In a groundbreaking move for South Africa’s transport sector, private sector participation in the country’s rail network is now a reality, thanks to Transnet’s publication of the final Rail Network Statement on Friday, Cape {town} Etc reports.
This pivotal development opens the door for private operators to begin utilising Transnet’s extensive rail infrastructure, offering much-needed relief for South Africa’s export challenges caused by deteriorating rail performance.
With minerals and essential goods stuck in transit due to Transnet’s struggling rail services, the introduction of private operators is expected to enhance efficiency and address critical bottlenecks in the supply chain. The Network Statement outlines the framework for private entities to operate on the country’s rail network, a move that could transform the landscape of South Africa’s logistics.
Key to the success of this new era of private rail participation is the tariff structure, which had previously sparked concerns in the industry. Transnet’s earlier draft proposals, particularly the minimum access fee of 19.79 cents per gross tonne per kilometre, had been met with criticism for potentially making private operators less competitive than road transport. However, the final version of the document has set out a more balanced tariff system, one that logistics expert Jan Havenga has praised as ‘exactly correct.’
The new tariff structure features two parts: a fixed cost based on train kilometres, and a variable cost linked to the gross tonnes per kilometre. For example, the Iron Ore Corridor will have a charge of 3.42 cents per tonne, along with a fixed cost of R650 per train per kilometre. Meanwhile, the Coal Corridor will see fees of 5.84 cents per tonne and a fixed R250 per train per kilometre. These tariffs, which apply to the current financial year, are set to be updated by the end of March 2025.
A major highlight in the statement is the identification of available capacity for private operators. Around 2.4 million tonnes of capacity across various rail routes have been made available for uptake, with ongoing work to unlock more opportunities. Although the North Corridor remains unavailable for coal transport, efforts are underway to facilitate third-party access to the Richards Bay Coal Terminal.
Applications for private rail operations are open until 7nFebruary, 2025, with evaluation scheduled to begin shortly thereafter. The first private operator trains could be operational by 3 April, 2025, according to Juwith Magabe, Transnet Rail’s acting general manager of commercial operations.
Private sector operators, including established players like Traxtion, are enthusiastic about the opportunities this change presents. Traxtion, which has been delivering rail solutions across sub-Saharan Africa for over 30 years, believes the new tariffs align with international best practices and will generate new revenue streams for Transnet. The company also expects private investment in rolling stock to alleviate the country’s logistical challenges and foster economic growth and job creation.
While the theoretical framework for private rail operations is in place, practical considerations, such as the need for significant investment in rolling stock, will require time. Nevertheless, the private sector is eager to step in and begin operations, and the government’s leadership, particularly from Transport Minister Barbara Creecy, has been praised for ensuring that the Network Statement was completed by the end of the year.
Despite challenges in unbundling Transnet and the ongoing need for a comprehensive rail master plan, the publication of the Network Statement marks a major step forward in transforming South Africa’s rail industry. As new players prepare to enter the market, the country stands poised to benefit from a more competitive and efficient rail network, unlocking the full potential of its export industry.
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