In the most efficient trade corridors, the average KMs/truck/year is between 120,000 to 150,000
Accordingly to a baseline study recently conducted by KTA to analyse operational models and cost structures, transporters are covering an average distance of 96,240 kilometres in a year far below the Port Charter target of 120,000 kilometres per truck per annum. The average mileage per truck indicator, commonly known as Kms/truck/year, is a measure of efficiency of trade corridors, productivity of road freight transport and an important determinant of freight rates.
The 2014 Logistics Performance Survey for East Africa, published by the Shippers Council of Eastern Africa revealed that the average KMs/truck/year is between 60,000 - 90,000, a situation that has significantly compromised corridor efficiency and increased the cost of transport and logistics services. The new finding, however, indicate a 7% increase in average distance covered over the last two years. It is yet to be established whether this increase has directly contributed to the recent reduction in transport rates.
The study, which was commissioned in October last year, gathered and assessed quantitative and qualitative data from the three strategic logistics towns of Mombasa, Nakuru and Nairobi and focused on the fleet owners, drivers and the stakeholders. The Baseline study was funded through a grant support from Trademark East Africa. KTA and TMEA have entered into a 3-year partnership to improve quality and efficiency of road freight transport services in Kenya and thereby contribute to approximately 4 - 6% reduction in overall truck operating cost and 2-3% reduction in transport prices over the period.
It is estimated that in the most efficient trade corridors, the average KMs/truck/year is between 120,000 to 150,000 translating into significantly affordable transport and logistics costs of up to an average 4% of the value of traded goods. This high turn-around supports the productivity and sustainability of the supply and logistics chain. However, constraints at the Port of Mombasa and along the Northern Corridor transport route have driven transport costs to an estimated 30% of the value of traded goods.
Furthermore, available data indicate that operational - both direct and indirect costs - and administrative costs for trucking companies constitute over 80% of the trucking charge. Kenya Transporters Association (KTA), a signatory to the Mombasa Port Community Charter, has committed to work towards attainment of an average of 120,000 KMs/truck/year in order to bring down the costs.
“Presently, over 95% of the KTA Members plying the Northern Corridor road network – which connects the Port of Mombasa and the hinterland - handle over 20 Million tonnes representing 94% of the total Port throughput. Over 6 Million Tonnes of this volume - representing over 30% - is transit cargo. An efficient, reliable, safe, environmentally friendly and cost effective transport system is, therefore, critical in ensuring the productivity, competitiveness and sustainability of the corridor,” avered the KTA CEO, Alfayo Otuke.
This modal split is likely to substantially change with operationalization of the Standard Gauge Railway. The SGR is expected to eat into the freight proportion currently handled by road. In a move aimed at ensuring that road freight transporters remain competitive, the Association has put in place elaborate plans to enhance operational capacities of transport operators through training and cost management. The trainings will, for instance, aim at optimizing vehicle utilization through effective fleet planning and regimented fleet maintenance. It is, generally, acknowledged that Fleet managers should ensure that firms obtain the most use of each vehicle in a fleet as well maximize the overall use of fleet.
According to the study, currently, average fleet utilization stands at 77% with about 70% of trucks doing empty returns upon delivery of cargo in various destinations – calling into sharp focus the need for vehicle optimization. The study findings further reveal that in-house maintenance facilities are largely operated by larger and well established companies while small operators, who are the majority, do not have regimented fleet management programs. Information provided by the drivers indicates that 57.1% of the drivers were offered training by the companies they worked for and 82.9% had not undertaken enhanced training. This gap reflects on frequent fleet downtime, high maintenance costs, poor fuel use and low returns among others.
The findings also established a number of challenges at the port of Mombasa and the Northern Corridor. Some the challenges included inefficiency of clearance of goods at the Port and the Borders, lack of coordination among government agencies and other interveners, frequent system downtime and inadequate infrastructure. In order to address some of these challenges, KTA intends to upscale its advocacy strategy through the stakeholders’ forums.
The Association also intends to collaborate with Government in instituting policy and regulatory alternatives that support conducive transport business environment in order to sustainably bring down the cost of transport. In this regard, the study proposes a self regulatory framework that supports voluntary compliance, reduces enforcement costs and offers incentives to encourage a culture of continuous improvement.