A fuel price increase, a major repair bill or a delayed customer payment can quickly have an impact. But beyond these immediate challenges, the industry is beginning to grapple with a different question: what happens if rail starts working again?

Despite the need to tackle these short-term challenges, operators must also anticipate how broader infrastructure changes could reshape the sector. South Africa has experienced a sustained shift from rail to road freight over recent years, as infrastructure deterioration, theft, vandalism and operational constraints have reduced rail network performance. In response, transport operators expanded fleets, developed new routes and absorbed volumes that historically would have been moved by rail.

Now that private participation is beginning to unlock investment in rail infrastructure and operations, the industry is entering a new phase. The question is not whether road freight will remain important; it will. The question is how operators position themselves in a market where freight flows may look very different in 5 or 10 years.

Rail reform will not affect every operator equally

Long-haul bulk commodity corridors are likely to be the first to see an impact. Commodities such as coal, chrome, manganese and iron ore are naturally suited to rail, particularly over long distances.

For operators heavily exposed to these sectors, rail reform presents a strategic question. If rail capacity improves over time, where will future growth come from?

Road freight volumes will not shift overnight. Reforms of this magnitude take time – often 5 to 10 years before meaningful volume and efficiency gains are realised. The opportunity lies in preparing for that change now.

Diversification will however become increasingly important, particularly for operators whose businesses are concentrated in sectors that could gradually shift back towards rail. Future competitiveness may depend less on fleet size and more on fleet mix, asset utilisation and the ability to respond to changing customer requirements.

The margin challenge is already here

While long-term planning is vital, day-to-day operational pressures continue to shape business realities.

For many operators, diesel accounts for up to half of daily operating expenses. Add insurance increases, vehicle maintenance, tyre replacement costs, security requirements and labour pressures, and it becomes clear why profitability remains under strain across much of the industry.

Cash flow is another reality many operators deal with every day. It's not uncommon for transport businesses to pay for diesel, salaries and maintenance long before invoices are settled. When payment terms stretch to 60 or even 90 days, working capital can quickly become just as important as fleet capacity.

Operational discipline has become one of the industry's most important competitive advantages. Fleet utilisation, route planning, fuel management and cash flow forecasting are central to protecting margins and maintaining business resilience.

The operators performing best are often not those with the largest fleets, but those with the clearest understanding of their costs, profitability and cash flow requirements.

Fleet decisions have become more strategic

With margins tight and market dynamics shifting, every decision about assets carries greater weight for future success. The choice is no longer simply about buying another truck. Businesses need to carefully consider about how assets will perform over their full lifespans and whether they align with future market opportunities.

From a financing perspective, this means operators are increasingly evaluating assets based on total cost of ownership rather than just the purchase price.

The growing presence of lower-cost truck manufacturers has created additional options for operators. However, maintenance requirements, fuel efficiency, residual values, parts availability and long-term operating costs all influence profitability over time.

In a sector where margins are already under pressure, the wrong fleet decision can have consequences long after the initial purchase.

Why financing conversations are changing

This shift in asset strategy calls for an equally considered approach to funding and capital allocation.

These realities are also reshaping how transport businesses think about funding. Historically, finance discussions centred on acquiring vehicles and growing fleet capacity. Increasingly, operators are looking for funding solutions that support broader business objectives.

Growth is no longer always about expanding a fleet. For some operators, it may mean entering a new sector, taking on different types of work or reducing reliance on a single customer. That requires access to capital that can support changing business needs over time.

As the industry changes, operators need to think beyond the next vehicle purchase. Decisions around fleet composition, working capital, customer concentration and expansion into new markets all require capital. The businesses best positioned for the future are likely to be those that view funding as part of a broader growth strategy rather than a standalone transaction.

Preparing for the next chapter

As operational, strategic, and financing considerations converge, businesses must look ahead to ensure ongoing resilience and growth. South Africa's freight industry is unlikely to become rail-dominated any time soon. Road transport will remain the backbone of the country's logistics system for the foreseeable future.

The next decade is likely to reward businesses that focus on profitability, operational efficiency and strategic decision-making rather than growth for growth's sake.

Rail reform will create new opportunities alongside new competitive pressures. The operators that succeed will not be those waiting to see what happens. They will be the ones already preparing for it.

Diane Frey, Head of Asset Finance, Investec Business and Commercial Banking

The views expressed in this article are subject to the Investec Bank Limited disclaimer.