Transport Minister Barbara Creecy. Picture: Ayanda Ndamane / Independent Newspapers
Minister of Transport Barbara Creecy has urged the board of Transnet to prioritise the recovery of freight logistics and indicated that the government might “interrogate” the State-owned logistics firm’s Recovery Plan after its losses widened.
Transnet on Monday reported a loss that widened from R5.1 billion last year to R7.3bn in the year to March, mainly due to the high court ruling that it must pay Total SA and Sasol about R6bn after the petroleum companies accused it of breaching a 1991 pricing contract.
Creecy attended the Transnet Annual General Meeting (AGM) on Monday in her capacity as the new shareholder representative for the government, and underscored the urgent need for Transnet to intensify its efforts to revitalise the country’s freight logistics sector.
To drive inclusive growth, Creecy said the country needed an efficient freight rail network to carry minerals, agricultural produce and manufactured goods to market.
Faced with declining freight capacity and long waiting times for ships at under-performing ports, Transnet last year developed a recovery plan, which stabilised the sector and improved freight carrying capacity to 149 million tons and reduced waiting times at ports.
“Here in Transnet our recovery has plateaued, from achieving 149m tons in 2023 to an expectation that we will not achieve more than 152m tons this year. The private sector is clear we need to be achieving 250 million tons a year if we are to assist the country on its overall path to economic recovery,” Creecy said.
“It thus requires us to interrogate the Transnet Recovery Plan and engage with its assumptions. While this might require steadfastness in our determination to improve operational efficiencies, we also require strategic and tactical agility to welcome an industry-wide collaboration.”
However, Creecy congratulated Transnet for achieving an unqualified audit opinion and reaffirmed her commitment to supporting it in its recovery journey. She emphasised the need for decisive leadership and innovative solutions to reshape the freight logistics sector and the entity’s role within it.
Among other challenges Transnet faces are an ageing fleet, high network vandalism and theft, underinvestment, which are issues it must deal with in addition to the current macroeconomic environment.
In its results statement, Transnet said that “rail volumes were impacted by various operational challenges, including collisions and community unrest on the coal line and equipment challenges on the ore line, derailments, Eskom power outages affecting all lines, as well as customer challenges on the coal and general freight business lines”.
Creecy highlighted the direct link between the national economy’s under performance and the current challenges faced by Transnet, urging the entity’s leadership to take immediate and focused action in support of Cabinet’s apex priority of rapid, inclusive and sustainable economic growth, which will create jobs and foster economic development.
In December, under the auspices of the Freight Logistics Roadmap, Cabinet approved the development of a framework for private sector participation (PSP).
This framework will identify suitable areas for private sector participation in rail and ports and outlines structural and contractual requirements to enable such participation.
Creecy said the department was working with the National Logistics Crisis Committee (NLCC) to finalise the development of a future PSP unit that will be established with the necessary skills and expertise in the design negotiation and contracting of projects.
She said this would enable private sector investment and participation in ports and rail to increase competition and efficiency while ensuring that the infrastructure remains State-owned.
In her address, Creecy stressed the urgency of recalibrating Transnet’s performance targets to better align with the nation’s economic needs and the necessity to pull out all the stops to achieve them.
Having visited the Ports of Cape Town, Saldanha, Durban and Richards Bay, and having engaged directly with managers responsible for key corridors, terminals and security, Creecy emphasised that Transnet’s recovery efforts must align with national initiatives.
She particularly highlighted the support from the NLCC, part of a broader initiative led by the President to stabilise and revitalise the logistics sector.
“You cannot solve your current problems on your own or by returning to the past. You can only solve them by embracing the support the National Logistics Crisis Committee is offering and mainstreaming these initiatives in everything you do,” she said.
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