South Africa’s freight challenges are not confined to one port, railway line or logistics facility. They stem from a network that must move goods between farms, factories, warehouses, ports and international markets, often through infrastructure that has struggled to keep pace with demand.

That is why private investment in logistics infrastructure deserves attention beyond the value of any individual transaction.

Absa’s reported expansion of its financing support for logistics infrastructure developer Newlyn Group to R5.1 billion raises a broader question: can private capital help close the gaps between the different parts of South Africa’s freight network?

The answer will depend less on the amount invested than on where the money goes, how projects connect to existing infrastructure, and whether the resulting facilities improve the movement of cargo.

The Problem is Not Simply a Lack of Warehouses

South Africa has logistics facilities across its major industrial and commercial centres. However, warehouse capacity alone does not resolve the challenges facing the freight system.

A warehouse may provide valuable storage space, but its usefulness depends on what happens outside its gates. If trucks face congestion, rail services are unreliable, or port operations are delayed, the warehouse becomes another holding point in an already disrupted chain.

The more important investment is in infrastructure that connects different activities.

This includes logistics parks near industrial centres, facilities linked to rail terminals, storage close to ports, and sites that allow cargo to move between road and rail without unnecessary handling or additional journeys.

The value lies in the connection. A facility that is properly integrated into the wider network can help businesses plan movements more efficiently and reduce the number of disconnected steps between origin and destination.

Why Multimodal Infrastructure Matters

Road freight remains essential because it offers flexibility and can reach locations that are not served directly by rail. It is particularly important for first-mile and last-mile movements.

Rail, however, can play a different role by moving larger volumes over longer distances. When the two modes are connected effectively, businesses can use each where it makes the most operational and economic sense.

This is the thinking behind multimodal logistics infrastructure.

Cargo could move by truck to a rail-linked facility, travel longer distances by rail, and then return to road freight for final delivery. Warehousing and storage positioned around these connections can support consolidation, distribution and export activity.

This model does not eliminate the need for trucks. It can, however, reduce the pressure on road freight by giving operators more options for moving cargo through the network.

For South Africa, that matters because freight costs are influenced not only by fuel and vehicle expenses, but also by delays, empty running, congestion, repeated handling and unreliable schedules.

Durban Shows Why the Connections Matter

The Durban–Gauteng corridor illustrates the challenge.

Cargo moving through the Port of Durban must travel between the coast and the country’s major industrial and distribution centres. That movement depends on a combination of port operations, rail infrastructure, road freight, warehouses, terminals and inland distribution facilities.

If one part of the corridor performs poorly, pressure is often transferred elsewhere. Delays at a port can affect truck scheduling. Rail constraints can push more cargo onto roads. Congestion can increase turnaround times and raise operating costs for transporters.

Investment in facilities near the port or along important freight routes could improve the way cargo is staged, stored and transferred. These facilities, however, will only deliver their full value if they are supported by reliable road access, functioning rail connections and efficient port operations.

This is the important distinction between building logistics infrastructure and improving logistics performance.

Private Capital Cannot Fix the Entire Network

Private investment can provide funding for new facilities, equipment, technology and development capacity. It can also introduce commercial pressure to improve service delivery and make better use of assets.

However, private logistics developments remain dependent on the wider transport system.

A privately financed rail terminal cannot operate effectively if the rail network lacks capacity. A modern warehouse cannot compensate for severe port delays. A logistics park may still struggle if road access is congested or surrounding infrastructure is inadequate.

Private investment should therefore not be viewed as a replacement for public infrastructure reform. It is one part of a wider system that includes Transnet, municipalities, road authorities, port operators, rail infrastructure managers, freight customers and logistics companies.

The strongest projects will be those planned with these dependencies in mind.

The Timing is Significant

South Africa is pursuing changes to its freight logistics system, including private-sector participation in port operations and the opening of the rail network to third-party operators.

These reforms could create opportunities for infrastructure developers and financial institutions. As more operators enter the market, supporting facilities such as terminals, storage, maintenance sites and cargo-handling infrastructure will become increasingly important.

But the relationship works both ways. New infrastructure can support reform by making it easier for different operators to access the network. At the same time, the success of those facilities will depend on whether the reforms improve the underlying network.

