By Eamonn Ryan, derived from the podcast
In a podcast hosted by Peter Bruce of FM, Jamie Holley, CEO of Traxion, shared insights into the challenges and opportunities in the South African rail logistics sector. This article explores the challenges and opportunities within South Africa’s rail system, offering insights that are highly relevant to the cold chain industry. This is Part 9 of a 12-part series.
Holley acknowledges that while infrastructure and capital investment are critical, the question of skills is just as important. Rail systems require highly specialised knowledge in areas like maintenance, signaling and operation, and the shortage of skilled labour has been a growing concern. Holley admits that his company also faces challenges with skills development, but they’ve been proactive about it, spending an average of R45 000 per employee per year on training to ensure its staff stay highly qualified. This is a significant investment in human resources, and it’s something that private companies will need to continue focusing on to ensure a successful long-term outcome for the rail industry.
As for Transnet, Holley is somewhat cautious about commenting on its internal challenges, given that he operates more on the private sector side. However, he recognises that Transnet’s ability to maintain and improve its infrastructure depends on its human capital, which is currently under strain. It’s a common issue across many sectors in South Africa: a gap between the needs of the economy and the available skills to meet those needs. Addressing this gap will require substantial investment in training and development, which in the case of railways, could take years to fully address.
The larger economic picture and the role of ports
A point of concern that Holley raises is the relationship between rail and ports. While improving the railway system is crucial for economic growth and export efficiency, the end point—the ports—are equally critical. The so-called ‘last mile’ of logistics, where goods are transported from the rail system to port facilities, remains a bottleneck in South Africa’s supply chain. Even though there have been some improvements in port operations, the country still faces inefficiencies that affect global competitiveness.
Holley is realistic about how much difference an improved rail system can make if the ports are not functioning efficiently. South Africa’s ports are still among the most inefficient in the world, with slow turnaround times and congestion issues that hinder global trade. While better rail infrastructure can certainly reduce some pressure on the roads and move goods more quickly to ports, without significant reforms and upgrades to the ports themselves, the country’s broader logistics and export challenges will persist.
This issue speaks to a larger structural problem within South Africa’s supply chain. As Holley points out, addressing rail infrastructure is necessary, but it’s only part of the puzzle. To truly make South Africa’s logistics sector world-class, the entire system—from rail to ports to the road network—needs to be overhauled. This requires a multi-faceted approach involving significant public and private sector collaboration.
An important moment for SA’s rail industry
Despite the challenges, Holley remains optimistic about the potential for recovery. The reforms that have been put in place, particularly the creation of the Rail Economic Regulator and the Private Sector Participation (PSP) framework, create a more favourable environment for investment. Holley believes this is a critical moment in South Africa’s railway history. If the country can successfully attract both private and public sector investment, the rail system could be revitalised and put on a path toward sustainability.
However, as Holley rightly points out, this moment also comes with a level of uncertainty. If the necessary investments and reforms don’t come through, the situation could become even more dire. This makes it a key moment for all stakeholders involved. It’s clear that both the government and private sector must act quickly to address the infrastructure needs, the skills gap, and the operational inefficiencies if South Africa is to regain its competitiveness in global trade and transportation. The railway system is the backbone of this effort, but it’s only one piece of the larger logistical puzzle.
Breaking down the SA rail system
To truly understand the challenges and opportunities in South Africa’s rail system, it’s essential to break it down into its two primary components: bulk freight and general freight. Bulk freight, which includes commodities like coal, iron ore, manganese and chrome, accounts for about two-thirds of the total rail volumes in South Africa. However, this freight only uses a small fraction of the country’s rail network—approximately 15 to 20% of the total tracks. These are long, heavy trains, often moving large quantities of commodities like coal or ore, which are a key part of South Africa’s exports.
On the other hand, general freight encompasses a broader range of goods, such as containers, vehicles and agricultural products in the cold chain. This type of freight utilises the bulk of the rail network and generally operates at a higher frequency and across a wider range of goods.