freeman et al. (2002) was mandated by Virginia‘s General Assembly to determine whether pavements in the southwest region of the State under higher allowable weight limit provisions had greater maintenance and rehabilitation requirements than pavements bound by lower weight limits elsewhere.

This study has included traffic classification, weight surveys, an investigation of subsurface conditions, and comprehensive structural evaluations, which were conducted at 18 in-service pavement sites. Visible surface distress, ride quality, wheel-path rutting, and structural capacity were measured during 1999 and 2000. Consequently, a subsurface investigation was conducted at each site in October 1999, in order to document pavement construction history, and subgrade support conditions. In addition, a survey consisting of vehicle counts, classifications, and approximate measurements of weights was administered to collect site-specific information about traffic volume and its composition. The results were used to estimate the cost of damage attributed only to the net increase in allowable weight limits. The study concluded that pavement damage increased drastically with relatively small increases in truck weight (Roberts, 2005).

The cost of damage to roadway pavements in those countries with a higher allowable weight limit was estimated to be $28 million over a 12-year period (Roberts, 2005). Among other factors, this figure did not include the costs associated with damage to bridges and motorist delays through work zones. In Louisiana, Roberts (2005) completed a study to assess the economic impact of overweight vehicles hauling timber, lignite coal, and coke fuel on highways and bridges. Firstly, the researchers identified 1,400 key control sections on Louisiana highways that carried timber, 4 control sections that carried lignite coal; and approximately 2,800 bridges that were involved in the transport of both of these commodities. Secondly, a calculation methodology was developed to estimate the overlays required to support the transportation of these commodities under the various gross vehicle weight (GVW) scenarios. Three different GVW scenarios were selected for this study including: (1) 80,000 lbs., (2) 86,600 lbs. or 88,000 lbs., and (3) 100,000 lbs (Roberts, 2005).

Finally, Roberts (2005) articulated a methodology for analyzing the effect of these loads on pavements. And it involved determining the overlay thickness required to carry traffic from each GVW scenario for the overlay design stretch. In addition, a method of analyzing the bridge costs was developed, using the following two steps: (1) determining the shear, moment and deflection induced on each bridge type and span; and (2) developing a cost for repairing fatigue damage for each vehicle passage with a maximum tandem load of 48,000 lbs.

This analysis showed that a 48 kilo-pound (kip) axle produced more pavement damage than the current permissible GVW for timber trucks; and it caused significant bridge damage at all GVW scenarios included in the study. The researchers recommended that the legislature eliminate the 48-kip maximum individual axle load, and keep GVWs at the current level, but increase the permit fees to sufficiently cover the additional pavement costs produced by overweight vehicles (Roberts, 2005).

2.9.1 Pavement Damage Cost Studies A total of about 4,000,000 miles of roads, including 46,572 miles of Interstate highways and over 100,000 miles of other national highways, form the backbone of the United States highway infrastructure (Boile et al., 2001). Careful planning considerations and wise investment decisions are necessary for the maintenance of the nation‘s massive infrastructure to support a sufficient level of operations, and to provide a satisfying degree of serviceability. Studies have found that trucks place heavy loads on paving, which leads to significant road damage, consequently resulting in increased highway maintenance costs nationwide (Boile et al., 2001).

Load-related road wear is considered to be an approximation for the marginal cost of road damage. Due to high axle loads, heavy vehicles are considered to be primarily responsible for road wear. Martin (2002) estimated the road wear cost for thin bituminous-surfaced arterial roads in Australia. This was based on the following two approaches: (1) a statistical relationship between the road-maintenance costs and a heavy-vehicle-road-use variable; and (2) a pavement- deterioration model that estimated the portion of load-related road wear based on pavement deterioration predictions for thin bituminous-surfaced granular pavements.

Similarly, Hajek et al. (1998) developed a marginal-cost method for estimating pavement costs from proposed changes in regulations governing truck weights and dimensions in Ontario, Canada. The procedure was part of a comprehensive study undertaken by the Ontario Ministry of Transportation, in response to government and industry initiatives to harmonize Ontario‘s truck regulations with those in surrounding jurisdictions. The study investigated the individual impacts of four proposed alternative regulatory scenarios.

The differences between the scenarios were relatively small; and they were directed only at trucks with six or more axles. The procedure for assessing pavement costs consisted of three phases: (1) Identification of new traffic streams; (2) allocation of these new traffic streams to the highway system; and (3) assessment of cost impacts of the new traffic streams on the pavement network (Hajek et al., 1998).

2.9.2 Pavement Management System In the past, pavements were maintained, but not managed. Hence, life-cycle costing and priority were not considered as important factors in the selection of maintenance and rehabilitation (M&R) techniques. Today‘s economic environment requires a more systematic approach to determining M&R needs and priorities (Shahin, 1994). All pavements deteriorate over time due to traffic and the environment. The growth of truck traffic is of special importance to pavement engineers and managers; since it is a major cause of pavement deterioration.

South Africa’s annual state-of-logistics survey indicates that the majority of dense, long-distance surface freight is transported by road, placing severe constraints on the country’s freight logistical infrastructure, and posing a significant exogenous risk to the growth aspirations of the country (Havenga, 2010). The risk is attributed to the excessive demand for road-freight transport, which is dependent on imported fuel at highly unstable prices, and is more damaging to the environment, leading to uncertain future offset charges.

The following can be considered as justification for implementing a railway system for Freight:

1) It helps to protect the environment:  Railway freight creates 70% less carbon dioxide than the equivalent road transportation system. Railway systems are, therefore, also more energy-efficient than road (Havenga et al. 2009). 2) It helps to boost the economy:  Rail freight is vital for the future economic well-being of the economy. It literally keeps the lights on; a quarter of our electricity comes from coal transported by rail (Havenga et al. 2009). 3) Rail freight breaking out of its traditional markets:  Consumer-rail freight increased by 16.7% in the 1st quarter of 2011; and it has grown by 29% in the last 5 years, despite the recession, in its eighth consecutive year of growth. The industry predicts that rail freight will have doubled by 2030 (Havenga et al. 2009).

4) It helps to relieve road congestion:  Rail is able to act as a freight bypass by offering a more reliable alternative; as road congestion continues to worsen. Road congestion costs business an estimated R400 billion to R500 billion per annum. (Havenga et al. 2009)

Most of the consignments have a shelf lifespan and with the challenges that are faced in-transit, the trains delay resulting in the products being not useful anymore; as they have exceeded their shelf life-span; for example Fast Moving Consumer Goods (FMCG) and lime, which is loaded from Lime Acres and delivered to Newcastle and Bijlkor. Also, the turnaround time of wagons would be longer, resulting in the customer not loading or receiving their monthly contractual volumes (Transnet Annual Report, 2004).

2.10 SUMMARY Road remains the dominant mode of transportation in the urban areas; while the railway system is almost exclusively responsible for the haulage of export coal and iron ore (Van der Mescht, 2006). Competition between the two modes of transportation for the conveyance of general freight is, therefore, restricted to the major transport corridors and the rural areas. Road and railways only compete in the area of the freight transport market, (Lawless, 1990). Based on the 2004 statistics, road transportation carried 140 million tons of corridor freight and 210 million tons of rural freight, of which rail only carried 40 million tons of corridor and 30 million tons of rural freight.

This means that about 82% of general freight was conveyed by road; and only 18 % by railways (Van der Mescht, 2006).

Railway-transportation services require very accurate planning of operation, in contrast to other modes of transportation. This is due to the fact that railway undertakings have to promote their railway transportation services for passengers well before the actual railway operation. A published and only rarely annually changed train timetable allows the customer to use railway transportation services efficiently.

Moreover, uncontrolled railway operation is particularly prone to deadlocks. Train drivers need to obtain the moving authority for a certain part of the railway infrastructure from a centrally authorized controlling centre, which assures a high level of safety.