Coordination will therefore matter as much as the availability of finance.

The Real Measure Will Be Better Cargo Movement

The significance of a large logistics financing facility should ultimately be measured by what it changes on the ground.

Does it reduce unnecessary truck movements? Does it make rail a more practical option for freight customers? Does it improve access to ports, reduce handling delays or help exporters move goods more predictably?

These are the outcomes that matter to manufacturers, retailers, exporters, transport operators and consumers.

Private capital has an important role to play in South Africa’s freight recovery. But investment figures alone do not improve a supply chain. The real opportunity lies in using that capital to build the connections the country’s logistics network has been missing.

For South Africa, the bigger test is whether investments like this can help move the country from isolated logistics projects towards a more connected, reliable and competitive freight system.

Transnet has reported a stronger financial and operational performance for the year ended 31 March 2026, with increased rail volumes, higher revenue and renewed progress on South Africa’s freight logistics reform programme.

In its annual results media statement, released on 10 September, the state-owned freight and logistics company reported revenue of R88.6 billion, a 7.1% increase on the previous year. Transnet also recorded a R4.6 billion profit, compared with a loss of R1.9 billion in the previous financial year.

The results suggest that some of the interventions introduced to improve the reliability of South Africa’s freight network are beginning to produce measurable gains. However, Transnet also acknowledged that significant operational and financial challenges remain.

Rail Volumes Show Signs of Recovery

Rail volumes increased by 4.9% to 167.9 million tonnes during the reporting period. Transnet attributed the improvement to focused interventions aimed at strengthening network reliability, improving maintenance execution and increasing asset availability. Pipeline volumes also increased during the year.

For customers relying on rail to move bulk commodities, minerals, manufactured goods and other freight, improved reliability can have an impact well beyond Transnet’s own results. More dependable rail services can support better production planning, reduce the need for alternative transport arrangements and improve the movement of goods between industrial areas, ports and export markets.

The company said that customers and industry stakeholders had begun to recognise improvements in rail performance and service delivery. It also noted positive feedback from the citrus sector regarding port operations and their contribution to improved export performance.

Despite this progress, Transnet’s operating environment remained difficult. The company identified derailments, rail network and rolling stock constraints, security incidents, equipment and power disruptions, adverse weather, resource shortages, community unrest and customer-related demand challenges among the issues affecting performance. The rail and port businesses were also impacted by R658 million in take-or-pay penalty adjustments.

Reinvent for Growth Remains Central to Recovery

Transnet’s recovery programme continues to be guided by its Reinvent for Growth strategy. The company said the strategy had supported targeted interventions focused on maintenance, asset reliability, operational discipline, technical capability, procurement and supply-chain efficiency.

These measures contributed to higher rail volumes, stronger cash generation and improved customer confidence, according to the statement. The broader objective is to create a more reliable and competitive freight system capable of supporting South Africa’s economic growth.

The challenge now is to ensure that these improvements are sustained. Freight customers require more than occasional operational gains. They need predictable services, consistent turnaround times and the confidence to plan production, inventory and exports around the available network.

Private Investment Changes the Port Landscape

One of the most significant developments during the year was the implementation of Transnet’s Private Sector Participation strategy through the Durban Gateway Terminal transaction.

Transnet disposed of a 49.999% interest in Durban Gateway Terminal to International Container Terminal Services Inc. (ICTSI) for R10.5 billion, with the transaction taking effect on 1 January 2026. The deal generated a reported profit on disposal of R12.5 billion, including a related fair-value adjustment.

Transnet retains a 50.001% shareholding in the terminal, while management control has transferred to ICTSI. The company described the transaction as an important step towards attracting private investment, improving operational performance and supporting the modernisation of South Africa’s port infrastructure.

The transaction also reflects a wider shift in the way the country is approaching freight logistics reform. Public infrastructure remains central to the system, but private-sector participation is increasingly being positioned as a way to bring in capital, technical expertise and operational capacity.

Infrastructure Investment Remains a Priority

Transnet invested R23.3 billion during the year in infrastructure, equipment renewal and operational improvements. The programme focused on the rail network, port performance, asset reliability and operational efficiency.

