State-owned logistics company Transnet this week concluded agreements with 11 private operators that will run trains across key freight corridors linking mines, industrial hubs and ports.
The agreements effectively end more than 100 years of state dominance over freight rail operations and mark a major policy shift for a country whose rail network was once regarded as one of the world’s most advanced commodity transport systems.
The operators will gain access to 41 routes across five strategic corridors serving coal, iron ore, manganese, fuel, containers and general freight.
The companies include ARC South Africa, Grindrod, TLD Marine, Sharp Logistics, Minrail, Interlinks and Motheo Logistics, among others.
The reform is significant because South Africa controls Africa’s largest freight rail network, with more than 20,000 kilometres of rail infrastructure connecting mines and factories to ports.
The network is central to exports from some of the country’s biggest industries, including mining, automotive manufacturing and agriculture.
But years of operational failures, vandalism, cable theft, corruption and underinvestment have severely weakened the system.
Freight volumes on Transnet’s rail network have fallen sharply over the past decade, forcing companies to move more cargo by road at significantly higher costs.
Exporters have repeatedly warned that rail delays and port congestion were making South Africa less competitive globally.
Mining companies including Glencore and Kumba Iron Ore have previously said logistics bottlenecks were hurting exports of coal and iron ore, even during periods of strong global commodity demand.
Industry groups estimate the rail crisis has cost the economy billions of dollars in lost exports and reduced investor confidence at a time when competition for global mining investment is intensifying.
The latest reforms come as African rail infrastructure attracts renewed attention because of rising global demand for critical minerals used in electric vehicles, batteries and clean energy technologies.
Countries including Angola, Zambia and Tanzania are already receiving major investment into railway corridors designed to move copper, cobalt and other minerals to international markets.
South Africa risks losing some of its competitive advantage if rail inefficiencies continue to disrupt exports.
Transnet said the new private operators are expected to add around 24 million tonnes of freight capacity to the network initially, with the potential to increase that to 52 million tonnes over the next five years.
The government wants annual rail freight volumes to rise from about 180 million tonnes to 250 million tonnes by 2030 as part of efforts to strengthen economic growth and improve export performance.
Some private operators are targeting the start of services later this year, while others are expected to begin operations in 2027.
Several companies have already started raising capital to buy locomotives and wagons. African Rail Company alone is reportedly seeking around $170 million in financing as investors position for opportunities created by the reforms.
Transnet is also reviving LeaseCo, its rolling stock leasing business, to help lower the cost of entry for new operators and improve access to locomotives and wagons.
Moshe Motlohi, chief executive of Transnet Rail Infrastructure Manager, described the agreements as a major turning point for the sector.
“This milestone represents more than slot allocation; it signals the creation of a functional and competitive rail marketplace,” he said.
The reforms, however, are already facing resistance over procurement policies linked to the planned rail upgrade programme.
South African business group Guma has challenged Transnet’s decision to engage directly with foreign original equipment manufacturers for some rail infrastructure supplies, arguing the approach sidelines local and black-owned businesses.
The dispute centres on a railway rail supply tender reportedly involving manufacturers from China, France, Japan and the United Kingdom.
The Black Business Council has backed calls for the tender process to be reviewed, saying state-owned companies should not exclude domestic firms from major infrastructure contracts.
Despite the tensions, investors and exporters say the opening of the rail network could become one of South Africa’s most important economic reforms in years if it succeeds in restoring reliability to a system long viewed as the backbone of the country’s industrial economy.
