The South African presidency unveiled a plan to hand over rail and port operations to private sector, in an effort to staunch the losses of at least $26.7 billion suffered since 2020 for its economy, according to a Bloomberg report.

This plan, encapsulated within a document known as the "Roadmap for the Freight Logistics System in South Africa" presents a clear timeline for the transformative measures, including the establishment of an independent port and rail regulator, allowing private companies to access rail lines and offering rights to operate ports and rail routes to private companies.

Notably, coal and iron ore rail export lines, which have been plagued by operational issues impacting exports by major entities such as Anglo American and Glencore, are now under consideration for private operation.

The urgency of addressing South Africa's broken logistics system is paramount. Cargo volumes on the coal rail line to the Richards Bay export terminal are at their lowest since 1993, iron ore railings are at their weakest in a decade, and general freight volumes have plummeted even further.

This drop has resulted in a considerable portion of freight being diverted to roads, leading to traffic congestion and infrastructure damage, primarily due to locomotive shortages and cable theft.

The underperformance of state-owned Transnet has prompted lobby groups representing miners and businesses in the key port city of Durban to call for the removal of Transnet's management.

In a structural transformation, Transnet is expected to become a holding company with various subsidiaries, potentially allowing stakes to be acquired by private companies, while the state will retain majority control over its infrastructure businesses.

(Writing by Alex Guo  Editing by Harry Huo)
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