Business Daily (Nairobi)
Ben Sanga
13 May 2008
Truck transport charges in the East and Central Africa region could rise sharply after a study conducted by a transport companies' umbrella body revealed a surge in costs of conducting such a business, Shipping News has exclusively learnt.
Business cost evaluation by Kenya Transporters Association (KTA) is meant to give guidelines to its members and help them determine correct tariffs to charge a client between Mombasa and Kampala.
The results indicate the need to increase the tariffs for transporting cargo within Kenya and to the Great Lakes region.
Cargo expected to be affected are those cleared from the Mombasa port. This means that cargo importers and exporters should brace themselves for harsh times ahead after Rift Valley Railways recently increased its cargo transport charges between Mombasa and Kampala.
The truck transporters association says a review of the charges would be based on a survey it conducted on six trucking companies in February.
KTA's research involved calculating the cost of a prime mover pulling a semi trailer of 30 tonnes from Mombasa to Kampala.
The truck companies involved were Highway Carriers, Transpares, Corner Garage, Roadtainers Mombasa, and Multiple Haulers, which spend an average of Sh323,538 per trip. Fuel was the highest expenditure, standing at an average of Sh108, 176 per trip.
In the report, however, KTA did not factor in other expenses like repairs and accidents, but it is believed that the companies suffer two to three vehicle write-offs per annum.
Other factors not factored in the survey include equipment operations/replacement costs, transport yard facilities costs and gratuity for employees.
The profits the companies make were also not mentioned in the report. Expenses factored in are insurance, licences, administration expenses, salaries and interests in capital markets. Other costs include tyre and tube replacement and other maintenance costs.
The review of the costs comes at a time when KTA has been perceived as a sleeping giant, struggling to stamp its authority on the truck transport segment.
Due to the dormancy of the association, some unscrupulous transport business brokers have been taking advantage and charging extremely high tariffs.
However, the association is working hard to resuscitate its mandate as the true representative of truck transporters.
It has already called for an annual general meeting on May 31, the first in 18 years. The association is also looking forward to appointing an auditor to check its accounts.
These steps come on the heels of interest from regional transporters who want to join the association, a move seen as meant to not only streamline truck transport in the country, but also in the region.
KTA is upbeat that the review of the costs would enable affiliate companies to charge an almost standardised rate, though the umbrella body has no legal mandate to enforce a standardised transport rate on its members.
The law does not allow KTA to set tariffs for its members, but the body can provide estimates that guide members in determining what to charge.
According to KTA acting executive officer, Eunice Mwanyalo, the research will act as a guide to truck companies in determining new transport tariffs.
Transit cargo operators from neighbouring countries are bracing for new rates, with calls made to KTA to ensure that the charges do not adversely affect cargo clearance from the port of Mombasa.
Road transport accounts for almost 90 per cent of cargo that leaves or enters the port, while the railway carries a paltry 10 per cent.
"This issue could have been settled a long time ago, but the stakeholders we invited to a meeting did not turn up. We are now telling them that they either turn up for the meeting so that we can discuss costing or we implement them (findings)," she said.
Transport tariffs are expected to surge going by rising world costs. The rise has been occasioned by factors such as the rise of oil price in international markets.
"We have already invited all stakeholders to attend a meeting at Tamarind Hotel so that we can discuss this issue. We expect them to attend so that we can finalise the matter. Our first step was conducting a study on the cost of doing business. We circulated the data to all stakeholders and they can see from those figures that the cost has risen," said Ms Mwanyalo
Meanwhile, the port police have issued a caution to cargo owners to go for reputable transporters to avoid being defrauded by crooks who have infiltrated the market.
Mombasa Port Criminal Investigation Officer, John Nyanzwii,issued the alert after bogus transporters stole six Kampala bound containers with dry batteries valued at Sh6 million.
The incident took place at Mtito Andei last week.
"A fake transporter approached the importer and offered to take the cargo to Uganda, only to disappear between Mtito and Sultan Hamud," Mr Nyanzwii said.
He said the two of the three trucks were later found abandoned, without the cargo. A driver was arrested.
"We are appealing to cargo owners to go for reputable transporters who they can be able to locate in case of a problem," he said.
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