The government’s commitment in allowing private sector access to SA’s rail networks will trigger an estimated medium-term investment of between R200 billion and R400 billion into locomotives plus, additional spend on facilities, maintenance, and land development.
This is according to Flying Swan Senior Project Manager and Interim Rail Economic Regulatory Capacity member, Jan-Louis Spoelstra who addressed SAPOA’s KwaZulu-Natal Chapter at a recent networking breakfast session.
Spoelstra says that the private sector would have access to the rail network in direct competition to the Transnet Freight Rail Operating Company (TFROC) by October 2024 in a bid to enhance the country’s connectivity and to boost the economy. As SA’s custodian of ports, rail, and pipelines, Transnet must be divided into two entities; Transnet Infra Manager (TRIM) and TFRO by September 2025 while costings and fees for private rail use will be finalised beforehand.
This means that private train operating companies could compete with the national system during 2024. Six local companies already have locomotives and Spoelstra anticipates another three international companies and network operators, that serve neighbouring countries, to join the network within the next two years.
“Concessions will be issued on main and branch lines and underpin a significant boost into multi-logistics solutions involving road and rail. The outcome will be a growth in demand for property developments on land adjacent to rail networks – manufacturing sites, freight villages and multi-modal logistics facilitators.”
SAPOA regional chapter chair Bernadette Khumalo says that revitalising the country’s railway network has a spin-off for back-of-port operations, effectively creating development nodes that facilitate an ease of flow.
This privatisation moves comes as StatsSA revealed that the economy contracted 0.01% during Q1 2024 with official unemployment standing at 32.90%. Meanwhile, the dire state of the railway system recently saw container trucks queuing for 50km to enter the Richards Bay Harbour following congestion in Durban.
Spoelstra says historically, the Nationalist Party government adopted mass privatisation to logistics, introducing the user-pay principle and toll roads in the late 1980s. This saw an explosion in freight logistics and today the country spends billions on road maintenance, but Transnet services for smaller businesses have disappeared.
Consequently, the country currently transports 150 million tons against 220 million tons in the pre-Covid era, while container transportation via road has dropped 75% in six years. Given the unsustainable cost of moving goods by road, Spoelstra emphasises that SA had to create a new logistics system. “It is vital to regain volumes on to the rail network as the Richards Bay congestion demonstrated.”
The initiative to revitalise the rail and port logistics system would introduce privately owned trains operating on the existing railways and underpin investment into the infrastructure.
Junaid Kathrada, Operations Manager TbM – Southern Africa and Islands, says the company’s local focus has shifted from container shipping to intermodal logistics, effectively capitalising on the opportunity to levy strengths and initiate efficiency growth and cost savings for customers. “Efficiency demands bi-directional flow for importers and exporters – full containers in both directions,” he says.
Cato Ridge Logistics Hub Consortium member and SAPOA regional committee member, Warwick Lord, says once intermodal models have instilled efficiency, property development opportunities around the rail and road infrastructure will “fall into place … the property will become easier to develop”.
