South Africa is opening its freight rail network to private operators in a bid to expand capacity and improve efficiency as state-owned Transnet faces equipment shortages, maintenance backlogs, and vandalism. The move aims to boost bulk commodity transport and ease pressure on the country’s logistics sector.
A Transnet Freight Rail train is seen at the Bronkhorstspruit station, in Bronkhorstspruit, South Africa, April 26, 2022. REUTERS/Siphiwe Sibeko/File Photo
Transport Minister Barbara Creecy said 11 out of 25 train operating companies that applied for access to the freight network had met the requirements and will proceed to the next stage of negotiations and contracting, without naming the companies.
South African logistics firm Grindrod said on Friday it had been granted access to the Transnet network.
"(The companies) are not cannibalising Transnet freight, they are adding capacity to what Transnet freight is already carrying," Creecy told reporters.
The firms secured slots across 41 routes, with the initiative targeting routes used to transport bulk commodities like coal, iron ore, chrome, manganese, sugar and fuel.
Contract conditions include railway safety permits, rolling stock readiness and securing port offloading capacity. Slot durations will range from one to 10 years, Creecy said.
Transnet’s infrastructure challenges
This year, the government has extended R149bn ($8.42bn) in guarantees to support Transnet's recovery but says it has limited resources to fund infrastructure development and address logistics backlogs.
Creecy said Transnet was also seeking R35bn in infrastructure funding from the government this year.
Transnet's freight rail volumes dropped to 152 million metric tonnes in the 2023/24 financial year, down from a peak of 226 million metric tonnes in 2017/18.
Expected impact on freight volumes
The new operators are expected to carry an additional 20 million tonnes of freight annually starting from the next financial year, advancing the government's goal of transporting 250 million tonnes by rail annually by 2029, Creecy said.
The operators could add 10 million tonnes of coal export capacity over the next three years, she added, from current levels of around 50 million tonnes.
Bulk mineral exporters such as Kumba Iron Ore and thermal coal exporter Thungela Resources have been forced to curtail production to align with Transnet's limited capacity.
