Over the past decades, Transnet has not been able to invest and maintain its infrastructure, resulting in the involvement and participation of private-sector players to restore operational reliability and increase volumes of commodities, mostly from the mines, being railed. This private sector involvement up until now has mainly been in sourcing spare parts for locomotives and ensuring continuous movement of cargo at ports by procuring specialised equipment.
The recent publication of the National Logistics Roadmap outlines how further private-sector participation will be implemented to enhance Transnet’s efficiency. Key aspects include the costing of rail services, the delineation of responsibilities between stakeholders, and the facilitation of capital investment required to restore the infrastructure.
The estimated required capital injection to revitalise Transnet runs into billions of rands.
We recently learned at a Mining Indaba 2025 panel discussion held with Transnet and the private sector, that both the iron ore and coal lines would need over R14 billion investment over the next five years to get an average of about 260 million tonnes (volume) a year back on rail by 2030.
By allowing private-sector involvement, infrastructure upgrades and operational efficiencies can be accelerated. This is particularly crucial for the mining industry, which has seen a significant decline in transported commodity volumes over the past five years.
Successful privatisation efforts will require a balance between State oversight and private-sector efficiency. Privatisation will introduce much-needed competition and accountability, but it’s crucial that regulatory frameworks keep pace to ensure fair and transparent operations.
Managing risk in a shifting logistics landscape – a guaranteed win
Financial security and risk mitigation are critical considerations in Transnet’s road to recovery.
The transition to privatisation presents both opportunities and risks. As new private operators enter this space, rail users will need to adjust to changing contractual frameworks.
As private entities begin playing a larger role in rail, port, and freight infrastructure, insurance (payment) guarantees will become an essential tool to ensuring contractual obligations are met and that liquidity challenges do not disrupt business operations.
Guarantees provide financial security to all stakeholders, allowing trade to flow without unnecessary financial bottlenecks.
For businesses investing in logistics infrastructure or securing rail and port access, risk management solutions will be key to navigating this new environment.
As more private players enter the logistics sector, their ability to meet financial and operational commitments will come under scrutiny. Guarantees act as a safeguard, ensuring that service providers and infrastructure investors can deliver on their commitments without the risk of non-payment by their clients.
This is particularly relevant in managing working capital or failure to pay by clients where delays or contractual disputes could have significant financial repercussions.
The road ahead: Balancing efficiency and oversight
In the face of privatisation, it’s only natural that stakeholders raise concerns over how private-sector infrastructure projects will be balanced with national interest. We’re going to see intense discussions on pricing models, service reliability and long-term maintenance commitments come to the fore.
While regulatory bodies will need to ensure privatisation avoids monopolistic pricing or exclusionary practices, businesses seeking to operate in this evolving landscape will require robust financial structures to support their participation. Guarantee providers, alongside financiers and insurers, will play a massive role to enable sustainable investment.
As the country moves towards more privatised logistics, guarantees will become even more important in mitigating risk. Guarantees provide a layer of confidence to all parties involved, helping to ensure that infrastructure managers can secure constant volume with less disruptions to the logistics value chain.
As South Africa embarks on this great logistics shift, collaboration between government, private enterprises, and financial institutions will determine the success of the country’s logistics transformation. A well-managed approach to privatisation could unlock significant economic benefits, ensuring that the logistics sector operates with both efficiency and resilience in the years ahead.
