An initial assessment by business into what it would involve to raise yearly freight rail volumes to 250-million tons, estimates that Transnet’s recovery alone could lift yearly volumes to about 190-million tons, leaving 60-million tons to be met through reforms aimed at opening the rail network to private-sector participation (PSP).

The assessment also indicates that about R280-billion in investment will be required to reach the target.

Business for South Africa (B4SA) transport and logistics focal area senior executive Ian Bird told delegates to a Transport Forum that there was a firm commitment from all participants to the National Logistics Crisis Committee (NLCC) to achieving the target over the coming four to five years.

The target was viewed, he added, as the threshold at which rail would begin contributing positively to both economic growth and job creation, which would represent a major turnaround from an estimate that the sector had lopped up to R400-billion of gross domestic product in 2023 on the back of rolling stock and infrastructure backlogs.

Transnet Freight Rail (TFR) railed 152-million tons in 2023/24, following a collapse in volumes to 149-million tons in 2022/23 and has set a 193-million-ton “stretch target” for 2024/25.

However, Transnet CEO Michelle Phillips has confirmed that Transnet is not currently on track to meet the target, which business and government set as a precondition, along with several other measures, for raising South Africa’s growth to 3% in 2025.

The growth target was set as part of the second phase of a government-business partnership to tackle South Africa’s electricity, logistics and crime crises. This, following the partial success of the first phase, particularly in the area of electricity loadshedding, which has not been implemented since March 26.

Bird said the NLCC, which was set up in March last year, was hoping to draw lessons from the successes achieved under the National Electricity Crisis Committee, which had been operating for a longer period.

He said that significant progress had already been made in helping Transnet to arrest its decline and in supporting the development of the Freight Logistics Roadmap for a fundamentally restructured logistics sector.

TFR, he said, was showing openness to the support it was receiving from the NLCC and private partners, including by agreeing to the secondment of five B4SA executives into the office of the CEO.

In addition, mutual cooperation agreements concluded to allow business to buy spare parts for the locomotives, under a mechanism where those expenses could be clawed back over time, had also proved successful on the coal line in particular.

Transnet’s recovery was insufficient, however, to support the envisaged broader economic upturn, with TFR still not delivering contracted volumes on the coal, iron-ore and general freight corridors.

“But we are still not going to get to the numbers the economy needs through Transnet alone,” Bird said, highlighting the urgency of the structural reforms to open the network to third-party operators and private investment.

There was also a need to firm up the frameworks to allow third-party access to the rail network, including through the finalisation of a Network Statement and tariff that was supportive of PSP.

While Bird said the Network Statement, which could be released this month, would not be “perfect” he expressed optimism that it would still have “numbers that I think will make sense to people”.