South Africa opens rail and port sectors to private investment

South Africa is making its most significant push yet to involve the private sector in overhauling its struggling rail and ports industries, creating potential opportunities for Asian investors and logistics companies.

For decades, the country’s railways and ports have been controlled by state-owned entities and largely closed to private participation. But earlier this month, the Department of Transport issued a formal request for information (RFI) inviting companies to outline how they could support critical logistics corridors that handle key exports such as iron ore, coal, manganese, chrome and vehicles. A request for proposals (RFP) process is expected to follow in August.

The move marks a shift in policy as the government seeks solutions to a logistics crisis that has hobbled South Africa’s export capacity. Years of underinvestment, equipment shortages, maintenance backlogs and widespread cable theft have left freight rail and port services in disarray. According to the World Bank’s 2023 Container Port Performance Index, the Port of Durban ranked 398th out of 405 ports globally, while Cape Town was last.

The economic cost has been severe. Rail volumes have plummeted, with coal transported by train falling to its lowest level in nearly three decades. Iron ore shipments to the port of Saldanha on the West Coast are at their weakest in close to 10 years. Vehicle manufacturers face logistical headaches, with those near Pretoria forced to truck cars to coastal ports, while coastal-based plants must do the same to reach inland markets.

It is estimated that revitalising the rail network will require investment of about US$11bn. Officials believe that opening operations to the private sector could unlock an additional 60m tonnes of freight capacity on top of the current 151.7m tonnes.

The government has stated it will retain ownership of the underlying infrastructure, such as tracks and port facilities. Private-sector involvement is expected to take the form of running trains on public rail lines, leasing operations, investing in export terminals, and contributing skills and technical expertise.

Several projects have already been earmarked for initial private sector engagement. The RFI specifically targets transport corridors used to move bulk commodities and manufactured goods. Among the priority projects are the iron ore line to Saldanha and the coal export corridor linking Mpumalanga’s mining region to the Richards Bay Coal Terminal.

To support these initiatives, an interim private sector participation (PSP) unit has been established. This unit drafted the current rail and port RFIs and is laying the groundwork for a permanent PSP office. That unit is expected to be housed within the Development Bank of Southern Africa – a decision welcomed by some observers who see value in positioning it outside of both state-owned rail and port operator Transnet and the Department of Transport, which are widely viewed as contributing to the sector’s current dysfunction.

 

References

‘The Container Port Performance Index 2023’, World Bank, 2024

‘South Africa must invest $16 billion to lift growth, researchers say’, Bloomberg, 06 January 2025

‘South Africa's Transnet sees rail volumes falling short of target this year’, Reuters, 04 February 2025

‘Speaking notes for the Minister at the launch of the Request for Information to interested and affected parties in potential private sector participation in rail and port freight logistics’, Department of Transport, 23 March 2025

‘South Africa takes key step on rail, ports fix with private help’, Bloomberg, 24 March 2025

‘Private sector to participate in rail and ports’, eNCA, 25 March 2025