Tuesday, June 25, 2013

East African Road Haulage and Freight Forwarding Sectors See Major Changes

Rwanda Losing Out on the Road as Tanzania Takes Steps to Curb Illegalities at the Ports
Shipping News Feature

RWANDA – TANZANIA – EAST AFRICA – According to a recent study, Rwandan road haulage firms have steadily lost market share against its neighbours over the past five years despite an increase in trade volumes within the East African Community (EAC). The report, named ‘Rwanda’s Road Freight Industry Competitiveness Study’ commissioned by the Ministry of Trade and Industry with support from TradeMark East Africa, attributes high road tolls in neighbouring countries, especially Tanzania, as the main reason why the local trucking industry has seen a decline in its share of the road freight market. Theodore Murenzi, the Secretary General of Rwanda Truckers’ Association, said:

“Rwandan truckers must pay US$500 per trip to the Dar es Salaam Port in contrast to Tanzanian firms that pay only US$152. The Northern corridor differences (with Kenya and Uganda) are also unfavourable but to a much lesser extent. This is the main problem that faces Rwandan road freight industry which will be dealt with through carefully negotiations within the EAC [East African Community].”

The study notes that Rwanda was one of the largest market players in 2007, with a 21% share of the road freight market, but during 2012, Tanzania became the dominant market player holding 40% of the market, followed by Rwanda on 14% while Uganda, Kenya and Congo held 14%, 13% and 10% respectively. When Rwanda held that 21% share, Tanzania held 22%; Uganda 20%; Kenya 15%; Democratic Republic of Congo 9%; and Burundi 3%. Speaking at a validation meeting in Kigali, Rwanda, John Argent, a consultant who conducted the study, said:

“Road freight across Rwanda’s borders has increased dramatically. The lion’s share of the growth comes via Rusumo, and almost all of this is carried by Tanzanian firms. Current road tolls and the rise of the Central Corridor’s importance explain most of the fall in Rwandan transporters’ market share.”

Meanwhile, over the border in Tanzania, the Ministry of Transport has taken action to end the establishment of fake clearing and forwarding agents who collude with freight movers, evade taxes and steal cargo, by establishing an accreditation board. Speaking at the International Federation of Freight Forwarders Association’s (FIATA - Fédération Internationale des Associations de Transitaires et Assimilés) Regional Africa and Middle East (RAME) Conference, held in Dar es Salaam, Deputy Permanent Secretary at Ministry of Transport, John Mngodo, explained:

“We believe that once we have established this board, we will help both local and foreign business persons engaged in professional clearing and forwarding agents. Heavy investment is being sunk in to revive the vital railway links which connect Dar es Salaam port to landlocked neighbouring countries in the region, that’s why transport is one of the sectors included in the ‘Big Results Now’ initiative.”

Former Tanzania Freight Forwarders Association (TAFFA) and Federation of East African Freight Forwarders Association (FEAFFA), President Otieno Igogo, welcomed the move adding that there has been demand for the establishment of a clearing and forwarding board that will ‘stamp out bad elements’ in the business. Currently agents are accredited by elements of the Customs authorities within the Tanzanian Revenue Authority.

East Africa has seen an upsurge in trade over the past decade and things may well accelerate further if the much vaunted scheme to launch a single currency for the region does eventually go ahead. Such a move would take a decade to organise according to local economists but, given the situation in the region where tribal and national loyalties often blur such issues, we may be in for a much longer wait than that.

Photo: A view looking into the Great Rift Valley in Northern Tanzania.