SUPPRESSION OF THE FREIGHT REPARTITION AND LIBERALIZATION OF TRUCK FREIGHT IN ECOWAS

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BURKINA SHIPPERS COUNCIL

 This study included four steps:

II. The analysis of different systems of repartition and truck freight and their impacts on the costs/prices of transport and on the competitiveness of the trucking industry

IV. ConclusionsRecommendations

III. Expected effects on liberalization of access to trucking freight

I. Regulation of the Management of the Trucking Industry

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Context/Problem Justification

Statement

and

Terravaninthorn S. G. Raballand (2008) Transport Prices in Africa : a review of international corridor Word bank

In regulated environments, such as West and Central Africa, regulatory constraints (formal and informal) should be dismantled because they are the principal cause of limited competition and the high price of transport.

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I. REGULATION OF THE MANAGEMENT OF TRUCKING FREIGHT

Multilateral In ECOWAS
Decision

conventions

A/DEC/20/5/80 relative to the ECOWAS Transport Program a) For road transport: the TIE b) Customs accords at the road transport level for interstate road transit: TRIE

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I. REGULATION OF THE MANAGEMENT OF

TRUCKING FREIGHT (2)

In UEMOA:

Two major acts characterize the road transport and transit policy in UEMOA:
a)

Recommendation N 04/97/CM relative to the implementation of a common action program concerning infrastructure and road transport at UEMOA

b)

Regulation UEMOA N09/2001/CM/UEMOA and its annex of 26/11/01 on the Customs Code Book I : Organizational framework, procedures and Customs Regimes
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I. REGLEMENTATION EN MATIERE GESTION DU FRET ROUTIER (SUITE) Les accords bilatraux

Bnin Burkina Cte dIvoire Guine Bissau Mali Niger Togo Sngal

Benin Burkina
Cte dIvoire Guine Bissau Mali Niger

AR AP AT AM AR AP AR AP AT AT AM AM AF
AT AT AT AR AP AT AR AT AM AR AT AR AT

Togo
Sngal

AR AP AR AT AT AM AR AP AR AT AT AM AR AT AR AP AT AR AT AR AT

AR AT

AR AT
AR AT

AR AT
AR AT

AR AP AT

AR AP AT AM AR AP AT AR AT AR AT AF
6

AR : Accord Routier / AF : Accord Ferroviaire / AP : Accord Portuaire / AM : Accord Maritime /AT : Accord de Trans
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I. REGULATION OF THE MANAGEMENT OF

TRUCKING FREIGHT (3)

The accord most discussed concerns the rule on the sharing of freight This sharing arrangement is generally accompanied by a taking your turn system This market division limits competition.
It also by default increases the already high cost of transport in the

Sahelian region The sharing of freight are biased by the efficiency of technique. Old trucks that are badly maintained are equally likely to get a load as new trucks thanks to the queing system used at ports
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I. REGULATION OF THE
MANAGEMENT OF TRUCKING FREIGHT (4)

The

second negative consequence arising from the first is that there is an oversupply of trucks.
de camions extends, then, the waiting time for trucks at the port.

This oversupply of trucks Cet excdent

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I. REGULATION OF THE MANAGEMENT OF

TRUCKING FREIGHT (5)

Overload

is applied to compensate for the low turnover of vehicles. The strict application of freight sharing accords lead to bribes paid to avoid the waiting line.
Overall, limited competition, mediocre

service, high transport prices and compromised governance are the results.
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II.
The analysis of different systems of repartition and truck freight and their impacts on the costs/prices of transport and on the competitiveness of the trucking industry

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II. FREIGHT SHARING SYSTEM

This

is to check the veracity or otherwise of the criticisms made in the management of freight The price of transport for delivery of merchandise from a port to the capital of a landlocked country in Africa varies from 15 to 20% of import costs, a figure 3 to 4 times higher than most developed countries.
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II. FREIGHT SHARING SYSTEM

The principal factors that explain the higher prices are:

Distances on the order of 1,000 km from port to landlocked country capital; Weak transport industry productivity in a large part of Africa.

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II. FREIGHT SHARING SYSTEM (3)

Costs depend are due to:

Low productivity in the sector. The average monthly distance a truck covers in Africa is from:

11.00012.000 km for national transport in South Africa 8.0009.000 km in Southern Africa (for example from South Africa to Zambia via Zimbabwe) 5.500 km in East Africa 2.500 km at the most for trucks desinted for Mali and Niger (according to the transiters).

