The government aims to move 250 million tonnes of freight per annum by rail within the next five years. Photo: Bloomberg
Transnet's network statement has received further endorsement from critical private sector players, including the Multi-Modal Inland Port Association (MIPA) and RailRunner South Africa.
It is being hailed as a landmark development that opens up South Africa's rail network to third-party operators at an affordable cost structure. However, questions linger regarding the funding and sustainability of the Transnet Rail Infrastructure Manager (TRIM), the spinoff from Transnet Freight Rail (TFR) that now oversees the rail network.
The main focus of the network statement is aligned with the government's goal of moving 250 million tonnes of freight per annum by rail within the next five years. TRIM has acknowledged that R65 billion will be needed for maintenance and capital expenditure.
Mike Daniel, the managing director of RailRunner South Africa, said with the network statement now in place, private sector operators could accelerate the deployment of innovative road-to-rail solutions.
The group, which offers a bimodal technology to enhance Transnet’s intermodal operations, aims to provide solutions for the Eskom coal problem, expand Transnet’s reach to new markets, and encourage the growth of a new class of logistics service providers.
“This will allow us to offer an efficient and sustainable transportation option, working in conjunction with road transport to optimise the movement of goods and reduce reliance on single-mode solutions. The rollout of this service offering will not be smooth sailing from the outset due to legacy issues such as security and signalling. However, we remain optimistic,” Daniel said.
MIPA, which represents six major inland ports in South Africa and one in Namibia, said the network statement provides the clarity and certainty needed for private investment in rail operations, which will help achieve the government's ambitious freight targets.
Warwick Lord, the chairperson of MIPA, said on Tuesday that the statement provides a comprehensive overview of the freight rail network, including key corridors, infrastructure, and services. The tariff system, based on a differentiated methodology, ensures fair and transparent access for third-party operators, enabling them to plan their services efficiently and invest in rolling stock.
“This is a significant step forward in creating a more efficient, sustainable, and competitive transport system. The release of the network statement is a transformative moment for South Africa's logistics sector,” Lord said.
Rail industry insiders, however, have questioned how TRIM, into which 56%, or 14 000, of Transnet Freight Rail’s employees have been transferred (while the rest have been moved to the Transnet Freight Rail Operating Company, or TFROC), would be funded, especially with Transnet effectively in business rescue.
“Yes, the proposition is good; operators will pay less. But how will the new entity pay for itself before it can prove its viability through the proposed tariffs? Will the Department of Transport give the unit an allocation? With Transnet reporting twice monthly to National Treasury, what is the use of the Transnet Board? If the network statement does not perform to satisfaction, who is accountable? How many slots need to be issued for the new arrangement to be viable?” a stakeholder noted.
Motlohi said TRIM would seek to leverage resources from key customers on its corridors through a model enabling those customers to recover the costs of their investments over time. He reported that there is already support for such an approach on the coal corridor and that he intends to canvass key customers on other corridors to follow suit.
In addition, the new entity will seek to access funding through the Budget Facility for Infrastructure, a National Treasury initiative supporting the execution of national priority infrastructure projects.
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