COMMENT | At the moment, the transport and logistics situation in the country does not seem to favour future growth and development, let alone domestic investment.

Problems are aplenty: duplicated structures (for both ownership and management), conflicting governmental policies, losses suffered by government-owned businesses, unfair advantages posed by highways, policies that favour highways over rail, ultra-profit making, one-sided concessions and investments in the highway sector are all considered contributing factors.

Other issues as to why a radical change is badly needed include inherent poor management of transport organisations, high rate of road accidents, poor services at high costs, the lack of manpower training and development, especially for drivers, supervisors, and managers.

Although logistics has been one of the highest growth sectors in the last five or six years, government policies that regulate the sector have been conflicting at best, favouring highway concession holders rather than rail or integrated transport operators.

It is known that the highway sector is growing more rapidly than rail. As highway traffic continues to grow, it becomes heavily used, congested and unsafe for other road users.

Statistics in Malaysia have shown that some fatal road accidents on the highways involve heavy vehicles – the cargo of which should have been transported by rail. But there is no such policy at the moment.

A free-for-all market situation where highways dominate dictates the choice of the freight and logistics mode market. This is the first failure of the government.

The freight and logistics sector is a big and growing market. And yet, rail transport is not getting a fair share of the cargo volume and its growth. In fact, rail transport is dying, despite the high-level investments put in by none other than the government of the day, in the form of double-tracking.

Why then were these massive investments made by the government, if not for the rail network to move more cargoes (and people)? This is certainly another failure on the part of the transport policy planners in Malaysia.

The increase in rail capacity, if in the hands of the right rail operator, would result in very effective services and produce an efficient operation for the market to further tap into.

In terms of efficient logistic services, road transportation could be designed to support the rail network and provide first and last mile connectivity in order to provide efficient door-to-door services. But this concept is not employed here, although it is very common in other developed countries.

Underutilised rail networks

It is unfortunate that the rail network is underutilised, with no proper services that the freight industry can boast of. The flashy new and electrified double-tracked railway network is currently carrying a miserable four percent of the total freight market per year for the peninsula cargo as a whole. The rest is dominated by the highways and roads.

Why are these obvious problems not looked into and resolved by our policymakers?

In Malaysia, due to a combination of poor policies, the lack of long-term strategies by the government, and the long history of poor service by the sole rail operator, aided by a continuous failure of the management to provide reliable and effective services, rail has become the last choice mode of transport.

Now, the situation is so bad that it has become common practice among many shippers not to consider rail logistics as a viable option.

A recent conversation with a large shipper revealed that even for long distance delivery, rail transport is the last mode of choice to be considered by most shippers, if it ever crossed their mind at all.

By right, heavy goods, especially dangerous goods, should be deemed compulsory to be transported by rail, as the cost per tonne kilometre is much lower. It is also safer.

In comparison, German rail operator, Deutsche Bahn, handles about 45 percent of the country’s total freight tonnage. Holland’s freight position is comparable, while smaller nations such as Switzerland and Austria have far better split of cargo carried by rail compared to road transportation.

Current rail capacity via double-tracking could easily double or triple the cargo volume, easing the highways for other road users, and increasing the safety factor for all.

As an example of conflicting policy, the government via the Transport Ministry even encourages long-distance freight lorries to use highways for cross-border traffic from Thailand to Malaysia and Thailand to Singapore.

Obviously, these movements generate large revenue for the highway operators as they can collect more tolls. But it is unnecessary, as the same cargo could easily and safely be transported by rail. This is another example of policy failure.

Why is our struggling rail operator, Keretapi Tanah Melayu Bhd (KTM), not given the task to handle these long-distance freight movements? Who owns KTM? It is none other than the Finance Ministry. And who owns the highway? Plus Malaysia Bhd, which is also owned by the ministry (and incidentally, the Employees’ Provident Fund). Need we say more?

KTM, similar to our national airlines, not only struggles to survive but has no clue as to how to generate revenue and grow the business, let alone formulate new ideas and tap into the logistics market and its growth.

Obviously, new investments are needed in order to service the growing market, which requires different sets of hardware to transport the cargo.

In theory, the fact that they are owned by the same owners should make it easier to streamline any competing policies, and at the same time, to decide on the allocation of our scarce resources in order to maximise our returns and economic benefits.

But the resultant practicality is obviously the opposite. Regulating agencies such as the Finance Ministry, Transport Ministry, Works Ministry, Land Public Transport Commission (Spad), Railway Assets Corporation (RAC), Malaysian Highway Authority (LLM) and others will not see the light at the end of the tunnel, unless they go down to the ground more often.

Whilst they are obviously protective of their own operating companies, most of whom are monopolistic in nature, these regulators are probably not aware of the conflicting policies designed in complete isolation from the other.

Operating companies such as KTM, MAB and Plus, are, in actual fact, competing in the same but much larger transport and logistics market. Therefore, there is a need to radically alter the way we formulate policies on transport and logistics.

The immediate initiative is to recognise that the current structure, organisation, and management of these companies are no longer viable, and they should not be allowed to compete against one another any longer.

Each must be allowed to co-exist and be made to play a specific role in each market segment, in order to benefit the country’s economy and command a reasonable return on the level of investment made.

Like highway companies, they must not be allowed to make excessive profits at the expense of another operator. Much of their heavy load should be made to go on rail by compulsion. Similarly, all types of dangerous and hazardous goods must be transported by rail so that the highways will be much safer for the public.

Without question, KTM as a century-old organisation needs to be revamped completely, now that we have lost not only the domestic market, but also the rail plot strategy and superior advantage of running freight services directly into Singapore and its ports – the main source of containerised cargo.

No doubt, some very bad decisions have been made by the current government as far as railway line ownership in Singapore is concerned. But pouring in new investments in the form of MyHSR Corporation Sdn Bhd (MyHSR Corp) and East Coast Rail Link when the current double tracking capacity is underutilised is a completely mind-boggling policy, to say the least.

Part 2: A raw deal for truck drivers

Part 3: Should Klang Valley get its own transport authority?

ROSLI KHAN has been a practicing transport and logistics professional, academic, consultant and company director for over 30 years.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.