Opening up the rail network to the private sector has become a core part of Transnet’s strategy, but the focus extends beyond just network access. Additional assets, particularly rolling stock, could support new market entrants while allowing Transnet to capitalise on leasing opportunities. This includes both fixed-term and short-term rolling stock leases.
Speaking during a Transnet podcast at Mining Indaba, Wilson Mogoba, Transnet General Manager: Business Development, highlighted the opportunity. "It's about finding new ways to diversify the business. The value proposition lies in leveraging our idle and surplus assets to unlock greater value," he said.
Traditionally, most railway companies have owned rolling stock as a capital asset, keeping it on their balance sheets. However, fleet renewal and maintenance across the continent have fallen behind, creating capacity constraints and making rolling stock ownership increasingly expensive. Transnet identified an opportunity to transition away from capital ownership towards a leasing model, making wagons and locomotives available for lease. In the future, port equipment may also be included in leasing arrangements.
Leasing is not a new concept for Transnet—it has already leased rolling stock to neighbouring countries, including Zimbabwe and Zambia. However, demand for leasing has grown, leading to a market study that identified significant opportunities, particularly along the North-South Corridor, which links the Port of Durban to the DRC. The lack of rolling stock has been a major bottleneck on this corridor, and by 2030, demand is projected to reach 200 locomotives and over 20,000 wagons. Additionally, South Africa’s rail reforms are expected to further increase demand.
Historically, Transnet has leased rolling stock on an ad hoc basis, but it is now working towards a structured leasing model. Plans are in place to overhaul idle rolling stock and make it available for lease. To support this initiative, Transnet has been mandated to find the right private sector partners, with the goal of launching a Request for Proposals (RFP) by the end of March 2025. The aim is to secure a funding partner to rehabilitate the rolling stock and establish a rolling stock leasing company in partnership with Transnet.
Three key considerations:
- This will ultimately be the largest rolling stock leasing company in South Africa.
- The adjudication process for the tender is expected to take around a year.
- This is the second attempt at establishing a JV-type rolling stock leasing company.
If you missed the Transnet Mining Indaba podcast, listen to it here.
