Moshe Motlohi, a logistics veteran with two decades of experience, is an important figure for South Africa’s efforts to end the rail monopoly of state-owned freight operator Transnet.
Motlohi is CEO of the Transnet Rail Infrastructure Manager (TRIM), an office responsible for repairing Transnet’s underperforming rail network — spanning 21,232km — and opening it to private sector operators for the first time to improve efficiencies.
At the end of February 2025, his office closed the application process for private operators to bring their locomotives and heavy-haul wagons to operate rail lines independently. Motlohi tells the FM that his office has received 98 applications from private operators for rail slots across Transnet’s network.
“This indicates that there is strong market interest. There is urgency and speed in the system to deliver rail reforms,” says Motlohi, a former manager of the port in Durban, whose appointment as TRIM CEO was confirmed in March. “We are now going through the adjudication process for those applications,” he says.
The FM understands that the 98 applications come from five rail operators — one of them being cargo-handling giant Grindrod — that have each submitted multiple expressions of interest for rail slots. The private sector operators are expected to be on the tracks in October.
Transnet is important for South Africa’s economy because it rails most of the iron ore and coal that the country produces and exports. When Transnet isn’t operating properly, many businesses, and South Africa’s exports, come to a standstill.
The state-owned enterprise’s rail network once symbolised South Africa’s mining strength, carrying trains loaded with coal and iron ore destined for China, India and other markets. However, the volume of cargo carried by Transnet has collapsed by more than a third over the past five years due to mismanagement, theft and vandalism.
There is urgency and speed in the system to deliver rail reforms
— Moshe Motlohi
So Transnet is now embracing the private sector as a partner for delivery, asking rail operators to independently run trains on its network for 10 years, with an option to renew, while also pouring in money over this period to upgrade the network.
Phase 1 of the rail reform initiative will entail the allocation of 2.1Mt of rail capacity to private sector parties on five of Transnet’s six rail corridors.
The north rail corridor, which runs between Ermelo in Mpumalanga and Richards Bay in KwaZulu-Natal, is excluded in this phase because Transnet is reluctant to give up control of it. This corridor is Transnet’s most profitable, and is strategic for South Africa, as it is responsible for bulk commodities — particularly coal exports.
There is a lack of rail slot capacity in this corridor. A senior executive close to TRIM tells the FM that the office is in talks with Transnet to include the north rail corridor in upcoming phases of the reform initiative.
Phase 2 will involve the expansion of rail slot availability on existing corridors, and in phase 3 access will further be increased, with timelines yet to be announced. The timelines are set to be specified in a network statement that TRIM will publish later in April, and applications for rail slots will be open again until June 30.
Though the rail reforms have been welcomed by the logistics industry, there is the grim reality that they won’t deliver overnight improvements because Transnet’s rail network has been underperforming for years.
Research from Stellenbosch University, cited broadly by the logistics industry and the National Treasury, has found that Transnet’s dysfunctional railway lines cost South Africa R1bn daily in lost GDP, primarily due to lost sales of commodities such as coal and iron ore, and R50m in tax revenue.
Motlohi says partnering with the private sector is the best way to shift cargo back from road to rail. But Transnet’s rail network is in disrepair and private operators alone will not improve efficiency without significant investment to refurbish the rail lines.
Transnet estimates that R65bn is required over the next five years to improve rail infrastructure, particularly the coal line to Richards Bay and the iron ore line from Sishen in the Northern Cape to Saldanha in the Western Cape.
Transnet does not have this money, as it is still a loss-making entity, having recorded cumulative financial losses worth R13.2bn, according to an analysis of its financial statements from 2020 to 2024. Lenders are wary of providing more money to Transnet to fund its operations because its debt load of R136bn is smothering and it has become difficult for the entity to pay back its lenders when debt repayments become due.
The chances of it defaulting on debt repayments are increasing. Underscoring Transnet’s heightened default risk is its rolling cash interest cover, which is sitting at 1.9 times, a decline from 2.1 times two years ago. The decline means that Transnet is burdened by debt expenses, and its ability to meet interest payments is questionable.
Through the reform initiative, Transnet wants private sector operators to help fund urgent refurbishments to the rail network.
This is how the rail reform will work. Rail operators will pay TRIM access fees, or tariffs, to operate on its rail network. The money TRIM raises in fees will help fund the R65bn urgently needed to bring the rail network up to standard. “Over the next 24 months we will work with private players. We’ve assessed the rail network independently and understand the associated costs. We’re working with private operators on funding support, but this support will not be free,” Motlohi explains.
Fixing the rail network will require overhauling the entire system, not just improving rail capacity but repairing the basics
— Gavin Kelly
Private operators would likely receive tariff rebates in exchange for capital contributions to TRIM. However, they want assurances that funds will be used specifically for rail improvements rather than for other areas of Transnet’s vast infrastructure business.
The logistics industry has raised several concerns about the rail reform.
Gavin Kelly, CEO of the Road Freight Association, says fixing the rail network will require overhauling the entire system — not just improving rail capacity but repairing the basics, including technology such as railway signalling. Transnet still uses outdated systems; in some cases, it uses Excel spreadsheets for managing train schedules.
“The rail system has been destroyed in many places. We have to rebuild and secure all the cabling and signalling, and some of the infrastructure of the depots and stations. Security of the infrastructure, and making rail lines efficient, will be the biggest challenges, because we want those lines to run nonstop. This is going to be a scheduling nightmare,” says Kelly.
Another concern raised by industry players, including Mesela Nhlapo, CEO of the African Rail Industry Association, is the independence of TRIM, as it is owned by the Transnet Group. This, in turn, also owns Transnet Freight Rail (TFR), which monopolised the rail network for years. The concern is that Motlohi and his office would be influenced by Transnet and not run a fair process in allocating rail slots to private operators.
But Motlohi has pushed back against this narrative. “Our orientation at TRIM is that South Africa has to come first, followed by customers, then Transnet.”
To strengthen independence, from September TRIM will have an executive committee and a board, and will record financial results — all separated from Transnet and TFR.
Motlohi has not ruled out financial support from the government, even though it is reluctant to throw more taxpayer-funded bailouts at Transnet. Over the past five years, Transnet has received R52bn in government-backed support (cash bailouts and guarantees), which has failed to reverse its decline.
Transnet has applied to the government’s restructured budget facility for infrastructure (BFI), run by the National Treasury. The BFI provides funding for specific infrastructure projects under strict conditions, including receiving co-funding from the private sector. If funding is secured, Motlohi expects “aggressive” improvements to the rail network to increase cargo volumes.
Transport minister Barbara Creecy has set a volume target of 250Mt for Transnet’s rail network by 2030. The last time volumes exceeded the 200Mt mark was in 2017. Creecy’s target seems lofty, considering that Transnet Group CEO Michelle Phillips targeted 160Mt-165Mt for the financial year ended March, up from 152Mt in the previous year but short of the 170Mt target set in September 2024.
Motlohi believes the 250Mt goal is achievable, “but only if we secure all the funds needed for maintenance”.
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