State-owned Transnet has made significant strides to deliver on localisation, as part of the country’s industrialisation policy, and the logistics sector can support manufacturing demand within South Africa for key components and equipment essential for its operations, it said in a release on December 9.

This will be an important contribution by Transnet to increasing inclusive growth in South Africa, which itself will enhance the group's business, it added.

The group notes that, if it is compelled to procure from intermediaries goods that are not manufactured in South Africa, it will be at a significant disadvantage in the market. This makes goods more expensive for Transnet and reduces its ability to lower the cost of logistics in South Africa.

"Transnet is, therefore, working with the Industrial Development Corporation (IDC) on the establishment of a local rail manufacturing facility. Transnet has committed to procure from a local supplier for a period of up to 15 years to ensure viability of the supplier," the logistics agency said.

Transnet has committed to deepen local capacity and capability in the rail sector by supporting existing rail component manufacturers and developing new suppliers to manufacture components in the rail industry within the domestic and regional markets.

This local manufacturing facility would represent a major milestone in Transnet’s transformation imperatives.

"Transnet is working on the development of a Rail Masterplan with Department of Trade, Industry and Competition's Trade and Industrial Policy Strategies division, which would drive further investment in this sector in South Africa. This work is expected to be completed at the end of February.

"Transnet remains committed to engaging with government on these initiatives, as part of the industrialisation of the South African economy," it said.