Earlier this month, state-owned rail freight operator, Transnet SOC Limited (“Transnet”) announced that it will be engaging with the private sector to enter into a 20-year operating lease for the maintenance and operation of its Durban to Johannesburg line. Known as the “Container Corridor”, this 670km stretch of railway line has the potential to greatly increase the efficient and timeous transport of containers between the port of Durban and the commercial hub of Johannesburg.
Transnet has confirmed that the announced follows a directive from Government to engage the private sector with the hopes of providing the much-needed funding to revive the ailing transport line. In recent years, poor maintenance, vandalism and theft of goods in transit have crippled the Container Corridor, with breakdowns and security incidents occurring on an almost daily basis.
Transnet hopes that joining with a private partner will provide the capital injection needed to restore the Container Corridor to full operating capacity, reducing the reliance on inefficient truck-transport and streamlining the transport of goods between the provinces.
While the United National Transport Union (“UNTU”) has been opposed to the privatisation of Transnet for some time, they confirmed that the announcement did not come as a surprise given the current state of Transnet, which has been crippled by its various loan obligations. In the wake of the announcement, UNTU has confirmed that it is committed to ensuring that all jobs are maintained amidst the creation of this private partnership, and that more jobs will be created moving forward.
Unlike UNTU, the South African Association of Freight Forwarders (“SAAFF”) has welcomed the announcement to privatise the line, stating that it provides a “glimmer of hope” that the Corridor will finally be able to operate at its optimal capacity. To the SAAFF, this represents a key turning point in the future of the Transnet railway system, which may not be capable of redemption if swift action is not taken to restore these transport lines functioning condition.
As it stands, Transnet is set to issue a Request for Qualifications to the private sector to identify interested and capable parties to partner with moving forward.
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