Railway corporate governance in a free-functioning freight transport market: A South African position

Abstract

Defining the economic role of rail freight transport in the national transport system of South Africa should be one of the basic ingredients of both an economically rational transport policy and the effective functioning of Transnet Freight Rail. In the interest of the national economy and in its own commercial interest, Transnet Freight Rail must only specialise in those fields where it can provide services tailored to the needs of customers at prices which are competitive and defensible in terms of economic principles. The institutional framework governing Transnet Freight Rail's operations should create an environment conducive to the management of its operations as a fully competitive and profit-oriented business by: • fostering a competitive freight transport market; • providing any required socio-economic rail services under special agreements; • Transnet's board of directors defining management objectives and granting real management autonomy to Transnet Freight Rail; and • Transnet Freight Rail defining clear and adequate performance indicators for itself. On the basis of these conditions, this paper outlines a governance structure under which Transnet Freight Rail as a public corporation can operate within a climate of free and effective competition.