End of an era for Transnet

Transnet’s railway and ports systems are set to be opened up to private players, with the utility’s reform process moving from concept to action. 

The logistics sector has been the subject of significant reform initiatives in recent years, largely as a result of Transnet’s poor performance. 

Transnet’s operational performance itself has improved remarkably over the past year, with rail volumes steadily rising and turnaround times at its ports decreasing. 

While the country’s ports ranked among the worst in the world according to the World Bank, two of them – Cape Town and Coega – were also among the most improved. 

It is vital for these operational improvements to be coupled with reform to open the sector to increased private participation, as Transnet no longer has the balance sheet to adequately invest in expanding and maintaining its vast infrastructure. 

The utility has also increasingly struggled to fund equipment purchases that are vital for making South Africa’s ports more efficient, with the government stepping in with tens of billions of rands in guarantees. 

Despite this, Transnet appears to have turned a corner. In contrast to last year’s audit of constraints, significant progress can be reported this time around, Cliffe Dekker Hofmeyr’s Vivien Chaplin and Haafizah Khota said. 

The rail network is at the centre of the government’s reform process, with the electricity challenge largely being dealt with.

Transnet’s trajectory began to shift in 2020 under the Economic Reconstruction and Recovery Plan, when the government committed to enabling third-party access to the core rail network.

The National Rail Policy followed in 2022 and mapped out the priorities, including the creation of a national Rail Planning Function, tasked to develop an integrated Rail Master Plan.

This will be combined with promotion of third-party access through a Private Sector Participation (PSP) framework, independent economic regulation of rail access and a shift of passenger demand from road to rail, Chaplin and Khota said. 

Policy advanced again in December 2024 with the enactment of the Economic Regulation of Transport Act. 

This establishes a single Transport Economic Regulator, responsible for fair, nondiscriminatory access and pricing across rail, ports, roads and airports. 

In parallel, Transnet’s infrastructure manager released the final Network Statement, outlining the operating rules and tariff methodology underpinning open access to the rail network.

Crucially, this has moved from planning to market engagement in March 2025 when the Department of Transport issued a Request for Information to test the appetite for PSP across rail and port projects. 

The process closed with 162 formal submissions, a strong signal of investor interest.

By August 2025, the concept turned to allocation as 11 of 25 applicants qualified for slots across 41 routes. The remaining intention is to augment, not displace, Transnet’s haulage. 

Chaplin and Khota said early signs of recovery are evident, with Transnet reporting a 10.7% increase in port container handling and modest improvements in rail reliability by mid-2025.

From zero to hero 

The positive sentiment has been echoed by big business and investors, which are increasingly looking for ways to capitalise on the improved performance of Transnet and better outcomes in the logistics sector. 

Business for South Africa (B4SA) regularly updates the country on the reform progress driven by its partnership with the government. 

These efforts were largely focused on the electricity sector. With that issue mostly solved, it has shifted attention more heavily towards logistics, crime and corruption, and youth unemployment. 

Toyota South Africa Motors CEO Andrew Kirby is the business leader charged with aiding the government’s reform of the logistics sector. 

At B4SA’s latest update, Kirby explained that the logistics sector is on track to go from zero to hero after it hit all-time lows in 2023. 

In the 2022/23 financial year, Transnet only managed to transport 149 million tonnes of cargo on its railways, down from 226 million tonnes in 2018. 

Apart from the dismal performance of Transnet’s railways, the average handling time to discharge cargo at its ports was 21 days. 

On average, the queues of trucks at South Africa’s border posts were 19 kilometres, with only 1,500 trucks processed daily. 

Transnet was characterised by mismanagement, a lack of leadership, and widespread vandalism and corruption. 

“This low point spurred us on to collaborate with Transnet, and in the last two and a half years, there has been a marked improvement, not just in performance but also in the working relationship,” Kirby said. 

Transnet implemented a formal Recovery Plan, backed by new leadership and a R51 billion government guarantee facility. This marked a clear pivot from crisis management to structural reform. 

Since then, the results have been clear, with Transnet’s rail volumes beginning to recover and its port efficiency improving. 

“Over time, with investment in infrastructure, improvements in maintenance, and creating a performance culture at South Africa’s ports, they have reduced the handling time to just two days,” Kirby said. 

Rail volumes have recovered to 171 million tonnes, up 15% from mid-2023, due to a significant reduction in vandalism of infrastructure and investment in new equipment. 

Truck border queues have been reduced from an average of 19 kilometres to just three, and over 1,700 trucks are being processed daily.