Explaining High Transport Costs within Malawi : Bad Roads or Lack of Trucking Competition?

Explaining High Transport Costs within Malawi : Bad Roads or Lack of Trucking Competition?

What are the main determinants of transport costs: network access or competition among transport providers? The focus in the transport sector has often been on improving the coverage of "hard" infrastructure, whereas in reality the cost of transporting goods is quite sensitive to the extent of competition among transport providers and scale economies in the freight transport industry, creating monopolistic behavior and circular causation between lower transport costs and greater trade and traffic. This paper contributes to the discussion on transport costs in Malawi, providing fresh empirical evidence based on a specially commissioned survey of transport providers and spatial analysis of the country s infrastructure network. The main finding is that both infrastructure quality and market structure of the trucking industry are important contributors to regional differences in transport costs. The quality of the trunk road network is not a major constraint but differences in the quality of feeder roads connecting villages to the main road network have significant bearing on transport costs. And costs due to poor feeder roads are exacerbated by low volumes of trade between rural locations and market centers. With empty backhauls and journeys covering small distances, only a few transport service providers enter the market, charging disproportionately high prices to cover fixed costs and maximize markups.

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Bibliographic Details
Main Authors: Wang, Hyoung, Lall, Somik V., Munthali, Thomas
Language:English
Published: 2009-11-01
Subjects:ACCESS ROADS, ACCESSIBILITY, AGGLOMERATION BENEFITS, AGGLOMERATION ECONOMIES, AIR, ARTERIES, ASPHALT, ASPHALT ROADS, AVAILABILITY OF TRANSPORT, AVERAGE DAILY TRAFFIC, BAUXITE, BETTER ROAD, BETTER TRANSPORT, BOTTLENECK, BOTTLENECKS, BRIDGE, CAPITAL INVESTMENTS, CITY SIZE, CONGESTION, COST OF TRANSPORT, DEPOSITS, DOMESTIC TRANSPORT, DRIVERS, ECONOMIES OF SCALE, ENGINES, EXTERNALITIES, FEEDER ROAD, FEEDER ROADS, FEEDER ROADS CONNECTING VILLAGES, FIXED COSTS, FLEETS, FOOTPATH, FOOTPATHS, FOREIGN EXCHANGE, FREIGHT, FREIGHT TRAFFIC, FREIGHT TRANSPORT, FUEL, FUEL COST, FUEL COSTS, GENERATORS, GOOD TRANSPORT, GPS, GRANITE, HDM4, HIGH TRAFFIC VOLUMES, HIGH TRANSPORT, HIGHWAY, HOUSING, IMT, INCOME, INFRASTRUCTURE IMPROVEMENTS, INFRASTRUCTURE INVESTMENT, INTERMEDIATE MEANS OF TRANSPORT, INTERNATIONAL FREIGHT TRANSPORT, INTERNATIONAL TRANSPORT, JOURNEYS, LABOR MARKETS, LAND USE, LANES, LARGE CITIES, LOADING, LONGER DISTANCES, LORRIES, LORRY, LOWER TRAFFIC VOLUMES, MAIN ROAD, MAIN ROADS, MEANS OF TRANSPORT, MIGRATION, MILEAGE, MOBILITY, MODES OF TRANSPORT, MOTORIZED TRANSPORT, MOTORWAYS, PAVEMENT, POOR ROAD, POPULATION DENSITIES, POPULATION DENSITY, PORTS, PRICE SETTING, PRODUCTIVITY, PROFIT MARGINS, PUBLIC POLICIES, PUBLIC SECTOR INVESTMENT, RAIL, RAILROADS, RECONSTRUCTION, ROAD, ROAD ACCESSIBILITY, ROAD AUTHORITY, ROAD CLASS, ROAD CONDITIONS, ROAD INVESTMENTS, ROAD LENGTH, ROAD LINKS, ROAD MAINTENANCE, ROAD NETWORK, ROAD NETWORKS, ROAD QUALITY, ROAD ROUGHNESS, ROAD SURFACE, ROAD TRAFFIC, ROAD TRANSPORT, ROADS, ROUGHNESS, ROUTE, ROUTES, RURAL ACCESSIBILITY, RURAL AREAS, RURAL HOUSEHOLDS, RURAL MOBILITY, RURAL ROUTES, RURAL TRANSPORT, RURAL TRANSPORT INFRASTRUCTURE, SANITATION, SAVINGS, SECONDARY ROADS, SHARING, SOCIAL SERVICES, SPEED, SPEEDS, STRUCTURES, TAX, TERRAIN, TERTIARY ROADS, TRACKS, TRADE VOLUME, TRAFFIC, TRAFFIC DATA, TRAFFIC DEMAND, TRAFFIC FLOWS, TRAFFIC VOLUME, TRAFFIC VOLUMES, TRANSPORT BURDEN, TRANSPORT CHARGES, TRANSPORT COST, TRANSPORT COSTS, TRANSPORT GEOGRAPHY, TRANSPORT IMPROVEMENTS, TRANSPORT INDUSTRY, TRANSPORT INFRASTRUCTURE, TRANSPORT INVESTMENT, TRANSPORT INVESTMENTS, TRANSPORT MARKETS, TRANSPORT NETWORK, TRANSPORT PRICE, TRANSPORT SECTOR, TRANSPORT SERVICE, TRANSPORT SERVICE PROVIDERS, TRANSPORT SERVICES, TRANSPORT VOLUME, TRANSPORTATION, TRANSPORTATION INDUSTRY, TRAVEL TIME, TRAVEL TIMES, TRIP, TRIP DISTANCE, TRIPS, TRUCKING, TRUCKS, URBAN DEVELOPMENT, URBANIZATION, VEHICLE, VEHICLE COSTS, VEHICLE OPERATING, VEHICLE OPERATING COSTS, VEHICLE TRANSPORT, VEHICLES, WALKING,
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20091117145646
https://hdl.handle.net/10986/4325
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Summary:What are the main determinants of transport costs: network access or competition among transport providers? The focus in the transport sector has often been on improving the coverage of "hard" infrastructure, whereas in reality the cost of transporting goods is quite sensitive to the extent of competition among transport providers and scale economies in the freight transport industry, creating monopolistic behavior and circular causation between lower transport costs and greater trade and traffic. This paper contributes to the discussion on transport costs in Malawi, providing fresh empirical evidence based on a specially commissioned survey of transport providers and spatial analysis of the country s infrastructure network. The main finding is that both infrastructure quality and market structure of the trucking industry are important contributors to regional differences in transport costs. The quality of the trunk road network is not a major constraint but differences in the quality of feeder roads connecting villages to the main road network have significant bearing on transport costs. And costs due to poor feeder roads are exacerbated by low volumes of trade between rural locations and market centers. With empty backhauls and journeys covering small distances, only a few transport service providers enter the market, charging disproportionately high prices to cover fixed costs and maximize markups.

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