---
title: "Transnet swings into a R5.7-billion financial loss as Freight Rail division battles export crunch"
description: "The state-owned transport group has blamed disruptions to its rail network (mainly 3,877 incidents of cable theft), power supply disruption, floods in KwaZulu-Natal, and a strike by workers for its worsening finances."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "DERAILED"
author: "Ray Mahlaka"
author_url: "https://www.dailymaverick.co.za/author/ray-mahlaka/"
canonical_url: "https://www.dailymaverick.co.za/article/2023-09-01-transnet-swings-into-a-r5-7-billion-financial-loss-as-freight-rail-division-battles-export-crunch/"
published: "2023-09-01T17:16:35"
updated: "2023-09-01T17:17:04"
lang: "en-ZA"
word_count: 424
---

# Transnet swings into a R5.7-billion financial loss as Freight Rail division battles export crunch

> The state-owned transport group has blamed disruptions to its rail network (mainly 3,877 incidents of cable theft), power supply disruption, floods in KwaZulu-Natal, and a strike by workers for its worsening finances.

By Ray Mahlaka · Published 1 September 2023, 19:16 SAST · Updated 1 September 2023, 19:17 SAST

## Key points
- Despite the ongoing negotiations, Transnet's rail network remains in disarray, with declining volumes, cable theft, power supply disruptions, floods and strikes resulting in the SOE reporting a loss of R5.7-billion for the year ending March 2023.
- Transnet reported a loss of R5.7-billion during the year ending March 2023
- Rail network disruptions, power supply disruption, floods and strikes have all contributed to this loss
- Transnet does not have enough locomotives to move through its rail network, with 370 currently idle
- Transnet has a debt of R130.1-billion, with R1-billion paid in interest every month

## Content

Transnet’s financial situation has turned for the worse, with the state-owned transport group reporting a loss of R5.7-billion during the year ending March 2023, mainly due to inefficiencies of its rail network.

During a results presentation on Friday, Transnet CEO Portia Derby described the reporting period as “harrowing” referring to Transnet’s rail network remaining in a mess, with volumes continuing to decline, indicating that the state-owned entity (SOE) is transporting fewer goods via rail.

Disruptions to the rail network (mainly 3,877 incidents of cable theft), power supply disruption, floods in KwaZulu-Natal, and a more than a week-long strike by workers have all resulted in Transnet swinging from a profit of R5-billion in 2022 to a financial loss.

Transnet’s rail operations are a crucial cog in South Africa’s economy. They are responsible for moving most of the iron ore and coal that is produced in the country and then taken around the world.

![Shipping containers onboard a cargo ship as it departs from the Port of Durban, operated by Transnet. (Photo: Waldo Swiegers / Bloomberg via Getty Images)](https://cdn.dailymaverick.co.za/i/TiMrhVYvll1d-AbmGuteKfcp9R0=/200x100/smart/filters:strip_exif\(\)/file/dailymaverick/wp-content/uploads/2023/07/GettyImages-969639258-1.jpg)

*Shipping containers onboard a cargo ship as it departs from the Port of Durban, operated by Transnet. (Photo: Waldo Swiegers / Bloomberg via Getty Images)*

But exporters are facing major problems in railing their goods to market and this can be seen at Transnet Freight Rail (TFR), the [largest division](https://www.transnet.net/Divisions/Pages/FreightRail.aspx) at Transnet which generates most (45%) of the SOE’s revenue of R68.9-billion. Rail volumes at Transnet declined by 13.6% as TFR moved 149.5 million tons (mt) from 173.1 mt. Volumes have been languishing below 200 mt since 2020.

A big problem with the freight business is that Transnet does not have enough locomotives that move through its rail network. About 370 locomotives — the heavy haul ones that are supposed to pull the coal and iron ore wagons — are idle. But 70 of these locomotives are set to be returned to service by March next year.

Transnet has been in a long-standing dispute over the corrupt 1,064 locomotive contract, which was declared illegal. Some of these locomotives were procured from China Railway Rolling Stock Corporation (CRRC), and as a result of the dispute, it refused to provide Transnet with spares for the locomotives.

**Read more in Daily Maverick:**[Why Gordhan’s diplomatic visit to China is a make-or-break moment for Transnet](https://www.dailymaverick.co.za/article/2023-03-29-why-gordhans-diplomatic-visit-to-china-is-a-make-or-break-moment-for-transnet/)

Derby said negotiations with CRRC are ongoing to fully resolve the dispute, but Transnet has signed a settlement agreement with the company, which has agreed to provide the SOE spare parts. Another pressure point for Transnet is its debt, with its borrowings increasing to R130.1-billion, from R128.8-billion in 2022. It pays R1-billion every month alone in interest on this debt. **DM**