The macrologistics effect of rail's underperformance on the South African economy

Research note – 21 April 2026

Research by GAIN Group
Zane Simpson, Jan Havenga, Henk Neethling, Anneke de Bod & Stefaan Swarts

Transnet SOC Ltd is responsible for managing and operating most of South Africa’s rail, port, and pipeline infrastructure to support an efficient and competitive national freight logistics system. It is a state-owned enterprise wholly owned by the Government of South Africa, which operates through seven divisions, each focused on specific components of the logistics system. Transnet Freight Rail (TFR), Transnet Engineering (TE), Transnet Rail Infrastructure Manager (TRIM), and Transnet Pipelines (TPL) are associated with the land-based logistics system, with the first three primarily linked to rail operations. Transnet National Ports Authority (TNPA) and Transnet Port Terminals (TPT) form part of the national maritime logistics system, while Transnet Property (TP) is responsible for managing the organisation’s vast property portfolio.

 

Transnet’s struggle in this regard has been well documented, with the cost of the country's freight rail and port underperformance initially quantified in the following academic article authored by members of the GAIN Group, under their academic affiliations with Stellenbosch University:

 

Havenga, J.H., Simpson, Z.P., Neethling, H., de Bod, A. & Swarts, S. 2023. The macrologistics effect of a state-owned enterprise, Transnet, on the South African economy. Journal of Transport and Supply Chain Management, 17(0):a952. Click here to view the open-access article

 

This research determined that the combined underperformance cost the South African economy a staggering R 504.8 billion, equal to 7.43% of its gross domestic product (GDP), in 2022. More than 90% of this cost (R458.4 billion, equal to 6.7% of GDP) was attributed to rail disruptions and failures, with the remaining R46.4 billion (equal to just over 0.7% of GDP) being attributed to port disruptions and failures. 

 

GAIN Group has since revised the calculation of freight rail-related cost for 2022, from the initial R458.4 billion to a revised R410.7 billion (equal to 6% of GDP at the time), and completed this calculation for 2023, 2024 and 2025. Table 1 summarises the effect of the national freight rail system's underperformance on the South African economy between 2022 and 2025.

 

Table 1: The overall economic effect of rail’s underperformance between 2022 and 2025

   Year      Cost (Rand billion)      % of GDP      Cost per day (Rand million)  
 2022  410.7  6.0  1 125
 2023  315.2  4.4  864
 2024  274.7  3.8  753
 2025  180.8  2.5  495

 

Table 2 splits these overall costs into their two primary components, namely unachieved bulk mineral exports and transport inefficiencies.

  • The first cost component stems from bulk mineral (coal and iron ore) export opportunities that are lost due to rail disruptions or failures because road transport cannot be used to move the missing rail volumes for these commodities.
  • The second cost component stems from transport inefficiencies caused by using road transport to move freight volumes that should have been moved on rail more efficiently (i.e. at a lower cost).

 

Table 2: The economic effect of rail’s underperformance between 2022 and 2025, split by the cost of unachieved bulk mineral exports and transport inefficiencies

   Year      Unachieved bulk mineral exports    Transport inefficiencies
   Cost (Rand billion)      % of total effect      Cost (Rand billion)      % of total effect   
 2022 315.5       77%     95.2       23%   
 2023  219.9       70%     95.3       30%   
 2024 175.8      64%     98.9        36%   
 2025  88.4       49%     92.4       51%  

 

As seen in the table, the high cost to the economy in 2022 was mostly due to unachieved minerals exports, representing 77% of the overall cost. Due to changing commodity prices, exchange rates, and the increased rail volumes for mineral exports, the loss for unachieved mineral exports decreased to R88.4 billion in 2025, representing a mere 49% of the loss in comparison. While the cost of unachieved mineral exports decreased, it is evident that the cost of transport inefficiencies remains a concern.

 

While the continued decline in the cost of the national freight rail system's underperformance confirms that national reform and turnaround efforts are making a difference, persistent issues continue to undermine the growth and competitiveness of the national economy. It should also be noted that changes to the country's port underperformance require further investigation, because the initial calculation of port disruptions and failures has not been updated since the publication of the 2023 article. 

 

Please refer to the 2023 article for more details on the methodology, but feel free to contact us if you have any questions. 

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