The state-owned enterprise (SOEs) turnaround started in June 2023, when President Cyril Ramaphosa launched the National Logistics Crisis Committee (NLCC).
South Africa’s rail, port and pipeline operator Transnet is inching back to recovery after years of operational decline.
Driven by a sharp deterioration in operational locomotives, lack of critical spares and disputes with suppliers, the operator’s freight rail volumes were in freefall as over 1,000 km of cable theft in Financial Year (FY) 2023 alone, inflicted nearly R4 billion in losses.
“These operational failures compounded chronic underinvestment in infrastructure, leading to mounting maintenance backlogs and a spike in derailments,” said institutional lender, Ninety-One in a report titled “Transnet’s recovery: Why institutional investors should be watching closely” released in July 2025.
Financially, the report prepared by Thanzi Ramukosi, Investment Specialist and Alastair Herbertson, Managing Director at Ninety-One said, Transnet was equally distressed, “with poor free cash flow, high gearing, and multiple breaches of bank covenants shaking investor confidence.”
However, the state-owned enterprise’s turnaround started in June 2023, when President Cyril Ramaphosa launched the National Logistics Crisis Committee (NLCC), bringing together public and private sector leaders to address the Rainbow nation’s transport and logistics crisis.
Three months later, in September 2023, Transnet unveiled a formal recovery plan, backed by new executive leadership and a R51 billion (US$2.8 billion) government guarantee facility, marking a clear pivot from crisis management to structural reform.
Since then, the results have begun to show, starting with an increase in rail volumes from 150 million tonnes in FY23 to 160 million tonnes in FY25. Transnet is targeting 181 million tonnes for FY26.
Over the same period, Durban Pier 2 which handles nearly half of South Africa’s container traffic, was equipped with 20 new straddle carriers, reducing backlogs by 45%.
“While challenges remain, Transnet’s recovery is gaining credibility. For institutional investors, this is no longer just a troubled SOE; it is a strategic national asset at the centre of an unfolding economic and policy realignment,” the report said.
“Backed by reform, capital, and political resolve, Transnet’s transformation signals a turning point for South Africa’s logistics, and for those with the capital and conviction to stay the course.”
The turnaround has been aided to a large extent by the opening of its networks to private participation, according to the report.
There are signs that customers are beginning to see the SEO as a reliable partner once again.
Transnet and Hozatel Manganese Mines (HMM) – a joint venture operated by a wholly owned subsidiary of South32 Ltd –signed a 10-year contract under the third phase of the Manganese Export Capacity Allocation (MECA3) framework.
“This agreement is a testament to the efficiency and reliability of our services. It also reflects our commitment to the mining sector, underpinned by reliable and predictable access to rail capacity for our manganese exporters,” said Transnet Group CEO, Michelle Phillips.
The agreement provides HMM with the operational certainty needed to support its mining and export activities, in turn contributing to local jobs and the country’s economic prosperity.
Earlier, Transnet and United Manganese of Kalahari (UMK) signed a 10-year contract for the transportation of manganese by rail from UMK’s mine in the Northern Cape to ports for export markets.
Through the Manganese Export Capacity Allocation (MECA) 3 agreement, Transnet allocates rail and port capacity to manganese producers in South Africa for their export volumes, the contract with UMK “signifying the company’s confidence in Transnet’s ability to ensure efficient access to global markets.”