Derailed by design?
Derailed by design?
South Africa wants its railways back; the target is 250 million tonnes a year by 2030. The obstacles are enormous, the policy is cloudy and the private sector is unconvinced. This, writes NICK PORÉE, is the story of a modal shift that may never shift.
From 2024, the recapitalisation of Transnet from the national fiscus has been supporting a gradual recovery of bulk freight tonnages on rail and improved efficiency at ports. Current plans call for railway tonnage to reach 250 million tonnes per annum (mtpa) by 2030, making it timely to examine which commodities might realistically be attracted from road to rail haulage. This analysis notes that there is interest in supplying the necessary capital and assumes that a number of competing train operating companies (TOCs) will emerge to supply the necessary capacity.
Freight moved on public roads is estimated at between 1,500 and 1,700mtpa, including urban distribution. Long-haul road freight, derived from National Roads Agency (NRA) data on national corridors, amounts to approximately 140mtpa, of which 20 to 30mtpa consists of bulk commodities that were, or could become, rail cargo.
Traffic of these corridors involves numerous origins and destinations, uses provincial roads from inland areas to ports and includes specialised transport (such as refrigerated and abnormal loads), as well as variable proportions of empty vehicles – meaning tonnage figures along corridors remain uncertain.
In 2024, railways hauled approximately 152mtpa of bulk trainload commodities, but they currently do not compete with road haulage for breakbulk or short-haul transport – except for containers and automotives moving to and from ports. It is worth noting that 131.4mtpa of general cargo was hauled in 1976/77 – before the start of bulk coal and iron ore exports through Richards Bay and Saldanha.
In the intervening decades, the railway abandoned all breakbulk facilities and scrapped rolling stock and handling equipment in order to concentrate on what was supposed to be the more profitable bulk business. The massive losses – running to hundreds of billions of rands – incurred by both the railway and the mining industry over that period make any reference to profitability somewhat ironic.
Railway base load
A starting point for estimating potential rail tonnage is the current base load of available bulk commodities, as set out in the table below.
Commodity | mtpa |
Iron ore and magnetite | 60 |
Coal | 58 |
Manganese | 15 |
Miscellaneous minerals | 4 |
Timber | 8 |
Grain | 3 |
Containers | 3 |
Automotive | 1 |
Fuel | 3 |
Chemicals | 2 |
Other (agricultural exports) | 3 |
Total | 160 |
This base load could potentially be expanded by a further 60mtpa of iron ore, coal, manganese and other bulk products, subject to significant changes in industrial policy and the identification of profitable markets.
The challenge of road competition
The remaining 30mtpa required to reach the 2030 target of 250mtpa is, frankly, largely conjecture. It is assumed to consist of less-than-trainload (LTL) or breakbulk cargo – categories that would demand extensive investment in facilities, equipment and systems before rail could meaningfully compete with, let alone supplant, road haulage.
There are some major obstacles. Commodities with irregular volumes, low levels of backhaul and widely dispersed or off-rail origins or destinations simply do not suit railways. Profitable rail operation requires regular, trainload volumes moving between a limited number of destinations. Competing for breakbulk cargo is further complicated by the costs of intermodal transfer at terminals and the cross-haul by road required to deliver door-to-door.
Obstacles to growth
The drive to boost railway usage is aggravated by a combination of historical policy failures and current uncertainty around bulk commodities. The immediate obstacles include:
- The continuing de-industrialisation of South Africa in the face of competition from imported manufactured goods, including steel and chrome.
- The absence of railway services for industrial goods over the past 30 years, which has seen major industries relocate off-rail.
- The inflexibility of the monopoly railway model, which has actively encouraged the development of alternative road-based logistics and supply chain systems.
- Ownership of railway infrastructure by a single state-owned entity, meaning private sidings have been lifted or abandoned, accelerating the shift of entire industries to road haulage.
- The long-haul road freight industry has adapted, adopting efficient long-haul combinations – although the legal payload for seven-axle combinations remains capped by the outdated and economically irrational 56-tonne limit under Regulation 236, even as Performance Based Standards (PBS)/Road Transport Management System (RTMS) combinations become more widely used.
Looking further ahead, investment in bulk railway services is likely to be tempered by what can only be described as dirigiste national industrial policy – that is, heavy state direction of economic activity that discourages private investment and distorts market signals. Specific uncertainties include:
- Limited expansion of mining exploration and investment due to ongoing policy pressures.
- A possible 20-year horizon for several bulk commodities, including iron ore and manganese, as ore grades decline.
- The potential for beneficiation near source locations.
- The significantly lower transport volumes offered by critical minerals of the future – lithium, cobalt, vanadium, nickel, chromite, tungsten and graphite.
- Changing markets driven by geopolitical developments.