An annual initial schedule helps to control railway operations; since it reduces the vast complexity of real operational planning. Nevertheless, the liberalization and introduction of competition in the European railway system would break down these old established and rigid structures in the near future. However, in comparison to airline transportation and urban bus transport, the railway system is very rigid and hardly innovative. Furthermore, railways systems consist of very expensive assets. In order to make the best use of this valuable infrastructure, and to ensure economical operation, efficient planning of the railway operation is indispensable.

CHAPTER 3: METHODOLOGY

3.1 INTRODUCTION In this chapter, both qualitative and quantitative research methods were used, which assisted to validate the defined techniques employed in the data collection. How the questionnaires were designed and the data were collected are included in this chapter.

3.2 RESEARCH METHOD The research methodology is an approach employed to obtain information from a representative sample of individuals from a business unit on the issues discussed in the literature review. According to Myers (2009) the research method is a strategy of enquiry, which begins and then progresses from the underlying assumptions of the subject in the question to the research design, and then finally, to the data collection. This study seeks to combine both rail and road information, and then to compare the benefits of each mode of transportation. In addition, the study investigated the critical factors underlying the cost of quality in delivering the customers’ product, and also to produce and come up with solutions to the challenges the rail companies are currently facing. Some of the challenges that the railways are facing are: the increase in the number of locomotive failures, cable theft, poor infrastructure etc.

The primary research will employ a quantitative method, which will seek to explore the existing literature; and the information obtained from the literature will guide the outcome of the study.

3.3 DATA COLLECTION According to Marshall and Rossman (2006), it is important to match the data-collection method with the purpose of the study. Interviews are probably the most widely employed method in qualitative research (Bryman and Bell, 2007). The two types of data gathering methods for any study are primary and secondary data collection.

3.3.1 The primary data used in the study were acquired through the administration of structured questionnaires. The administration of the questionnaires was conducted in the following phases:

 Copies were sent out (hard copies and electronically) to three different companies in Gauteng, South Africa.

 The companies were Transnet Freight Rail(railway freight organisation), Barloworld (road-freight organization) and Grindrod (road-freight organization).  A reminder was sent by email within two weeks for a quick response to the questionnaires.

3.3.2 The secondary data used in the study were obtained from various hard copies and online sources, such as journals, articles and conference papers. The search for information was undertaken from the University of Johannesburg library.

Descriptive statistics will be utilized to transform the raw data into a form that is easy to understand and interpret. The data will be summarised by means of calculating averages and percentage distributions obtained from the survey responses. Pie charts, tabulation and bar graphs will be used to display the data for ease of interpretation. With regard to the methodological framework, the respondents will be requested to rate the factors, in terms of the descending order of importance. The factors with the mean score will be considered as the least- important scores.

3.4 QUESTIONNAIRE DESIGN A questionnaire is the research’s measuring instruments that employ the survey approach to collect the information (Geldenhuys (2008)). The questionnaire for this study was developed in consultation with Statkon research consultants; it comprised Section A to Section G; the independent variables being tested were related to the dependent variable. The questionnaire was designed in line with the literature relevant to the study. It should be comprehensive and able to convey the intended question to the respondent; a good questionnaire should consider and follow the seven basic principles:

1: Be clear and precise; 2: Response choices should not overlap; and they should be exhaustive; 3: Use natural and familiar language; 4: Do not use words or phrases that show bias; 5: Avoid double-barrelled questions; 6: State explicit alternatives; and the 7: The questions should meet the criteria of validity and reliability

Based on these principles, the questionnaire will be structured and grouped into four main categories:

3.4.1 Performance Management This entails exploring Transnet’s performance-management approaches from the perspective of strategy, performance, leadership, as well as the supporting documents.

3.4.2 Quality Management This comprises assessing the quality from the perspective of the customers’ requirements, railway performance, and the utilisation of the resources and assets.

3.4.3 Challenges and level of quality These include internal challenges, like cable theft, poor infrastructural maintenance and resource challenges.

3.4.4 Customer Satisfaction Assessing the impact of late deliveries of the customers’ requirements on their production.

This research aims to improve the understanding of the value of moving more freight on railway than road. It will do so by addressing the following questions:  How concerned are employees in the railway company about the challenges encountered during the delivery of customer’s products?  To what extent do employees agree on the impact that the performance and quality management have in the organization?  How can a rail Freight Company improve and manage the operational challenges, in order to satisfy the customers’ needs?  How can the railway company improve the way they are managing their challenges?  Does the management of challenges have an impact on the challenges? Or do the challenges experienced in the organization have an impact on the management of the challenges?

3.5 THE POPULATION The population for the research were employees from Transnet freight rail, Barloworld and Grindrod. This study was focused on how to improve rail operational efficiencies, in order to attract more freight back to rail. The operational efficiencies that were looked at are: the impact of the locomotive failures, infrastructural maintenance, as well as the rail-freight systems in South Africa and Transnet.

3.5.1 The Sample Frame The focus of this research is more on the operational inefficiencies that impact on the performance of TFR. The operational inefficiencies looked at are the impact that cable theft, failure on assets, network problems and poor infrastructure have on the service provided to the customer, resulting in TFR loosing volumes.

3.5.2 Sample Size The size of the population is not more than 200 employees. They are employed at various levels in operational management at Transnet Freight Rail, Barloworld logistics and Grindrod. The questionnaire will be given to every employee – from the most junior to the management in the organizations. The number of respondents from Rail Company was 50 against 100 questionnaires distributed, and from road companies it was 82 against 100 questionnaires distributed.

3.6 RESEARCH VALIDITY The respondents were selected randomly and with regard to validation, the response rate was not high as relative to the study, but it is acceptable for the level of the study. Given the quantitative nature of the study, reliability and validity of the findings can be assumed. Fundamentally, validity determines whether the study really accesses what it was planned to measure or how sincere the study results are. Therefore, the study can be said to meet the criteria relative to validity and reliability. The internal validity of the study results are legitimate because the sample selection process, data gathering and the analysis performed were consisted with standard procedure adopted in quantitative research methodology

3.7 ANALYSIS OF THE DATA The data collection and analysis are based on the theoretical framework that was developed initially. According to Saunders (1997:340), there would be a recurring theme emerging from the analysis in seeking to satisfy the postulations developed in the theoretical framework.

Statkon research consultants assisted in analysing the collected data. Statkon is a support area within the University of Johannesburg that provides aid to postgraduate students and academic staff in the collation and analysis of data. The Microsoft excel ranking function was used to compute the rank of the mean scores of the responses. Statkon used the Statistical Product and Service Solutions (SPSS) software package to analyse the data, and to provide a descriptive analysis. The survey required the respondents to indicate their opinion on how strongly they agreed or disagreed with the statements in the questionnaires.

The data were analyzed into a number of categories for research discussions and interpretation; the descriptive statistics were analyzed and discussed with their applicable frequency tables, a factor analysis was also applied in the study to reveal and discuss the groups of questions and responses that indicated closer relationships amongst each other. The statistical reliabilities were verified throughout the entire results; the normality of the data were confirmed and discussed for all the applicable factors; and comparisons and correlations were also conducted for the research results; and a number of relationships were discussed.

The Kaizen Meyer-Olkin Measure of Sampling Adequacy was applied to ascertain whether the data were suitable for further use, according to the recommended criteria; and Bartlett’s Sphericity test was used for confirming their significance. For the normality test, the Shapiro-Wik tests and the Kolmogorov-Smirnov tests were considered to test the normality of the data depending on the values of the variables, such as the mean; the variance; the standard deviation; the median skewness, and the Kurtosis were also considered for confirming the normality of the results. The analysis of variance (ANOVA) and the T-tests were also exploited for comparing the groups. Correlation tests were conducted as well.

3.8 SUMMARY The research method that was used in this research was both qualitative and quantitative. The data gathering process was sufficiently described, the structure of questionnaires was presented and also the type of questions asked to the respondents. Questionnaires were distributed to the respondents through the email and the hard copies that were sent to the Rail Company and different road companies in Gauteng, South Africa. The companies to which the questionnaires were sent were mentioned in this chapter.

