South Africa is reducing its reliance on the China Railway Rolling Stock Corporation (CRRSC) with plans in motion to start the local assembly of locomotives.
State-owned freight rail operator Transnet projects that as many as 90 locally made 23E locomotives will be operational on the North Corridor within the next 15 months. This is the main corridor through which local coal is transport into global markets.
This comes after Transnet was unable to secure spares from CRRSC for Chinese-made locomotives in its fleet, which severely hindered its ability to fulfill its mandate.
The new trains will be produced by Alstom and assembled at Transnet Engineering’s facility in Durban, and are expected to unlock almost eight million tonnes of railing capacity.
“It is a game-changer for export coal because those 90 locomotives are going to stabilise us,” said Theo Johnson, Transnet’s acting managing executive for the North Corridor, as per News24.
Transnet is also working on recovering out-of-service CRRSC locomotives with parts sourced from private suppliers.
The impasse between Transnet and CRRSC has been ongoing for the better part of a decade and stems from a termination of an illegal contract in the state capture era, the freezing of its bank accounts by the Special Investigating Unit, as well as legal action instituted by the South African Revenue Service due to alleged bribes paid.
Fringe benefits
Jan Havenga, Logistics Professor at Stellenbosch University and Director of Gain Group, said there will certainly be a “material difference” in Transnet’s performance once the new trains are put into service.
That said, he mentioned that there will be several other benefits stemming from the new arrangement that one may not think of.
Mainly, the locally made trains “remove an alibi” for poor performance.
“If I say alibi, I refer to the previous management [of Transnet]. I think that Transnet Engineering, whose hand I can see in this, has been working on solutions for quite a few years now,” Havenga told The Money Show.
“But, the previous management liked the idea of having this locomotive alibi and allowed other things to slip. It was very clear to me at the time; if you were a careful observer you could see it.”
He noted that the current management structure is far removed from its predecessor, as those in charge of Transnet at the moment engage with industry stakeholders and are open to suggestions.
Even so, the locally made locomotives will remove any temptation for the new management to rely on the same alibi as those they replaced.
Another interesting aspect is that the Transnet contract is with Alstom, a reputable French multinational rolling stock manufacturer.
“Alstom is a wonderful good-news story for South Africa for many reasons, not only for this contract,” said Havenga.
Alstom in a joint venture with a local firm has built approximately 600 trains in the small town of Nigel, Gauteng.
“I’ve been to their factory twice, and they’re building the most fantastic trains. 250 of them have been delivered to Prasa (Passenger Rail Agency of South Africa), 150 have been deployed into service, I’ve personally travelled in a few of them, and they’re marvelous,” said Havenga.
“This should make South Africa the train production hub for Africa.”
While the road ahead will be anything but easy going, Havenga said he has faith that the current Transnet management will be able to stay on track and deliver on their targets.
He said the problems that the entity will henceforth face are most likely not going to be technical, but will revolve around the reform of Transnet.
It’s done a lot of good work in fixing its trains and motivating its employees, but large parts of the Transnet rail network is still in dire straits.
“We’ve not completely solved the problem yet of how they’re going to put money into [the network], and part of the problem there is Transnet, not Transnet in terms of its leadership, not at all, it’s Transnet as a being… it needs to be unbundled,” said Havenga.
“If we can unbundle Transnet effectively, and then find the right modalities to fix the network, we’re going to get this solved.”
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