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    • Railway Transport Manufacture Locomotives Rolling Stock industry South Africa

    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2023

    Michael Felton | South Africa | 23 March 2023

    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2021

    Liz Kneale | South Africa | 12 March 2021

    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2019

    Liz Kneale | South Africa | 22 August 2019

    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2017

    Liz Kneale | South Africa | 28 July 2017

    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2017

    Liz Kneale | South Africa | 23 February 2017

    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2015

    Liz Kneale | South Africa | 27 October 2015

    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2014

    Liz Kneale | South Africa | 08 October 2014

    Report Info

    Report Summary Table of Contents
    Enquire about this report

    Report Coverage

    This report focuses on freight and passenger rail transport and the manufacture of railway locomotives and rolling stock and includes information on the size and state of the industry, revenues, volumes, transport costs, investment and expansion and turnaround plans. There are profiles of 27 companies including major state-owned players such as PRASA and Transnet, whose businesses include Transnet Freight Rail and Transnet Engineering, Gautrain operator Bombela and locomotives and rolling stock manufacturers such as Alstom and Gibela.

    Introduction

    • The rail industry has been plagued by ageing infrastructure and governance issues.
    • Companies continue to shift the transport of goods to road as the rail system becomes increasingly unreliable.
    • The plan to open the rail network to private participation has failed to gain traction, with only one successful bidder to date.
    • Theft and vandalism of rail infrastructure remains rampant and locomotive availability is a major issue.
    • The state-owned Passenger Rail Agency of South Africa (PRASA) and Transnet Freight Rail (TFR) are lossmaking and have been involved in procurement irregularities and irregular, fruitless and wasteful expenditure and poor governance.

    Strengths

    • Financial and policy support from government in the form of the PRASA rolling stock renewal and support programmes, Gautrain network expansion project and Transnet capital planned expenditure.
    • High levels of investment in the sector.
    • Local and international manufacturers of all sizes active in the domestic market.
    • Lower environmental impact compared to road transport.
    • Rail is on average 33% cheaper than road transport, especially for distances greater than 500km.
    • The establishment of manufacturing facilities to fulfil Transnet and PRASA acquisition contracts.

    Weaknesses

    •  Original equipment manufacturers’ challenges associated with meeting the localisation requirements of the acquisition programmes.
    • Critical skills shortages at all levels resulting in inefficiencies, increased accident rates and poor service delivery.
    • Declining performance of the manufacturing and mining sectors.
    • Management instability and governance and supply chain issues at PRASA and TFR.
    • Old and outdated infrastructure and inability to combat theft and vandalism.
    • Split responsibility for freight rail under the Department of Public Enterprises and passenger rail under the Department of Transport.
    • Underdeveloped rolling stock value chain.

    Opportunities

    •  Partnerships to explore alternative ownership and financial models for wagons, sidings and branch lines.
    • Additional back-of-port rail facilities to improve use of terminal facilities.
    • Development of collaborative intermodal transport systems and collaboration with customers and industries to implement supply chain solutions.
    • Infrastructure and capital expansion projects will create demand for transportation of imported machinery and equipment.
    • Infrastructure programmes could increase capacity leading to increased passenger and freight volumes.
    • Integration of local rolling stock suppliers into global original equipment manufacturer value chains and empowerment partnerships as a result of the capital expansion projects.
    • Investment in rail network and infrastructure projects on the African continent will increase the demand for locomotives and rolling stock.
    • Localisation requirements and focus on supp

    Threats

    • A decrease in rail freight and passenger volumes and revenues due to operational inefficiencies and deteriorating infrastructure.
    • Actions of competitors in public transport when rail services recover and market grows.
    • Alleged procurement irregularities and corruption.
    • Extensive rail and port infrastructure projects on the African continent could divert freight away from South Africa.
    • High unemployment reduces the number of passengers travelling to and from work.
    • Inability to manufacture stock within the lead times.
    • Increasing competition from road freight and passenger transport.
    • Increasing electricity and steel costs, high inflation and wage increases.
    • Political unrest.
    • Rising labour, diesel and electricity costs and implementation of carbon tax.
    • Severely constrained global supply chains that impact rolling stock renewal, re-signalling programmes, an

    Outlook

    • Theft and vandalism of rail infrastructure has left many commuters stranded.
    • Passenger numbers are under pressure although there is slight growth on lines operated with new train sets.
    • PRASA is revitalising stations and lines and developed a short-term plan to improve the limited service, a medium-term plan that focuses on the rebuilding of infrastructure, and a long-term plan focused on modernisation.
    • The plan to include private sector players has largely failed to materialise and is severely impacting government’s plan to migrate road freight to rail.
    • The plan recognises that TFR is operationally and financially broken, there has been widespread corruption and wasteful and irregular expenditure and it neglected the maintenance of its rail infrastructure because of state capture and widespread theft and vandalism.
    • Trains often face delays in moving goods.
    • TFR has a capital investment shortfall of R80bn over the next five years to restore its operations, as it is in a crisis of falling volumes and revenue and does not have the capital to invest in its network and capital equipment.

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2023

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2019-08-22

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2017-07-28

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2017-02-23

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2015-10-27

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2014-10-08

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 11
    2.2. Geographic Position 15
    2.3. Size of the Industry 16
    3. LOCAL 28
    3.1. State of the Industry 28
    3.2. Key Trends 40
    3.3. Key Issues 40
    3.4. Notable Players 41
    3.5. Corporate Actions 44
    3.6. Regulations 45
    3.7. Enterprise Development and Social Development 50
    4. AFRICA 51
    5. INTERNATIONAL 58
    6. INFLUENCING FACTORS 64
    6.1. Unforeseen Events 64
    6.2. Economic Environment 65
    6.3. Environmental Issues 68
    6.4. Technology, R&D, Innovation 70
    6.5. Government Support 72
    6.6. Operating and Input Costs 73
    6.7. Safety and Security 74
    6.8. Investment in Rolling Stock and Rail Infrastructure 77
    6.9. Localisation and Supplier Development Programmes 82
    6.10. Private Sector Open Access and Concessions 85
    6.11. Governance and Supply Chain Issues 87
    6.12. Mining Sector Issues 89
    6.13. Cyclicality 90
    7. COMPETITIVE ENVIRONMENT 91
    7.1. Competition 91
    7.2. Ownership Structure of the Industry 92
    7.3. Barriers to Entry 93
    8. SWOT ANALYSIS 94
    9. OUTLOOK 96
    10. INDUSTRY ASSOCIATIONS 97
    11. REFERENCES 97
    11.1. Publications 97
    11.2. Websites 99
    APPENDIX 1 101
    Summary of Notable Players 101
    COMPANY PROFILES 110
    ABB South Africa (Pty) Ltd 110
    ACTOM (Pty) Ltd 113
    African Rail and Traction Services (Pty) Ltd 121
    ALSTOM Rolling Stock SA (Pty) Ltd 122
    ALSTOM Ubunye (Pty) Ltd 124
    Bombela Operating Company (Pty) Ltd 126
    Denel Vehicle Systems (Pty) Ltd 128
    Galison Manufacturing (Pty) Ltd 130
    Gibela Rail Transport Consortium (RF) (Pty) Ltd 132
    Global Railway Engineering (Pty) Ltd 134
    Ikusasa Rail (Pty) Ltd 136
    Knorr-Bremse (South Africa) (Pty) Ltd 138
    Lucchini South Africa (Pty) Ltd 140
    Passenger Rail Agency of South Africa 142
    Progress Rail SA (Pty) Ltd 146
    R and H Rail (Pty) Ltd 148
    SAFreight Logistics (Pty) Ltd 150
    Siemens (Pty) Ltd 152
    Siyahamba Engineering (Pty) Ltd 156
    Swasap (Pty) Ltd 158
    Thelo DB (Pty) Ltd 160
    TMH Africa (Pty) Ltd 162
    Transnet SOC Ltd 163
    Traxtion Sheltam (Pty) Ltd 168
    Trident South Africa (Pty) Ltd 171
    Versa Rail (Pty) Ltd 173
    Wabtec South Africa Technologies (Pty) Ltd 175

