Department of Transport
| moving south africa |
| RECOMMENDATIONS: OVERVIEW |
Department of Transport |
|
|
|
|
|
|
8. Strategy Recommendations: Overview
General Principles
The guiding premise of the strategy is the satisfaction of customers of transport, principally the end users of the system, but also the nation, in the service of fulfilling national objectives. Thus, the strategy works to propagate a vision, a set of ideas that integrates the needs of transport customers and the needs of policy-makers, while ensuring that the system can deliver on these needs in a sustainable fashion into the future. Sometimes this will require making trade-offs amongst those different needs, and the strategy framework provides a mechanism for these choices to be made. Figure 58 demonstrates the foundation of the vision.
Figure 58: Foundations of the Transport Vision
The vision of the strategy becomes the critical component in a decentralised delivery environment such as the one found in South Africa. The vision effectively defines the guiding set of principles that grounds the strategy in action. The objective is to provide a set of guidelines that allow for everyday choices. MSA seeks to define a set of guidelines that will allow for coordinated activity, taking the system into strategic alignment around its core set of choices.
Once the situational analysis had identified and articulated the key gaps in the system and the strategic challenges facing transport, the MSA team then evaluated a number of potential ‘visions’ for the overall system, based on the findings of the customer research and the potential national objectives to be prioritised. These were then reduced to a single integrated vision for transport. Once this vision, encompassing the strategic transport objectives for the system, was established, then the project moved into the realm of specifying strategic actions, and ultimately specifying the criteria for the tactical actions that should follow from these upstream choices. The creation of a vision for the strategy, however, does not tell the NDOT, the rest of government, or the industry which actions to take.
To inform this next level of decision, Moving South Africa established a hierarchy of choice, as is illustrated in Figure 59.
Figure 59: The Choice Hierarchy
The two highest orders of choice – those relating to scope and role of modes (including the optimal scale economies for each mode) – must be decided at the system level, and managed from there. The choice hierarchy requires critical strategic choices to be made first: those, in particular, related to the desired scope of the transport system. Put simply, how broad should the system be, or how far should it reach? What is the density of traffic moving over this system? This choice sets out what MSA calls the strategic vision.
With limited funding available from the government or from industry, and with insufficient human capacity to operate the system, scope must be the first choice. Furthermore, transport economics fundamentally depend on density and distance, and both of these factors are directly affected by scope decisions. These choices ultimately define the complexity of the network, and the resulting levels of service and reliability delivered.
Choices about scope must be made with reference to applying these limited resources most efficiently within the system in a focused fashion.
The next set of decisions at the system level is that of the desired role of modes within the system, which are reflected in the strategic actions taken. Given the heavy fixed cost nature of transport assets, it is possible to realise substantial economies of scale by loading high volumes of traffic over the fixed assets. This can lead to greater efficiency, higher utilisation, and lower average costs. However, to answer role of modes questions, it is essential to determine not only the scale advantage in each mode, but also the service characteristics of each mode, and where there should be a choice of modes. Many of these issues reside at the firm level, but are within the ambit of the strategy due to the substantial fixed cost consequences of such decisions.
Ultimately, decisions about scope and role of modes, taken together, will determine the extent and size and composition of the fixed cost backbone of the transport system. These choices constitute the principal work of the strategy, since they pertain to the task of overcoming the enormous disadvantage created by dispersed spatial industrial and residential economies. The choices about scope and density – the consolidation of the core transport assets in the economy such that they provide a focused, low cost backbone for the system overall – become the first decisions of the strategy. These decisions also set the stage for the service of the non-economic goals of the government.
As a key outcome of the strategy must be the extension of service to the Stranded and the continuing support of the Survival segments, MSA sought to create a flow of benefits that provided firms with the basis for long-term sustainability within a service extension framework. In principle, the systems benefit from strategic choice and alignment must be reinvested in bringing cheaper and better transport to urban passengers, export manufacturers and rural and special needs passengers.
The third arena for choice is the realm of improving firm-level competitiveness (the platform). This is where most of the tactical actions to fulfill the strategic vision occur. These actions can be taken by government, to create, for instance, appropriate competitive environments, or enhanced buyer power. Here the principal objective of the strategy is to fix the signaling mechanisms, between government and firms, amongst firms, and between firms and their customers. Thus, the key actors in this realm are firms, who will need to take steps – consistent with the strategic actions – to improve operating efficiencies, raise the level of service quality, extend services or make pricing decisions.
Institutional and regulatory arrangements therefore exist as a consequence of other strategic decisions taken further upstream. The strategy is otherwise neutral, and does not propose a ‘correct’ institutional structure. This, as well as ownership arrangements, becomes an output, dependent on other decisions. The strategy is indifferent to these choices, as long as they promote the strategic vision, create rising levels of productivity, and serve customer needs.
Finally, based on the strategies for each portion of the system and the situational analysis data (including the international benchmarking and global trends work), the strategy distills a set of key strategic principles with which to guide future tactical actions, and assure successful implementation.
In defining these principles, MSA recognises that an activist, developmental government has a funding role in respect of investments in pursuit of national objectives. The social returns from various investments must properly be viewed as economic returns in pursuit of key national objectives. Investments of this nature – key strategic allocative choices – must be transparent, measurable and accountable for specific asset allocation decisions. It is critical that the impact of decisions of this order be limited to their particular development arena, and that clear signals of value are transmitted into the system, and in no way distorted customer decision making elsewhere in the system.
The term ‘ring-fencing’ is used on occasion in this report to refer to such clearly defined allocative choices in order to emphasise the point that such choices – while valid and important in meeting specific national objectives – do not compromise the sustainability of other parts of the system.
| CONTENTS | Next Section -> | |
|
||
| back to MSA page | ( 9. strategy recommendations: freight customers ) | |