CHAPTER 4: RESULTS AND ANALYSIS

4.1 INTRODUCTION This chapter presents the results from the survey conducted during the course of this research project. The returned questionnaires were analysed with the help of Statkon, in order to derive further meaning from the questionnaires that were sent out.

4.2 RESPONSE TO QUESTIONNAIRES The company names or those groups that completed the questionnaires or data are: Barloworld Logistics, Grindrod and Transnet Freight Rail; with a total of 132 respondents who individually completed the questionnaires. Table 4.1 below shows the number of questionnaires that were distributed to the different companies.

Table 4.1: Distribution of questionnaires

Some questionnaires were sent electronically to the 50 respondents from Transnet Freight Rail, 52 from Barloworld, and 30 from Grindrod. All the questionnaires returned had been answered correctly. Figure 4.1 below shows the percentage of the respondents from the different companies, Barloworld having the highest number of respondents with a percentage of 39.4%, followed by Transnet Freight Rail with 37.9%, and Grindrod with 22.7%.

37.9% 39.4% Barloworld Grindrod Transnet Freight Rail

22.7%

Figure 4.1: Distribution of each company’s responses to the questionnaires

4.3 DEMOGRAPHIC OF RESPONDENTS The following section discusses the demographic of the respondents who participated in the study; it is imperative for the results that the responses be grouped, according to the categories below; because this gives more meaning to the data being analyzed; and it further breaks down the data into a number of variables to be measured and reported.

4.3.1 COMPANY BACKGROUND This section of the questionnaire requested organizational information from the respondents on how the company’s service should be categorised. Only 20.5 % of the respondents agreed that their company was categorized under commodities; while 14.4 % stated that their company was categorized under customers; and 86% were categorized under both the commodity and the customer groupings. The results are presented in Figure 4.2 below.

14.4%

20.5% Customer Commodity Both

86%

Figure 4.2: Classification of the organization

Which commodities are being transported from the different companies? This section shows the results in percentages of the commodities that are being transported by both the rail and road companies. The results are shown in Table 4.2 below.

Table 4.2: Commodities transported

How many trains and trucks are used daily? This section shows the results for the number of trains and trucks that are being used daily to service the customers. The results are presented in Figure 4.3 below.

40 Trains

30 Trucks

0 Less than 5 Between 5-10 Between 11-15 More than 15

Figure 4.3: Number of trains and trucks used daily

From Figure 4.3, it shows that Rail Company transports most of the product, based on the number of trains they run daily.

Some of the challenges encountered while in transit

Table 4.3: List of challenges encountered during delivery

From the above table 4.3, it may be observed that 30.3% of the respondents are slightly concerned about the theft; while 6,8% were not concerned at all.

As many as 25% are concerned about the absenteeism of personnel; and only 29,5% were extremely concerned about the traffic congestions that delay the delivery of the product. A total of 25,8% were also extremely concerned with the infrastructural maintenance that is poor; and only 16,05% of the respondents were neutral about the failure of the assets. Only 28% of the respondents were slightly concerned about the poor maintenance schedule on all the assets.

4.3.2 DEMARCATION What is your gender? The results indicate that 65.2% of the respondents were males; and 34.8% were females. Figure 4.4 below indicates the distribution of the gender responses to the questionnaires.

0 Males Females

Figure 4.4: Gender responses to the questionnaires

What is your ethnic group? The results indicate that 65.2% of the respondents were black; 15.2 % were whites; and 13.6% were coloureds; and 6.1% were Indians. The results are shown in Figure 4.5 below.

70 60 50 40 30 20 10 0 Black White Coloured Indian

Figure 4.5: Ethnic group of respondents to the questionnaires

What is your highest qualification? The results of this section show 37.9% of respondents had the highest qualification; while 3% had the lowest qualification (lower than grade 12); and 10.6% had a postgraduate degree. Figure 4.6 indicates the level of qualification of the respondents.

40 35 30 25 20 15 10 5 0

Figure 4.6: Level of qualification of respondents

What is your job level in the organization? The respondents’ positions in their organization also contributed positively to the data from the questionnaires; because unskilled workers may not possess, or even know the correct information about the organization.

Figure 4.7 below shows that 43.5% of the respondents were managers, followed by junior officials (29.0%) and supervisors (19.8%). The managers had the most useful information concerning the organizations for which they were working.

50 45 40 35 30 25 20 15 10 5 0 Junior Official Supervisor Specialist Management

Figure 4.7: Job level of respondents of questionnaires

In which environment are you currently based? The results from the section shows that 72.9% of respondents are office-based; 15.5% being based in the field; and 11.6% are based in both the office and the field. The results are illustrated in table 4.4 below.

Table 4.4: Environment where respondents are based in the organization

4.3.3 PERFORMANCE MANAGEMENT The statistics below show the results of the individual respondents on their perception on the status of performance management in the organization:

Do the employees understand their roles in the operations? The results show that 53.0% employees agreed with the statement of understanding their roles in operations; while 28.8% strongly agreed. Figure 4.8 below shows the results.

0 Strongly Disagree Neutral Agree Strongly agree disagree

Figure 4.8: Agreement of roles in operation

Employees participate in improvement programmes to enhance their efficiency? The responses of the respondents on how they participate in improving programmes to enhance efficiency in the organization are presented in Figure 4.8.

0 Strongly Disagree Neutral Agree Strongly agree disagree

Figure 4.9: Agreement in program improvement

From the above figure 4.9, most of the respondents agreed (47.7%) with the programme improvement to enhance the efficiency in the organization; and only 22% of the respondents strongly agreed with the statement.

The performance objectives are being monitored The responses of the respondents on the performance objectives being monitored in their organization are presented in Figure 4.10. Only 49.2% agreed with the monitoring of performance objectives in the organizations; while 1.5% strongly disagreed with the statement.

0 Strongly Disagree Neutral Agree Strongly disagree agree

Figure 4.10: Monitoring of performance objectives

The performance objectives are being evaluated The responses of the respondents on the performance objectives being evaluated in their organization are presented in Figure 4.11 below.

Only 49.2% agreed with the monitoring of performance objectives in the organizations; while 28.8% strongly agreed; and 1.5% strongly disagreed with the statement.

0 Strongly Disagree Neutral Agree Strongly disagree agree

Figure 4.11: Evaluation of performance objectives

There is management support to better employees’ performance. The responses of the respondents on the management support to improve employee performance are presented in Figure 4.12. From these figures, it is clear that management is committed to supporting the employees to perform better for the organization.

45 40 35 30 25 20 15 10 5 0 Strongly Disagree Neutral Agree Strongly disagree agree

Figure 4.12: Level of agreement for management support

Management encourages better employee performance. The results of the respondents show that there is a commitment on the part of management; and they encourage their team to perform better in the organization. As many as 36.4% of the respondents strongly agreed that management encourages better employee performance; while 35.6% agreed; and 6.1% strongly disagreed with the statement. The results are shown in Figure 4.13 below.

40 35 30 25 20 15 10 5 0 Strongly Disagree Neutral Agree Strongly disagree agree

Figure 4.13: Management encourages better employee performance.

Training and development are offered to improve employee-performance efforts The results show that most employees agree (41.7%) that training and development are offered to improve employees’ performance efforts; while 33.3% strongly agreed with the statement; whereas only 5.3% strongly disagreed.

The results are shown in Figure 4.14 below.

45 40 35 30 25 20 15 10 5 0 Strongly Disagree Neutral Agree Strongly agree disagree

Figure 4.14: Training and development offered in the organization

4.3.4 Quality Management The statistics below show the results of the individual respondents on their perceptions of the status of quality management in their organization:

There is a decrease in the number of resource failures The results of the respondents show that 39.4% of the respondents agreed with the statement; while 24.2% were neutral on this issue. See Figure 4.15.