    Report Coverage

    This report focuses on freight and passenger rail transport and the manufacture of railway locomotives and rolling stock. It includes comprehensive information on Transnet, Prasa and Gautrain, including financial performance, infrastructure development and governance and supply chain issues. There are profiles of 31 companies including Transnet and Prasa, suppliers such as Siemens, ABB and Actom and logistics companies such as SAFreight Logistics.

    Introduction

    This report focuses on freight and passenger rail transport and the manufacture of railway locomotives and rolling stock. The announcement by president Cyril Ramaphosa that the rail network will be open to private sector participation and the new CEO appointments at state-owned Transnet and the Passenger Rail Agency of South Africa (Prasa) are likely to introduce a new era in the South African rail sector, which is in dire need of revitalisation. Although the sector has been hard hit by the coronavirus pandemic, the South African economy was in recession prior to its onset and the rail industry was plagued by aging infrastructure and governance issues. Prasa estimates a total annual revenue loss of R757m and Gautrain weekday general passenger ridership fell to about 14% of pre-pandemic levels in August 2020. Transnet Freight Rail volumes decreased by 16.4% in the six months ending September 2020. Prasa and Transnet are still suffering the effects of the legacy of poor governance and procurement irregularities with ongoing investigations by the Special Investigation Unit and appearances at the commission of inquiry into state capture.

    Strengths

    • Financial and policy support from government in the form of the Prasa rolling stock renewal and support programmes, Gautrain network expansion project and Transnet capital planned expenditure.
    • High levels of investment in the sector.
    • Local and international manufacturers of all sizes active in the domestic market.
    • Lower environmental impact compared to road transport.
    • Rail is on average 33% cheaper than road transport, especially for distances greater than 500km.
    • The establishment of manufacturing facilities to fulfil Transnet and Prasa acquisition contracts.

    Weaknesses

    •  Original equipment manufacturers’ challenges associated with meeting the localisation requirements of the acquisition programmes.
    • Critical skills shortages at all levels resulting in inefficiencies, increased accident rates and poor service delivery.
    • Declining performance of the manufacturing sector.
    • Management instability and governance and supply chain issues at Prasa and Transnet.
    • Old and outdated infrastructure.
    • Split responsibility for freight rail under the Department of Public Enterprises and passenger rail under the Department of Transport.
    • Underdeveloped rolling stock value chain.

    Opportunities

    • Development of collaborative intermodal transport systems.
    • Empowerment partnerships as a result of the capital expansion projects.
    • Huge investment in rail network and infrastructure projects on the African continent will increase the demand for locomotives and rolling stock.
    • Infrastructure and capital expansion projects will create demand for transportation of imported machinery and equipment, increasing demand for locomotives and rolling stock.
    • Infrastructure programmes could increase capacity leading to increased passenger and freight volumes.
    • Integration of local rolling stock suppliers into global original equipment manufacturer value chains.
    • Localisation requirements and focus on supplier development should create a sustainable chain of manufacturers and suppliers.
    • Open access to the rail network for private sector investment should enhance competitiveness and promote efficiency.
    •&nbs

    Threats

    • A decrease in rail freight and passenger volumes and revenues due to the lockdown restrictions.
    • Alleged procurement irregularities and corruption.
    • Extensive rail and port infrastructure projects on the African continent could divert freight away from South Africa.
    • High unemployment reduces the number of passengers travelling to and from work.
    • Inability to manufacture stock within the lead times.
    • Increasing competition from flexible, efficient and convenient road freight and passenger transport.
    • Increasing electricity and steel costs as well as the negative effect of above-inflation and double-digit wage settlements will reduce competitiveness.
    • Rising labour, diesel and electricity costs and implementation of carbon tax.
    • Weak economic growth, leading to lower production, with less freight to transport, resulting in lower investment in expansion, and reducing the demand for additiona

    Outlook

    James Holley, CEO of Traxtion Africa and chairperson of the RailRoad Association of South Africa (to be rebranded as the African Rail Industry Association) said: “the state of the industry pre-Covid-19 should not be overshadowed by the devastating impact that the virus is having on the country. Pre-virus, as an industry, we lost several key role players through bankruptcy and we are now seeing a huge acceleration of companies filing for business rescue, shutting down, retrenching, and this is an extremely testing time both for the South African economy as well as for our industry.” He believes that the association is positioned to act as the catalyst to revitalise, transform and advocate for the economic benefit of manufacturers, suppliers and operators in the rail and associated sectors. Development Bank of Southern Africa transport, logistics and bulk water infrastructure finance principal Nangamso Maponya suggested that African railway owners, operators and investors should consider linking freight and passenger rail services to diversify or mitigate the risk of revenue loss on one system while using the revenues from the other side to balance the scales. South African Heavy Haul Association chairperson Brian Monakali said that “the rail industry needs to take greater steps to start introducing smart and resilient railway operations and infrastructure, so as to improve efficiency and safety.” Smart systems are able to self-monitor and self-diagnose railway conditions and then predict failures or problems before they occur. Transnet CEO Portia Derby said Transnet was prioritising the use of private-sector investment across several of its operations in support of government’s persistent call for the cost of logistics to be reduced. The Department of Transport is preparing policy documents on private sector participation in the use of branch lines, in accordance with the national policy on branch lines, and guidelines on a rail access regime including fair access to rail networks and transparent setting of tariffs.

