Struggling state-owned logistics company Transnet Freight Rail could be in for serious structural reforms in the new year as the government has given the green light to the long-awaited road map and also adopted the framework for private sector participation in the railway network.
Minister in the Presidency Khumbudzo Ntshavheni yesterday said the Cabinet, in its last meeting for the year, considered and approved for publication the Freight Logistics Roadmap, as well as the Draft Rail Private Sector Participation Framework.
The Roadmap for the Freight Logistics System in South Africa draft document, which was published on the Department of Transport’s website, will be released for broader public consultations before returning to the Cabinet for approval.
Ntshavheni said the Freight Logistics Roadmap outlined a clear path to address immediate challenges in the logistics system and also sought to reform the system in the long term.
“The immediate priority is to stabilise and improve the operational performance of the freight rail network, which presents a severe constraint on exports,” Ntshavheni said.
“The main implementation mechanism for the short-term interventions will oversee operational improvement through five corridors, with full alignment with the Transnet board-approved turnaround plan which identifies short- and medium-term actions to improve operations and stabilise the company’s finances.”
In addition, the road map outlines a path to implement the commitments made in the National Rail Policy and the National Commercial Ports Policy and plans for the reform of the freight logistics system.
In March, President Cyril Ramaphosa directed Transnet to implement reforms swiftly and completely to turn around the crisis in South Africa’s logistics system.
This followed Ramaphosa’s announcement in the February State of the Nation Address that the government would develop a Freight Logistics Roadmap that would translate policy commitments into reality, including the restructuring of Transnet Freight Rail to create a separate infrastructure manager and the implementation of an open access regime for the freight rail network.
The road map, which was expected to be considered by the Cabinet around February 2024, outlines three areas of intervention to improve rail performance.
These include returning long-standing locomotives to service through agreements with Original Equipment Manufacturers (OEMs) to ensure a supply of spares, collaboration with law enforcement agencies to improve security and safety of the rail network, and capital investment programme both for the expansion plans and also to sustain operations.
The implementation of the road map will be overseen by the Department of Transport, Department of Public Enterprises, National Treasury and the Presidency through the national logistics crisis committee (NLCC) to enable a coherent, integrated response to the challenges within the national logistics system.
Business Leadership South Africa (BLSA) yesterday said the impact of the logistics crisis was now clear in the economic growth numbers which were showing falling sales and production of commodities and other goods.
BLSA CEO Busi Mavuso, however, said the task teams were already working to improve performance of key lines, including the appointment of a new leadership team at Transnet that was committed to the road map, following the resignation this year of the CEO and several other executives.
"The good news is that there has been more urgency in tackling this crisis, and there is now a strong joint effort through the NLCC. Learning from successes in the electricity sector, the NLCC has drawn up a road map that will see major participation by the private sector in logistics,” Mavuso said.
“Some steps toward this have been made, including a process to concession the Durban container port terminal, but this needs to accelerate, including allowing the private sector to operate certain rail corridors.
“While I think we can say that we broke the back of the electricity crisis in 2023, I hope to be able to say the same of the logistics crisis in 2024.”
Meanwhile, the Cabinet also considered and approved the Draft Rail Private Sector Participation (PSP) Framework, which aims to provide an interim approach to and a model for future decision-making to enable private sector participation in the railway infrastructure system.
The Rail PSP Framework proposed commencement of private sector participation through opportunities that were aimed at fixing the railway infrastructure first, given the current challenges within the railway infrastructure
With the approval of the Rail PSP Framework, the Department of Transport will establish a PSP unit that will identify and prioritise projects and develop an implementation plan to facilitate PSP initiatives.