Transnet is improving – but not fast enough

Transnet showed some operational and financial improvements over the past year but fell short of its own targets set in its Recovery Plan.

Transnet recently released an update on its operational performance and rail reform for the 2023/24 financial year.

It reported that total rail volumes increased by 1.5% to 151.70 million tonnes compared to the previous year.

However, this is 1.8% lower than the targets envisioned in its recovery plan. Revenue also came in 0.3% lower than budgeted.

Engineering News reported that Transnet CEO Michelle Phillips attributed these shortfalls to train derailments experienced in 2023.

 “We lost close to a million tonnes in one of the derailments that we experienced towards the end of the year,” she said. 

“If that derailment had not occurred, we would probably have achieved or been very close to achieving the target.”

However, Transnet made some progress by lowering its operating expenses by 4.2% compared to its budget.

Transnet chairman Andile Sangqu said that while real progress has been made and the utility is stabilising, “we are not out of the woods yet”.

The utility began implementing its Recovery Plan in October 2023 to stabilise its operational and financial performance for the year ending March 2025. 

“We are pleased to say Transnet’s journey to recovery is on course. We are executing our plans to enhance operational and financial performance for long-term, sustainable growth,” Sangqu said.

He explained that Transnet is implementing its Recovery Plan in the context of fundamental changes in the legislative and regulatory regime in which it operates, as necessitated by the National Rail Policy and the Freight Logistics Roadmap. 

“Transnet fully embraces this policy imperative, and the company is making solid progress in its implementation, in line with the expectations set out by the government,” he said.

“We support this process wholeheartedly because it opens numerous opportunities for Transnet by ensuring better use of the rail network.” 

He acknowledged that international comparisons strongly suggest that South African ports are failing to achieve competitive outcomes.

He referred to the World Bank’s Container Port Performance Index 2020, published in 2021, where all of South Africa’s commercial ports cluster at the bottom of the 351 ports evaluated based on objective data from shipping lines.

Sangqu also welcomed the introduction of private sector participation at some of South Africa’s ports.