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2021

    Full Report

    R 1 900.00(ZAR) estimated $99.92 (USD)*

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    Industry Landscape

    R 1 330.00(ZAR) estimated $ 69.95 (USD)*

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    Historical Reports

    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2023-03-23

    R 9 500.00(ZAR) estimated $499.62 (USD)*

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2019-08-22

    R 1 900.00(ZAR) estimated $99.92 (USD)*

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2017-07-28

    R 1 900.00(ZAR) estimated $99.92 (USD)*

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2017-02-23

    R 1 900.00(ZAR) estimated $99.92 (USD)*

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2015-10-27

    R 1 900.00(ZAR) estimated $99.92 (USD)*

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2014-10-08

    R 1 900.00(ZAR) estimated $99.92 (USD)*

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 6
    2.2. Geographic Position 9
    3. SIZE OF THE INDUSTRY 12
    4. STATE OF THE INDUSTRY 19
    4.1. Local: Overview 19
    4.1.1. Local: Prasa 20
    4.1.2. Local: Gautrain 23
    4.1.3. Local: Transnet Freight Rail 25
    4.1.4. Corporate Actions 27
    4.1.5. Regulations 28
    4.1.6. Enterprise Development and Social Economic Development 33
    4.2. Continental 36
    4.3. International 40
    5. INFLUENCING FACTORS 47
    5.1. Coronavirus 47
    5.2. Economic Environment 50
    5.3. Rising Operating and Input Costs 52
    5.4. Investment in Rolling Stock and Rail Infrastructure 54
    5.5. Private Sector Capacity Expansion Projects 60
    5.6. Private Sector Open Access and Concessions 61
    5.7. Governance and Supply Chain Issues 62
    5.8. Localisation and Supplier Development Programmes 64
    5.9. Challenges and Issues Facing the Mining Sector 66
    5.10. Technology, Research and Development (R&D) and Innovation 67
    5.11. Labour 68
    5.12. Crime, Security and Safety 72
    5.13. Cyclicality 75
    5.14. Environmental Issues 75
    6. COMPETITION 77
    6.1. Barriers to Entry 78
    7. SWOT ANALYSIS 78
    8. OUTLOOK 80
    9. INDUSTRY ASSOCIATIONS 81
    10. REFERENCES 82
    10.1. Publications 82
    10.2. Websites 84
    APPENDIX 1 86
    Transnet Freight Rail Business Units: Commodities and Critical Train Flows 86
    APPENDIX 2 89
    Summary of Notable players 89
    APPENDIX 3 98
    Current and Future Passenger and Freight Rail Related Projects on the African Continent 98
    APPENDIX 4 105
    Suppliers to the Rail Manufacturing Industry 105
    APPENDIX 5 112
    Localisation and Supplier Development Initiatives and Incentives 112
    COMPANY PROFILES 115
    ABB SOUTH AFRICA (PTY) LTD 115
    ACTOM (PTY) LTD 118
    AFRICAN RAIL AND TRACTION SERVICES (PTY) LTD 126
    ALSTOM UBUNYE (PTY) LTD 127
    BOMBARDIER TRANSPORTATION SOUTH AFRICA (PTY) LTD 129
    BOMBELA OPERATING COMPANY (PTY) LTD 131
    CRRC E-LOCO SUPPLY (PTY) LTD 133
    CRRC SA ROLLING STOCK (PTY) LTD 135
    DENEL VEHICLE SYSTEMS (PTY) LTD 137
    ETION LTD 140
    GALISON MANUFACTURING (PTY) LTD 144
    GIBELA RAIL TRANSPORT CONSORTIUM (RF) (PTY) LTD 146
    GLOBAL RAILWAY ENGINEERING (PTY) LTD 149
    IKUSASA RAIL (PTY) LTD 151
    KNORR-BREMSE (SOUTH AFRICA) (PTY) LTD 153
    LUCCHINI SOUTH AFRICA (PTY) LTD 155
    PASSENGER RAIL AGENCY OF SOUTH AFRICA 157
    PROGRESS RAIL SA (PTY) LTD 161
    R AND H RAIL (PTY) LTD 163
    SAFREIGHT LOGISTICS (PTY) LTD 165
    SIEMENS (PTY) LTD 167
    SIYAHAMBA ENGINEERING (PTY) LTD 171
    SWASAP (PTY) LTD 173
    THELO DB (PTY) LTD 175
    TMH AFRICA (PTY) LTD 176
    TRANSNET SOC LTD 177
    TRAXTION SHELTAM (PTY) LTD 182
    TRIDENT SOUTH AFRICA (PTY) LTD 185
    VERSA RAIL (PTY) LTD 187
    WABTEC SOUTH AFRICA TECHNOLOGIES (PTY) LTD 189
    WICTRA HOLDINGS (PTY) LTD 191

    Introduction

    This report focuses on freight and passenger rail transport and the manufacture of railway locomotives and rolling stock. The proposed National Rail Policy plans to stimulate a renaissance in the South African railway sector by introducing remedial infrastructural investment and institutional interventions to position rail as the backbone of the national transport sector. As part of its drive to revitalise the rail industry as a whole and create the fifth largest railway network globally, the National Transport Master Plan will invest R751.74bn in infrastructure projects until 2050, with 43% earmarked for the rail sector. The proposed capital expenditure and expansion projects of Transnet, the Passenger Rail Agency of South Africa (Prasa) and the Gautrain Management Agency (GMA) will lead this revival. However, it is not known at this stage how the alleged extensive governance and supply chain irregularities at Transnet and Prasa will affect their ability to fulfil the expectations in this regard.

    Strengths

    • Financial and policy support from government in the form of the Prasa rolling stock renewal and support programmes, Gautrain network expansion project and Transnet market demand strategy.
    • High levels of investment in the sector.
    • Local and international manufacturers of all sizes active in the domestic market.
    • Lower environmental impact compared to road transport.
    • Rail is on average 33% cheaper than road transport, especially for distances greater than 500km.
    • The establishment of state-of-the-art manufacturing facilities to fulfil Transnet and Prasa acquisition contracts

    Weaknesses

    • Critical skills shortages at all levels of the industry resulting in inefficiencies, increased accident rates and poor service delivery.
    • Current management instability and governance and supply chain issues at Prasa and Transnet.
    • Current underdeveloped rolling stock value chain.
    • Declining performance of the manufacturing sector.
    • Inflexible nature of railway lines limits service opportunities.
    • Old and outdated infrastructure.
    • Original equipment manufacturers’ challenges associated with meeting the localisation requirements of the acquisition programmes.
    • Split responsibility for freight rail which falls under the Department of Public Enterprises and passenger rail which falls under the Department of Transport.

