Substantial Advancements in Rail Reform

Last week marked a pivotal step forward for a more competitive and efficient logistics system in South Africa.

Transport Minister Barbara Creecy announced the distribution of rail slots to 11 new train operating companies across 41 routes and six corridors.

This achievement is the culmination of years of dedicated cooperation between the business sector and the government, focused on improving the rail network by introducing private operators and investors.

When we speak of structural reform in logistics, this is a clear representation of our vision – creating a competitive environment that promotes efficiency, investment, and ultimately drives economic growth.

This initiative is in line with the strategy we have been advocating through the National Logistics Crisis Committee (NLCC).

The announcement followed comments made by Finance Minister Enoch Godongwana to BLSA members last week regarding the urgent need for structural reform.

For South Africa to effectively tackle the challenges presented by the global trade landscape and geopolitical issues, we must improve our economic efficiency and support growth.

The transport minister’s announcement addresses this critical need.

The logistics crisis has cost our economy over R100 billion in lost mining revenue alone.

This has initiated a historic partnership between organized business and the government.

Through the NLCC, we engaged more than 45 private sector experts and CEOs who worked alongside the government to achieve the objectives set out in the Freight Logistics Roadmap that supports Friday’s announcement.

A key focus is to stabilize and enhance Transnet’s performance in transporting goods along existing logistics corridors.

This strategy is already yielding results. For example, last month, Kumba Iron Ore reported a 4% increase in the ore it was able to transport by rail from its Northern Cape mines to Saldanha Port.

Equipment availability at the port has also improved, allowing Kumba to boost its sales by 3%.

However, incidents of derailments and unscheduled port shutdowns for equipment repairs still occurred.

Introducing competition has never been an easy endeavor.

Breaking a monopoly requires political courage, regulatory sophistication, and sustained dedication from all parties involved.

The emergence of 11 new players ready to transport an additional 20 million tonnes of freight annually starting in 2026/27, with the potential to fund future growth, is a testament to what can be accomplished when we move beyond the outdated dichotomy of public versus private and focus on solutions.

The minister indicated that these new operators could unlock up to R100 billion in investment for rolling stock.

This is exactly the type of private capital infusion that our rail system urgently needs.

For too long, Transnet has struggled with operational efficiency and capital constraints, leading to deferred rolling stock and infrastructure maintenance and a significant decrease in local manufacturing capacity.

The beauty of this reform is that private operators will bring their own resources – expertise, equipment, and, crucially, accountability to customers.

The minister’s ambitious goal of moving 250 million tonnes by rail by 2029 is within reach if we maintain this momentum.

In contrast to Transnet’s current performance of approximately 160 million tonnes, the transformative potential is evident.

Every tonne shifted by rail instead of road lowers logistics costs, reduces congestion on our highways, enhances our environmental footprint, and importantly, stimulates job creation.

I am particularly encouraged by the transparent, merit-based assessment that led to these allocations.

The establishment of the Interim Rail Economic Regulatory Capacity (IRERC) to supervise the consultation process exemplifies the type of institutional innovation needed throughout government.

Separating the Transnet Rail Infrastructure Manager (TRIM) from Transnet Freight Rail, achieved last year, was a critical step for the success of this reform.

It is impractical for the infrastructure owner to also act as the dominant operator, as this creates inherent conflicts of interest that hinder fair access.

This structural separation, strongly advocated by BLSA, gives us a legitimate chance at competitive rail operations.

Of course, allocating slots is simpler than running trains. The real challenge now lies in implementation.

The conditional award letters that require Railway Safety Regulator permits, rolling stock readiness, and port capacity arrangements are vital safeguards for a system that must operate safely and efficiently, yet they must be delivered in a timely manner.

We must prevent a recurrence of the delays seen in the concessioning of the Durban Container Port, where a preferred bidder announced two years ago is still unable to proceed due to legal complications.

The upcoming opportunity for ad-hoc applications for additional routes next week, followed by the 2026/27 timetable applications, signals that this is not a one-off event but the beginning of a dynamic, responsive allocation system.

This iterative approach enables us to learn and improve while continuously building momentum.

This rail opening should be viewed alongside the advancements we are making in port reforms and the initiatives of Operation Vulindlela aimed at expediting infrastructure improvements.

The logistics system is interconnected – efficient movement of goods by rail has little value if they remain stuck in port queues for weeks.

Reduced vessel waiting times at Durban Port, improved crane productivity, and efficiency gains at the Lebombo border all contribute to a logistics ecosystem that can finally start competing on a global scale.

However, rail reform remains the cornerstone due to its cost and capacity advantages for bulk commodities.

Success in this initial phase of rail reform will determine our ability to attract the next wave of private investment necessary to upgrade our entire transport network. International operators and financiers are monitoring closely.

They recognize a country finally serious about structural reform, yet they also see the implementation risks that have thwarted previous reform efforts.

Business is committed to supporting the government in making this endeavor successful.

We will continue to provide technical expertise through the NLCC and other forums.

But we also expect accountability.

The targets are clear, the framework is established, and the operators have been selected.

Now we require concrete investments, operational trains, and increased tonnage.

This announcement symbolizes hope – not the naive hope of pie-in-the-sky thinking, but a legitimate hope grounded in witnessing policy transformation into practice.

After years of decline, South African rail is finally set on a recovery path.

We must maintain momentum to complete this transformation.

*This column was first published in the Business Leadership South Africa (BLSA) weekly newsletter. The author Busisiwe ‘Busi’ Mavuso is the CEO of BLSA.

*The views Busi Mavuso expresses in this column are not necessarily those of The Bulrushes.