“How opening the rail network to private operators can improve logistics performance, boost competitiveness and drive economic growth.“
09 July 2026 | Author: By Professor Chengedzai Mafini, Executive Dean of the Faculty of Management Sciences at the Vaal University of Technology (VUT), and John Maluleke, a transport economist and consultant with more than 50 years of experience in the rail sector.
4 minutes read time.
In 2025, the South African government liberalised the rail sector by opening access to private operators. This decision represents one of the most strategically significant economic reforms made in the country since the dawn of democracy in 1994. The government’s realisation that the monolithic rail regime, dominated by Transnet and in place since the apartheid era, was creating severe supply chain bottlenecks that were slowing the national economy served as an important trigger. Some of the challenges experienced include infrastructure deterioration, operational inefficiencies and chronic logistical disruptions, all of which signal the rail system’s underperformance. Liberalisation of the freight rail supply chain is therefore a deliberate interventionist strategy by government to restore business and investor confidence, thereby boosting the country’s industrial competitiveness and enhancing long-term growth.
Strategic economic benefits
Rail liberalisation brings enormous benefits to the business community by enhancing the country’s production planning, storage and export loading. Additionally, the influx of private investment reduces the country’s reliance on government funding to build trains and expand the rail system. It is likely to further lead to competitive pricing, efficiency, innovation, reduced risk and potentially lower logistics costs. Companies such as AR&T Rail, Grindrod Rail and Traxtion Sheltam, if given full access to operate, bring technical expertise, capital investment capability and international best-practice knowledge. Apart from signalling the industry’s confidence in the reforms, the entry of such companies also increases the prospect of higher performance expectations across the rail sector. Currently, over 80 per cent of cargo in South Africa is transported by road. Moving such freight from roads to the rail system will likely reduce the number of heavy trucks on major highways, lowering congestion, extending infrastructure lifespan and reducing accident frequencies. Since a large portion of the freight rail system in South Africa operates on electric power, it results in significantly greater energy efficiency than the road system. Moreover, liberalisation increases opportunities for local rail equipment manufacturing. Local rail equipment suppliers, such as Alstom, Galison, Gibela, Surtees and others, may benefit from increased demand for locomotives, wagons, parts and maintenance solutions. Such local sourcing promotes homegrown industrialisation, skills development and localisation of the rail supply chain.
Recipe for success
To ensure success, the rail reforms should be implemented meticulously. Rail traffic management and signalling infrastructure is currently in a dilapidated state and should be urgently rehabilitated to ensure uninterrupted rail locomotion. The recent establishment of the Transport Economic Regulator (TER) is a critical and commendable attempt to ensure a fair, transparent and competitive rail market in South Africa. However, the government must urgently empower this body to deliver its mandate by ensuring it is capacitated and fully operational. Among other things, the TER should be tasked with facilitating smart partnerships between the public and private sectors. Such partnerships can then be vehicles for accelerating the repair of outdated infrastructure. There is also a need for policy stability, as sudden changes can prompt investors to flee. All new players in the rail sector must be given equal opportunities to compete. Rail should also be seamlessly integrated with ports, roads and air transport through modern intermodal systems. The success of the rail sector cannot be achieved without an adequate, competent workforce. To upskill the rail sector workforce, the government needs to utilise its extensive network of higher education institutions and available technical experts by harnessing their capabilities and directing them to this national cause. Ultimately, the immediate challenge is to deliver a disciplined, credible and business-aligned implementation to ensure these rail reforms become one of the country’s defining economic success stories.