    Opportunities

    • Development of collaborative intermodal transport systems.
    • Empowerment partnerships as a result of the capital expansion projects.
    • Huge investment in rail network and infrastructure projects on the African continent will increase the demand for locomotives and rolling stock.
    • Increased competition from third-party private sector operators as a result of the implementation of the National Rail Policy.
    • Infrastructure and capital expansion projects in South Africa will create demand for transportation of imported machinery and equipment, thereby increasing demand for locomotives and rolling stock.
    • Infrastructure programmes if handled according to correct supply chain procedures should increase capacity leading to increased passenger and freight volumes.
    • Institutional interventions should enhance competitiveness and promote effective operation.
    • Integration of local rolling stock suppliers into global ori

    Threats

    • A decrease in rail freight and passenger volumes and revenues.
    • Alleged procurement irregularities and corruption.
    • Extensive rail and port infrastructure projects on the African continent could divert freight away from South Africa.
    • High unemployment reduces the number of passengers travelling to and from work.
    • Inability to manufacture stock within the lead times.
    • Increasing competition from flexible, efficient and convenient road freight and passenger transport.
    • Increasing electricity and steel costs as well as the negative effect of above-inflation and double-digit wage settlements will reduce competitiveness.
    • Rising labour, diesel and electricity costs and implementation of carbon tax.
    • Weak economic growth, leading to lower production, with less freight to transport, resulting in lower investment in expansion, thereby reducing the demand for additional rolling stock for bulk and

    Outlook

    The International Transport Forum forecasts that global freight and passenger mobility demand will grow as the population continues to expand, particularly in cities. Urbanisation rates will be particularly high in emerging and developing economies. Much of the anticipated increase in the global population by 2050 is projected to occur in Africa and by 2100 the continent will be home to approximately 40% of the world population. The future of the South African locomotive and rolling stock manufacturing industry will be determined by the contracts awarded by Transnet, Prasa and the Gautrain Management Agency. In spite of declining passenger patronage, Prasa expects to attract new customers through the upgrading, modernisation and expansion of existing rolling stock, networks and services. In spite of the current market conditions Transnet believes that general freight volumes will rise steadily in the coming years, driven by new business development initiatives, expansion into the rest of Africa, Middle East and South Asia, and an increase in capacity through the acquisition of new rolling stock. However, the impact of the alleged governance and procurement irregularities on the achievement of these objectives, as well as on the overall intention to revitalise the rail sector, remains unclear. As mentioned, Gautrain Management Agency has implemented measures to make Gautrain travelling more convenient and is awaiting funding for the proposed Gautrain 2 expansion project. According to WSP Africa’s infrastructure and transportation division director Vishaal Lutchman, the future of rail infrastructure in South Africa is bright as government has set an ambitious target to have the fifth largest railway network globally. The National Transport Master Plan aims to invest R751.74bn in infrastructure projects until 2050, with 43% of this earmarked for the rail sector. “Currently, the biggest potential for growth definitely lies in the bulk, or freight, rail networks, where a sizeable amount of the planned investment into rail infrastructure projects is aimed at turning the country into a key player in the global freight market.” Brian Monakali, chairman of the South African Heavy Haul Association believes that customers will, in future, demand far greater visibility over their cargo, from point of collection to point of delivery, and will also expect higher levels of service predictability and reliability. To deliver on those expectations, operators are going to have to become digital railway companies. “By 2030, I expect trains will be able to talk to each other through technology and I also expect that the rolling stock will be in a position to communicate with the infrastructure to gauge the condition of the infrastructure so as to facilitate predictive maintenance and improved reliability.” Transnet research and development executive Konrad Boshoff reports that the South African rail sector is seeing “real development in looking at newer technologies and the implementation thereof”.

    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2019

    Full Report

    R 1 900.00(ZAR) estimated $99.92 (USD)*

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    Industry Landscape

    R 1 330.00(ZAR) estimated $ 69.95 (USD)*

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    Historical Reports

    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2023-03-23

    R 9 500.00(ZAR) estimated $499.62 (USD)*

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2021-03-12

    R 1 900.00(ZAR) estimated $99.92 (USD)*

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2017-07-28

    R 1 900.00(ZAR) estimated $99.92 (USD)*

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2017-02-23

    R 1 900.00(ZAR) estimated $99.92 (USD)*

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2015-10-27

    R 1 900.00(ZAR) estimated $99.92 (USD)*

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2014-10-08

    R 1 900.00(ZAR) estimated $99.92 (USD)*

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 7
    2.2. Geographic Position 9
    3. SIZE OF THE INDUSTRY 11
    4. STATE OF THE INDUSTRY 17
    4.1. Local 17
    4.1.1. Corporate Actions 26
    4.1.2. Regulations 31
    4.1.3. Enterprise Development and Social Economic Development 36
    4.2. Continental 40
    4.3. International 48
    5. INFLUENCING FACTORS 55
    5.1. Economic Environment 55
    5.2. Rising Operating Costs 57
    5.3. Investment in Rolling Stock and Rail Infrastructure 60
    5.4. Governance and Supply Chain Issues 67
    5.5. Localisation Requirements and Supplier Development Programmes 70
    5.6. Movement from Road to Rail 71
    5.7. Challenges and Issues facing the Mining Industry 74
    5.8. Technology, Research and Development (R&D) and Innovation 75
    5.9. Labour 78
    5.10. Environmental Issues 84
    5.11. Cyclicality 85
    5.12. Crime, Safety and Security 86
    6. COMPETITION 89
    6.1. Barriers to Entry 91
    7. SWOT ANALYSIS 91
    8. OUTLOOK 93
    9. INDUSTRY ASSOCIATIONS 94
    10. REFERENCES 95
    10.1. Publications 95
    10.2. Websites 97
    APPENDIX 1 99
    Notable Players in the Rail Sector 99
    APPENDIX 2 107
    Transnet Freight Rail Business Units: Commodities and Critical Train Flows 107
    APPENDIX 3 110
    Prasa Medium Term Capital Expenditure Programme 2019/20 to 2021/22 110
    APPENDIX 4 111
    Suppliers to the Rail Manufacturing Industry 111
    Appendix 5 120
    Current Localisation and Supplier Development Initiatives and Incentives 120
    COMPANY PROFILES 129
    ABB SOUTH AFRICA (PTY) LTD 129
    ACTOM (PTY) LTD 132
    AFRICAN RAIL AND TRACTION SERVICES (PTY) LTD 140
    ALSTOM UBUNYE (PTY) LTD 142
    BOMBARDIER TRANSPORTATION SOUTH AFRICA (PTY) LTD 144
    BOMBELA OPERATING COMPANY (PTY) LTD 146
    CRRC E-LOCO SUPPLY (PTY) LTD 148
    CRRC SA ROLLING STOCK (PTY) LTD 150
    DENEL VEHICLE SYSTEMS (PTY) LTD 152
    ETION LTD 155
    GALISON MANUFACTURING (PTY) LTD 159
    GE SOUTH AFRICA TECHNOLOGIES (PTY) LTD 161
    GIBELA RAIL TRANSPORT CONSORTIUM (RF) (PTY) LTD 163
    GLOBAL RAILWAY ENGINEERING (PTY) LTD 166
    IKUSASA RAIL (PTY) LTD 168
    KNORR-BREMSE (SOUTH AFRICA) (PTY) LTD 170
    LUCCHINI SOUTH AFRICA (PTY) LTD 172
    MEHLEKETO RESOURCING (PTY) LTD 174
    PASSENGER RAIL AGENCY OF SOUTH AFRICA 176
    PROGRESS RAIL SA (PTY) LTD 179
    R AND H RAIL (PTY) LTD 181
    SAFREIGHT LOGISTICS (PTY) LTD 183
    SIEMENS (PTY) LTD 185
    SIYAHAMBA ENGINEERING (PTY) LTD 189
    SWASAP (PTY) LTD 192
    TMH AFRICA (PTY) LTD 194
    TRANSNET SOC LTD 195
    TRAXTION SHELTAM (PTY) LTD 200
    TRIDENT SOUTH AFRICA (PTY) LTD 203
    VERSA RAIL (PTY) LTD 205
    WICTRA HOLDINGS (PTY) LTD 207

    Report Coverage

    As well as covering passenger and freight transportation by rail, the detailed report on the South African rail sector includes information on the manufacture of concrete railway sleepers and turnouts. The report profiles the two state-owned entities, PRASA and Transnet, as well as four other role players in the railway transport sector.

