• Company’s CEO was criticized by ministers over rail service
• Freight-rail volumes plunged 34% in five years to March 2023

South Africa’s state logistics company said it’s doing the best it can within the constraints it faces and is making some progress, after being blamed by business and government for sapping economic growth and costing jobs.

Michelle Phillips, who took over as Transnet SOC Ltd.’s chief executive officer in February, was criticized over the company’s failure to lift rail-freight volumes by government ministers at an Aug. 13 meeting, people who attended said. A day later, at a public presentation, an official from President Cyril Ramaphosa’s office said mining firms were firing people because of the company’s inability to move their production to ports.

“The recovery plan is focused on what is within the control of the organization, taking into account the state of its finances, the network, availability of rolling stock,” Transnet said in a response to queries. “The operational challenges that Transnet is experiencing have a historical context.”

Over the five fiscal years ending March 2023, the amount of freight moved by Transnet, including key exports such as coal and iron ore, collapsed 34% to 149 million tons amid corruption and management scandals. Annual volumes under 220 million tons lead to job cuts, the presidency said in the slides.

Among those that have cut jobs are Kumba Iron Ore Ltd. and coal miners Glencore Plc and Seriti Resources Holdings Ltd.

Green Shoots

Transnet lifted volumes marginally to 152 million tons in the year ended March 2024 and has set targets of 170 million tons for this financial year and a 193 million tons for the next one.

This “is what we believe is achievable with the current status of the resources available to Transnet,” the company said, adding that it has a 50 billion rand ($2.8 billion) maintenance backlog across its rail operations and ports.

Progress is being made, it said. “Several initiatives have been implemented in support of the recovery plan and continue to be robustly executed,” Transnet said. “Green shoots are visible in strategic segments like manganese, chrome and containers, with export lines, coal and ore, remaining our key focus.”

The company has stepped up security on its rail lines, which are plagued by cable theft, and has restored 38 locomotives to service and added 10 new ones. A dispute with a Chinese supplier means that 99 other locomotives remain idled.

Source: https://www.bloomberg.com/