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Transnet plans to shrink the 20 000 km freight rail network it operates by at least 35 percent as it focuses on delivering more profitable cargo loads.
Transnet, which also runs the nation’s main ports and pipelines, has been hobbled by a shortage of locomotive parts, the theft of cables used to operate its electric trains and inefficiencies that have arisen due to it being a monopoly. The problems have impacted the main line that takes coal from mines in the eastern Mpumalanga province to port.
“At this point we can’t justify operating something which actually causes us to make a loss and so that’s why there’s this revision of certain flows across the network,” Portia Derby, Transnet’s chief executive officer, said in an interview in Cape Town this week.
South Africa’s freight rail system and harbours were established after the discovery of diamonds in 1867, and the assets were eventually folded into Transnet, according to the company’s website. Like Eskom, it has periodically had excess capacity and became a price-taker over time, Derby said.
Transnet’s rail tariffs are based on weight, meaning it generates less revenue from carrying loads of lighter products such as timber or sugar than from ferrying coal or ore, but that doesn’t reduce the required number of trains and maintenance. The government will take a final decision on closing or outsourcing lines.
“We can operate more effectively with a slightly smaller network,” said Andrew Shaw, Transnet’s chief strategy and planning officer. “It still serves the economic interest of the country and it still allows additional operators.”
If implemented, Transnet’s new strategy would make more locomotives available to move coal on its North Corridor route. Disruptions on the line resulted in exports from the Richards Bay Coal Terminal on the east coast falling to a three-decade low in 2022. – Bloomberg
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