It is a Friday morning in June 2010. In just a few hours, Bafana Bafana will take to the field against Mexico in the first match of the football World Cup. The country’s mood is electric, buoyant, like anything is possible.
That feeling has clearly risen up the 50 or so floors to the C-suite at Transnet’s headquarters in the Carlton Centre where acting CEO Chris Wells, wearing the required football shirt, gives a quick rundown on the state-owned company’s plans to concession thousands of kilometres of “noncore” railway lines to private operators.
The concessioning, like the football team’s World Cup dreams, goes nowhere because the last thing Transnet wants is private operators and Wells is soon gone too.
Fast-forward to 2025 as the government — faced with crumbling roads and Transnet battling to run trains — tries again.
Transnet’s most recent network statement, published in late December, and adopted by transport minister Barbara Creecy, could result in the utility splitting into a train operating company (TOC) and the Transnet Rail Infrastructure Manager. The most significant development is a rail regulator in terms of the Economic Regulation of Transport Act.
As a brief from law firm Cliffe Dekker Hofmeyr notes, the structure is simple: the TOC and Transnet are subject to an independent infrastructure manager who manages the network, while the economic regulator sets access tariffs on a transparent and fair basis.
“If implemented properly, [this] presents a means to reduce Transnet’s debt; it reported a loss of R7.3bn in its most recent financial year,” say Vivien Chaplin and Gaby Wesson, the note’s authors. “[This would] improve the condition of South Africa’s rail network, efficiencies and connectivity, encourage local and international investment and boost the South African economy as it will benefit the larger supply chain reliant on rail and transport in general.”
One of the big improvements over previous proposals is a revised tariff structure. Instead of a single tariff of 19.7c a kilometre across the whole rail network, the plan is for multitiered tariffs for different parts of the network.
Private operators and freight shippers seem, as the cliché goes, “cautiously optimistic”.
Warwick Lord, chair of the Multimodal Inland Port Association, called it “a transformative moment” for South Africa’s logistics sector.
James Holley, CEO of private locomotive and rail operator Traxtion, says the company has conducted a “detailed review” of the statement.
“There are some issues that need to be resolved,” he says. “We’re engaging actively with the infrastructure manager and we’re open to engage with any elements of the government and business to ensure we get a network statement that’s investible.”
If it all comes to pass, Mike Daniel, MD of RailRunner South Africa, will be a very happy man.
The RailRunner is a bimodal system comprising a conventional truck-trailer chassis with normal wheels for running on roads that can be quickly loaded onto a dedicated rail bogie for use on railway tracks. Instead of shifting containers or loads from road to rail, the system allows the entire unit to be shifted to either mode.
The truckers would own their “horses” and trailers while Transnet — or other locomotive operators — would haul the trains.
A typical RailRunner train would consist of 50 truck-trailers running on the special bogies, though overseas experience has shown that it could operate with up to 200 trailers.
The technology also removes the need for conventional freight terminals. All it needs is a flat piece of ground, rail and level ground called “terminal anywhere”.
“It’s a major jump forward,” says Daniel, noting that there are many parts of South Africa that Transnet’s 21,000km rail network does not reach.
Instead of trucks clogging the country’s roads as they trek from city to city, trucking companies could focus on the “first and last miles” part of the logistics chain.
Local industry would also benefit, Daniel says, with the RailRunner bogies manufactured in South Africa in line with localisation requirements. Only the joint that holds the bogies together and the brakes would be built overseas.
“RailRunner will do for Africa’s logistics what cellphones did for the continent’s communications,” he says.
The prospect of private operators hauling trains on the state-owned network is now brighter than it has been since 2005 when a swashbuckling US rail entrepreneur named Henry Posner III was busy rehabilitating failed railways in Mozambique, Malawi and Guatemala, among others. He had hoped to do the same in South Africa but was blocked by intransigence and rudeness.
On a flight from Joburg to Nampula in Mozambique, having been stood up yet again by Transnet executives, he leant across the aisle and said: “I’m so pleased to be going to a country where rail has a future.”
Come back, Mr Posner. All is forgiven.
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