Julia Rwigamba

Railway

Urgent Action Needed as South Africa's Freight Rail Volumes Experience Significant Decline

The African Rail Industry Association (ARIA) has sounded the alarm over the critical state of South Africa's railways, urging immediate action to address the terminal decline. ARIA's chairperson, James Holley, has revealed that Transnet, the country's rail transport company, is projected to have transported only 155 to 160 million tonnes of goods in the financial year ending on March 31, 2023. This represents a staggering decline of more than 30% compared to the 226 million tonnes moved in 2018.

During a web event on Thursday, Holley emphasized the profound implications of this decline, stating, "We seem to be approaching a critical inflection point with regards to our railways. If we don't swiftly change course, the consequences for our industry and the broader economy will be deeply concerning."

Jan Havenga, an independent researcher and professor at Stellenbosch University, noted that the general freight loss accounts for approximately 2% of the country's GDP. He emphasized that this decline has been steadily worsening each year.

ARIA believes that the only viable solution for rail recovery is for the industry to unite and rally behind the government's reform plans and agenda. Holley emphasized that a progressive rail policy, which took 14 years to develop, needs to be implemented without further delay to ignite the South African economy.

Havenga suggested that restructuring Transnet's expansive rail network is crucial. This may involve ring-fencing and corporatizing specific low-density and export corridors while maintaining a core network. Furthermore, the rail industry urgently needs to address track infrastructure investment, estimated at over R100 billion, to restore track integrity.

However, ARIA acknowledges that Transnet's capacity to raise additional capital will be limited, and the current fiscal position of South Africa indicates that the National Treasury is unlikely to provide the necessary grant funding for railway infrastructure restoration. ARIA believes that private sector participation is the remaining source of funding and highlights the existing appetite for such investments due to the underlying freight volumes.

Holley stressed the urgent need for a well-defined framework to guide implementation, including the vertical separation of railways into infrastructure ownership, management, and train operating companies. He also underscored the critical importance of the Private Sector Participation Framework for success. ARIA fully supports the implementation of various bills, including the Regulation of Transport Bill, the Rail Masterplan, and the Rail Transportation Bill. However, they emphasize that third-party access should not be delayed and urge immediate action to prevent further setbacks.

Havenga emphasized the mandate for private sector involvement, urging Transnet to collaborate with external expertise to overcome bottlenecks and achieve real vertical separation.

While specific statistics on passenger rail volumes are unavailable, it is estimated that they have plummeted by more than 80% since the late 2000s. ARIA believes that devolving the responsibility of the Passenger Rail Agency of South Africa (Prasa) to the metros is a primary reform measure, and they express encouragement at the appetite for such reforms.

Holley concluded with cautious optimism, acknowledging the long road ahead but recognizing signs of progress as Prasa is on track to spend its capital expenditure budget for the first time since 2016. This development might represent the first tangible advancement in passenger rail in quite some time.

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Julia Rwigamba is a vibrant content creator, blogger, and transport and logistics enthusiast. With a passion for creating engaging and informative content.

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Written by Julia Rwigamba

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