The names of successful applicants for licences to operate private rail transport networks are expected to be announced by the end of August.
By Nico van Burick, senior journalist at African Farming and Landbouweekblad
The first call for applications for licences closed on 27 February, and 98 applications were received, according to the newly formed Transnet Rail Infrastructure Management (TRIM).
Moshe Motlohi, chief executive of the newly established TRIM, recently met with representatives from the South African Grain and Oilseed Traders Association (SACOTA), Agbiz and Agbiz Grain to outline TRIM’s strategy as it pertains to the grain industry.
It’s all part of efforts to deregulate South Africa’s rail industry, after government gave permission last year to split the “old” Transnet Freight Rail (TFR) into two separate entities: TRIM and the remainder. The latter, with assets comprising mainly locomotives and wagons, will still be known as TFR but will function as an independent network operator, competing with private network operators that will be licensed to use the rail infrastructure.
SACOTA Sees Consortium as Best Option
André van der Vyver, executive director of SACOTA, says considering the relatively small volumes of grain transported compared with commodities like minerals, the seasonal nature of grain exports and the variability of harvests year to year, it is unlikely that any SACOTA member would take the risk of seeking exclusive use of a specific railway line or network.
He suggests it would be more practical for SACOTA members to form a consortium with a network operator and members of Agbiz Grain – which operate silos – to work with TRIM. The process of granting licences to network operators is a crucial step towards identifying key players and understanding their strategies, paving the way for meaningful progress.
Also read: Transnet recovery plan bears fruit in freight terminals
TRIM Splits Rail Network into A and B Lines
Of particular interest to the grain industry is TRIM’s decision to divide the rail network into two parts: the A network and the B network. The A network will consist of the core main lines, such as the Gauteng-to-Durban container line and the mineral line to Richard’s Bay. Most of the rural branch lines that could serve grain silos fall into the B network.
The A network will largely be under TRIM’s control, with allocated time slots for the number of trains that can run on specific lines per day or week. These slots can then be assigned to private network operators or the “new” TFR at a regulated rate. TRIM will maintain and upgrade these lines where necessary. However, TRIM currently lacks the funds and capacity to maintain the B network lines, which it does not consider part of its core strategy. TRIM has indicated that it is open to industry proposals regarding the B network.
Eastern Free State Sidings Hold Potential
SACOTA believes that two things are necessary for the grain industry to benefit from this deregulated environment. As an example, he refers to five sidings in the Eastern Free State where there are 27 grain silos; theoretically, a significant portion of the grain stored there could be transported cost-effectively by rail to Durban for export.
First, there must be a licensed network operator responsible for providing locomotives and wagons for transport on these branch lines. Traders and storage operators will need to commit to generating sufficient business for the network operator. The grain would then be transported to Bethlehem or Harrismith, where it could be consolidated into full trainloads and allocated time slots for rail transport to Durban.
Second, there must be a commitment by one or more private entities to maintain these branch lines. And this is apart from storage operators that have to maintain the sidings.
Cost Savings Could Boost Competitiveness
Van der Vyver says SACOTA is currently planning a survey to determine which of its members might be interested in joining a consortium. Once the network operators are identified, there will be approximately two months to develop a consortium strategy and signal interest to TRIM.
It is unclear how the situation will progress, but with an expected surplus, it would be ideal to start transporting grain for export by rail by late April or early May 2026.
Van der Vyver says prior to last year’s drought, data from the previous three years showed that about 350 000 tonnes of grain could be exported from Durban per month. Half of this volume could be transported to the harbour by rail.
For high-volume, long-distance freight, rail transport is typically cheaper than road transport – locally, it costs about two-thirds as much. Saving a third on transport costs could be the deciding factor in whether exports remain competitive.
Also read: Transporting fertiliser by train to Zim and Zambia is possible