    Introduction

    The proposed National Rail Policy plans to stimulate a renaissance in the South African railway sector by introducing remedial infrastructural investment plus institutional interventions to position rail as the backbone of the national transport sector. The major revitalisation investment will entail the conversion of an outdated Cape gauge network to a standard gauge high-performance national rail network and the provision of sufficient capacity for heavy haul and general freight services, as well as for regional rapid transit and long-distance passenger services. Although the impact of the allegations of procurement irregularities is not known, the renewal of the rail sector will get started with the Transnet Market Demand Strategy Investment, the PRASA Rolling Stock Renewal Programme and the Gautrain rolling stock and network expansion project. As well as covering passenger and freight transportation by rail, this report includes information on the manufacture of concrete railway sleepers and turnouts.

    Strengths

    •  Rail is on average 33% cheaper than road transport, especially for distances greater than 500km.
    • Financial and policy support from the Government in the form of the current PRASA Rolling Stock Renewal and support programmes, Gautrain network expansion project and Transnet Market Demand Strategy.
    • Lower environmental impact compared to road transport.

    Weaknesses

    • Critical skills shortages at all levels of the industry resulting in inefficiencies, increased accident rates and poor service delivery.
    • Current management instability and supply chain issues at PRASA and Transnet.
    • Inflexible nature of railway lines limits service opportunities.
    • Old and outdated infrastructure.
    • Split responsibility for freight rail which falls under the Department of Public Enterprises and passenger rail which falls under the Department of Transport.

    Opportunities

    • Development of collaborative intermodal transport systems.
    • Increased competition from third-party private sector operators as a result of the implementation of the National Rail Policy.
    • Infrastructure and capital expansion projects in South Africa will create demand for transportation of imported machinery and equipment.
    • Infrastructure programmes should increase capacity leading to increased passenger and freight volumes.
    • Institutional interventions should enhance competitiveness and promote effective operation.
    • Private Sector Participation Programmes.
    • Proposed Single Transport Economic Regulator will set prices, provide regulated third party access to rail network, improve competition and lower costs to business.
    • The devolution of metropolitan passenger services to local authorities.
    • Weak rand increases value of exported commodities thereby increasing volumes.

    Threats

    • A decrease in freight rail volumes and revenues. This could be as a result of the controversial Mining Charter and low projected growth rates which will lead to contraction in manufacturing, mining and agricultural output and vehicle sales.
    • Alleged procurement irregularities and corruption.
    • Extensive rail and port infrastructure projects on the African continent could divert freight away from South Africa.
    • Increasing competition from flexible, efficient and convenient road transport.
    • Rising labour, diesel and electricity costs and future implementation of carbon tax.
    • Worsening economy as the volatile rand increases the costs of imported rolling stock and components while credit downgrades negatively affect the cost of borrowing.

    Outlook

    In spite of declining passenger patronage, PRASA expects to attract new customers through the upgrading, modernisation and expansion of existing rolling stock, networks and services. Although current market conditions continue to temper Transnet’s expectations, the entity believes that general freight volumes will rise steadily in the coming years, driven by new business development initiatives, expansion into the rest of Africa, Middle East and South Asia, and an increase in tractive effort through the acquisition of new rolling stock. However, the impact of the alleged procurement irregularities on the achievement of these objectives, as well as on the overall intention to revitalise the rail sector, remains unclear.

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 6
    2.2. Geographic Position 7
    3. SIZE OF THE INDUSTRY 9
    4. STATE OF THE INDUSTRY 15
    4.1. Local 15
    4.1.1. Corporate Actions 22
    4.1.2. Regulations 22
    4.1.3. Enterprise Development and Social Economic Development 25
    4.2. Continental 28
    4.3. International 30
    5. INFLUENCING FACTORS 31
    5.1. National Rail Policy – Draft White Paper 31
    5.2. Economic Environment 33
    5.3. Rising Operating Costs 33
    5.4. Investment in Rolling Stock and Rail Infrastructure 35
    5.5. Supply Chain Issues 44
    5.6. The Movement from Road to Rail 45
    5.7. Private Sector Participation (PSP) 48
    5.8. Challenges and Issues Facing the Mining Industry 49
    5.9. Technology, Research & Development (R&D) and Innovation 50
    5.10. Labour 52
    5.11. Cyclicality 55
    5.12. Environmental Concerns 56
    5.13. Crime, Safety and Security 56
    6. COMPETITION 58
    6.1. Barriers to Entry 60
    7. SWOT ANALYSIS 60
    8. OUTLOOK 61
    9. INDUSTRY ASSOCIATIONS 62
    10. REFERENCES 62
    10.1. Publications 62
    10.2. Websites 64
    APPENDIX 1 65
    Railway operators who applied for a railway safety permit during the period 2016/17, in accordance with the Railway Safety Regulator Act 65
    APPENDIX 2 71
    Transnet Freight Rail Business Units: Commodities and Critical Train Flows 71
    APPENDIX 3 74
    Examples of Current and Future Rail-Related Projects on the African Continent 74
    APPENDIX 4 77
    PRASA Capital Expenditure Programme MTEF 2017-2020 77
    APPENDIX 5 78
    Overview of the Manufacture of Concrete Sleepers and Turnouts 78
    COMPANY PROFILES 87
    BOMBELA OPERATING COMPANY (PTY) LTD 87
    GRINDROD CORRIDOR MANAGEMENT (PTY) LTD 89
    GRINDROD RAIL OPERATIONS (PTY) LTD 91
    PASSENGER RAIL AGENCY OF SOUTH AFRICA 93
    SAFREIGHT LOGISTICS (PTY) LTD 96
    TRANSNET SOC LTD 98

    Report Coverage

    The Manufacture of Railway Locomotives and Rolling Stock report lists domestic locomotive and rolling stock acquisitions to date, examines current conditions and describes capacity expansion programmes. Also covered are regulatory issues, developments in the rest of Africa and factors influencing the success of the local manufacturing sector. The report profiles 34 companies, including Gibela Rail Transport Consortium (RF) (Pty) Ltd, a joint venture between Alstom Southern Africa Holdings, Ubumbano Rail and New Africa Rail, and CSR E-Loco Supply (Pty) Ltd, the South African subsidiary of China’s CRRC Zhuzhou Locomotive. Also profiled is SMME, CNR Rolling Stock South Africa (Pty) Ltd, which is involved in the design, manufacture, testing, commissioning and maintenance of locomotives and rolling stock. A list of local manufacturers and suppliers of specialised systems and components to the rail manufacturing industry is included in the Appendix of this detailed report.

