By 
By: Andile Sangqu
Transnet stands at a pivotal juncture. We face a confluence of challenges and nascent opportunities that require decisive action. Amid our many challenges, introspection guides us, enabling sharper decision-making and problem-solving. As the board — appointed on July 11 2023 — completes two years in office, it is time to reflect on our journey.
When the board was appointed, Transnet was grappling with several challenges that threatened our operational and financial sustainability. The challenges are rooted in and shaped by past decisions and patterns. These include underinvestment in maintenance; poor governance; a sharp increase in security incidents; and port and rail inefficiencies.
These have caused severe financial distress due to declining volumes, escalating costs and mounting debt. Our operational and financial performance necessitated a comprehensive intervention. The Transnet board spearheaded implementation of a recovery plan in October 2023 to stabilise operations and address critical financial needs. The plan was designed to stem the downward spiral of inefficiency and financial distress and restore Transnet’s functionality. To a large degree, we have achieved this.
The acknowledgement we receive from the industry is a powerful validation of our commitment to an improved service offering, and a deep focus on enhancing efficiency.
One of the key deliverables when we launched the recovery plan was to stabilise the leadership. In this regard, we appointed Michelle Phillips as group CEO and filled other critical executive positions.
Collectively, our executives bring deep understanding of the business and vast institutional knowledge. They understand our core operations, market dynamics and strategic objectives and can translate our broad objectives into actionable plans.
Transnet has been deliberate about investment in port and rail infrastructure because one of the key stimulants of our recovery is sustaining capital investment. Over the next five years, we plan to spend R127.7bn on capital investment, of which R108.2bn (84.7%) will be sustaining capital focused on projects to maintain and refurbish our infrastructure. Our customers have taken note of improvements at our ports, with quicker turnarounds for their cargo and efficient handling.
The Southern African Association of Freight Forwarders, whose members represent a significant portion of the country’s international trade, recently attested to the marked turnaround in the country’s ports, as Transnet handled above-target volumes. The acknowledgment we receive from the industry is a powerful validation of our commitment to an improved service offering, and a deep focus on enhancing efficiency.
A key pillar in the success of our intervention has been collaboration with customers, the national logistics crisis committee and other key stakeholders. This has helped us bring in new levels of innovation and planning. The value of these collaborative efforts becomes clear when considering the complexity and the lengthy time frames required for fixing rail networks. While the recent gains are significant and demonstrate our commitment to progress, it is crucial to acknowledge the underlying realities. Despite the invaluable government guarantees, our balance sheet remains weak due to a combination of chronic underinvestment, high debt and external factors such as crime.
The high debt burden leads to significant net finance costs, amounting to R14.7bn*, which impact our cash flow. Strengthening our financial foundation is paramount to securing long-term resilience and unlocking our full potential. The government guarantees — R47bn in December 2023 and R51bn in May 2025 — represent a shared commitment to build a resilient and sustainable Transnet, capable of fulfilling its role as the backbone of South Africa’s freight logistics chain.
The high levels of debt — R144.8bn* — and the maintenance backlog require restructuring and optimisation of the balance sheet. Our balance sheet optimisation project, with the support of the National Treasury, seeks to unlock value from underutilised assets and streamline our capital structure. An optimised balance sheet lays a stable foundation for Transnet, enabling us to invest in our future. We will work closely with stakeholders such as the ratings agencies and the investor community in finding a sustainable balance sheet model.
Structural reforms are key to resolving our challenges and strengthening our capacity to improve performance and enable economic growth. Work is under way to implement the corporatisation of TRIM (Transnet rail infrastructure manager) and TNPA (Transnet National Ports Authority) to enhance governance, attract investment and improve service delivery.
In October 2023, the Transnet board and the shareholder announced the appointment of the inaugural board of directors of TNPA, marking a critical step in the transformation of the entity. As of April 1, TRIM has been responsible for the ownership, management, operation and maintenance of the country’s rail network.
On December 20 2024, we published the final network statement, which outlines the rules for the entry of private operators onto the rail network. An update on the allocation of slots to private operators is imminent. We are confident in the path we have set and look forward to continued success and focused pursuit of our strategic objectives. The “reinvent for growth” strategy is a well-defined road map to address our core issues, with a focus on optimising the business and transforming it to enable economic growth.
Through dedicated effort and strategic implementation, we have begun to address the key challenges. We are now firmly moving in the right direction. This month the board announced the establishment of the business operations performance committee to, among other things, track and monitor business operations in an integrated way. This will enhance strategic oversight and focus, while ensuring that our operational priorities are aligned with the overall corporate strategy.
We are not yet where we would like to be. But the progress is real, the business is being stabilised and we are increasingly optimistic. Considering the complexity of transforming a logistics company the size of Transnet, the progress thus far is something we should acknowledge and appreciate.
* Unaudited figures. 2025/2026 audited data will be published on conclusion of the external audit.
