The biggest threat to Transnet is not its mountainous debt but cable theft and derailments, says Juanita Maree, CEO of the South African Association of Freight Forwarders.
“Unless we fix the security on our lines we’re in deep, deep trouble,” she says.
“After cable theft you restore the lines but the cable theft continues. The moment you fix a line there’s another cable theft and it’s closed again. You need sustainability of security, it can’t go on like this.”
She doesn’t entirely blame Transnet, whose CEO and senior management she credits for significant improvements at ports.
“This is the first time that I have confidence in the top executives of Transnet,” Maree says. “I think their hearts are in the right place and they want to fix it. That I can tell you without a doubt. They’re the best team we've had at Transnet for many years.”
But will they have the tools and funding to help them fix it?
“There you’re talking investment and cash flows and government guarantees, which are necessary but not sufficient.
“The only long term fix is to sort out security. If we don’t protect our most important national asset, our rail infrastructure, then what are we busy doing?”
This goes way beyond Transnet, she says.
“The government, law enforcement, communities need to take on the security threat to the rail network head on. To say ‘this is a national asset and we need to protect it’.
“In terms of security and broken infrastructure we’re sitting now with the fruits of state capture. It’s totally unrealistic to think we can resolve these issues in 18 months or even two years. It’s just not possible.”
But the fact that the department of transport has gone to the market with requests for information for five key rail corridors and has received an “overwhelming” response from the private sector gives her hope.
“This says to me there’s a phenomenal desire to help with the rail network infrastructure.”
The understanding is that the department will analyse the responses and come back to the industry in the middle of this month, “which for me is quite encouraging. Never before have we had that kind of transparency and engagement.”
The concession process is unlikely to start rolling until next year, “but what is positive for me is that we’re really going in the right direction now”.
“But security is a massive issue. If you’re in a business and you repair something and tomorrow you come back and it’s been stolen, and it happens 10 or 15 times, you lose hope,” Maree says.
“Unless we tackle security head-on the good people are going to lose hope. Because we don’t address it at the core, and we don’t resolve it. Coupled with that you’ve got derailment. We cannot have derailments. That talks to the infrastructure.”
How can the infrastructure be fixed when it will cost R200bn, and according to ratings agency S&P Global, which has just downgraded Transnet, the SOE will be more than R150bn in debt by the end of the year?
“That’s why you have a board,” Maree says. “I think the CEO and her executive team are doing a great job to the extent they can, but the board must be actively involved in helping. Otherwise what is the purpose of a board?”
To deal with Transnet’s security crisis there must first be an awareness of its extent and consequences, which she thinks is lacking.
“There needs to be an understanding that if we don’t look after our network we will not be able to grow this country. The logistics network doesn’t stand on its own. It’s an enabler of growth.”
There has to be an enabling environment, and only the government can create it, not business.
“We need to say to government, ‘You create an enabling environment. We as business can take this enabling environment and make it grow and build synergies and accelerate. But creating an enabling environment is not our job.’ It’s the job of government.”
Until the private sector is satisfied infrastructure is being properly protected, they’re unlikely to invest in it. It’s a very simple equation
— Juanita Maree, SA Association of Freight Forwarders CEO
The government needs to foster and reward legitimate trade, create space for legitimate trade to grow and be utterly ruthless about tackling illicit trade, which includes activities such as cable theft,” Maree says.
“Unless we make those strong and hard decisions we will not be able to grow and flourish.”
Without a secure rail network Transnet will not meet the freight volume targets so critical for economic growth, she says.
“Security is our No 1 challenge. It can be coupled with train derailments resulting from the lack of investment in maintenance for so many years, but there’s a direct link between lack of security and derailments.
“We can blame Transnet, but we as business and government need to say that security is the greatest risk to our national asset, our railways, and needs to be tackled with far, far greater vigour.
“If you steal a cable or are involved in cable theft there should be zero tolerance. Because your activities impact along the whole supply chain. The consequences are bigger than you can ever understand. That multiplier effect is not understood.”
Given the billions the National Treasury is pouring into Transnet in government guarantees, would she expect it to be doing more to ensure the asset is properly protected?
“Maybe I’m a very simple person, but for me you’re not going to put up a new building with new infrastructure and everything if you don’t have security or a reaction unit or escalation protocols. There are things you do to safeguard your asset. Our integrated national logistics network is nothing other than a prime asset.
“How can we then, if it’s a prime asset, think not to protect it? Not to protect our rail network, not to protect our signalling?”
Transnet will struggle to get the equity it needs to fix its rail infrastructure if there is uncertainty about its security, she says.
“Why would the private sector invest in infrastructure if they know it’s not being secured? It would be money down the drain. Until the private sector is satisfied infrastructure is being properly protected, they’re unlikely to invest in it. It’s a very simple equation.”
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