South Africa’s Rail Reform: Can Private Operators Unclog Export Corridors?
Monopoly Broken, 11 New Operators In
South Africa has taken a landmark step: for the first time in decades, private companies will run trains on the state’s Transnet freight network. Out of 25 applicants, 11 have been conditionally approved to operate on 41 routes across six key corridors, with slot leases ranging from one to ten years. The corridors cover the heavyweights of South African exports such as coal, iron ore, manganese, chrome, fuels, and sugar, while Transnet retains ownership of the track itself.
What’s at Stake: 100 Million Tonnes Lost
Transnet moved only 152 million tonnes in FY 2023/24, well below the government’s 250 mtpa by 2029 target. The causes are familiar: equipment shortages, cable theft, track neglect, and port bottlenecks. Mining giants like Kumba and Thungela have repeatedly cut production targets because they simply couldn’t get product to port. The new open-access model is pitched to add 20 mtpa by FY 2026/27, a modest but critical uplift.
Opportunity: From Demurrage to Deal Flow
For exporters and their Western partners, the upside is clear. More predictable rail slots should:
Cut demurrage and stockpile risk at mines and ports
Improve offtake reliability, allowing traders to capture prices closer to international benchmarks
Unlock new investment opportunities: long-tenor slots (up to ten years) create the conditions for financing locomotives, wagons, depots, and tech upgrades. Rolling-stock leasing, long discussed, suddenly looks viable.
Risk: Execution Drag, Again
The risks are equally clear. The program is conditional: no trains move until operators secure safety permits, rolling-stock readiness, and port alignment. The state is still plugging gaps with R149 billion in guarantees this year and a further R35 billion request for infrastructure spend. Without those funds, chronic maintenance backlogs and theft could delay capacity gains. Execution, not policy, remains the Achilles’ heel.
What to Watch in the Next 120 Days
Slot contracts: final awards by corridor and the public list of operators
Permits: approvals from the Railway Safety Regulator
Port interface: berthing capacity for coal, iron ore, and manganese shipments
Funding signals: how much of the new R35bn is directed to track rehabilitation
Throughput data: early volume prints against the promised +20 mtpa
Axis-Framework: Implications for Business
Infrastructure & Access: Slots are real and tenors are bankable. Implication: logistics risk can be priced lower if corridor performance holds.
Regulatory Model: The state retains the track while private operators run trains. Implication: contract diligence (slot curtailment, KPIs) is critical.
Macro Health: Fiscal guarantees create breathing space but don’t erase structural fragilities. Implication: expect a gradual rather than instant recovery.
Bottom Line
For Western firms reliant on South African bulk, this is the most serious logistics reform in years. But treat it as a measured improvement, not a magic fix. Use 2025/26 to secure multi-year throughput commitments, hedge against currency and execution risk, and line up leasing and maintenance partners. If the slots actually move freight, South Africa’s export corridors could start to look investable again.