News / South Africa eyes new operators for 'a rail network in dire need of refurbishment'

ID 121411021 © Oppermana

South Africa has taken another long-overdue step to reform its rail sector with private investment and third-party access, but there are concerns it could still be “exploited for personal gain”. 

Transport minister Barbara Creecy recently announced that government-owned rail operator Transnet had selected new train operating companies (TOCs), describing it as a “significant step” to reform the country’s rail. 

25 TOCs applied and 11 “met the necessary requirements”.

The allocations span 41 routes and six corridors, with operational durations of between one and ten years, and Transnet estimated that the new TOCs would carry an additional 20m tonnes of freight a year from the 2026/27 financial year. 

David Taylor, a South African rail specialist and CEO of transport consultancy TayloRail, told The Loadstar: “I think the overall structural reform agenda will benefit freight owners in the region… increased competition should increase service levels and decrease overall supply chain costs.” 

“However, I think that this is still early,” he added.  

Dr Jacob van Rensburg, head of research and development at the Southern African Assocation of Freight Forwarders, told The Loadstar that transitioning from a public monopoly model towards an open access concessioning framework was an “essential structural reform for South African logistics”. 

But he added that while the model was “relatively straightforward” in the bulk sector, given the limited number of large integrated players and should see “quicker uptake and measurable efficiency gains”, the container sector was “more complex”. 

“A typical point-to-point solution involves multiple stakeholders across the supply chain, from shipping lines and forwarders to terminals and depots. Implementation here will inevitably require more time and coordination before shippers and forwarders realise tangible benefits,” Dr van Rensburg explained.  

Indeed, Cindy Luyt, GM South Africa at 1Up Cargo, also highlighted there was a long road ahead for reform. She told The Loadstar the rail system in South Africa had been neglected for three decades and would take “massive investment” and “substantial time” to repair. 

“The network is in dire need of refurbishment,” agreed Mr Taylor. “Transnet is under severe financial constraint… Industry is willing and able to work with government, but terms and conditions need to be mutually agreeable and workable for this to happen – and we have yet to see these terms and conditions.”

And there are concerns that, with no independent supervision to oversee the country’s rail network, the benefits of allowing third-party access could be overshadowed.

Ms Luyt said she “cannot see this benefiting the industry as a whole”. 

“This article specifically talks of six corridors that will have private investment and stakeholders handling the cargo movement. That in itself is concerning, as unless there is independent oversight, this may be further exploited for personal gain, as has been the case with a lot of issues within South African parastatals over the past 30 years,” she said. 

Mr Taylor added that the “bankability of third-party access” in South Africa was “still in question”, and urged: “It is critical to govern the relationship between these stakeholders once steel meets steel.”

A transport economic regulator is not yet in place and, according to Mr Taylor, there is not yet “a fair, equitable and bankable” network statement, which outlines the terms and conditions for operators to access the rail network, or any rail access agreement. 

“Without a credible, capacitated and capable regulator, the process retains significant risk in undue influence,” he said.  

“This is everybody’s business, and our rail sector is not simply a convenience, it’s an imperative for the upstream economy. We therefore need to keep pushing for the correct outcome that favours South Africa Incorporated.”

The Department of Transport assured it would announce the date of publication of Volume 4 of the Network Statement, and when applications will open for available slots for the 2026/27 timetable.