Progress Report: South Africa Shifts Freight Transportation From Road To Rail

Written by Staff

In 2013, about 71 percent of the 734-million tons of freight moved in South Africa was moved by road, despite the fact that railways make up 80 percent of Africa’s infrastructure, according to a PWC report.

Over the next four years, South Africa plans to shift its freight transportation from road to rail, cutting carbon emissions and costs in the process.

Rail volumes are projected to increase from about 200 million tons to 350 million tons by the end of the program, according to South Africa’s Market Development Strategy overview.

The biggest railway deal in South Africa’s history is predicted to propel the country’s economy to a new level of prosperity. Eva Grey explores the country’s infrastructure strategy and finds out more about a recent spate of record rail investment deals.

From Story by Eva Grey.

South Africa’s railway system is set to flourish under a boost of record investment aimed at turning the country into a key player in the global freight industry.

The development was first announced in 2012, when Transnet, South Africa’s state-owned ports and rail company, launched the Market Development Strategy, a seven-year 300 billion rand ($33.82 billion) investment scheme with a clear strategy to rejuvenate the country’s ports, rail and pipelines infrastructure.

A big portion of this investment is dedicated to rail. In March 2014, Transnet announced a 50-billion rand ($4.26 billion) contract with four manufacturers to build a 1,064-strong locomotive suite.

The move marked the start of the biggest rail recapitalization program in the country’s history. China’s rolling stock manufacturers China North and South Rail won the lion’s share of the contract, followed by Bombardier Transportation (Canada) and General Electric (U.S.) as key tenders.

Much more than just a development scheme, the project is an initiator of growth: by boosting the national freight volumes to unprecedented levels, with a particular focus on the country’s key industries of iron ore and coal, the strategy is trusted to fuel a strong economy in South Africa.

The plan is in its third year, and the outlook is positive. The most recent development saw Transnet secure 13 billion rand ($1.1 billion) in funding to build its locomotive fleet. The financial backing announced March 2 comes from a range of funders and financial institutions, including Barclays Africa, Investec, Standard Bank, Old Mutual and Export Development Canada.

The money is funding locomotives from Bombardier and General Electric.
Most importantly, the deal marks the first tangible step towards South Africa’s ambition to accommodate the fifth-largest railway system in the world by 2019.