The disruptions experienced by TFR did not only affect the
freight movements between the mine and the production
facility, but also had a significant impact on freight
movements directly from the mine to its customers. Until
2009, two of Firm A’s biggest customers received all of their
freight by rail. However, from 2010 these customers started
receiving the bulk of their freight by road, with rail only
being used on an ad hoc basis. Total freight movements to
customers are depicted in Figure 7. It is apparent that road
freight transport to customers was in decline from 2006 to
2009, whilst rail transport increased over the same period.
However, since 2010, the trend has changed to the point that,
in 2011, the tonnages moved by road exceeded the tonnages
moved by rail for the first time.
It is noticeable that TFR’s annual rate increases were not
inflation related. Figure 8 indicates what the rail rand/ton
rate would have been from 2006 until 2012 had the rates
increased based on inflationary changes.
If Firm A was able to move all of its freight tonnage by rail
during 2006 until 2011, and did not have to move a portion
of its freight off rail and onto road (since 2009), a significant
transport cost saving would have been attained. The cost
differential between road and rail transport is illustrated in
Figure 9.
It is apparent from Figure 9 that more was spent on transport
costs than would have been necessary had all freight moved
by rail. The longer this trend continues, the greater the cost
differential becomes. Table 3 illustrates the difference in