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Trucking in Africa

It is estimated that 80 percent of the freight in Africa is transported by trucks. With no reliable alternatives to trucking within Africa, this mode of transport plays a critical role in the movement of goods from points of origin to various final destinations across the continent. However,challenges in the road transport sector in Africa are vast. While issues such as inadequate infrastructure, continuous delays in port clearance, and long queues at country borders are well known, there are a multitude of other issues that have cost and operational implications. Transport costs for landlocked countries can be as much as 75 percent of the value of the exports. Studies show that Africa’s high cost of transportation can be attributed to poor road infrastructure, which adds 40 percent to the transport costs in coastal countries and 60 percent in landlocked countries. The cost of shipping a container from Dubai to Mombasa in Kenya, ranges from USD$1,400 to USD$1,700 for a 40-foot container, however, to transport the same container from Mombasa to Kampala in Uganda costs approximately USD$3,800. This means that the sea transport from Dubai to Mombasa that represents 70 percent of the distance accounts for only 30 percent of the cost, while 20 percent of the journey will be overland to Kampala and accounts for 67 percent of the cost.The trucking sector is a crucial component in the overall African economy as so many industries rely on it for their supply chain solutions. “It can be viewed as the irreplaceable backbone in the supply chain for both import and export industries,” says Deanne de Vries, VP Africa for Agility. In addition to the role trucking plays in supporting trade activities, it is also a vital player in the secondary movement of goods across national borders and within individual countries.

 

Challenges

 

According toAfrica Infrastructure Country Diagnostic report published in 2008, “Africa’s road density is sparse when viewed against the vastness of the continent,” an observation that still holds true today. The report further observes thatthe concept of an intra-regional trunk road network—the Trans-African Highway—has existed for some time, but owing to missing links and poor maintenance on key segments its potential to connect the continent remains unrealized. At present, most attention focuses on roads that link sea corridors into landlocked countries. While the condition of these strategic roads is generally good, the effective speed of international freight traffic is immensely slow. Greatly needed are measures to improve the efficiency of land frontier crossings through the creation of one-stop border posts, and other measures to improve the linkages between ports and upstream road and rail corridors, as well as the administrative efficiency of ports. At present, the absence of a smooth interface between maritime and land transport systems means that most of Africa’s containers are “stuffed and stripped” in the vicinity of the port, rather than used as a mean of facilitating multi-modal transport.

Last year, the Council of Scientific and Industrial Research (CSIR) in accordance with Imperial Logistics and the Stellenbosch University launched the ninth State of Logistics Survey in Johannesburg, which obtained data from a broad range of industry and government stakeholders and identified the key challenges in the South African road freight sector.The survey mentioned that the contribution of transport costs to overall logistics costs in 2012 is pinned at 61 percent, the highest it has been in the past nine years and far higher than the global average. The vulnerability of transport costs to a volatile cost driver – the price of crude oil – and South Africa’s entrenched dependence on road transport does not bode well for the economy.

In March 2013, the Transit Transport Co-ordination Authority of the Northern Corridor (TTCANC)conducted a Northern Corridor Stakeholders Survey covering the transit sections of Kigali – Rubavu/Goma via Shorongyi, Kigali – Akanyaru/Kanyaru Haut and Kanyaru Haut – Bujumbura – Gatumba/Kavimvira. The Survey Team made observations in various areas. It was observed that at many border stations there is poor Internet connectivity to support the electronic customs declaration and exchange of information amongst the stakeholders of the supply chain. At these stations, the telecom internet service providers use the 2G GSM which is suitable for voice but not data transmission. But on the Rwanda side of the border stations, the telecom Internet service providers use 3G GSM and the high speed Fiber Optic that is suitable for data transmission. Another issue often the trucking sector in Africa faces is inadequate parking space for vehicles that are awaiting clearance at the border stations. These border stations also lack warehouses for storage of goods subject to customs control and verification sheds for the examination of goods. TTCANC addressed serious need for private sector participation in the development of warehouses, and transit parking yards to cater for the increasing volumes of goods across the borders and goods in transit.In the same survey,the Democratic Republic of the Congo (DRC) customs reported that goods imported through the Northern Corridor lacked proper documentation. There is no institutionalized mechanism for exchange of information between DRC and its neighbors. After the goods are cleared by Customs for exit to DRC at the border stations of Rubavu-Rwanda and Gatumba- Burundi, all the documents are given to the driver or his clearing agent, this gives room for their manipulation before being presented to the DRC Customs.Diversion of goods is also an important issue mentioned in the survey. The customs authorities reported instances where they do not receive some of their expected imports. It was also reported that in some cases goods entered for transit at their border stations disappear before exiting to the destination country, thus leading to loss of revenue. Furthermore, DRC customs reported that when goods are in transit there is a variation in the goods received in DRC with those expected as per the advance information obtained through their representative at the Port of Mombasa. The Northern Corridor transit route linking Burundi, Rwanda and DRC-South Kivu to the Port of Mombasa through Kampala is long with several transit nodes to cross including border stations, weighbridges and check points, which makes it expensive. This has resulted in a good number of traders in Burundi, DRC and Rwanda to avoid using the Port of Mombasa.

