Roadfreight rates not sustainable - truckers

While “hard” infrastructure issues are being dealt with by the Zambian government, there is a need to step on the ‘soft’ issues in order to make trucking sustainably profitable, says Shashi Patel, chairman of the Truckers’ Association of Zambia. He says the association has welcomed the government’s investment in the transport sector as a whole. Road transport has accounted for the bulk of this investment. But, while roads have been upgraded on trunk and main routes linking provincial centres, work still needs to be done on those to the major agricultural areas. “While the mines may exist in urban areas, they are not awarding freight contracts to local transporters. “As a result, trucking companies are struggling to sustain their existence,” he says. The association believes that the transport rates are too low and are not sustainable due to high operational costs in Zambia. In addition, f luctuating fuel costs are not helping the situation. For crossborder transporters, border delays are contributing to the high cost of doing business. Consignors and consignees are reluctant to pay demurrage in such circumstances while the truck stands idle, says Patel. Zambian truck f leets are also ageing and finance is difficult to raise without longterm contracts from the mines and other major importers and exporters. Without the security of a contract, financial institutions see transporters as high risk and therefore charge interest rates averaging 24%. In order to survive the business landscape, most local transporters are opting to import used vehicles. Maintenance costs are high because all spares have to be imported. A weakening kwacha means that parts become more expensive. Used trucks are also not as economical as the latest models. For consignors and consignees, the resultant risk is that used vehicles (some of them very old) will break down or a number of local trucking companies will go out of business – with the remainder being able to dictate prices to the shippers, says Patel. The table below shows the budget allocation to the road transport sector compared to total national budget for the period 2010-2015. INSERT & CAPTION Work still needs to be done on roads to the major agricultural areas. – Shashi Patel