Private operators ready to enter South Africa’s rail freight market

The struggle of the African Rail Industry Association (ARIA) to allow third-party access to the South African rail freight sector seems to pay off. Traction is the name of the first private operator to express interest in entering the South African market and offers some incentives for the country’s government.

Rail has been South Africa’s logistics backbone for decades now. Yet, the country’s sector is not as advanced as expected, with the monopoly of the national railways causing problems. One of these problems is the old infrastructure and the lack of healthy competition.

Rail is seen as the means to help the African state with its economic recovery. South Africa’s finance minister, Tito Mboweni, has underlined that “rail has supported the economy for decades.” “With infrastructure needing repairs or replacement, partnerships with the private sector and other players are critical”. The same applies to Mesela Nhlapo, CEO of ARIA, which lobbies to introduce private operators in the country’s railway network.

You can watch the interview that Mesela Nhlapo gave to below:

An interesting case for companies

Traxtion has clearly expressed its interest in leading the way for private operators entering the South African rail freight market. The fact that the county’s president Cyril Ramaphosa has committed himself to opening the rail network, the company feels the needed safety to invest.

Specifically, the company is already raising the needed capital before the country’s official introduction of structural reform to provide the necessary assets and equipment for operations right away. Even though South Africa has not officially opened its rail freight market, even an open call and verbal commitment are enough to draw the interest of big operators.

Incentives in place

The rail freight operator sees an opportunity in South Africa since it’s an unexplored and unexploited market with much potential. Indeed the volumes of rail freight operations in South Africa cannot be unseen. Nevertheless, the company has also much to offer in return. With 34 years of experience in Africa, it has completed some very successful projects, including operations in Tanzania and Zambia. The railway authority of the two countries underlines that due to Traxtion, the freight volumes of the Calabash Joint Venture, a rail logistics company in Tanzania and Zambia, has increased by 26,5 per cent compared to last year.

Success in other countries is not the only incentive that Traxtion offers to South Africa. What is more, the company claims to have a solid basis of clients and freight owners in the country. “Our name already inspires confidence in the name of our services. We have a regional presence with boots on the ground in seven African countries, bringing confidence back to rail for the benefit of our customers,” argues James Holley, CEO of Traxtion.

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Author: Nikos Papatolios

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