Despite these challenges, Lawrence Mangarunyi, divisional manager of Kenya basedSiginon Global Logistics observes that the industry is generally growing with great investment by the African government, which has now focused on improving the infrastructure within the East Africa region. “Africa has also lately improved in profile as a business partner. It is therefore attracting a lot of investors and this has boosted trucking through freight of imports and exports.” But he also adds that security within African countries continues to pose grave challenges, which must be tackled as a matter of urgency for the trucking sector to thrive.

Supply chain solutions in Africa are getting increasingly dependent on efficient road transport. This has led to strong demand for trucking services from all sectors resulting in high prices. In addition, constant increase in fuel prices, inflation, high bank interests, poor road conditions, exorbitant amount of regulations, increase the cost of operations. Mangarunyi also admits it is important to improve the dilapidated infrastructure within the countries to reduce costs incurred by transport companies to cater for these challenges.

A key aspect of trucking is to encourage regional integration.Cross border transport is essential for boosting trade between African countries and subsequently improving the development of those economies. “Cross border transport is certainly affecting the evolution of bi-lateral relationships between countries in a positive way as it helps in developing harmonized trade practices across Africa,” says Vries.

 

The single window system

 

East Africa has been at the forefront with the electronic single window system. Trucking companies regard the move as an extremely positive business development.“The Single window system will enhance efficiency in clearance of cargo destined for East African countries. We are delighted that this will enable us to please our customers due to assurance that their cargo will be delivered to them without unnecessarily delays particularly at the borders,” adds Mangarunyi.

Vries adds, “It harmonises the trade and tax practices of all countries in the region and reduces the hassles of clearing the same goods at all intervening borders, which leads to massive reductions in cost of operations and ultimately benefits the traders and consumers via price reductions.” It additionally benefits the transport sector due to improved turn-around time. The resulting faster clearances at the port and faster transit time means a faster turn-around of the trucks which will lead to a greater efficiency in fleet management.

The demand for road transport services in Africa is dependent on the economic conditions and growth of the region. Recently, development in key sectors of the economy has led to increased demand for road transport. “There is increasing recognition of the potential that the African continent can play in world trade. East Africa, with recent oil and gas finds and strong agricultural capacity is emerging as one of the leading trade hubs on the continent,” says Vries. One of the key factors to achieving the region’s potential will be better infrastructure to facilitate trade. Vries provides an example of Uganda, where 90 percent of all imports and exports move over the road network.“Road transportation will play a crucial role in facilitating trade and growing its economy,” says Vries.

Kenya on the other hand is a country that is plagued with traffic jams particularly on the major highways. “This has hampered efficiency in cargo delivery and instead increased days of cargo delivery due to long transit times,” saysMangarunyi. The state of roads in some parts of the Northern corridor remains in poor state. This therefore poses the challenge of road traffic accidents as well as increased wear and tear on the vehicles.

 

Key trends

 

There is greater emphasis on observing high security in cargo handling during transportation, which has been observed by trucking companies. “This has led to the need for investments to cater for security particularly in areas most affected by high insecurity,” says Mangarunyi. He further adds that the ever rising fuel costs globally have created a need for research on alternative energy that can be used.

One important trend affecting the road transports sector in Africa is the renewed focus on rail. “China, for example, is building a standard gauge railway track between Mombasa and Kampala. They are also upgrading the TAZARA railroad that was originally built in the early 1970s. “These and other rail projects will impact the road transport once they are fully operational,” says Vries. The poor functioning of the railway system in the past has negatively affected the performance of ports that can be linked. Improvements of the railway system are required to meet the increasing transport needs of the region. Proper functioning of the railway system will also help to save the roads by diverting the heavy containers from the road to railway transport.

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