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ABSTRACT
This paper focuses on key areas for reducing transport costs in Southern Africa emerging from recent research on cross-border freight between Malawi, Mozambique, South Africa, Zambia and Zimbabwe. We consider the impact of competition, border delays and lack of return loads on transport rates which could be reduced significantly through increased availability of return loads for transporters, linked to growing industrial capacity in each country. Furthermore, increased competition and reducing delays for transporters contributed to a large reduction in transport rates between Lusaka and Johannesburg, with similar effects from Malawi. Margins charged in refrigerated transport are high due to low levels of rivalry and lack of return loads. Measures to reduce border constraints and enable greater rivalry between transporters from different countries could have a downward effect on transport rates in the region which are shown to be above benchmarks for efficient transport.
Acknowledgements
This paper is largely based on two working papers funded by UNU-WIDER as follows:
Vilakazi, T & Paelo, A, 2017. Understanding intra-regional transport: Competition in road transportation between Malawi, Mozambique, South Africa, Zambia, and Zimbabwe. WIDER Working Paper No. 2017/46.
Vilakazi, T & Paelo, A, 2017. Towards the integration of markets: Competition in road transportation of perishable goods between Malawi, South Africa, Zambia, and Zimbabwe. WIDER Working Paper No. 2017/49.
The findings of the two working papers above were presented in the form of a PowerPoint presentation at the National Treasury and UNU-Wider Conference in November 2016 as below. UNU-Wider supported the research in partnership with National Treasury of South Africa, and authors of working papers were required to present the findings at the event. See:
Thando Vilakazi and Anthea Paelo. November, 2016. Causes of high road freight costs in southern Africa for perishables and commodities. National Treasury and UNU-Wider Conference. Pretoria, South Africa. Link: https://www.wider.unu.edu/sites/default/files/About/1_2_vilakazi.pdf Accessed 9 April 2018.
One of the working papers above (1) is also referred to in a UNU-Wider research brief on the UNU-Wider website as a summary and policy brief drawing from the main findings of the research, as follows:
‘Reducing transport costs to spur regional growth in Southern Africa’. UNU-Wider Research Brief No. 7/16. Link: https://www.wider.unu.edu/sites/default/files/RB2016-7-Reducing-transport-costs-to-spur-regional-growth-in-Southern-Africa.pdf Accessed 9 April 2018.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1 Excluding basic metals and chemicals. Quantec data.
2 This paper is largely based on two working papers as indicated.
3 There is reference throughout the paper to routes to and from Maputo in Mozambique although this is not a central focus of this paper. Furthermore, information regarding Mozambique is drawn from interviews in the other countries with market participants operating on Mozambique routes.
4 There are important caveats in terms of measurement and heterogeneity, usefully outlined by Calderón & Servén (Citation2008).
5 In the underlying research study, respondents were asked based on standardised interview guides to indicate the average rates paid or charged in 2015 for the transportation of a particular type of good, for example, perishable items, by city pairing where applicable. Responses were given in US Dollars, or in local currency terms in which case the rates were converted using annual average exchange rates. Unless otherwise stated, rates included in tables are based on an average of the average rates stated by respondents.
6 There are almost no recent international studies with reliable comparators that could be applied in this case, or for refrigerated transport.