45 40 35 30 25 20 15 10 5 0 Strongly Disagree Neutral Agree strongly disagree agree

Figure 4.15: Decrease in the number of resource failures

Resources are maintained regularly. The results show that 43.9% agreed with the regular maintenance of resources; but 25.8% strongly agreed; and only 4.5% strongly disagreed. The results are shown in Figure 4.16 below.

50 45 40 35 30 25 20 15 10 5 0 Strongly Disagree Neutral Agree strongly disagree agree

Figure 4.16: Regular maintenance of resources

Consignments are delivered in the right quality. As many as 44.7% of the respondents agreed with the statement; while 29.5% strongly agreed; and 3% strongly disagreed. This shows that customers do receive their consignments in the right quality. Figure 4.17 shows the results.

0 Strongly Disagree Neutral Agree strongly disagree agree

Figure 4.17: Delivery of consignments in the right quality

There is a planned maintenance schedule for the resources. The results show that 43.9% agreed with the statement; 31.1% strongly agreed; whereas only 2.3% strongly disagreed. This shows that there is indeed a planned maintenance schedule for the resources in their organizations. See Figure 4.18.

50 45 40 35 30 25 20 15 10 5 0 Strongly Disagree Neutral Agree strongly disagree agree

Figure 4.18: Maintenance schedule for the resources in the organization

There is a planned maintenance schedule for the infrastructure. The results show that 32.6% agreed with the statement on the planned maintenance for the infrastructure; 23.5% were neutral on the statement; and 24.2% strongly agreed. This could be because other employees do not have the knowledge of the maintenance schedule; or the schedule is not shared with them. Figure 4.19 below shows the results of the respondents.

35 30 25 20 15 10 5 0 Strongly Disagree Neutral Agree strongly disagree agree

Figure 4.19 Maintenance schedule for the infrastructure in the organization

4.3.5 Challenges This section shows the results of the individual respondents on their perception of the status of some of the challenges experienced in the organization: The results are presented in Table 4.5 below. Table 4.5: Challenges experienced in the organization

As many as 29,5% of the respondents were not challenged with poor communication between employees and customers; 33,3% were only challenged to a small extent on the lack of motivation. Most of the respondents felt that the challenges that affect them to a moderate extent are the lack of management support, and poor employee commitment.

4.3.6 Management of challenges This section shows the results of the individual respondents on their perception of the status of challenge-management experienced in the organization. Most of the respondents agreed on the management of the challenges in the organization. Table 4.6 shows the results of the respondents.

Table 4.6: Management challenges

4.3.7 Customer satisfaction This section shows the results of the individual respondents on their perception of the status of customer satisfaction in the organization: Table 4.7: Customer satisfaction in the organization

Most of the respondents agreed on the customer satisfaction in their organization. As many as 35,4 % agreed that Just-in-Time applies in the delivery of the customers’ consignments; while 40,8% agreed that the customers’ products are received in good quality; however, as many as 43,8% agreed that the consignments are received in good quantity. A total of 45,4% of the respondents agreed that customers’ requirements are clearly tabulated.

4.4 FACTOR ANALYSIS In this section, various statistics were used to measure the significance of the research which is necessary in showing the accuracy of the study. The results from the study were subjected to factor analysis; in order to determine whether any relationships can be further determined between the variables. The SPSS package was utilized to extract the data and a number of factors were determined from all the questionnaires’ sections, with 7 factors being the most in performance-management and customer-satisfaction. The Kaiser-Meyer-Olkin measure of sampling adequacy was used to ensure that the values were above the recommended value of 0.6 for all the factors; and that the test is significant at 0.000 sig. value.

For the company background, KMO was 0.760 at 0.000 sig. value; for performance management, KMO was 0.863 at 0.000 sig. value; for quality management, KMO was 0.724 at 0.000 sig. value; for challenges, KMO was 0.810 at 0.000 sig. value; for management of challenges, KMO was 0.811 at 0.000 sig. value; and for customer satisfaction, KMO was 0.854 at 0.000 sig. value supporting the factorability of the correlation matrix. The above are presented in Table 4.8.

Table 4.8: Factor analysis with KMO values

Extracted components from the principal components analysis were also confirmed as having eigenvalues exceeding 1, as recommended. The total variances are shown in Figure 4.20.

55.284 49.712 Company background Performance management 59.224 61.492 Quality management Challenges 53.63 58.342 Management of challenges Customer satisfaction

Figure 4.20: Total value explained

From the above figure, performance management has the highest total variance (61.492%); with 59.224% for management of challenges; and 58.342% for quality management; as well as 55.284% for customer satisfaction; and 53.63% for challenges; in addition to 49.712% for company background.

4.5 EMPIRICAL RELIABILITIES

4.5.1 Some typical challenges encountered during delivery

Table 4.9 shows the reliability statistics of some of the challenges encountered during delivery of products to customers. Cronbach’s Alpha, based on the standardized items, is 0.835; and the values above 0.7 are considered acceptable; while the values above 0.7 are preferable. In this case, the value is more than 0.7, making it preferable. Table 4.9 Item statistics of challenges during delivery

Item-Total Statistics Scale Corrected Squared Cronbach's Some typical challenges Scale Mean if Variance if Item-Total Multiple Alpha if Item encountered with trucks during delivery Item Deleted Item Deleted Correlation Correlation Deleted 1) Theft 16.06 27.227 .607 .512 .811 2) Absenteeism of personnel (drivers) 16.15 24.869 .806 .712 .771 3) Traffic congestion that delays the delivery 15.94 26.765 .592 .469 .814 of products 4) Poor infrastructure 15.94 30.981 .316 .191 .863 5) Failure on assets 16.21 24.596 .717 .642 .787

6) Poor maintenance schedule on all assets 16.38 26.130 .654 .624 .801

The data are reliable; because the Cronbach's Alpha value is 0.837; thus, the values above 0.7 are considered acceptable. All values on the inter-item correlations are positive, indicating that the items are measuring the same underlying characteristics.

4.5.2 Performance Management

Table 4.10 Item statistics of performance management

Item-Total Statistics Scale Corrected Squared Cronbach's Scale Mean if Variance if Item-Total Multiple Alpha if Item Item Deleted Item Deleted Correlation Correlation Deleted 1. Employees understand their roles in operations 23.30 27.126 .637 .502 .912 2 .Employees participate in improvement 23.53 25.442 .753 .618 .901 programs to enhance efficiency 3. The performance objectives are being monitored 23.26 26.605 .774 .744 .900 4. The performance objectives are being evaluated 23.31 26.811 .710 .711 .906 5. There is management support to 23.53 23.793 .847 .766 .890 better employee performance 6. Management encourage better employee performance 23.40 23.983 .786 .740 .898 7. Training and development is offered to 23.36 25.590 .697 .579 .907 improve employee performance efforts

Cronbach’s Alpha based on the Standardized Items is 0.916; and the values in table 4.11 above 0.7 are thus preferable. All the values on the inter-item correlations are positive, indicating that the items are measuring the same underlying characteristics.

4.5.3 Quality Management

Table 4.11 Item statistics of quality management

Item-Total Statistics Scale Corrected Squared Cronbach's Scale Mean if Variance if Item-Total Multiple Alpha if Item Item Deleted Item Deleted Correlation Correlation Deleted 1) There is a decrease in the number of resource 15.25 9.288 .390 .386 .717 failures 2) Resources are maintained regularly 14.86 8.048 .703 .636 .585 3) Consignments are delivered in the right quality 14.71 8.710 .654 .472 .615 4) There is a planned maintenance schedule for all 14.67 8.392 .766 .616 .576 resources 5) There is a planned maintenance schedule for the 15.09 11.320 .086 .237 .833 infrastructure

Cronbach's Alpha Based on Standardized Items is 0.749. Above table 4.13 shows values above 0.7 are considered acceptable. Not all the values on the inter-item correlations are positive, indicating that the items are not measuring the same underlying characteristics.

