Minister Barbara Creecy: Rand Merchant Bank Think Summit 2025

Programme Director,
Members of Cabinet and Deputy Ministers in attendance
Chairperson of the Board of the Rand Merchant Bank 
Members of the RMB EXCO
Panellists
Members of the Media
Ladies and gentlemen

Let me thank the organisers for the invitation to participate at this critically important and highly informative Think Summit; these fora have become a significant source of sustainable solutions to the many challenges we face especially in network industries that are essential for our economy’s recovery and growth.

The theme of this Think Summit for reform and recovery reflects a shared perspective between business and government about structural reforms needed to accelerate South Africa’s economic recovery and social development.

We all know that in the aftermath of the COVID 19 Pandemic South Africa’s logistics sector has been underperforming with serious negative implications for the country’s economy and its citizens. Business Day recently estimated these inefficiencies cost the economy as much as a  R 1 billion a day.

In 2023, government and the private sector established the National Logistics Crisis Committee (NLCC) to facilitate urgent action to improve performance by the Transnet rail and port network.

Areas of focus included performance of key freight logistics rail corridors; congestion at strategic border crossings and associated national highway corridors such as the N1 and N3, as well as interventions to combat cable theft and maintenance backlogs at Transnet.

At a policy level, interventions in the logistics sector are guided by the National Rail Policy of 2022 and complemented by the National Freight Logistics Roadmap of 2023.

The National Rail Policy enables the introduction of open access and private sector participation in the national rail network, fostering effective competition to enhance both the quantity and quality of rail services and reduce costs of transportation while the network remains state-owned.

In this regard there have been two significant developments over the last six months. The first is the release by the Department of Transport of the Network Statement  and Rail Access Tariffs for 2024/5. Work is currently underway to publish the Network Statement and Rail Access Tariffs for 2025/26 for our rail industry.

I like to call this important document a menu and a price list for third party operators interested to do business on our key freight corridors.

The second key development is the release of the Request For Information (RFIs) on the five key rail and port corridors. The RFI seeks to solicit information from participants in the rail and port freight logistics sector with the objective of using such information to develop Framing Problem Statements for relevant Requests for `Proposals which we aim for Transnet to issue by  August this year.

In June we hope to issue an RFI for passenger rail that will include operational areas such as signaling, depots and rolling stock as well as high speed rail corridors. This information will be used by PRASA to issue RFPs in October this year.

To guide investment in rail corridors the Department and National Treasury have created a private sector participation (PSP) unit that will be hosted by the Development Bank of Southern Africa. The PSP unit has a number of workstreams to ensure future bidding processes  support empowerment; localisation and the needs of organised labour.

To address regulatory challenges, we have established the Interim Rail Economic Regulatory Capacity (IRERC) which would later form part of our new institution the Transport Economic Regulator.

The IRERC aims to create fairness and transparency for third-party operators, improve network utilisation, increase competition, and reduce costs. This process includes frameworks for network access, determination of the tariff methodology, service levels, and a contractual framework.

The vertical separation of Transnet and the appointment of a manager has been a critical step to facilitate transparent implementation of third-party access. As of 1 October 2024, Transnet Rail Infrastructure Manager (TRIM) is operating independently from Transnet Freight Rail.

Minister Tau’s  recent decision to issue a block exemption for the rail and ports industry from sections of the Competition Act that prohibit agreements between competitors, means that companies can collaborate on procurement and sharing of the services of for improvements in port and rail.  This opens the way for short and long term investment in rail infrastructure.

Ladies and gentlemen we understand that these interventions while moving ahead, will take time to reach financial close and ensure new investment in our rail network. 

Accordingly Transnet has developed a recovery plan aimed at stabilising port and rail volumes. The establishment of various “war rooms” for specific corridors and commodities has allowed Transnet and the private sector to collaborate and share expertise, and address challenges such as derailments and unplanned maintenance. 

Business and Transnet have co-operated to improve maintenance and security on key freight corridors and hope to find ongoing short term mechanisms to promote investment in the rail network while the longer term reform agenda rolls out.

Transnet will put in bids to the budget facility for infrastructure at National Treasury for maintenance and refurbishment of the network and selected terminals.

Joint initiatives have managed to increase freight volumes to 161 million tons per annum in March 2025. While this is still a long way from our 2030 target of 220 million tons, its an improvement on past performance.

As part of Transnet’s recovery plan, replacement and refurbishment of critical equipment such as cranes, RTGs, straddles, and haulers is happening in our ports. 

Continued collaboration with original equipment manufacturers has ensured that spare parts for essential machinery can be sourced when necessary. This has resulted in improvements at our ports where ship waiting times and queuing times for trucks have decreased.

Last week Transnet issued a R17bn concession contract to five private sector partners to fund, construct and operate several liquid bulk terminals at the Port of Richards Bay.

A key part of turning around the fortunes of our rail and ports logistics systems has been collaboration with stakeholders to address bottlenecks and inefficiencies. The close collaboration with the fruit growers association and other logistics stakeholders in Cape Town has eradicated the delays experienced last year and despite higher wind stoppages this year, the port is meeting agreed shipping plans with no vessel waiting to berth due to poor operations performance.

In Richards Bay the port and municipality have established a truck holding facility that has moved trucks from the N2 and port access roads in order to address congestion.

Ladies and gentlemen

A great deal of work has also been done to ease congestion on the N1 and N3 corridors in partnership with the SA Road Freight Association.

As we reflect on the journey of the last ten months, I am reminded of the Chinese proverb which says: “the best time to plant a tree was twenty years ago. The second best time is now”.

We all agree these critical reforms to our freight logistics sector should have been implemented twenty years ago. The second best time to implement them is now.  The change process we are currently implementing is massive, complex and far from embedded.  

As this change process proceeds it will change Transnet, the rail ecosystem of our country and properly managed could see a new era of rail, rolling stock and port development. This in turn has the potential to free our mining, agriculture and auto industries from current constraints. It also has the potential to support new domestic industrialisation in steel and related industries.

Its exciting, its challenging and it needs support from all sectors of government, business, labour and civil society.

I thank you

#ServiceDeliveryZA