    Introduction

    This report focuses on the manufacture of railway locomotives and rolling stock. This industry is part of the drive to revitalise the rail industry as a whole, and includes locomotive and rolling stock acquisition programmes by Transnet to the value of R51bn, the Passenger Rail Association of South Africa (Prasa) valued at R123.5bn, and the proposed expansion programme of the Gautrain Management Agency with an estimated value of R4.3bn. The contracts have been awarded to consortiums and joint ventures consisting of global original equipment manufacturers (OEMs), local OEMs and empowerment partners. Successful OEMs are faced with the challenge of additional contractual obligations which include the use of 65% local content, the establishment of local manufacturing facilities, the development of a core of skilled technical staff and the creation of a sustainable supply chain of local manufacturers and suppliers.

    Strengths

    • High levels of investment in the sector.
    • Local and international manufacturers of all sizes active in the domestic market.
    • The establishment of state-of-the-art manufacturing facilities to fulfil Transnet and PRASA acquisition contracts.

    Weaknesses

    • Current underdeveloped rolling stock value chain.
    • Declining performance of the manufacturing sector.
    • Loss of skills as a result of underinvestment in the sector.
    • OEM challenges associated with meeting the localisation requirements of the acquisition programmes.
    • Reliance on contracts from Transnet, PRASA and the Gautrain Management Agency.

    Opportunities

    • Empowerment partnerships as a result of the capital expansion projects.
    • Huge investment in rail network and infrastructure projects on the African continent will increase the demand for locomotives and rolling stock.
    • Localisation requirements and focus on supplier development should create a sustainable chain of manufacturers and suppliers and the skilling of approximately 19,527 individuals over the next ten years.
    • Planned infrastructure and capital expansion projects that are expected to create demand for transportation of imported machinery and equipment, thereby increasing demand for locomotives and rolling stock.
    • PRASA Rolling Stock Renewal programmes and Transnet Market Demand Strategy that are expected to revitalise the rail manufacturing industry.
    • The African Union’s declaration of South Africa as a rail Centre of Excellence for the African continent provides a crucial platform for deepening the country’s rail manufacturi

    Threats

    • Decline in the number of passengers on commuter trains.
    • Inability to manufacture stock within the lead times.
    • Increasing electricity and steel costs as well as the negative effect of above-inflation and double-digit wage settlements will reduce competitiveness.
    • Weak economic growth, leading to lower production, with less freight to transport, resulting in lower investment in expansion, thereby reducing the demand for additional rolling stock for bulk and general freight.

    Outlook

    Stakeholders believe that the future of the South African locomotive and rolling stock manufacturing industry will be determined by the contracts awarded by Transnet, PRASA and the Gautrain Management Agency. The promotion of the movement of freight and passengers from road to rail is expected to increase the demand for additional locomotives and rolling stock and Gary Steinmetz of DCD Rolling Stock asserts that the future of the industry is bright if a systematic and planned refurbishment and replacement programme is implemented for the current ageing and new stock. Looking to sub-Saharan Africa, a region that has become attractive to investors and railway suppliers, Marc Granger of Gibela commented, “By producing quality components, local suppliers will, in addition to being able to service Gibela and the South African rail sector, be able to compete in global markets, opening up real potential for significant exports and resultant foreign exchange earnings for South Africa. We are starting to make very substantial progress in rejuvenating our local rail manufacturing industry’s capabilities and capacity.”

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2019-08-22

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2017-07-28

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 3
    2.2. Geographic Position 5
    3. SIZE OF THE INDUSTRY 6
    4. STATE OF THE INDUSTRY 12
    4.1. Local 12
    4.1.1. Corporate Actions 20
    4.1.2. Regulations and Policy 22
    4.1.3. Enterprise Development and Social Economic Development 24
    4.2. Continental 25
    4.3. International 29
    5. INFLUENCING FACTORS 33
    5.1. Draft White Paper on National Rail Policy 33
    5.2. Localisation Requirements 34
    5.3. Supplier Development 37
    5.4. Economic Environment 39
    5.5. Rising Operating Costs 40
    5.6. Labour 40
    5.7. Technology, Research and Development (R&D) and Innovation 42
    5.8. Environmental Issues 44
    5.9. Cyclicality 44
    5.10. Electricity Constraints 44
    6. COMPETITION 45
    6.1. Barriers to Entry 46
    7. SWOT ANALYSIS 47
    8. OUTLOOK 48
    9. INDUSTRY ASSOCIATIONS 48
    10. REFERENCES 49
    10.1. Publications 49
    10.2. Websites 50
    APPENDIX 1 52
    Suppliers to the Rail Manufacturing Industry 52
    APPENDIX 2 61
    Current Localisation and Supplier Development Initiatives 61
    COMPANY PROFILES 69
    ABB SOUTH AFRICA (PTY) LTD 69
    ACTOM (PTY) LTD 73
    AFRICAN RAIL AND TRACTION SERVICES (PTY) LTD 82
    ALSTOM UBUNYE (PTY) LTD 84
    AMSTED RAIL AFRICA (PTY) LTD 86
    ANSYS LTD 88
    AVENG LTD 92
    BOMBARDIER TRANSPORTATION SOUTH AFRICA (PTY) LTD 96
    CNR ROLLING STOCK SOUTH AFRICA (PTY) LTD 98
    CSR E-LOCO SUPPLY (PTY) LTD 100
    DCD GROUP (PTY) LTD 102
    DENEL VEHICLE SYSTEMS (PTY) LTD 105
    ELECTRO-MOTIVE DIESEL AND LOCOMOTIVE COMPANY (PTY) LTD 107
    GALISON MANUFACTURING (PTY) LTD 109
    GE SOUTH AFRICA TECHNOLOGIES (PTY) LTD 111
    GIBELA RAIL TRANSPORT CONSORTIUM (RF) (PTY) LTD 113
    GLOBAL RAILWAY ENGINEERING (PTY) LTD 115
    GLOBAL RAILWAY INTERNATIONAL (PTY) LTD 117
    GRINDROD LOCOMOTIVES (PTY) LTD 118
    GRINDROD RAIL CONSTRUCTION COMPANY (PTY) LTD 120
    GRINDROD RAIL OPERATIONS (PTY) LTD 122
    IMBANI HOLDINGS (PTY) LTD 124
    KNORR-BREMSE (SOUTH AFRICA) (PTY) LTD 127
    LUCCHINI SOUTH AFRICA (PTY) LTD 129
    MEHLEKETO RESOURCING (PTY) LTD 130
    R AND H RAIL (PTY) LTD 132
    SAFREIGHT LOGISTICS (PTY) LTD 134
    SIEMENS (PTY) LTD 136
    SIYAHAMBA ENGINEERING (PTY) LTD 139
    SWASAP (PTY) LTD 142
    TRANSNET SOC LTD 144
    TRIDENT SOUTH AFRICA (PTY) LTD 149
    VENUS RAILWAY SOLUTIONS (PTY) LTD 151
    WICTRA HOLDINGS (PTY) LTD 153

    Report Coverage

    The report on the South African Railway sector focuses on the current state of the sector, developments within the sector and factors influencing the success of the industry. The report profiles seven companies including the two state-owned enterprises as well as independent entities, Bombela Operating Company (Pty) Ltd, the operator and maintainer of the Gautrain and Grindrod Rail Operations (Pty) Ltd, which has a fleet of 65 locomotives.