4.5.4 Quality Management continues

Table 4.12 Item statistics of quality management

Item-Total Statistics Scale Corrected Squared Cronbach's Scale Mean if Variance if Item-Total Multiple Alpha if Item Item Deleted Item Deleted Correlation Correlation Deleted 1) There is a decrease in the number of resource 11.70 6.732 .541 .309 .851 failures 2) Resources are maintained regularly 11.30 6.136 .778 .628 .733 3) Consignments are delivered in the right quality 11.16 7.051 .650 .464 .794 4) There is a planned maintenance schedule for all 11.11 6.972 .711 .553 .771 resources

Cronbach's Alpha Based on the standardized items is 0.839. Consequently, the values shown in table 4.15 are above 0.7 therefore considered acceptable. All the values on the inter-item correlations are positive, indicating that the items are measuring the same underlying characteristics.

4.5.5 Challenges

Table 4.13 Item statistics of challenges

Item-Total Statistics Scale Corrected Squared Cronbach's Scale Mean if Variance if Item-Total Multiple Alpha if Item Item Deleted Item Deleted Correlation Correlation Deleted 1) Poor communication between employees and 10.04 13.854 .525 .289 .847 customers 2) Lack of motivation for employees 9.69 11.804 .765 .639 .779 3) Lack of management support 9.91 12.419 .709 .603 .796 4) Poor employee commitment 9.92 14.895 .552 .350 .837 5) Lack of maintenance on the assets 10.02 12.901 .720 .547 .794

Cronbach's Alpha Based on the standardized items is 0.844. Thus, the values above 0.7 are preferable. All the values on the inter-item correlations are positive, indicating that the items are measuring the same underlying characteristics. Table 4.17 above shows values that are above 0.7.

4.5.6 Management of challenges Table 4.14 Item statistics of management of challenges

Item-Total Statistics Scale Corrected Squared Cronbach's Scale Mean if Variance if Item-Total Multiple Alpha if Item Item Deleted Item Deleted Correlation Correlation Deleted 1) There is a planned maintenance programme 19.50 20.929 .531 .613 .893 2) A risk management plan is available in case of 19.44 20.217 .669 .645 .876 incidents 3) Our fleet is regularly serviced 19.65 18.014 .819 .697 .851 4) We deliver according to customer appointments 20.08 16.702 .707 .660 .874 5) The operation area is efficient 19.79 17.242 .769 .709 .858 6) Insurance policies are monitored regularly 19.68 18.789 .793 .639 .857

Cronbach's Alpha value is 0.888; and Cronbach's Alpha based on the standardized items is 0.893. Thus the values above 0.7 are considered acceptable. All the values on the inter-item correlations are positive, indicating that the items are measuring the same underlying characteristics. Values in the above table 4.19 are above 0.7, therefore they are acceptable.

4.5.7 Customer Satisfaction Table 4.15 Item statistics of customer satisfaction

Item-Total Statistics Scale Corrected Squared Cronbach's Scale Mean if Variance if Item-Total Multiple Alpha if Item Item Deleted Item Deleted Correlation Correlation Deleted 1) JIT (Just-In-Time) applies in delivering the 24.57 18.871 .714 .565 .874 customers’ consignments 2) Customers’ consignments are received in good 24.06 22.137 .690 .588 .873 quality 3) Customers’ consignments are received in the right 24.41 20.635 .660 .497 .877 quantity 4) Customers are being updated or given feedback 24.09 21.085 .785 .666 .861 regularly 5) Communication occurs between employees and 24.19 21.126 .719 .624 .868 customers (No gap in communication) 6) Consignments are always delivered to the right 23.91 23.007 .618 .555 .881 place (destination) 7) Customers’ requirements(orders) are clearly 23.97 22.780 .679 .533 .875 tabulated

Cronbach's Alpha value is 0.889; and Cronbach's Alpha based on the standardized items is 0.895. Thus, the values above 0.7 are considered acceptable. All the values on the inter-item correlations are positive, indicating that the items are measuring the same underlying characteristics.

4.6 CORRELATION Correlation analysis is used to describe the strength and direction of the linear relationship between two variables. The procedure for obtaining and interpreting a Pearson product-moment coefficient is designed for interval level (continuous) variables. It can also be used if you have one continuous variable and one dichotomous variable. Spearman’s rank-order correlation is designed for use with ordinal levels, or with ranked data; and it is particularly useful when your data do not meet the criteria for Pearson’s correlation.

Pearson correlation coefficient can only take on values from -1 to +1. The sign in front indicates whether there is a positive correlation (as one increases, the other decreases). The size of the absolute value provides an indication of the strength of the relationship.

A perfect correlation of 1 or -1 indicates that the value of one variable can be determined exactly by knowing the value of the other variable. On the other hand, a correlation of 0 indicates no relationship between the two variables. Correlation becomes significant at the 0.01 level. (See Table 4.23 for the correlation analysis of the study).

Table 4.16: Correlation analysis of the study

Below are the results of the relationships displayed in the above table:  There is a negative correlation between some typical challenges encountered during delivery and the performance management, quality management and management of challenges. Some of the typical challenges encountered during delivery have a relationship with these challenges and the quality of the services

provided to the customers thus the challenges encountered during delivery have an impact on performance management, quality management and management of challenges.  There is a negative correlation between performance management and challenges. Performance management has a relationship with quality management, the management of challenges, and the quality of services provided to customers and it impacts them.  There is a negative correlation between quality management, and some typical challenges encountered during delivery.  There is a negative correlation between challenges, performance management, quality management, management of challenges and the quality of services provided to customers. These challenges have a relationship with some of the typical challenges encountered during delivery,.  There is a negative correlation between the management of challenges; and there are some typical challenges encountered during delivery.  There is a negative correlation between the quality of services provided to customers, some typical challenges encountered during delivery, performance management, quality management and the management of challenges. The quality of service provided to customers has a relationship with some of the typical challenges encountered during delivery, performance management, quality management and the management of challenges.

The size of the correlation coefficient ranges from -1.00 to 1.00; so, this value will indicate the strength of the relationship between the variables. A correlation of 0 indicates no relationship at all; a correlation of 1.0 indicates a perfect positive correlation; and a value of -1.0 indicates a perfect negative correlation.

4.7 EXPLORATORY DATA ANALYSIS

4.7.1 Some typical challenges encountered by both rail and road companies during delivery The total number of samples is 132.Only 82 of these being respondents from the road companies (Barloworld and Grindrod); and 50 respondents being from the rail company (Transnet Freight Rail). In both groups (i.e. road and rail) there are no data missing.

T-Test is used when you have two groups or datasets; and you wish to compare the mean scores on some continuous variables.

From the box plot below shown on figure 4.22, it may be seen that the road employees are not that concerned about the challenges encountered with trucks during the delivery of customers’ products compared with the rail company, showing a higher median value of just below 4%; while that of the road is below 3%.

Figure 4.21: T-test of normality for challenges during delivery

Each distribution of scores is represented by a box and protruding lines. The length of the box is the variables interquartile range; and each box contains 50% of the cases. The line across the inside of the box represents the median value.

4.7.2 Performance Management The total number of samples is 132. Of these, 82 are respondents from the road companies (Barloworld and Grindrod); and 50 respondents are from the rail company (Transnet Freight Rail). In both groups (i.e. road and rail) there are no data missing.

The T-Test is used when you have two groups or datasets; and you wish to compare the mean scores of some continuous variables. From the below box plot shown in figure 4.23, it can be seen that road employees are exposed to higher levels of performance management in the organization than are the rail employees. Box plot shows that the road employees show a higher median value of just above 4%; while that for the road is just above 3%. There are fewer outliers on the rail than there are for the road in the boxplot.

