Marks a major step in rail reform and could present opportunities to companies involved in supplying the rail transport industry with product, components and wear parts, either directly or indirectly.
Government has said it will allow private firms to run trains on its freight rail network, aiming to boost efficiency as state-owned logistics firm Transnet struggles to keep up with demand. Transnet, which runs the country’s freight rail and port services, has faced equipment shortages and maintenance backlogs worsened by widespread cable theft and vandalism, prompting the government to seek private sector involvement.
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.
“(The companies) are not cannibalising Transnet freight, they are adding capacity to what Transnet freight is already carrying,” Creecy told reporters.
Six key corridors
The new operators will be allocated slots across 41 routes and six key corridors, primarily for bulk commodities such as coal, iron ore, chrome, manganese, sugar, fuel and containers. Contract conditions include obtaining safety permits, ensuring rolling stock readiness, and securing port offloading capacity. Slot durations will range from one to ten years.
This year, the government has extended R149 billion 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 R35 billion in infrastructure funding from the government this year.
Transnet’s freight rail volumes dropped to 152 million metric tons in the 2023/24 financial year, down from a peak of 226 million metric tons in 2017/18.
The new operators are expected to carry an additional 20 million tons of freight annually starting from the next financial year, advancing the government’s goal of transporting 250 million tons by rail annually by 2029, Creecy said.
The operators could add 10 million tons of coal export capacity over the next three years, she added, from current levels of around 50 million tons. 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.
The identities of the successful TOC applicants, their shareholders and the routes for which they had applied were not immediately disclosed. However South African logistics firm Grindrod said it had been granted access to the Transnet network, as did ARC and Menar.
