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South Africa’s grain industry has a clearer idea about the future of rail transport after Moshe Motlohi, acting chief executive of the newly established Transnet Rail Infrastructure Manager (TRIM) met with officials of Agbiz, Agbiz Grain, and the South African Cereal and Oilseed Traders Association (Sacota) on Tuesday, 22 July. The focus was for the grain industry to understand what TRIM’s strategy for the grain industry will be.
Towards the end of last year, government gave permission to Transnet to split the ‘old’ Transnet Freight Rail (TFR) into two entities, TRIM and the remainder, as part of its efforts to deregulate the rail industry. The remainder – mainly locomotives and wagons – will still be referred to as TFR, but will function as an independent network operator.
The ‘new’ TFR will in future compete with private network operators that will be licensed to use the rail infrastructure. Private entities that wish to offer network operator services must apply for a license from TRIM. The first opportunity has already taken place with applications closing on 27 February 2025. A total of 98 applications were received.
Tariff discussions continue
There are still ongoing discussions regarding the tariffs as this requires buy-in from industry and approval from the Interim Rail Economic Regulatory Capacity (IRERC). However, the part of the rail deregulation that is of most interest to the grain industry, is the decision by TRIM to divide the rail network into an A- and B-network.
The A-network will be the core main lines of the rail network, such as the KwaZulu-Natal (KZN) container line from Gauteng to Durban, and the mineral line to Richards Bay. Most of the rural branch lines that service the grain silos, fall in the B-network.
The A-network will for the most part remain fully under control of TRIM with slots (the number of trains that can run per day or week on a given route) being allocated to private network operators, including the ‘new’ TFR, at a fee. This will be maintained and upgraded, as necessary, by TRIM.
However, at present TRIM does not have the funds or capacity to maintain the B-network lines. It also does not see this as part of its core strategy. TRIM has therefore already indicated that it is open to industry proposals.
Commitment needed
For the grain industry to benefit from the deregulated environment, two things will have to happen. To illustrate this, the five branch lines in the Eastern Free State can be used as an example (Figure 1):
Figure 1: The five branch lines in the Eastern Free State
In an export year, the bulk of export grains are sourced in this area – containing 27 grain silos – and, in theory, a substantial percentage of this grain could cost-effectively be transported by rail to Durban.
First of all, a licensed network operator must show interest in allocating several locomotives and wagons to service these five branch lines. For this to be a viable proposition, traders and storage operators will also have to make some type of commitment to generate business for the network operator. The grain, or more precisely the loaded wagons, must then be amassed/gathered in Bethlehem or Harrismith where they will, as one complete train, utilise one of the slots secured by the network operator on the KZN container corridor to Durban.
Secondly, another commitment is required, that being from one or more private entities who will maintain these branch lines. This is apart from storage operators that have to maintain their own sidings. Core to the deregulation of TFR, is that in future the maintenance of branch rail lines vs utilisation of the lines, will be seen as separate services or businesses.
When it comes to B-network lines, a network operator may show interest in only using a small sub-section of one line (like a tourist line) or maintaining a line for a specific purpose, for example to transport forest logs to a nearby sawmill. The same entity may wish to perform both functions.
Could a consortium be the way forward?
What lies ahead for the grain industry? Motlohi said the successful applicants for network operating licenses will be announced by the end of August 2025. Given the relatively low volumes of grain transported (compared, for example, to minerals), the seasonality of the grain export season, and the variability from year to year, it is unlikely that any Sacota members have the risk appetite to embark on a venture of securing one or more branch lines for their exclusive use.
It is more feasible that Sacota members, together with a network operator and Agbiz Grain members (storage operators) form a consortium to engage with TRIM. The TRIM licensees’ announcement is an important step, as without knowledge of who the successful licensees are, and what their strategy will be, not much progress can be made.
Figure 2: TRIM Estimated Timelines
While waiting for TRIM to make the announcement on licensees, Sacota intends to survey members to determine who would be interested in forming such a consortium. Once the network operators are known, there will be approximately two months (September and October) to formulate a consortium strategy before TRIM announces a request for interest (RFI) from the market. For each region or each set of branch lines, or single line, there is likely to be a consortium with a unique set of traders, silo operators, and network operators that may be interested. The blueprint may be more or less the same, but the details will differ.
At this stage, any talk of what will happen beyond compiling an RFI, meaning January to April 2026, is very vague. Sacota members, though, do understand that if there is a surplus crop next year, the ideal time to commence with exports is end-April/beginning-May 2026. We trust that the necessary arrangements will then be in place. If not, another perfect opportunity to export grain by rail may be missed.
In conclusion, why is the revival of rail such an important economic driver for the grain industry? The three years before last year’s drought have shown that the port of Durban can export about 350 000 tonnes of grain per month. Of this, rail export capacity is approximately 175 000 tonnes per month or 50%, meaning that the basic rail infrastructure is in place, although a portion of it may require maintenance. Towards the tail-end of the export programme, rail volumes dropped to approximately 10 000–12 000 tonnes per month or about 6% of rail export capacity.
Globally, rail is much cheaper than road. In South Africa the cost of rail is approximately two-thirds of the cost of road transport. This potential saving often means the difference between whether South Africa is competitive in the grain export market or not. It is crucial that selective rail corridors and supply lines are revived. – Dr André van der Vyver, executive director, Sacota
For more information contact dr André van der Vyver, executive director of Sacota at Andre.vandervyver@sacota.co.za or 083 412 0287, or Juan-Pierre Kotze, Sacota’s manager: Research and Projects at info@sacota.co.za or 076 814 5888.
