Private rail operators will boost the South African economy

The South African economy will benefit immensely if private rail operators are allowed access into the market. Image credit: Wikipedia

28 February 2021 – Opening up third-party access to South Africa’s rail infrastructure will fundamentally change the way freight moves in the country. Private rail operators will boost the South African economy. In addition, it will benefit a range of other industries and grow the size of the rail market for all players.     

South Africa can emulate the likes of global powerhouses like Germany that used rail to build effective transport routes into key markets across Europe and the rest of the world by expanding the usage of the state-owned rail network to private rail operators. Government owned Transnet could benefit immensely through access fees generated from new cargo flows. Increasing rail capacity will improve the competitiveness of South Africa’s economy. This will stimulate growth and that means that jobs created are not limited just to those that would be created in the rail sector but many multiples more upstream.

Opening up third-party access to South Africa’s rail infrastructure would fundamentally change the way freight moves in the country. This would not only grow the size of the rail market for all players, but ultimately benefit a range of industries and the entire economy.

Independent rail operator Traxtion’s CEO James Holley, says that by giving third-party operators access to the rail network would not only enable more efficient freight movements within the country, but unlock potential new export markets by providing capacity to freight goods to ports and the rest of the continent.

Granting third-party access to the country’s core rail network within the next 12 months is a key element of the Economic Reconstruction and Recovery Plan presented by President Ramaphosa last October. Under this policy, private freight rail operators will be allowed to operate on the state-owned rail infrastructure alongside Transnet.

Holley says there is a ‘significant’ body of cargo – including steel, agricultural products, hazardous chemicals, specialised products and general freight – that is well suited to rail transport but is not currently moved by rail. Providing additional rail capacity to service this demand would create an ‘unprecedented’ boom in the rail freight market.

“The rail industry in South Africa should be pursuing getting as many extra tonnes on rail as possible. One of the big winners would be Transnet, who would benefit from access fees generated from these new cargo flows. Increasing rail capacity will improve the competitiveness of South Africa’s economy. This will stimulate growth and that means that jobs created are not limited just to those that would be created in the rail sector but many multiples more upstream,” says Holley.

Global manufacturing powerhouses like Germany, which has built effective transport routes into key markets across Europe and the rest of the world, has created a world-class rail network through state-owned rail operator Deutsche Bahn’s long-standing partnerships with a range of third-party operators, says Holley.

“We are already seeing strong demand from freight movers that are eager to access this new rail capacity. What is most exciting is that this will lead to new business and expansions to existing businesses who have needed this capacity to grow,” says Holley.

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