    Introduction

    This report covers passenger and freight transportation by rail, sectors characterised by decades of ageing infrastructure, poor maintenance and lack of investment. Both the Passenger Rail Agency of South Africa (PRASA) and Transnet are implementing huge capital investment programmes to revitalise the rail industry. To modernise the rail passenger industry, PRASA will implement a R123.5bn Rolling Stock Renewal Programme supported by programmes to increase capacity and upgrade stations and national signalling systems. Transnet’s Market Demand Strategy will invest R336.6bn on capital projects over a seven-year period, with R210.5bn allocated to Transnet Freight Rail for rolling stock, which includes locomotives, passenger coaches and freight wagons, and rail network expansion initiatives aimed at increasing market share to 35% by 2019. During the past few years low economic growth, the drop in commodity prices, low manufacturing and mining output and electricity constraints, have all had a negative effect on freight rail volumes.

    Strengths

    • Capital expansion projects create opportunities for empowerment partnerships together with ongoing PRASA, Gautrain and Transnet empowerment and job creation initiatives.
    • Current PRASA Rolling Stock Renewal and support programmes and Transnet Market Demand Strategy will increase capacity leading to increased volumes.
    • Increasing demand for Gautrain services.
    • Lower environmental impact compared to road transport.
    • Rail is on average 33% cheaper than road transport, especially for distances greater than 500km.

    Weaknesses

    • Critical skills shortages at all levels of the industry resulting in inefficiencies, increased accident rates and poor service delivery.
    • Current management instability and controversy at PRASA.
    • Inflexible nature of railway lines limits service opportunities.
    • Old and outdated infrastructure.
    • Split responsibility for freight rail which falls under the Department of Public Enterprises and passenger rail which falls under the Department of Transport.

    Opportunities

    • Change from competitive transport systems to collaborative intermodal transport.
    • Government’s Strategic Integrated Projects (SIPS) to develop, strengthen and optimise freight corridors will increase volumes to be carried.
    • Infrastructure and capital expansion projects in South Africa and sub-Saharan Africa will create demand for transportation of imported machinery and equipment.
    • Move from road to rail will increase volumes to be carried.
    • Private Sector Participation Programmes will remove barriers for investment.
    • Proposed Single Transport Economic Regulator will set prices, provide access to rail network, improve competition and lower costs to business.
    • Revitalisation of branch lines will increase capacity and encourage private investment.
    • Weak rand increases value of exported commodities thereby increasing volumes.

    Threats

    • Extensive rail and port infrastructure projects on the African continent could divert freight away from South Africa thereby creating competition for South African freight rail and ports.
    • Increased competition from flexible, efficient and convenient road transport.
    • Low commodity prices, global economic climate and slowdown in Chinese economy which will reduce exports; and low projected growth rates will lead to contraction in manufacturing, mining and agricultural output and vehicle sales, thereby reducing demand for transportation by rail.
    • Proposed declaration of strategic minerals could discourage investment and limit exports requiring transportation by rail.
    • Rising labour, diesel and electricity costs and future implementation of carbon tax.
    • Weak rand increases costs of imported rolling stock and components.

    Outlook

    According to the Minister of Transport “In fast-tracking the modernisation of public passenger rail transport, government is investing R172.3bn over the next ten years towards capital projects that will transform the passenger rail transport in our country.” However, the OECD Economic Surveys South Africa 2015 report states that PRASA’s capital development programme focuses on reversing past under-investment and decline of service quality, which will not address the lack of public transport services in currently under-serviced areas. It believes the agency needs to “extend the geographical reach of its services in response to changes in the spatial use of land arising from urbanisation and new housing developments” such as townships, affordable housing developments and informal settlements. Dr Jan Havenga, Director: Centre for Supply Chain Management, Department of Logistics, Stellenbosch University, forecasts that “South Africa’s freight task is expected to treble over the next 30 years, with further concentration on the long-distance corridors.” Co-ordinated and market-driven actions to meet these requirements include the development of an intermodal service for long-distance finished products, the development of strategies to further rail freight services for long-distance intermediate traffic, the maintenance and development of rail’s core competency around the transport of mining commodities and the revitalisation of the low-density branch line network through government involvement in order to facilitate rural employment and equitable access to the core transport network.

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2019-08-22

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2017-07-28

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    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2014-10-08

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    Table of Contents

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    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Supply Chain 5
    2.2. Geographic Position 6
    3. SIZE OF THE INDUSTRY 9
    3.1. Passenger Rail Services: PRASA 10
    3.2. Passenger Rail Services: Gautrain 11
    3.3. Freight Rail Services 11
    4. STATE OF THE INDUSTRY 16
    4.1. Local 16
    4.1.1. Passenger Rail Services 18
    4.1.2. Passenger Rail Services: Gautrain 20
    4.1.3. Freight Rail Services 21
    4.1.4. Corporate Actions 24
    4.1.5. Regulations and Government Programmes 24
    4.1.6. Enterprise Development and Social Economic Development 27
    4.2. Continental 30
    4.2.1. Passenger Rail Services 31
    4.2.2. Freight Rail Services 31
    4.3. International 33
    5. INFLUENCING FACTORS 35
    5.1. Green Paper on National Rail Policy 35
    5.2. Improved Regulatory Oversight 36
    5.3. Investment in Rolling Stock and Rail Infrastructure 37
    5.4. The Movement from Road to Rail 44
    5.5. Private Sector Participation (PSP) 47
    5.6. Economic Environment 49
    5.7. Challenges and Issues Facing the Mining Industry 51
    5.8. Rising Operating Costs 53
    5.9. Technology, Research and Development (R&D) and Innovation 54
    5.10. Labour 57
    5.11. Cyclicality 61
    5.12. Environmental Concerns 62
    5.13. Safety and Security 64
    5.14. Electricity Supply Constraints 66
    5.15. Government Initiatives 67
    6. COMPETITION 68
    6.1. Barriers to Entry 70
    7. SWOT ANALYSIS 71
    8. OUTLOOK 72
    9. INDUSTRY ASSOCIATIONS 73
    10. REFERENCES 73
    10.1. Publications 73
    10.2. Websites 75
    APPENDIX 1 77
    Rail Operators Excluding PRASA, TFR and Gautrain 77
    APPENDIX 2 83
    Transnet Freight Rail Business Units: Commodities and Critical Train Flows 83
    APPENDIX 3 86
    Current and Future Rail-Related Projects on African Continent 86
    APPENDIX 4 89
    TETA: Rail Sector Scarce Skills 89
    COMPANY PROFILES 91
    African Rail and Traction Services (Pty) Ltd 91
    Bombela Operating Company (Pty) Ltd 93
    Grindrod Corridor Management (Pty) Ltd 95
    Grindrod Rail Operations (Pty) Ltd 97
    Passenger Rail Agency of South Africa 99
    SAFreight Logistics (Pty) Ltd 103
    Transnet SOC Ltd 105

    Introduction

    This report focuses on the manufacture of railway locomotives and rolling stock. The industry is driven by the collective investments, valued at more than R430bn, of Transnet and the Passenger Rail Agency of South Africa (PRASA). The current contracts have been awarded to rail consortia and joint ventures comprising global companies and local empowerment partners such as Gibela and CSR E-loco Supply on the one hand, or to global original equipment manufacturers of locomotives such as China North Rail and General Electric. The establishment of local sustainable rolling stock supply chains is essential if the successful bidders are to meet the localisation requirements and Transnet Engineering (TE) will have to play a strong role as builder-partner, assembly-partner and technology-transfer partner.