Figure 4.22: T-test of normality for performance management

4.7.3 Quality Management

The total number of samples is 132. Of these, 82 are the respondents from the road companies (Barloworld and Grindrod); while 50 respondents are from the rail company (Transnet Freight Rail). In both groups (i.e. road and rail) there are no data missing. The T-Test is used when you have two groups or datasets and wish to compare the mean scores of some continuous variables. From the box plot below shown on figure 4.24, it may be seen that the road employees are aware of the impact that quality management has on the organization – with a median value of just above 4%, compared to the rail organization showing a median value of less than 4%.

Figure 4.23 T-test of normality for quality management

4.7.4 Challenges

The total number of samples is 132. Of these, 82 are respondents from the road companies (Barloworld and Grindrod); and 50 of the respondents are from the rail company (Transnet Freight Rail). In both groups (i.e. road and rail) there are no data missing.

The T-Test is used when you have two groups or datasets and wish to compare the mean scores of some continuous variables. From the box plot below shown on figure 4.25, it can be seen that the road has a lower median than that of the rail. The road has a median of just above 2%; and the rail has a median value of just below 3%, with an outlier above 4%.

Figure 4.24 T-test of normality for challenges

4.7.5 Management of challenges The total number of samples is 132. Of these, 82 are respondents from the road companies (Barloworld and Grindrod); and 50 of the respondents are from the rail company (Transnet Freight Rail). In both groups (i.e. road and rail) there are no data missing.

The T-Test is used when you have two groups or datasets and you wish to compare the mean scores on some continuous variables. From the box plot below figure 4.26, it may be seen that the road has a higher median than that of the rail. Road has a median of 4.5%; and the rail has a median value of just 3.2%. Both box plots shows outliers, with the road having outliers between 2% and 3%, and rail having an outlier at 1%.

Figure 4.25 T-test of normality for management of challenges

4.8 REGRESSION ANALYSIS

Multiple regression is a sophisticated extension of correlation; and it is used when you want to explore the predictive ability of a set of independent variables on one continuous dependent- measure. Different types of regression allow you to compare the predictive abilities of particular independent variables; and to find the best set of variables to predict a dependent variable.

The independent variables from the above table show a relationship with the dependent variable; all the values are above 0.3, except the mean Q9, which is less than 0.3. Therefore; quality management and the management of challenges correlate substantially with one another.

Model Summary In this model, we check the value given under the heading R squared. This tells us how much of the variance in the dependent variable (Customer Satisfaction) can be explained by the model (which includes independent variables).

Table 4.17 Regression analysis

In this case, the R squared value is 0.574, which means that the model explains 57,4% of the variance in customer satisfaction. The result is shown in the above table 4.24

Table 4.18 ANOVA analysis Model Sum of squares df Mean F Sig. Square Regression 34.194 4 8.549 39.466 0.000 Residual 25.343 117 0.217 - - Total 59.537 121 - - -

The ANOVA table is used to assess the statistical significance of the results. This tests the null hypothesis that multiple regression in the population is equal to 0. The model in the above table 4.25 reaches statistical significance with the sig. value = 0.000

Table 4.19 Variables that contribute to the prediction of the dependent variable

From the above table, we can check which variables in the model have contributed to the prediction of the dependent variable. From the above table4.26, we look at the Beta column (under the Standardized coefficients), and the highest beta coefficient is 0.372, which is for the management of challenges.

This means that this variable makes the strongest unique contribution to explaining the dependent variable when the variance values explained by all the other variables in the models are controlled.

The sig. values for the challenges encountered during delivery (the mean Q9 in the above table is 0.006), quality management (0.000), and management of challenges (0.000) are all less than 0.05 – meaning the variances are making a significant and unique contribution to the prediction of the dependent variable. However, the sig. value for group is 0.073, which is higher than 0.05, this means the variable is not making any significant unique contribution to the prediction of the dependent variable.

CHAPTER 5: DISCUSSION

5.1 INTRODUCTION In this chapter, a full discussion will be given on the background information of the respondents (demographic information), their company background, and a collaboration of work in all the organizations mentioned, together with the performance management, quality management, the management of challenges, and customer satisfaction. The data analysis is one of the most critical elements of research; because this is the process of modelling and inspecting, in order to ensure that it provides useful information. The total number of respondents amounted to 132, of which 22.7% were from Grindrod, 39.4% from Barloworld, and 37.9% were from Transnet.

5.2 BACKGROUND INFORMATION The responses indicated that the respondents came from different categories and levels, managers, supervisors, specialists and junior officials. The level of education of those who responded to the questionnaires showed that most of them were educated: 37.9% held a Baccalaureate degree; and 10.6% were postgraduates. Of all the responses, 65.2% of the respondents were males and 65.2% of the respondents were blacks, followed by 15.2 % being white. Most of the respondents were between the ages of 36-50 years, with 43.2% being on the management level. As many as 71.2% of the respondents were office-based.

5.3 ORGANIZATIONAL INFORMATION The figure of 73.5% shows that their organizations employ more than 500 employees. From the response, Rail Company transports the highest number of trains daily, when compared with the other road companies. This means that they deliver more tonnages to the customer. As many as 97.7% indicated that their organization transports the customer’s consignments daily, with more than 15 trains and trucks. The organizations are based and focused on the mining sector, the automotive industry, FMCG, construction and retail departments.

As many as 65.2% of the responses showed that the organizations are based on both the commodity and customer; while a figure of 14.3% showed that they transport vehicles; 14.0% indicated that they transport cement; and 12.9% stated that their main cargo was coal.

5.4 CHALLENGES ENCOUNTERED DURING DELIVERY The respondents agreed that there are challenges encountered during the delivery of products to the customer. Most of the respondents that were concerned about the challenges were the respondents from the rail organization.

The challenges that are experienced are the following:  Theft As many as 30% of the respondents were slightly concerned;  Absenteeism of drivers A total of 25% of the respondents were concerned about absenteeism of drivers;  Traffic congestion that delays the delivery of products As many as 29.5% of the respondents were extremely concerned about the traffic congestion;  Poor infrastructure A total of 26.5% of the respondents were concerned about the poor infrastructure;  Failure of assets 26% of respondents were also extremely concerned about the failure of resources in their organizations  Poor maintenance schedule on all assets.  Only 28% of the respondents said they were slightly concerned about the poor maintenance schedule on all the assets in the organization.

5.5 PERFORMANCE MANAGEMENT The performance of the rail organization still needs to be monitored; as most of the respondents did not agree with the statements, when compared with those of the road respondents. The organization needs to view the performance management from a holistic perspective.

A number of areas can be addressed to improve on the performance management. It is the responsibility of management to establish performance systems in the organization that would appreciate and manage performance efforts.

5.6 CUSTOMER SATISFACTION The performance and the effectiveness of communication were issues that were analyzed. It was found that the respondents who were comfortable about the satisfaction of the customer were the ones from the road organizations. This was caused by various challenges in the rail organization. Timely delivery using trucks was regarded as being better by most of the respondents; while for the rail system, only a few agreed.

CHAPTER 6: CONCLUSION AND RECOMMENDATIONS

6.1 CONCLUSION The findings and results of the study confirm that the objectives of the study have been met. The results show that there are still some improvements that need to be implemented in the organization, in order to satisfy the customers. There are areas that need to be highlighted, such as management involvement to empower and motivate the team, training and education to be offered to all the employees.

The objective of the study being to improve on the operational efficiencies of the railway company – with the view of attracting more customers – it was shown in the results that most employees are extremely concerned with the late delivery of customer’s products; and this would have an impact on the customer’s production. The tonnages that the customer requires must also be taken into consideration; and from the results, it may be observed that the rail company delivers more tonnages than any of the road companies.

In the literature review it was stated that the trucks have a major impact on the infrastructure as well as on the environment. By moving freight via rail this problem would be reduced and controlled.

From the data collected, it is clear that the road companies show less concern – compared with rail – when it comes to the challenges encountered during the delivery of customers’ products. Most respondents from the road company were not concerned about the challenges; whereas employees in the rail company were concerned; and not only were they concerned with the challenges encountered with trains during delivery, but also with the real operational problems, challenges in the organization, and the management of these challenges.

