Nothing could have prepared Transnet chairman Andile Sangqu for what he found in 2023 when he was appointed to lead the state-owned logistics entity. He describes it as akin to an aircraft in free fall.
Appointed by late public enterprises minister Pravin Gordhan, Sangqu said he found broken relations with clients, coupled with mounting debt, underscoring an “existential crisis” that required a turnaround plan after South Africa missed out on the commodity cycle.
“Try and picture a massive aircraft on a descent, heading down at high speed, heading for a crash with 51,000 passengers on board, and [then] you change the captain. The country cried [that] this thing needs to be turned [around], and we did,” he said this week, addressing the group’s turnaround strategy at the University of Pretoria’s Gordon Institute of Business Science in Johannesburg.
Transnet narrowed its losses to R1.9bn in 2025 from R7.3bn the previous year after an improvement in rail freight volumes, pointing to progress with the turnaround plan. This was after the group battled with maintenance and service backlogs, cable theft and a shortage of spare parts.
The group implemented a plan with three-month, six-month and 18-month targets following inputs from industry players and tapping into internal experience.
“One of the things that was really broken in Transnet more than anything else was relationships [with] clients. When you have almost that hostility because there’s something about South African clients, deep inside them, they love this country.”
In terms of the commodity cycle, South Africa had missed out a lot because of the challenges at Transnet. Going back to basics and cementing relationships with clients helped to move the dial for the entity. “Management 101 laid down the foundation of what we see today as a big turnaround, in my view, and I can say to you now, Transnet is not in a crisis.”
The resilience and goodwill of clients helped, with the CEO of one of the biggest coal mining companies offering to help Transnet succeed, emphasising how failure was not an option, Sangqu said. The group was able to enter into mutual co-operation agreements, whereby clients could procure spare parts on its behalf.
Sangqu said the group found that over the years, Transnet was performing well, except that the money spent on repairs and maintenance was at its lowest level as a percentage of revenue compared to the average for the rail industry of 10%.
“The problems Transnet finds itself in have been coming for the longest time, and they reached a crisis point. We are talking about a massive country infrastructure upon which the weight of the economy rests, and there are no easy answers. When things are broken, it will not take six months,” he said.
Transnet is going on tender later in April or early in May to invite bidders to build a manganese terminal in Gqeberha to ensure South Africa is able to respond to the global demand for critical and strategic minerals.
“It is our role as Transnet to understand where the world is going and come up with a response that will power this economy. But, more than that, it makes me very excited about the possibility of what we will be able to do to turbocharge the economy.“
As part of the reform, Transnet Freight Rail established the Transnet Rail Infrastructure Manager (TRIM) to maintain and operate the rail infrastructure.
Sangqu pointed to the 25-year concession to run and upgrade the Durban Container Terminal Pier 2 awarded to Philippines-based company International Container Terminal Services and the issuing of licences to 11 new train operating companies brought on board for rail haulage as examples of structural reforms gaining steam.
“You can go anywhere in the world, to Australia, you can go to Brazil; we’ve done the work. The pace, the speed with which we’re doing that, puts it beyond doubt about our determination and our resolve to open up the logistics network. In fact, we should be given credit for that because what we’re doing is unprecedented. That does not suggest we’re not going to make mistakes. Like all of the country, we will make mistakes.”
Sangqu said Transnet, which suspended nine employees implicated in alleged collusion with suppliers in March, is serious about corporate governance and is dealing with governance as it pertains to suppliers and third-party players.
“We had to make a clear and unequivocal statement that there’s no room for tolerance of any form of governance issues. It’s a very big statement, and we live by it.”