Opening Frieght Corridors

South Africa's Leap Toward Rail Reform

By Jessie Taylor

South Africa is entering a new chapter in its freight rail sector, where private operators will share access to Transnet’s rail corridors. After years of underinvestment, declining volumes, and logistical bottlenecks, the government has selected 11 train operating companies (TOCs) to run services on 41 routes across the national freight network. The announcement marks a significant step toward liberalising rail freight, unlocking private capital, and boosting efficiency across bulk commodity, container and fuel transport.

While Transnet will retain ownership of tracks, signalling and infrastructure, the private sector’s entry under a third-party access model is intended to bring fresh dynamism, competition, investment and additional capacity.

From Monopoly To Open Access

Transnet Freight Rail has held a de facto monopoly on South Africa’s freight rail for decades. Its dominance, however, came under severe straininfrastructure decayed, theft and vandalism took their toll, rolling stock aged, and service reliability declined. Freight volumes tumbled from a high of 226 million tonnes in 2017/18 to approximately 152 million tonnes in 2023/24.

The government’s 2022 National Rail Policy aimed to change that by endorsing a vertical separation model: leaving infrastructure in state hands but permitting multiple operators to access the network. In that sense, the 2025 slot allocation is the first practical realisation of that policy.

Transport Minister Barbara Creecy has confirmed that of the 25 applicant TOCs, 11 have met the criteria to be conditionally awarded corridor slots. These operators now enter commercial negotiations with Transnet to finalise contracts. Those allocations span six major corridors: North (coal, chrome), Iron Ore, Cape (manganese), Northeast (containers, fuel, chrome), Central (containers, coal) and Container corridors (for containers, sugar). The corridors’ selected link key inland mining regions to coastal ports such as Durban, Richards Bay, and Saldanha Bay. These routes are central to South Africa’s export economy. Opening them to competition may ease logistics constraints, reduce freight costs, and unlock suppressed commodity flows.

Minister Creecy emphasised that the TOCs are not meant to cannibalise Transnet’s volumes, but to add capacity - filling gaps Transnet has struggled to service. The target is to increase freight moved by rail from roughly 160 million tonnes today toward 250 million tonnes by 2029.

The reform holds the promise of meaningful gains. Private operators bring access to capital for rolling stock, maintenance, and operational innovations. In one projection, the newcomers could move an additional 20 million tonnes per annum, representing an 11% uplift on current levels.

Further, estimates suggest that private investment in rolling stock, sidings and terminals could amount to up to R100 billion over the coming decade.

Regional and Sectoral Significance

The first operators are expected to commence operations between 2026 and 2028, following negotiations, preparations and safety compliance.Transnet has also floated, creating a LeaseCo, a rolling stock leasing entity, partly to ease barriers to entry for TOCs that initially lacked large fleets. That could accelerate participation.

Slot allocations will be revisited annually via updates to the Network Statement, which defines available slots, tariffs and conditions. The infrastructure manager (TRIM) will be pivotal in managing access, interoperability, and fairness.

Additionally, non-selected applicants will be allowed to reapply in future rounds.

The Interim Rail Economic Regulatory Capacity (IRERC) is set to mediate consultation processes on Transnet’s draft Network Statement and oversee open access fairness.

Capacity in safety permitting (via the Railway Safety Regulator), environmental oversight, port interface coordination, border procedures and customs integration must align with rail operations. The state must also ensure that Transnet, while a competitor, remains an impartial infrastructure provider.

Further, oversight is needed to monitor cost pass-throughs, slot allocations, performance monitoring, non-delivery penalties, and contracting transparency. Public sector leaders and parliamentarians have a role in ensuring the public interest remains central.

South Africa’s rail freight reform is ambitious, overdue and laden with promise. The first slot awarded to private TOCs signals that the idea is no longer theoretical but actionable. If executed well, the reform could restore much of the capacity lost over years of neglect, reduce logistics bottlenecks, and offer mining, agriculture and exporters a more reliable path to ports.

Moreover, opening corridors invites innovation - new operating models, leasing arrangements, interoperability, digital scheduling, dynamic slot pricing and infrastructure co-investment. The public and private sectors may co-evolve toward a more responsive, market-aware freight rail system.

Sources: News24 | Engineering News | Reuters | BizCommunity | Cape Business News | EcofinAgency