Maritime imports
If deindustrialisation continues, the question arises as to whether imported goods can make up part of the projected growth in rail cargo. Analysis of port cargo data points to Durban as the focal point for international imports, handling approximately 30mtpa of various commodities: around 4mtpa of bulk, 3mtpa of breakbulk and roughly 23mtpa of containerised cargo.
Containerised cargo
The railway currently moves approximately 150,000 containers per annum (round trip) between ports and inland areas – about 15% of imports. A further 20%, or 8mtpa, is transported inland by road, some of which could potentially be attracted to rail if efficient services were available.
The principal obstacle to a modal shift, however, is the logistical efficiency of containerised distribution in the greater eThekwini area. A large proportion of containerised cargo is destuffed at distribution centres, where goods are checked, sorted, weighed, graded, repackaged and labelled before being consolidated into mixed loads on maximum-cube road vehicles for direct delivery to businesses in the hinterland.
This process eliminates cross-haul costs and typically allows the contents of three Twenty-Foot Equivalent Units (TEUs) to be delivered door-to-door on a single vehicle – often with the added advantage of a return backhaul.
Dry bulk exports
Most dry bulk exports from South Africa already move by rail to Richards Bay, Matola, Saldanha, Durban and Gqeberha, but an estimated 20 to 25mtpa still travels by road. Dry bulk exports through Durban – including manganese, chrome, sized coal, wood chips, petroleum products and sugar – amount to about 10mtpa in total, with roughly half carried by Transnet Freight Rail (TFR) and the balance by road. Breakbulk exports through Durban amount to approximately 1mtpa and offer no realistic opportunity for rail.
Other export and import cargoes
Seasonal agricultural commodities – refrigerated fruit, export maize, imported wheat and animal feeds – may offer some rail potential. Fruit exports totalled 4.2mtpa, with 2.8mtpa moving through Cape Town. There are also some options for refrigerated rail services for citrus and avocados, though demand is highly seasonal. Bulk imports such as fuel, malt and wheat are largely destined for off-rail locations. There may be some potential for irregular imports of cement, steel, certain minerals and vegetable oils, but again, most destinations are off-rail and consignments rarely constitute full trainloads.
Conclusion
The last serious attempt at comprehensively mapping the freight market across all modes was the provincial Freight Transport Databank project undertaken for the Department of Transport (DoT) between 2005 and 2008, followed by the National Transport Master Plan in 2012. That data was never upgraded or consolidated into the intended national freight databank.
The industry remains unregulated, all current road freight volumes are estimates and Transnet releases only selective annual data for rail and ports. This will be further aggravated with the introduction of private terminals and TOCs, unless the regulatory framework is modernised to require data submission from licensed operators – as is standard practice in developed countries.
Traxtion’s recent announcement of the capacity to supply mainline diesel locomotives and rolling stock is a step in the process. The delivery of 200 23E locomotives to TFR from the Durban assembly plant offers some hope of expanding bulk mineral services, but this amounts to recovery of lost Transnet capacity, not net growth, and does nothing to shift the competitive balance in intermodal transport, beyond a possible gradual reduction in bulk export tonnages on road.
According to Operation Vulindlela, seven TOCs are expected to commence operations on the freight rail network in the first quarter of 2027. Yet, at the start of 2026, the state of negotiations between Transnet as monopoly access provider, the DoT as regulator and prospective TOCs makes it very difficult to assess the realistic potential for a modal shift. Until the White Paper, private sector partnership, roadmap, Transnet Rail Infrastructure Manager 4, the request for information for the B-network and the role of Interim Rail Economic Regulatory Capacity are clarified and made public, implementation will remain an enigma and private sector appetite will be understandably muted. The secrecy of official debates and announcements does not offer assurance of short-term change.
The real long-term opportunity for shifting 50mtpa of breakbulk cargo from road to rail lies in the development of intermodal services – whether through containers (swap bodies), loaded road vehicles (piggyback) or trailers on flatcars (TFC). But the severe imbalance of cargo volumes between the larger centres is a negative feature of the South African and sub-Saharan freight transport markets.
Given the cost of premises and equipment, viable intermodal terminals may only be possible at a handful of industrial centres with the production volumes to justify regular trainloads. It is worth recalling that it took 40 years for German private TOCs to capture 50% of the rail market after open access was introduced in a far more dynamic economy. South Africa faces a harder task.
Until there is an independent network manager, equitable regulation and genuine open access with real competition for services, innovation and investment by the private sector will remain sporadic. Rehabilitation of lines, signalling and rolling stock will depend on fiscal support and the terms of Transnet borrowings, while open access and competition will be managed to protect Transnet’s interests.
Recovery, in short, is likely to be glacial and expensive. Railway evolution in South Africa is unlikely to make serious inroads into the road freight industry for some years to come.
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