Russell Baatjies has been appointed the permanent CEO of Transnet Freight Rail (TFR), the state-owned transport group’s largest and most dysfunctional division. 

Baatjies, a Transnet insider and veteran, had been acting as CEO of the freight rail division since late last year when Siza Mzimela and other high-profile executives abruptly resigned. 

From 1 March, he will be the permanent CEO.

On Thursday, Transnet confirmed the appointment of Baatjies as well as that of Michelle Phillips as the group CEO and Nosipho Maphumulo as the group CFO. 

Read more in Daily Maverick: All you need to know about Michelle Phillips, Transnet’s eighth CEO in 23 years

The appointment of Baatjies, Phillips and Maphumulo marks the filling of top positions at Transnet that were vacant for more than five months. 

The business community has largely welcomed these appointments, saying they are mostly credible and signal a crucial step toward reform at Transnet. 

“We have, over the past months, seen a much-needed improvement in the relationship between the country’s transport and logistics authorities and those businesses whose existence is dependent on efficient and effective logistics,” said Mxolisi Mgojo, the president of Business Unity SA, the largest business organisation in the country. 

“But this progress, while valuable and necessary, is only the first step in addressing the crisis. Stability is essential to sustain the good work being done.”

Under former Transnet group CEO Portia Derby and Transnet Freight Rail CEO Siza Mzimela, the state-owned entity (SOE) could not fulfil its basic function of moving trains to market and efficiently moving containers through South African ports. 

The dysfunction of Transnet has undermined the economy’s recovery and growth and impacted tax revenue because the fortunes of mining companies were affected by the SOE’s failing operations.

The mining industry, which depends on Transnet trains to move coal and iron ore, estimated that the SOE’s inability to run the trains due to mismanagement, cable theft and vandalism cost the industry R50-billion in lost opportunities in 2022 alone. 

Mzimela was not seen as the right fit for running Transnet trains. She was the CEO of state airlines SAA and SA Express, both of which were in business rescue. The latter is now defunct. 

She also had no rail experience. 

Mzimela’s reign at TFR has been described as “disastrous” by the mining sector. Over the past three years, rail volumes have been languishing below 200 million tons.  

As the new CEO of TFR, Baatjies has the herculean task of arresting the decline. 

Baatjies has been with the SOE for 17 years. During this period, he held various positions, including at Transnet Engineering where he was responsible for the maintenance of locomotives – the heavy-haul ones that pull the coal and iron ore wagons in the Western Cape region. He also worked at TFR for seven years.

A business source described Baatjies to Daily Maverick as a “reformer”, a trait that might put him in good stead when it comes to reforming rail operations. 

On his to-do list would be to push reforms in May this year, when Transnet will bring in the private sector to run trains independently and invest in rail infrastructure. DM