Answer 24

Over the last two decades, the railway industry has experienced an evolutionary
process. Present railways practices are so different from the historical railroad’s
practices. Even though the number of countries that have completely reformed their
railways is still relatively small, reformation adopted by developed countries have
increased the effectiveness of rail industry.
Historic practices
-Single stated-owned firms
In the past, the government was entrusted with the management of both the rail
services and infrastructure. For instance, the railroads were the first industry subject
to regulations imposed by the federal government in United states. Since the state
set a monopolistic rail industry, they had the ability to set rates, prohibit competition,
and control the market in all regions. Government approval was required for the
opening of new services or closure of existing lines. This historical practice
discouraged competition. In addition, Management in a state-owned railway is liable
to be subject to political pressures that conflict with their commercial responsibilities.
Governments influence decisions on a whole range of issues, making it difficult later
to hold management accountable for the results of decisions that were influenced by
government and sometimes by organised labour. As time went on, the harmful and
effects of single stated-owned railroads increased. Some railroads regions
experienced “standing derailment” while others teetering on the brink of collapse and
bankruptcy.
-A business activity oriented exclusively toward production targets, rather than
commercial and market targets.
The historic South African rail transport was designed not generate profit but rather
be at break-even point. They would often fall to the trap of increasing short-term
operation and ignore investing in long-term projects. The railroads would tend not to
be responsive to the needs of new market demands and changing trends. This rail
business orientation was prompted by the Act of Parliament- Clause 127 of the Act
of Union (1910) which brought a separated tax structure with generally high tariffs for
mechanical cargo and low taxes for agricultural and mining items. The strategy along
with the burden imposed by several technical characteristics placed the railroads
industry in a weak position when compared against alternative transport modes.
Present trends
-Privatisation of national railways and competition
Due to the harmful effects of historical practices, most governments nowadays seek
to promote competition among the old rail firms and those entering or new to the
market. The objective is to offer improved rail services in the crucial areas of speed,
quality, route and technological innovation. the goal can be achieved when new
operators establish new markets, provide unique service, and offer lower prices.
Great Britain is the only area where privatisation has fully been embraced. This is
because it is such a complex task for the government to reform from public to private
ownership. There are several sovereign duties that should be transferred to new
private firms.
Green practices
Over the past two decades, there has be an ongoing environmental concern by
governments, firms, customers, and other organisations. This has put pressure on
the way business is carried out. The rail industry is also altering, adopting more and
more of green supply chain practices. The rail industry is perhaps one of the
greenest forms of transport with 80% less emission of greenhouse effect in
comparison to road transportation which account for 70% of land freight in the South
Africa. Nowadays, any modal shift towards rail travel is said to reduce CO2
emissions and thus contribute to meet CO2 emission reduction target.
As state-owned railways restructure, new governance and regulatory oversight roles must evolve.
• In the past (historical practices), most state-owned railways were self- governing:
– Internal safety inspectorate: the railway industry in South Africa before the national regulatory act
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were self-policing. the working condition, safety inspection and audits were carried out by the
railroads themselves, there was no high entity or authority to answer to and these led to inefficiency
and ineffectiveness in executing safety for the people, environment and firms within the rail
industry.
– Engineering and design groups were responsible for developing internal standards, practices, and
p p p
customs: groups with not so much experience and education were given the responsibility and task
to develop irrelevant fields.
– Prices were set by precedent (past practice), statute, or as a function of cost. In the year of 1887,
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President Grover Cleveland signed the Interstate Commerce Act to regulate the shipping rates,
traffic pools and prevented price discrimination by interstate carriers. The mission of the act was to
prevent monopolist rail market and introduction of competition. However, the railroads industry
saw an over-regulation for century and teetering on the brink of collapse and most bankrupt by the
1970s as the railways were too expensive.
– Often, the Transportation Minister, Director General, or other government officials were involved
p p p
in dispute resolution: during the interstate commerce Act in America, even if a railroad and a
customer wanted to reduce the shipping cost, they will not do so without the permission of the
government.
Present trends
– Safety: Ensuring the safety of workers, passengers, and public receives high attention as it has
significant impact on the competitive marketplace as rail accidents are highly costly to the operating
firm, environment and society
– Transport pricing oversight
– Infrastructure access and pricing

– Contractual compliance
Primary focus areas of regulating safety
– Operating practices like hours of service for operating employee
– Equipment and rail specific infrastructure such as braking systems and signal systems
– Matters of public safety and convenience

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Answer 24

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Over the last two decades, the railway industry has experienced an evolutionary

– Transport pricing oversight

– Infrastructure access and pricing

Primary focus areas of regulating safety

– Operating practices like hours of service for operating employee

– Matters of public safety and convenience

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