Employees from the rail and road companies differ with regard to quality management, performance management, and the management of challenges in the organization. Railway employees show frustration in their organization; and this ultimately has a negative impact on the customers’ satisfaction.

Customer satisfaction was the dependent variable in the data; and it was matched with all the independent variables that were part of the data: a) The challenges encountered during delivery; b) performance management; c) quality management; d) challenges; as well as d) management of the challenges in the organization.

Not all of those mentioned had a relationship with the dependent variable. Only the challenges during delivery, quality management, and management of challenges had any relationship with customer satisfaction.

6.2 RECOMMENDATIONS The recommendations made in this chapter are based on the findings of the research, from the literature review, and from the data collected.

6.2.1 SUMMARY OF THE RESEARCH This research investigated the operational challenges encountered in the railway company (Transnet Freight Rail). The research was carried out in order to overcome the rail-operational challenges with the view of attracting more customers to do their business via the railway transportation system. This would also help society and the environment by decreasing the number of road trucks damaging the roads, and by reducing carbon emissions that are found on the road – polluting the atmosphere and damaging the roads – causing potholes.

The challenges experienced with trains and trucks during delivery, quality management in the organization, and the management of challenges have an impact on the customers’ satisfaction.

6.2.2 RECOMMENDATIONS a) Employee empowerment and involvement The concept of employee participation has taken many different forms – evolving through the employee involvement and participative decision-making concepts – into the contemporary empowerment perspective. The notion of empowerment involves the workforce being provided with a greater degree of flexibility, and more freedom to make decisions relating to work.

Employee empowerment is a strategy and philosophy that enables employees to make decisions. Employees own their work and take responsibility for their results. Employee empowerment helps organisations where the customer interface exists. It is the process of enabling or authorising an individual to think, behave, and take actions in an autonomous way. It is the state of feeling self- empowered to take control of one’s own destiny.

Employee empowerment can be conceived in two ways: 1. As a set of managerial practices aimed at increasing employees’ autonomy and responsibilities; and 2. As an individual’s proactive work orientation.

Employees’ behaviour reflecting empowerment has been neglected, despite the practical importance. Presumably, empowerment is not only implemented to change employee cognitions, but also to foster proactive behaviour that could have an impact on the organizational outcomes.

Transnet Freight Rail’s employees deal with customers on a day-to-day basis. Each department is given its own responsibilities. In the customer-care department, the employees interact with customers in terms of updating them and giving them feedback regarding their loads that are in transit. Customers must be updated should anything happen that might cause their load (products) to be delayed. The customer-care department has a relationship with the logistics- integration department, which deals with resources (locomotives, crew, and auxiliary equipment).

The logistics-integration department supplies resources to move the customers’ products. Both departments own their work and take the responsibility for their results or actions. Employees would be more responsible; they would have to own their work; and in so doing, they would become more enthusiastic and increase their production – getting better results for the organization; and this should boost their confidence.

b) Training in quality and performance management to be offered to all employees from junior officials to management Every employee in the organization should be given a chance to attend training or a refresher- course. Doing one thing over and over again tends to be less challenging to the employees; and they end up being bored and frustrated. Managers should share their job profile with the junior officials, and train them to create capacity and for continuity. Employees are also mentored and trained. They are given a chance to learn what other colleagues (be it a manager or a fellow colleague) do. In so doing, employees are empowered; since they feel that they are being trusted. Their potential is being recognised; and consequently, they would do their best.

The field of organizational learning explores ways to design organizations, so that they fulfil their function effectively, encourage people to reach their full potential, while at the same time, helping the world to become a better place.

When an organization truly wants to create a positive work environment that is based on high trust, exceptional customer service, collaborative teamwork, operational excellence, and creative problem-solving, then the leadership team must begin to understand, invest in, and be responsive to the needs of the group that represents the organization’s most valuable assets, and is also one of its most important customers: the employees.

An organisation that works together harmoniously brings positive and better results; since they all come up with ideas for innovation. As they say, ‘Many heads are better than one’. If employees work together and brain-storm, then they would all be on the same page of enabling the organisation to reach its goals, and also to satisfy the customers’ needs by ensuring that they receive their loads on time, and in the right state.

Organisational learning improves the company’s image, by becoming more people-oriented.

c) Knowledge of the customer’s production Understanding the customer’s production would influence the transportation of the product. Lack of knowledge and understanding by some employees would have a negative impact on how they deliver their outputs in the workplace.

Normally, employees tend to not care what happens at the backside of the customer’s siding. When customers receive their products, they build a stockpile, according to the different materials they receive. What employees in the freight organization lack is an understanding of the different types of materials being transported. For example, there are different grades of coal and iron ore; but to freight employees, this is just coal and iron ore.

Employees would be in a position to ensure that customers’ products are delivered at the right time, in the right quality and quantity.

d) Awareness of safety at the hotspots to minimise theft Hotspots are places where there is always theft, be it a cable theft, hijacking or stealing of some equipment (tarpaulins, chains, etc.). People in the nearby community should be made aware of the impact theft has on the organization and on the country itself. Getting the community involved should assist in reducing the theft. Community interaction should make it easier for citizens to understand the role of local agencies and agents – through sign-posting, leading and more explanations.

The building of communication strategies and the modernisation of its infrastructures are also important. Special communication networks: before and during crises, and structured communication in general, should aim to reassure the public and restore their confidence, while maintaining their vigilance. The most appropriate options recommended are the mainstreaming of preventive actions throughout local safety strategies. For example, schools can be built; and organizations need to sponsor the schools in the communities.

There should be law enforcement and the criminal justice system at large ought to be involved, and to act according to the seriousness of the crime; and they should ensure that the thieves are not left walking free in the streets. Increase and tighten security at those places, and train them regularly. Some of the community members could be trained to become security guards; and this would create employment for them.

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APPENDIX I: COVER LETTER 03 March 2014

Dear Sir/Madam I am a post graduate student enrolled at the University of Johannesburg, Department of quality and operation management for the award of M-tech. I kindly request that you please help by completing the following short questionnaire, which should not take longer than 10 minutes. The purpose of this questionnaire is to evaluate the operational efficiencies in the freight transportation companies in a view of satisfying the customer and providing efficient service for the economy. Please note that all responses will be totally treated confidential and will remain completely anonymous throughout the research investigation.

Should you have any queries or comments regarding this questionnaire, you are welcome to contact me

Yours sincerely Julliet Madubanya Student Number: 200573839 Department of Quality and Operations management, APB Campus University of Johannesburg [email protected] 0720564692

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APPENDIX II: RAIL QUESTIONNAIRE

Please answer the following questions by marking an X or crossing the relevant block or writing down your answer in the space provided Example of how to complete the questionnaire: Gender group? If you are a female, then you will cross next to the female block Female X Male

Section A- Background information This section is only for comparisons and statistical purposes, your confidentiality is strictly guaranteed and your names are not required. 1. What is your gender? Male Female

2. What is your ethnic group? Black White Coloured Indian or Asian

3. What is your age? Younger than 20 21-35 years 36-50 years 51 years or years older

4. What is your highest educational qualification? Lower than grade Grade Certificate/national Baccalaureate Post- 12 12 diploma degree(s) graduate degree(s)

5. What is your job level? Operations (Junior Official) Supervisory (Including Junior manager) Specialist Management Other

If other, please specify:

6. Under which work environment are you currently based? Office based Field based Other

Please specify if other:

Section B- Company background This section is only for getting the background of the company, what the company is all about 1. Company Name:

2. How many people does your company employ? Less than 50 Between 51-200 Between 201-500 More than 500

3. How can the company’s service be categorized? Commodity Customer Both

4. If based on commodity, which commodities are being transported? Coal Vehicle Grain Container Steel Fuel Copper Cement

5. If based on customers, which industries do they service? Mining sector Construction Retail Automotive FMCG

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6. How often do you transport your commodities? Daily A few times a Every 2nd Monthly About About every 6 week to weekly week every 3 months to months annually

