Kick start, push start, or non-start

South Africa’s transport and logistics sector is at a critical juncture. The economy is increasingly reliant on a system that is struggling to function, with Transnet’s highly publicised “recovery plan” promising progress over several years. But will these efforts genuinely revive the country’s failing transport network, or are we merely prolonging the inevitable? In this no-holds-barred column, NICK PORÉE dives into the heart of the crisis, exposing the glaring issues and misguided strategies that plague the sector. 

South Africans are being asked to wait patiently as Transnet stages its grand “recovery plan”. Meanwhile, the transport and logistics industry – several times larger than the government and its state-owned companies (SOCs) – is being told that the Presidency is “reforming South Africa’s logistics system to enhance efficiency and competition” with “massive new investment”. Yet, in the same breath, the government reassures us that “private sector participation does not equate to privatisation”, nor does it reduce the state’s control over logistics assets. 

In fact, the South African railway SOCs have always shunned any close cooperation with private sector logistics, as they operate as closed monopolies which supply the services decided by the management – not by customers or country demand. They now cling to the monopoly as the haven for collective decision making, free from the vicious commercial disciplines of personal responsibility, accountability, and – heaven forbid – dismissal. Freight rail now has less than 10% of the total freight transport market and undertakes limited bulk transport, but not logistics. Despite these realities, it is proposed by the National Logistics Crisis Committee (NLCC) and other government agencies to become the “backbone” in transforming the transport and logistics of the country!

Six supposed levers for transformation

Six key levers have been defined to achieve this transformation:

1. The Transnet Recovery Plan.
2. Support for the plan by the National Treasury’s conditional R47 billion guarantee (a fraction of the total amount required to resuscitate the network).
3. The Freight Logistics Roadmap produced by the Department of Transport, which offers little indication or understanding of the roles and volumes of transport and “logistics”, or how to influence the many freight markets.
4. The Economic Regulation of Transport Bill (with impracticalities and assumptions, and little indication of the reorganisation implied in the concept).
5. The Rail Private Sector Participation (PSP) Framework (which appears to assume that the private sector will be donating to the cause).
6. The Transnet Draft Network Statement, which details the functions of the newly-created Transnet Infrastructure Manager (TRIM) and the corporate plans for the use of railway infrastructure by private sector operators. This includes scheduling of rail services and proposed charges, with some totally unrealistic assumptions of investment by private sector train operating companies (TOCs) into a system controlled by the competing government railway operator.

A mountain of debt, no clear plan, and a system in tatters

Transnet has current debt of over R135 billion and needs to borrow more than R100 billion to recover. It currently pays over R1 billion/month in interest and has a potential operating profit of about R5 billion/year, so the “recovery” may take some time. The gradual recapitalisation of the Passenger Rail Agency of South Africa (PRASA) is receiving less publicity but will necessarily be funded by the taxpayers. Instead of dynamic 30-year restructuring plans for the revitalisation of railways and ports, with private investors and renewed competitive impetus, the logistics industry will have to resign itself to using more road freight and diversifying to neighbouring ports.

The current rail situation is described in the reports of the railway safety regulator (RSR) to the Parliamentary Portfolio Committee, where it is noted: “The fleet is over 37 years old and one third of the fleet is constantly out of service, so reliability and performance is poor. The signalling system is at the end of its economic life (only 23 – or 14% – of the 162 signalling installations have not exceeded their design life). There is a loss of critical skills and poor management practices. Operating procedures are not adhered to, and human error is a key factor in operational failures. Absence of a National Railway Safety Information System (NIMS) limits reporting capacity. Warning directives in the form of Manual Train Authorisations due to unsafe sections on the national rail increased from 35,356 per month in January 2018 to 136,470 per month in July 2019. This means that on average per year, the opportunity for fines nearly doubled from 68,297 to 130,150.”

According to the DA “Railway Safety Report – 2021”, RSR revenue increased from R17 billion to R44 billion in 2021 without having any impact on the operating performance of Transnet Freight Rail (TFR) or PRASA. According to the 2024 RSR Annual Report, in 2023 there were 9,916 negative event reports (27 per day).

It must be recognised that these RSR reports must preclude any serious intentions by private TOCs to invest in and operate on a system where the present incumbent defers maintenance and ignores safety regulations. The DA proposal in 2021 was to merge TFR and PRASA, as the two SOCs cross-invoice over R1 billion per year for shared facilities.

With the present crisis, however, reorganisation and corporatisation of the SOC railway companies is essential in order to achieve effective separation of the national track network from TOCs. The network manager must be totally independent, control the entire network, and include a train coordination division which, for obvious operational and safety reasons, regulates train path applications and the movement of every train on the total network. This is impossible at present, but essential for open access to multiple TOCs, which will include TFR, PRASA, municipalities, and many others.

Creating open access requires immediate action to establish the rail network manager, the RSR, and the railway economic regulator as independent entities within the Department of Transport as a prerequisite to attracting private TOC investment. This will also require the acquisition of a sophisticated railway management software program to manage the train coordination, technical operations monitoring, and network maintenance.

Ports: bottlenecks of frustration

The parlous state of Transnet ports has also been noted in the World Bank report and is a source of obstructions, costs, and frustrations to the industrial, mining, and agricultural import-export supply chains. There is a need for very high-level redesign of the ports, which were developed piecemeal as adjuncts to the railways monopoly and have never been modernised over the past 30 years to accommodate the switch to 85% road haulage and changing maritime demands.

This requires a total overhaul of the current structures, as well as international-level expertise and funding, to create modern ports with a 30-year future. Despite current contentions regarding one container terminal, the overall development plans must include provision for the back-of-ports supporting logistics operations, efficient access routes, and greatly improved communication and planning systems.

The plans made in 2012 were shelved, ignoring economic and commercial demands, so the rot continues. Port employees and the supporting logistics industries struggle on against the odds created by aged equipment and facilities, management incompetence, and current debt.

Flogging a dead horse

South Africa’s logistics system needs far more radical change than the NLCC’s piecemeal efforts. Continuing to pour billions of rands into propping up inefficient SOCs is nothing short of flogging a dead horse. Without genuine reform, the country’s logistics sector will remain a drag on economic growth, guaranteeing inefficiency for years to come. 

The question is clear: will we continue to wait for recovery plans that never deliver, or will we embrace the bold changes necessary to transform South Africa’s transport and logistics system?