Weak level of competition between transport service providers Poor state of road infrastructure

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II. Freight Sharing System (4)

Transport
Route

costs structure and profitability (Teravaninthorn et Raballand)

Price (US$ Variable Fixed costs Profit Margin per km) costs (US$ (US $ per (%) per km) km) 1.54 0.66 80

Tema-Ouaga 3.53

TemaBamako
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3.93

1.67

0.62

80

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II. II. Freight Sharing System (5)

According to Zerelli and Andy Cook, profit margins are not 80% but nearerr to 15-20%. For our part, based on a simulation, we have the following conclusions: If a coefficient of 100% average utilization is applied, the distance (km) that will allow the reimbursement of a vehicle: In 2 years, on the order of 90,000 km ; In 5 years, on the order of 50,000 km And on the life of the vehicle about 50,000 to 15/03/2013 15 60,000 km

II. II. Freight Sharing System (5)

If

a coefficient of utilization of 75% is applied, more realistic but still optimistic, reimbursement : In 2 years is impossible ; In 5 years would require an annual distance (km) on the order of 80 to 100,000 km For the life of the vehicle will be 50 to 60.000 km
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II. II. Freight Sharing System (6)

Structure

of the transport market The application of a 1/3-2/3 rule where the transport conditions are negotiated by a professional group of transports with a shipper or a representative. By intermediaries ( coxers By direct negotiation of contracts established with a shipper or representative
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II. Freight Sharing System (7)

Impact of freight sharing rules on transport prices and the competitiveness of the sector Summary of criticisms of the freight sharing system
In West Africa, transport companies obtain high profit margins There is an oversupply of trucks The quota system protects trucking companies from landlocked countries Unlike the quotas, the taking turns has no legal basis The quota system is maintained in the system of old trucks The quota and the taking turns systems give rise to the use of coxers (intermediaries) which increases the cost of transport The quota and the taking turns systems give rise to more corruption

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II. Freight Sharing System (8)

Implementing

regulations or the sharing of cargo and their impact on prices Port of Lom Port of Cotonou Port of Tema Port of Dakar

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II. Freight Sharing System (9)

Port Tema Tema Tema Lom Lom Destination Mali Burkina Niger Mali Burkina Quota 1/3-2/3 No No No No Taking of turns Rarely Rarely Yes Rarely

Lom Cotonou Cotonou Cotonou

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Niger Mali Burkina Niger

No except containerized Rarely except cargo and rice containerized cargo and rice Yes Yes No No Yes Rarely Rarely Yes
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II. Freight Sharing System (10)

The

management of freight by quotas is applied on 2 of 9 corridors considered in this study (22%), Niger being the destination country in both cases. In other cases the quota and taking turns are not likely to change the rules of the game

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III. Analysis of the expected effects on liberalization of access to trucking freight

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III. Analysis of the expected effects on liberalization of access to trucking freight

Inefficiencies linked to the rules of sharing freight and the expected effects of liberalizing access to freight

a) The 1/3-2/3 rule

Contestability of markets is a guarantee of efficient allocation of resources Regulatory conditions Financial constraints (second constraint) Relations between shippers and transporters
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III. Analysis of the expected effects on liberalization of access to trucking freight

Application of sharing mechanisms external to the market for the transport of merchandise en transit, by corridor
Applied Quotas (1/3 2/3) Lom-Niamey Cotonou-Niamey Lom-Ouagadougou Waiting turns Tema-Niamey Lom-Niamey Cotonou-Niamey Lom-Bamako Lom-Ouagadougou Cotonou-Bamako Cotonou-Ouagadougou Abidjan-Bamako Abidjan-Ouagadougou Tema-Bamako Tema-Ouagadougou

Partially

Rarely

Uncertain Non applied

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Cotonou-Bamako Cotonou-Ouagadougou Abidjan-Bamako Abidjan-Ouagadougou Tema-Bamako Tema-Ouagadougou Tema-Niamey Lom-Bamako

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III. Analysis of the expected effects on liberalization of access to trucking freight

Point

of view of stakeholders met in the

field The administrations The transporters The transport auxiliaries, shippers and shippers carriers (truckers)

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III. Analysis of the expected effects on liberalization of access to trucking freight

a) The question of strategic merchandise

b) Attribution of a waiting line for non-strategic merchandise c) Selling off transport rights

d)The question of cabotage

e) Why is such a scenario hard to implement?

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IV.
CONCLUSIONS RECOMMENDATIONS

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IV. CONCLUSIONS - RECOMMENDATIONS

Suppression,

pure and simple, of the taking turns

Prerequisites

for changing the rules of sharing freight

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IV. CONCLUSIONS - RECOMMENDATIONS

Microeconomic measures: training and informing of operators Macroeconomic measures

The role of Shippers Councils BESC System (Electronic Cargo Tracking) ; SYGESTRAN System (Road Transport, Rail and Air Management System) ; Virtual Freight Market System
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IV. CONCLUSIONS - RECOMMENDATIONS

Necessity

to regionally implement

measures La tarification de rfrence Dissymetrical and seasonal change in traffic The seasonal peak is it manageable? Offers are they too rigid? Necessity to evaluate the entire transport system 15/03/2013

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CONCLUSION

There are certainly significant possibilities to reduce the costs and prices of transport These possibilities rest first in an overall consideration on the functioning of the sector and the management of the enterprise It is not our intention here to dictate road transport policy, we sought to illuminate issues, and explain decisions and this is what we delivered throughout this work. May the discussions that will engage, from this work, facilitate a definite majority position on these controversial issues of taking turns and quotas.

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Thank You
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