TRANSPORT RATES: Cost of Road Transport as at 15th April 2022

Minimum Transport Costs and guidance on charges

In response to various members’ inquiries to be guided by the association on the costings of various routes and especially in lieu of the recent fuel increases, the KTA Costing Committees (Mombasa and Nairobi) have considered the current prices of fuel and other costs to come up with the minimum costs incurred by transporters when delivering goods to various destinations.

The minimum transport cost is USD 2.12 per kilometer one way for transit cargo excluding road user.

The minimum transport cost is Kshs 225 per kilometer one way for local cargo but does not include last mile whose costs vary.

Members can then use the kilometres to the various delivery points to calculate costs to various destinations.

Note that, fuel at the current rates of Ksh123.3 per litre forms 47% of the costs.

Further, please note this is a cost guidance only to be used by our members who are at liberty to decide on their margins.

A sample of two route costs are below.

A sample of two routes costs

On Behalf of the Board

Newton Wang’oo
Chairman
enya Transporters Association

TRANSPORT RATES: Advisory as a result of Fuel Price Increase

The Energy and Petroleum Regulatory Authority (EPRA) has advised that the price of diesel will increase by ksh 9.90 per litre to retail at Kshs 125/= per litre pump price in Nairobi with effect from 15th April 2022.

Kenya Transporters Association Ltd wishes to commend the Government of Kenya for continuing to use the Petroleum Development Levy fund to cushion the country from the actual market prices. This makes the price more competitive compared to the price of fuel in the neighbouring countries. We however fail to understand the need to tax and then subsidise fuel especially when non-payment of the subsidies was the major factor for the fuel shortage.

While we are cognizant of the Government of Kenya efforts to normalise the situation and ensure fuel is available within the next 72 hours, we hope systems and policies have been put in place to sustain adequate fuel supply throughout the country.
We remain concerned that setting the price does not necessarily result in fuel availability if the underlying problem has not been addressed.

If fuel is not available then the price set is inconsequential. Transport rates have remained the same from the time fuel price was kshs 80/= per litre to the current price of 125/= per litre. Fuel as a cost used to form 35% of total transport cost at the time fuel was kshs 80/= per litre while now it is close to 50% of transport costs at current prices. Increase in fuel costs also results in increase in other transport costs like tyres and spares.

Transport margins cannot accommodate these increases. We can barely cover the running costs.
While we appreciate and support the government's efforts, it is important to remain as going concerns otherwise we will go bankrupt and end up closing our businesses. Our fleet and other assets will be auctioned for failure to meet our obligations while our clients move on to other transporters. The cycle will continue.

Fuel being a direct input in transport costs, transporters have no alternative but to pass on the impact of the fuel price increase to our clients or we will perish.

We as Kenya Transporters Association Ltd are of the considered view that Transport Rates should ideally increase by 20-22% from the rates charged when fuel was at kshs 80/= per litre.

On Behalf of the Board

Newton Wang’oo
Chairman
Kenya Transporters Association

Authorized Economic Operator: The seamless movement of goods through certified channels

An Authorized Economic Operator is a party involved in international movement of goods that has een approved by or on behalf of customs administration as complying with the world customs organisation (WCO) or equivalent supply chain security standards. It is a voluntary programme for WCO Member countries.

Eligibility
AEO Program Operators involved in international trade are approved by the Customs Administration.
To qualify for the programme, companies have to satisfy the AEO Compliance Procedure which involves:

  • Documentation of Standard Operational Procedures (SOPs)
  • Compliance culture
  • Training of company staff
  • Internal audit programme/mechanisms
  • Root cause investigations & Corrective & preventive measure actions
  • Communication
  • Risk assessment

Kenya Transporters Assocaiation engaged Kenya Revenue Authority in sensitizing its members and creating awarenes and or benefits of the AEO Programme. For seamless transactions, the whole supply chain, that is the importer, shipping line, clearing agent, and transporter should be AEO certified. It was proposed that all AEO certified transporters be accorded benefits/privileges that would front and entice them to join the AEO Certification, among them:

  • Preferential treatment on issuance of seals.
  • Dedicated entry gates at ports.
  • Dedicated border lanes to expedite clearances.
  • Should have a local distinctive recognizable badge for easy identification.

With the AEO team to deliberate on the aforementioned issues and provide feedback.

GOVERNMENT OF KENYA HAS FAILED TO RESOLVE THE FUEL CRISIS

The Government of Kenya has publicly stated there is enough fuel in the country, that they have remitted the subsidies that were due to the oil companies and which were said to be the reason the oil marketers were not importing and distributing fuel.

We were assured the current fuel crisis will be resolved in two to three days after the payment of subsidies. We assume that the subsidies were paid in full.

One week has gone by and transporters are still suffering, with long queues being experienced in many parts of the country.

On top of the shortages at the pump stations, there is also shortage experienced by bulk buyers with prices 25% higher than pump prices when the fuel is available.
Transporters are perplexed by the current shortage of fuel. How can there be enough fuel and at the same time a shortage of fuel where it is needed.

Are there plans to increase the fuel prices?

Is fuel being hoarded to await price increase in the next cycle?

Why is the government unable to resolve this issue?

Transporters are wasting a lot of time in queues waiting for fuel. This translates to huge losses as they still have to pay their fixed costs. Losses are incurred by other related sectors like agents and manufacturers as demurrages and delays in delivering essential materials add to costs of production and the final product.

It is not enough to assure Kenyans that there is enough fuel. Livelihoods are at stake. It is also important to note that any fuel price increase will lead to increase in transportation rates and this chain reaction will end with high costs for goods on the shelves.

We once again ask the Government of Kenya to urgently get to the bottom of the problem and resolve it.

On Behalf of the Board

Newton Wang’oo
Chairman
Kenya Transporters Association

Harmonization of Road User Charges (RUC’s) in the EAC

The Meeting of experts was convened following a directive of the Sectoral Council on Transport, Communications and Meteorology (TCM) issued in June, 2021 at its 17th meeting.The Sectoral Council had deliberated on the matter, which had been referred to it by the Regional Monitoring Committee (RMC) on Non-Tariff Barriers. The item had at several times been discussed by the RMC and other stakeholders but a solution had not been found.

The TCM noted that the lack of harmonization of Road User Charges (RUCs) in the EAC has persisted since 2001 and is considered one of the major Non-Tariff Barriers impeding trade within the region. Efforts to harmonize the charges since then have not been successful and the issue exists to date.

The meeting recommends to the Sectoral Council on TCM to direct:

  1. Partner States to apply the distance + weight charging principle;
  2. Partner States that use flat rates to abolish them in favour of (a) above;
  3. Partner States to continue charging RUCs on the basis of the following three categories of vehicles:
    (i) Buses (large buses)
    (ii) Truck of three or less axles
    (iii) Heavy Goods Vehicles of more than three axles (truck with a drawbar trailer or articulated vehicles / semitrailers);
  4. EAC Partner States applying COMESA harmonized rates between themselves to continue doing so;
  5. Other EAC Partner States to reciprocate the distance + weight rates charges by the United Republic of Tanzania;
  6. EAC Secretariat to undertake a regional study with a view to proposing harmonized rates in the EAC;
  7. Foreign registered vehicles to be charged transit fees on the basis of a round trip from the point of entry to the destination and back provided the destination is within the country of entry;
  8. Partner States to publish in their national gazettes the applicable rates and disseminate the information as required by WTO guidelines;
  9. Partner States to prepare a schedule of computed charges from points of entry to various destinations within their respective territories and post them at every point of entry
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