16 October 2023
By: Fredalette Uys
If the intended reforms at the struggling Transnet succeed, there is light at the end of the tunnel for the state enterprise.
According to Mitchell Brooke, logistics manager at the Citrus Growers’ Association (CGA), the reforms at Transnet could result in a turnaround in key corridors and networks.
In the CGA’s weekly newsletter, Brooks expresses his concern about the severe deterioration in Transnet’s operational performance, specifically in the port and railway divisions.
According to a report on Moneyweb, Transnet’s inability to get products to ports will result in an estimated 5% reduction in gross domestic product in 2023. Cargo volumes have declined to the lowest since World War II, the report says.
Languishing
Brooke says the railway network underperforms on all strategic routes due to widespread vandalism and theft of infrastructure, accompanied by the decline of the locomotive fleet.
The mining sector is particularly badly affected, leading to truck congestion at borders and ports. The decline has also hit the crucial line between Durban and Gauteng, causing a significant decrease in rail traffic. The transportation of citrus from northern regions cannot reach its full potential.
Despite profits in the previous financial year for Transnet National Ports Authority (TNPA) and Transnet Port Terminals (TPT), cargo movements at ports have been hampered by faulty equipment. Operations at the Durban and Cape Town terminals are stalled due to outdated machinery.
Brooke says Transnet is now faced with the challenge that three things must happen simultaneously. The first is that operational performance must align with demand and the network’s capacity.
To achieve this, the functional fleet on the rail and port networks must be expanded. This will require significant capital investment on maintenance and procurement.
In its latest financial report, Transnet identified a strategy to get the basics right. It aims to ensure that the most skilled people are appointed and operate to the best of their abilities in line with results and delivery targets.
An organisation reporting losses, according to Brooke, will struggle to raise capital to reinvest in fleet maintenance and acquisition on the scale Transnet needs. “Without that, operational performance cannot be reversed to give the balance sheet a boost.”
New winds
According to Brooke, the challenge facing Transnet can be resolved through policy reform and partnerships with strategic networks.
One of them is the application of the national railway policy where the railway network will be separated from the operation of railway services on the network. Its effect is that important private railway operators will quickly be able to run their trains on the national network.
“This is a significant development in the citrus industry since a larger-scale rail network is required and it can be coordinated with private operators in the near future.”
Another significant reform is the partnership between TNPA and International Container Terminal Services of the Philippines at the Kaai 2 container terminal in Durban. The partnership agreement is expected to come into effect by April 2024 and could bring about a turnaround at the terminal. A partnership is still awaited at the Ngqura container terminal at Coega.
Another development is that TNPA has applied for capital investment in marine equipment on a large scale, thanks to a tariff application to the port regulator.
TPT has also outlined a maintenance and fleet acquisition schedule for Kaai 1 in Durban, Ngqura container terminal and the Cape Town terminal.
According to Brooke, the fleet can be adjusted before the 2024 citrus peak season, and the operation of terminals can be significantly improved.
He says the new national logistics crisis committee is in constant touch with the presidency to ensure the necessary reforms are implemented, with Agbiz representing citrus growers in the biweekly meetings.