A further R14.8 billion in grant funding approved by National Treasury through the Budget Facility for Infrastructure is expected to support strategic rail and port projects. Transnet said the funding should assist infrastructure development, improve network performance and reduce future funding requirements.

For the freight industry, the value of this investment will ultimately be measured through practical outcomes: fewer disruptions, improved equipment availability, stronger port productivity and more consistent cargo flows.

Rail Reform Moves Towards Implementation

Transnet also reported progress on the structural reforms affecting South Africa’s freight rail system.

The accounting separation of Transnet Freight Rail into the Transnet Freight Rail Operating Company and the Transnet Rail Infrastructure Manager has been completed. The infrastructure manager is expected to play an increasingly important role in network quality, infrastructure management and reliability.

The company has also concluded rail access agreements with 11 train operating companies. The first private operators are expected to begin services during the 2026/27 financial year.

The introduction of third-party operators is intended to increase network utilisation, expand customer access and support additional freight volumes. Its success, however, will depend on the condition and capacity of the rail network, the effectiveness of access arrangements and the ability to coordinate different operators across shared infrastructure.

The Recovery is Underway, But the Pressure Remains

Transnet’s latest results point to progress, particularly in rail volumes, revenue generation and the implementation of freight reforms. Yet the company’s own statement makes clear that the recovery is taking place against a backdrop of equipment constraints, infrastructure challenges, security concerns and uneven demand.

The focus for the year ahead will be on improving operational reliability, increasing freight volumes, strengthening customer confidence and creating a safer and more efficient operating environment. Transnet also expects further progress in private rail participation and strategic infrastructure projects.

For South Africa’s logistics industry, the key question is whether these improvements can develop into a consistent change in the way goods move through the country. A stronger Transnet could reduce pressure on road freight, support exporters and improve the competitiveness of local industries. But that will depend on turning financial recovery and reform commitments into reliable day-to-day freight services.

Read the full Transnet annual results media statement (10 September)

The South African Freight and Logistics Association (SAFLA) and the Road Freight Association (RFA) were present during the recent interaction between Durban Gateway Terminal (DGT) and relevant stakeholders and organisations that have operations or members processing cargo through the terminal.

Representatives of DGT and International Container Terminal Services Inc (ICTSI) were candid and open regarding challenges experienced – as well as what had been achieved in the period that Transnet had signed the agreement with ICSTI.

Whilst there are challenges, the terminal was functioning well – given the challenges experienced, and both DGT and ICTSI listened to comments from all present and noted that two processes were in place to address the operations at DGT. 

One was short term: this included the waiving of all terminal storage charges whilst the current set of challenges were experienced, and secondly, there was an accelerated programme to keep the various pieces of machinery operating at the best levels of safety and functionality, as was possible. Gensets had been brought in to deal with power disruptions.

In addition, DGT acknowledged the problems with the slot booking system and already had developed a solution to vastly improve the process – this was to be shared with all shareholders in due course for comment and implementation.

DGT also brought Transnet into the meeting to address certain aspects that had placed pressure on operational efficiencies.

Long-term plans: the Terminal requires significant refurbishment and upgrading / modernising to compete with the options of other ports on the Southern African continent. Much of the equipment needed has been ordered – but there are lengthy lead times in the delivery of the equipment.

“There are immediate short-term options – such as reducing the pressure on the terminal whilst upgrades and interventions are applied. Perhaps Transnet can lower container movement tariffs (from other ports) for a period, whilst DGT is brought to the level of efficiency required. As we have noted – transporters are carrying the costs of inefficiencies,” said Gavin Kelly, Chief Executive Officer of the RFA. “Fleets are standing without bookings while fixed costs run, drivers are queuing on Bayhead Road, and every standing hour ends up in the price of goods. Slot releases must match real capacity, and truck staging must be fast-tracked now. Without trucks, South Africa stops.”

“SAFLA is delighted at the waiving of storage charges whilst the current set of challenges are being experienced,” said Dave Logan of SAFLA. “This will meaningfully ease the burden on freight forwarders and their clients, and we welcome this gesture of good faith from DGT and ICTSI.”

SAFLA and the RFA stand ready to contribute member evidence and practitioner expertise to a joint recovery task team alongside DGT, Transnet, government and other industry bodies.