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South Africa’s freight and logistics system is showing further signs of recovery, with Transnet returning to profitability, rail volumes increasing and private-sector participation moving from policy to implementation.

Transnet reported a R4.6-billion profit for the financial year ended March 31, 2026, compared with a R1.9 billion loss in the previous year. Revenue increased 7.1% to R88.6-billion, while EBITDA rose 0.7% to R30.9 billion. Rail volumes increased 4.9% to 167.9 Mt, up from 160.1 Mt, as interventions aimed at improving network reliability, maintenance and asset availability began to yield results.

The improvement is significant for South Africa’s mining industry, which remains heavily dependent on Transnet’s rail and port infrastructure to move bulk commodities to export markets.

The Minerals Council South Africa has previously identified the deterioration of freight logistics as one of the major constraints on mining-sector growth. Minerals Council CEO Mzila Mthenjane said earlier this year that Transnet’s rail performance had “bottomed out” and was now trending upwards. “There certainly is a turnaround. They’re really moving in the right direction, even though they couldn’t meet their targets this year,” Mthenjane said.

He has nevertheless stressed that substantial work remains, noting that Transnet is still a long way from the 226 Mt it railed in 2017.

Private operators bring investment into the freight network

One of the most consequential elements of Transnet’s recovery is the opening of its rail network to third-party operators.

Transnet says Rail Access Agreements have now been concluded with 11 train operating companies, with the first operators expected to begin services during the 2026/27 financial year. The reform is intended to increase network utilisation, attract additional capital and allow customers to move more freight by rail.

For mining companies, the significance is potentially considerable: greater rail capacity and more reliable access could support higher exports of commodities ranging from coal and manganese to chrome, iron-ore and other minerals.

The reform has already moved beyond the conceptual stage. Transnet Freight Rail has been separated from the infrastructure-management function, with the Transnet Rail Infrastructure Manager (TRIM) responsible for managing the network and facilitating third-party access.

Mthenjane has welcomed the move, while warning that implementation cannot lose momentum. “We cannot afford any deviation from the timelines to enact the unbundling of Transnet Rail Infrastructure Manager (TRIM) and Transnet National Ports Authority from the Transnet Group,” he said.

The investment requirement is substantial. Transnet has indicated that it needs about R14-billion a year over the next five years to bring the network up to the required standard, while Investec analysts have previously estimated the broader requirement at about R200 billion.

Durban terminal deal provides template for private-sector participation

The Durban Gateway Terminal (DGT) transaction provides another important example of how Transnet is seeking to bring private capital and operating expertise into the logistics system.

Transnet sold a 49.999% interest in DGT to Philippines-based International Container Terminal Services Inc (ICTSI) for R10.5 billion, effective January 1, 2026. Although Transnet retains a 50.001% shareholding, management control has transferred to ICTSI. The transaction generated a R12.5 billion profit on disposal, including a related fair-value adjustment, making a significant contribution to Transnet's return to profitability.

For investors, however, the bigger question is whether the transaction can deliver sustained improvements in logistics performance rather than simply a once-off accounting benefit.

Financial Mail editor Tim Cohen described the DGT transaction as a “miniature version” of what could eventually happen across Transnet, with outside operators and capital potentially playing a greater role across the logistics group. He noted that Transnet's operational numbers were “heading in the right direction”, while arguing that the company's challenge was increasingly shifting from an operational crisis to a capital crisis.

That distinction is important for mining investors: restoring rail and port performance requires not only better management and maintenance, but sustained investment in infrastructure.

Transnet says foundations have been laid for long-term growth

Transnet chairperson Dr Andile Sangqu is more bullish about the direction of travel. Speaking following the results, Sangqu said the company had established the foundations needed to become financially and operationally sustainable. He highlighted investment in port and rail infrastructure, improved maintenance regimes, lifecycle asset management, cost control and stronger supply-chain management.

“It’s bringing in an ethos of focusing on the operations and making sure that we cut costs as well... also improve our supply chain management processes and modernise our equipment while strengthening our collaboration with the private sector,” Sangqu said. His assessment is that Transnet has moved beyond stabilisation and into a phase where reforms can begin to unlock longer-term growth. “We really have turned the corner, and we have laid a very important foundation for many years to come,” he said.

Transnet CEO Michelle Phillips has similarly pointed to the reversal of the long-term decline in rail volumes, while emphasising that the recovery is still underway. “All in all, since 2023, we have reversed the volume decline and we continue to make a recovery on rail,” Phillips said.

Mining industry still needs a bigger step-up in volumes

Despite the improved trajectory, Transnet's latest figures also highlight the scale of the opportunity still ahead. The 167.9 Mt railed during the year remains below the company's 180 Mt target and well below historical levels.

For mining companies, the difference between incremental recovery and a genuinely competitive logistics system will ultimately be measured in additional tonnes moved reliably and cost-effectively to port. The industry therefore remains focused on whether open access, infrastructure investment and private-sector participation can translate into materially higher capacity.

Mthenjane has described the recovery as encouraging but cautioned that vandalism and infrastructure constraints continue to hamper performance. “One thing that has been a consistent issue has been vandalism on the rail,” he said. “It’s the one thing that continues to hamper full performance.”

R14.8-billion infrastructure funding adds further momentum

Transnet invested R23.3 billion during the reporting period in infrastructure, equipment renewal and operational improvements. National Treasury has also approved R14.8 billion in grant funding through the Budget Facility for Infrastructure for strategic rail and port projects. That funding, combined with private-sector participation, could help address one of the central constraints facing the recovery: the sheer scale of capital required to restore and expand the logistics network.

Transnet's latest results also show that operational recovery is beginning to be accompanied by improved investor and stakeholder confidence. The company says it advanced funding initiatives with development finance institutions during the year, including France's Agence Française de Développement.

The test now is whether recovery becomes growth

The return to profitability is an important milestone for Transnet, but the mining industry will be watching the next phase more closely.

The priority is no longer simply to stop the decline in rail volumes. It is to create a logistics system capable of supporting substantially higher mineral exports, attracting private capital and improving South Africa's competitiveness in global commodity markets.

That means delivering on open-access rail, improving network reliability, resolving security challenges, investing in infrastructure and ensuring that private operators can operate on commercially viable terms. Cohen's assessment captures the transition facing Transnet: the operational crisis is easing, but the capital challenge is becoming more prominent.

For mining, that makes the next stage of Transnet's reform programme particularly important. If the new public-private model can convert improving operational performance into sustained increases in freight volumes, the impact could extend well beyond Transnet's balance sheet — strengthening South Africa's position as a competitive mining and minerals-exporting jurisdiction.

The direction of travel is increasingly positive. The next measure of success will be how quickly that momentum translates into tonnes moved, exports delivered and new investment unlocked.

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