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Challenges to the Ghanaian Transport Industry

Posted by Ziad Hamoui on January 16, 2012 at 9:40 AM


The current transport system in West Africa is facing mounting pressure to lower transport costs and to reduce axle weight at the same time. These two objectives, which are antagonistic by nature, require careful examination and urgent attention in order to come up with an effective mechanism to effect any permanent change into the Ghanaian transport industry. In order to understand the issue of high transport costs in West Africa, it is important to answer two main questions:

 1. Why do transport companies overload their trucks?

2. Why does it take so much time to move on the road                  

 The reason why overloading takes place is because, due to the geographic and demographic nature of West Africa, cargo traffic is imbalanced both ways; during export, there is a lack of return cargo to the hinterland at the discharge point and the time factor makes it crucial to return the vehicle for its next collection with minimum delay, while during import, there is a lack of return cargo from the hinterland and a similar reasoning that prevents delays to collect. As such, transport companies either need to charge inflated prices per ton, or overload a truck on its cargo-loaded journey, or a combination of these two options.

 Next, the reason why transit time is so long is because of inefficient documentation procedures and verification at the various points of entry, checkpoints and barriers, in addition to unsuitable road infrastructure to allow a fast movement along the corridors. This difficulty allows the possibility of corruption through the ‘Human’ factor, since a manual process or human intervention might decide how long it takes for a certain process to proceed.

 The disruptive effect of this inefficiency is most obvious during short-distance export container transfers within the port cities in Ghana; instead of a scenario where the full consignment is ready for quick pick-up, transport companies need to keep fleets idle for the entire duration of the day, sometimes until the next day, at the additional expense of both the shipper and the carrier. Assuming that vehicle is roadworthy, that asset could have transported more than twenty containers during a day’s work, and yet its single load has been delayed by a full day, with no evidence that the next day would be any better.

 The effect of overloading & inefficient documentation is compounded by the fact that drivers are tempted to carry illegal cargo on an empty leg by colluding with a shipper from under the table. Such a practice offers the possibility of below-cost transport service, which is a win-win situation at the expense of the vehicle owner. Another effect is that the same amount of cargo needs to be moved by considerably more vehicles, which leads to congestion and more extensive damage for the road infrastructure, as well as higher costs for the transport companies.

 Due to the prevalence of extremely heavy articulators that ply the corridors of West Africa, especially during transit transport, axle-weight limitation is currently facing tough regulations and strict enforcement, which would lead to considerable savings on infrastructure investment and maintenance costs for the public sector, both at regional and international levels.

 

And yet, such a move would be an incomplete one without coming up with an alternative business model for the transport companies and the remainder of the industry’s stakeholders, one which rehabilitates drivers that have been put out of business due to a more efficient transport model, into income-generating alternative careers. Otherwise, transport companies will have to make up the loss of payload by the only alternative available; by raising cost per tonne. Unfortunately, such a reaction defeats the purpose of lowering transport costs across West Africa.

 One of the possible solutions would be the imposition of stricter law enforcement on the road, in order to prevent illegal haulage and force shippers to pay for prevalent market prices. Such a move would lead to an increase in demand for legal transport which, coupled with an initiative to increase the efficiency of document processing, would lead to a better use of transport assets and, consequently, an ability to gain economies of scale. With that, a transport company would be able to spread its expenses thinner and achieve a lower transport cost and, consequently, a lower transport price for shippers.

 It is a fact that the Ghanaian transport industry is in dire need of a complete restructuring, away from a purely competitive, unregulated and chaotic economic system (‘Me bo, me ho modin’ trucking) that is plagued with corruption and weak law-enforcement, to a more consolidated, organised and law-abiding form, especially within urban areas.

 However, the main problem with the implementation of any solution is the lack of relevant data to support these claims; the legal transport market needs to be surveyed and balanced against the amount of cargo that is transported across the country, in order to assess what percentage of total cargo is moved through legal channels. The next issue would be to convince the legal transport players, as well as the various other stakeholders from the public and private sectors, of the benefits of cooperation on matters of service pricing, exchange of transport data, policy implementation, forum discussions and industry professionalization through education and other means available.

Categories: Opinion

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