    Strengths

    • Local and international manufacturers of all sizes active in the domestic market.
    • Transnet’s recent emphasis on the importance of investment in the sector.

    Weaknesses

    • Current underdeveloped rolling stock supply chain.
    • Declining performance of the manufacturing sector.
    • Loss of skills as a result of underinvestment in the sector.
    • Reliance on contracts from Transnet and PRASA.

    Opportunities

    • Empowerment partnerships as a result of the capital expansion projects.
    • Government’s R845bn Strategic Integrated Projects (SIPS) to develop strengthen and optimise freight corridors will increase demand for locomotives and rolling stock.
    • Huge investment in rail network and infrastructure projects on the African continent will increase the demand for locomotives and rolling stock
    • Infrastructure and capital expansion projects in South Africa will create demand for transportation of imported machinery and equipment, thereby increasing demand for locomotives and rolling stock
    • Localisation requirements and focus on supplier development.
    • Move from road to rail will increase volumes to be carried, thereby increasing demand for locomotives and rolling stock.
    • PRASA Rolling Stock Renewal programmes and Transnet Market Demand Strategy that are expected to revitalise the rail manufacturing industry.

    Threats

    • Inability to manufacture stock within the lead times.
    • Increasing electricity and steel costs as well as the negative effect of above-inflation and double-digit wage settlements will reduce competitiveness.
    • Lowering of projected growth rates will lead to slowdown in manufacturing, ining and agricultural output requiring transportation by rail, thereby reducing the demand for locomotives and rolling stock.
    • Worsening economy that could negatively affect the local manufacturing sector.

    Outlook

    The future of the domestic manufacturing industry will be determined by the contracts awarded by Transnet, PRASA and the Gautrain Management Agency. Massive investment in railway networks and infrastructure on the African continent will also increase the demand for locomotives and rolling stock. In order to capitalise on the available expansion programmes, South African manufacturers and component suppliers realise they need to increase their capacity, skills and productivity to either compete directly with global companies or form joint ventures or partnerships with global suppliers to compete for the above-mentioned contracts. According to Transnet Port Terminals CEO Karl Socikwa, “Transnet believes rolling stock will be pivotal for the development of new industries and influencing how much is manufactured locally. This will promote strong, sustainable growth in the sector, which in turn will lead to more job opportunities.” This view is supported by KPMG’s De Buys Scott who notes that state-owned Transnet and PRASA investments, collectively valued at more than R430bn, offer significant localisation opportunities for South Africa. “The establishment of local industries is taking place on the back of Transnet’s and PRASA’s investment strategies, which will ensure an increasing capability to manufacture passenger and freight locomotives in South Africa. This will render the country as the African leader in rail infrastructure development with significant opportunities to influence developments in Southern African Development Community countries and even further north.”

    Railway Transport and Manufacture of Locomotives and Rolling Stock Industry in South Africa 2014

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Supply Chain 2
    2.2. Geographic Position 3
    3. SIZE OF THE INDUSTRY 3
    4. STATE OF THE INDUSTRY 9
    4.1. Local 9
    4.1.1. Corporate Actions 12
    4.1.2. Regulations and Policy 12
    4.1.3. Enterprise Development and Social Economic Development 14
    4.2. Continental 16
    4.3. International 17
    5. INFLUENCING FACTORS 20
    5.1. Revitalisation of the Domestic Rail Industry 20
    5.2. Localisation Requirements 20
    5.3. Supplier Development 21
    5.4. Economic Environment 22
    5.5. State and Competitiveness of the Manufacturing Sector 23
    5.6. Rising Operating Costs 24
    5.7. Labour 25
    5.7.1. General 25
    5.7.2. Unions 25
    5.7.3. Skills and Training 26
    5.8. Technology 27
    5.9. Environmental Concerns 28
    5.10. Cyclicality 28
    6. COMPETITION 28
    6.1. Barriers to Entry 29
    6.2. Research and Development (R&D) and Innovation 29
    7. SWOT ANALYSIS 29
    8. OUTLOOK 30
    9. INDUSTRY ASSOCIATIONS 31
    10. REFERENCES 31
    10.1. Publications 31
    10.2. Websites 32
    APPENDIX 1 34
    Suppliers to the Rail Manufacturing Industry 34
    APPENDIX 2 41
    Focus Areas for Local Content 41
    APPENDIX 3 42
    Current Supplier Development Initiatives 42
    ORGANOGRAM 47
    COMPANY PROFILES 49
    ABB SOUTH AFRICA (PTY) LTD 49
    ACTOM (PTY) LTD 52
    ANSYS LTD 59
    ARUP (PTY) LTD 61
    AVENG LTD 63
    BAE SYSTEMS - LAND SYSTEMS SOUTH AFRICA (PTY) LTD 67
    BOMBARDIER TRANSPORTATION SOUTH AFRICA (PTY) LTD 69
    CNR ROLLING STOCK SOUTH AFRICA (PTY) LTD 71
    CSR E-LOCO SUPPLY (PTY) LTD 72
    DCD GROUP (PTY) LTD 73
    GE SOUTH AFRICA TECHNOLOGIES (PTY) LTD 76
    GIBELA RAIL TRANSPORT CONSORTIUM (RF) (PTY) LTD 77
    GRINDROD LOCOMOTIVES (PTY) LTD 79
    GRINDROD RAIL CONSTRUCTION COMPANY LTD 81
    IMBANI HOLDINGS (PTY) LTD 83
    KNORR-BREMSE (SOUTH AFRICA) (PTY) LTD 85
    MEHLEKETO RESOURCING (PTY) LTD 86
    OPICONSIVIA INVESTMENTS 265 (PTY) LTD 87
    R&H RAIL (PTY) LTD 88
    RRL GRINDROD (PTY) LTD 89
    SAFREIGHT LOGISTICS (PTY) LTD 90
    SIYAHAMBA ENGINEERING (PTY) LTD 92
    SWASAP (PTY) LTD 94
    TRANSNET SOC LTD 96
    TRIDENT SOUTH AFRICA (PTY) LTD 99
    VENUS RAILWAY SOLUTIONS (PTY) LTD 101
    WICTRA HOLDINGS (PTY) LTD 102

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