Rail reform: breakthrough or false dawn?

The Department of Transport’s announcement that 11 private freight operators have been granted access to 41 rail routes has been widely welcomed. It is an event that Transport Minister Barbara Creecy has hailed as a turning point in South Africa’s long-delayed rail reform journey. CHARLEEN CLARKE reports, however, that while many stakeholders see this as a moment of genuine hope, others remain sceptical as to whether it represents the silver bullet solution to Transnet’s woes.

For decades, the country’s freight rail system has been locked into a state monopoly under Transnet Freight Rail. The results have been plain to see: a steady deterioration of infrastructure, missed investment cycles, spiralling inefficiencies, and the haemorrhaging of freight to the roads. South Africa’s highways, increasingly clogged with heavy trucks, have borne the brunt. Mines, manufacturers, and farmers have watched costs mount while international competitors enjoy leaner, more reliable logistics.

The arrival of private Train Operating Companies (TOCs) on 41 routes, then, is no small matter. It promises not only a shot at revival for rail, but also a realignment of the balance between road and rail freight. The vision is to lift current volumes from 160 million tonnes to 250 million tonnes by 2029 – a 90-million-tonne increase that could transform the economy’s logistics backbone.

A long-awaited step forward

The Road Freight Association (RFA), which represents the country’s truckers, might have been expected to react defensively. Instead, its acting CEO, Kevin van der Merwe, described the development as “an historic and necessary step towards a more efficient national logistics system for South Africa”.

The RFA has long argued that rail and road should be seen as complementary, not antagonistic. Van der Merwe emphasised that both modes have “critical roles to play in the efficient and cost-effective movement of freight in and through South Africa”. Rail, he argued, is better suited to heavy bulk commodities and long-haul corridors, freeing up the road network for distribution and shorter-distance transport.

He noted that the introduction of private TOCs could revitalise the rail network, reduce congestion on the roads, cut logistics costs, and even generate new employment in the rail sector. Importantly, rail’s resurgence will inevitably require partnerships with road operators to manage first- and last-mile movements. “This milestone in the rail reform journey is a clear signal that the government is committed to structural reforms that will benefit the entire country,” he said.

Yet Van der Merwe struck a cautious note. The success of the initiative, he warned, will depend on “a clear and stable regulatory framework, equitable access to efficient ports and other key infrastructure, and a shared commitment from all stakeholders to operational excellence”. Without strong oversight, fair regulation, and well-maintained track, South Africa risks repeating old mistakes.

Business welcomes the opening of the tracks

Business Unity South Africa (BUSA) also greeted the announcement as a breakthrough, framing it as essential for the survival of embattled industries. BUSA has estimated that the reforms could unlock 20 million additional tonnes of freight in the coming year alone, marking an important step toward the government’s 2029 target.

For BUSA’s CEO, Khulekani Mathe, the stakes could not be higher. “This is about saving jobs now and building a stronger economy tomorrow,” he argued. South Africa’s logistics bottlenecks are not merely an inconvenience – they threaten the competitiveness of mining, agriculture, and manufacturing, with rising costs already endangering thousands of jobs.

Opening freight rail to private operators ends decades of monopoly, but Mathe was quick to stress, “This is not about privatising public infrastructure. The rail network remains a national asset, owned by the state and regulated in the public interest. What is changing is who can run trains.”

The challenge now, BUSA said, is to ensure that access to rail corridors is transparent, equitable, and governed by consistent rules. Director of economic policy Lunga Maloyi highlighted that BUSA members were ready to invest not only in locomotives and wagons, but also in security, maintenance, and corridor upgrades. Such investments could spark life into upstream industries, revive local suppliers, and rebuild industrial capabilities hollowed out by years of decline.

Yet BUSA, too, underlined that the reform’s credibility will depend on outcomes that are tangible to the public: lower prices, better infrastructure, more exports, and decent work. Without visible benefits, scepticism about the motives and capacity of both government and business will deepen.

The sceptic’s view

Not everyone is convinced, however, that the fanfare is justified. Nick Porée, FOCUS columnist and transport expert, poured cold water on some of the optimism, pointing out that the RFA and BUSA statements contained “the anticipated conciliatory language directed at the Department of Transport”. In practice though, he argued, road freight remains rail’s strongest competitor, and there is little clarity on whether the TOCs will be given a fair chance to compete.

Porée expressed doubts about Transnet’s true intentions. Many stakeholders, he said, would reserve judgement until the detailed TOC agreements were published. He recalled that the first attempt at Transnet’s Rail Infrastructure Manager (TRIM) initiative was “poorly conceived”, raising concerns that this new round could fall into the same traps.

The economics, too, appear fraught. For private operators to compete with road freight, Porée argued, track access fees would need to be set at around R0.05 per tonne-kilometre. Yet Transnet shows no sign of being ready – or willing – to manage genuine open access. Instead, restrictive conditions and anti-competitive clauses could be slipped into contracts, discouraging competition.

Perhaps most damning was his critique of the pace of reform. The “glacial” roll-out, he warned, could drain the fiscus long before benefits materialise. There is “every possibility that Transnet Freight Rail will burn through another R200 billion before next year without producing real results”.

Porée also questioned the wisdom of granting provisional permits for fixed routes. Internationally, operators typically apply for a single origin–destination pair and may expand across the network over time. By locking entrants into specific routes, Transnet may be seeking to prevent the emergence of serious competitors with robust networks.

A fork in the tracks

Taken together, these perspectives paint a picture of both promise and peril. The consensus was that reform was long overdue. Without it, South Africa risked consigning itself to permanent decline in logistics, with devastating ripple effects across the economy.

But the debate now shifts to the fine print: the costs of access, the pace of implementation, and the independence of regulation. If Transnet continues to exercise heavy-handed control, the private sector’s investment appetite could wither. If, however, the state demonstrates genuine commitment to open, fair competition, the influx of private operators could transform not just rail, but the wider economy.

Beyond symbolism

For ordinary South Africans, the issues at stake are not abstract. They translate directly into the prices of goods, the viability of jobs, and the competitiveness of exports. A revitalised rail system could mean fewer trucks on crumbling roads, cheaper consumer goods, and a greener transport system. But a failed reform, bogged down in bureaucracy or anti-competitive practices, would deepen cynicism and squander a rare chance to reset the logistics sector.

The RFA is right to stress that this is “the beginning of a long journey”. BUSA is right to highlight that the measure of success will be jobs and competitiveness. Porée is equally correct to warn that entrenched interests and institutional inertia could derail the project before it gains real traction.

The true test ahead

The announcement of 11 new freight operators is an important milestone. In truth, however, the real test has not yet begun. Success will be measured not in speeches or press releases, but in the sight of trains moving reliably across the country, freight costs coming down, and industries regaining their lost competitiveness.

There are two possible outcomes to Minister Creecy’s announcement. One leads to revitalisation, investment, and growth; the other to further stagnation, frustration, and waste. The difference between them will be determined by the resolve of government, the vigilance of business, and the integrity of regulation.

The question is whether this moment marks the beginning of rail’s rebirth, or yet another false dawn. We can only hope to soon see the sun appear above the horizon…