The logistics cost issue
Logistics costs are high in developing regions mainly because of poor economies of scale (small volumes) and coordination problems (gathering information and negotiating contracts).
Based on trucking surveys for more than 400 companies in thirteen African countries, it is observed that it is not the transport costs (cost to transport service providers) that are excessively high in the Sub-Saharan region, but the transport prices (costs to shippers), especially in Central Africa. This is mainly a result of official and unofficial market regulation and structure in trucking services, notably in West and Central Africa.
In order to seriously tackle transport-related constraints on corridors in Africa, the donor community should support the following activities:
- Transport market liberalization;
- Collection of data in the trucking industry;
- The use of country-specific trucking data in the economic analysis and design of road maintenance strategies, because in most cases, investments in roads will probably not lead to decreased costs for end-users of transport services.