7. How many trains do you use daily? Less than 5 Between 5-10 Between 11-15 More than 15

8. What is the number of trains used Monthly? Less than 10 Between 10-20 Between 21-50 More than 50

9. Some typical challenges encountered with trains during delivery To what extent are you concerned about the following challenges? Please complete by

placing a CROSS “X” in the appropriate

box Extremely Extremely 1.Not at all1.Notat concerned 2. Slightly concerned 3. Neutral 4. Concerned 5. concerned 1) Theft 2) Absenteeism of personnel (drivers) 3) Traffic congestion that delays the delivery of products 4) Poor infrastructure 5) Failure on assets 6) Poor maintenance schedule on all assets

Section C- Performance Management This section of the questionnaire explores your perception on the status of performance management in the organization To what extent do you agree with each of the following

statements? Please complete by placing a CROSS “X” in the

appropriate box

Strongly disagree agree

1. 2. 2. Disagree 3. Neutral 4. Agree 5. Strongly 1) Employees understand their roles in operations 2) Employees participate in improvement programs to enhance efficiency 3) The performance objectives are being monitored 4) The performance objectives are being evaluated 5) There is management support to better employee performance 6) Management encourage better employee performance 7) Training and development is offered to improve employee performance efforts

Section D- Quality Management This section of the questionnaire explores your perception on the status of quality management in the organization

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To what extent do you agree with each of the following statements? Please complete by placing a CROSS “X” in the

appropriate box

Strongly disagree agree

1. 2. 2. Disagree 3. Neutral 4. Agree 5. Strongly 1) There is a decrease in the number of resource failures 2) Resources are maintained regularly 3) Consignments are delivered in the right quality 4) There is a planned maintenance schedule for all resources 5) There is a planned maintenance schedule for the infrastructure

Section E- Challenges This section of the questionnaire explores your perception on the status of some of the challenges experienced in the organization To what extent are these challenges present in your organisation? Please complete by placing a CROSS “X” in the appropriate box

moderate moderate

To extent no To a small extent

1. 2. 3. To 3. a extent 4. Tolarge a extent To 5. a very large extent 1) Poor communication between employees and customers 2) Lack of motivation for employees 3) Lack of management support 4) Poor employee commitment 5) Lack of maintenance on the assets

Section F- Management of challenges This section of the questionnaire explores your perception on the status of management of challenges in the organization To what extent do you agree with each of the following statements? Please complete by placing a CROSS “X” in the appropriate box

Never Rarely Sometimes Often Always

1. 2. 3. 4. 5.

1) There is a planned maintenance programme 2) A risk management plan is available in case of incidents

3) Our fleet is regularly serviced 4) We deliver according to customer appointments 5) The operation area is efficient 6) Insurance policies are monitored regularly

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SECTION G: Customer satisfaction This section of the questionnaire explores your perception on the status of customer satisfaction in the organization To what extent do you agree with each of the following statements? Please complete by placing a CROSS “X” in the

appropriate box Strongly disagree Disagree Neutral Agree Strongly agree

1. 2. 3. 4. 5.

1) JIT (Just-In-Time) applies in delivering the customers’ consignments 2) Customers’ consignments are received in good quality 3) Customers’ consignments are received in the right quantity 4) Customers are being updated or given feedback regularly 5) Communication occurs between employees and customers (No gap in communication) 6) Consignments are always delivered to the right place (destination) 7) Customers’ requirements(orders) are clearly tabulated

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APPENDIX III: ROAD QUESTIONNAIRE

8. What is your ethnic group? Black White Coloured Indian or Asian

9. What is your age? Younger than 20 21-35 years 36-50 years 51 years or years older

10. What is your highest educational qualification? Lower than Grade Certificate/ Baccalaureate Post-graduate grade 12 12 National degree(s) degree(s) Diploma

11. What is your job level? Operations (Junior Official) Supervisory (Including Junior manager) Specialist Management Other

If other, please specify:

12. Under which work environment are you currently based? Office based Field based Other

Please specify if other:

Section B- Company background This section is only for getting the background of the company, what the company is all about 10. Company Name:

11. Which group best describes the employees capacity? Less than 50 Between 51-200 Between 201-500 More than 500

12. How can the company’s service be categorized? Commodity Customer Both

13. If based on commodity, which commodities are being transported? Coal Vehicle Grain Container Steel Fuel Copper Cement

14. If based on customers, which industries do they service? Mining sector Construction Retail Automotive FMCG

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15. How often do you transport your commodities? Daily A few times a Every 2nd Monthly About About every 6 week to weekly week every 3 months to annually months

16. How many trucks do you use daily? Less than 5 Between 5-10 Between 11-15 More than 20

17. What is the number of trucks used Monthly? Less than 10 Between 10-20 Between 21-50 More than 50

18. Some typical challenges encountered with trucks during delivery To what extent are you concerned about the following challenges? Please complete by

placing a CROSS “X” in the appropriate

box 1.Not at all1.Notat concerned 2. Slightly concerned 3. Neutral 4. Concerned 5. Extremely concerned 7) Theft 8) Absenteeism of personnel (drivers) 9) Traffic congestion that delays the delivery of products 10) Poor infrastructure 11) Failure on assets 12) Poor maintenance schedule on all assets

statements? Please complete by placing a CROSS “X” in the

appropriate box

Strongly disagree agree Disagree

2. 2. 2. 3. Neutral 4. Agree 5. Strongly 8) Employees understand their roles in operations 9) Employees participate in improvement programs to enhance efficiency 10) The performance objectives are being monitored 11) The performance objectives are being evaluated 12) There is management support to better employee performance 13) Management encourage better employee performance 14) Training and development is offered to improve employee performance efforts

Section D- Quality Management This section of the questionnaire explores your perception on the status of quality management in the organization To what extent do you agree with each of the following statements? Please complete by placing a CROSS “X” in the

appropriate box

Strongly disagree agree

2. 2. 2. Disagree 3. Neutral 4. Agree 5. Strongly

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6) There is a decrease in the number of resource failures 7) Resources are maintained regularly 8) Consignments are delivered in the right quality 9) There is a planned maintenance schedule for all resources 10) There is a planned maintenance schedule for the infrastructure

Section E- Challenges This section of the questionnaire explores your perception on the status of some of the challenges in the organization To what extent are these challenges present in your organisation? Please complete by placing a CROSS “X” in the appropriate box

To no extent To extent a small

3. 4. 3. 3. Tomoderate a extent 4. To a extent large 5. To very large a extent 6) Poor communication between employees and customers 7) Lack of motivation for employees 8) Lack of management support 9) Poor employee commitment 10) Lack of maintenance on the assets

Section F- Management of challenges This section of the questionnaire explores your perception on the management of challenges in the organization To what extent do you agree with each of the following statements? Please complete by placing a CROSS “X” in the appropriate box

Never Never Rarely Sometimes Often Always

6. 7. 8. 9. 10.

7) There is a planned maintenance programme 8) A risk management plan is available in case of incidents 9) Our fleet is regularly serviced 10) We deliver according to customer appointments 11) The operation area is efficient 12) Insurance policies are monitored regularly

SECTION G: CUSTOMER SATISFACTION This section of the questionnaire explores your perception on customer satisfaction in the organization To what extent do you agree with each of the following statements? Please complete by placing a CROSS “X” in the

appropriate box Strongly disagree Disagree Neutral Agree Strongly agree

6. 7. 8. 9. 10.

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8) JIT (Just-In-Time) applies in delivering the customers’ consignments 9) Customers’ consignments are received in good quality 10) Customers’ consignments are received in the right quantity 11) Customers are being updated or given feedback regularly 12) Communication occurs between employees and customers (No gap in communication) 13) Consignments are always delivered to the right place (destination) 14) Customers’ requirements(orders) are clearly tabulated

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