Government and business are urging Transnet to show greater ambition in its plans to recover freight volumes, describing the current recovery plan as falling well short of what is required to support higher economic growth and job creation.

The State-owned group has set a target to move 170-million tons of freight during the current financial year having achieved 152-million tons in 2023/24, up from the 149-million-tons slump of 2022/23.

The 170-million-ton target remains well below the 226-million tons moved by Transnet in 2017/18 and is also below contracted volumes for key mined commodities.

In a presentation following the first high-level meeting between Cabinet members and business leaders since the formation of the Government of National Unity, the Presidency’s Rudi Dicks revealed that Transnet was performing below its own recovery plan.

This was confirmed by Transnet CEO Michelle Phillips, who told participants to a PSG webinar that it was currently two-million tons behind target and that efforts were under way to make up for the deficit during the remainder of its financial year.

However, Dicks also argued that the recovery plan was below the volumes required to support South Africa’s economic recovery and cautioned that business’ confidence in Transnet’s ability to meet its turnaround targets remained low.

In his presentation, Dicks displayed a graph indicating that volumes of between 200-million and 220-million represented the threshold at which Transnet was supportive of economic recovery and job creation, with there being negative employment impacts below that level.

“So, it's important for us to work closely with the Transnet leadership to be able to ensure that we do have a more ambitious target to push up the volumes,” Dicks said.

Neither business nor government commented, however, on whether raising the level of ambition would require a government bail-out, with the National Treasury having thus far refrained from making any new allocation, having instead extended a R47-billion guarantee facility.

Dicks said the key priorities agreed to by the National Logistics Crisis Committee included:

• finalising governance reporting lines for Transnet following the closure of the Department of Public Enterprises;
• commencing  ‘breakthrough initiatives’  with clear lines of accountability between business, the Department of Transport, and the Presidency;
• supporting the Transnet board and executives with additional skills and resources;
• revising the shareholder compact;
• securing additional funding for security;
• appointing the Transport Economic Regulator board;
• capacitating a private sector partnership unit to accelerate private rail and port investments; and
• issuing the final Network Statement to facilitate the opening of rail access to third-party operators.

The Network Statement, including the associated tariff, has been deliberated upon by Interim Rail Economic Regulatory Capacity and is expected to be published in either August or September.