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Connecting Landlocked Developing Countries to Markets
The uncertainty of informal payments makes the cost to traders several times greater than the cost to the trucking company. The transport tariff charged has to be enough to cover the maximum out-of-pocket cost to the driver and the maximum time delay to the truck, or else the trucking company will have to fund the difference from its profit margin. To avoid this risk, the tariff charged usually must be much greater than that actually incurred during the transit of the truck.
Recommendations Trucking is bound to remain the main mode of transportation available to developing country corridors for the foreseeable future. Unfortunately, until recently, the role of the sector for corridor performance and the urge to modernize it was not fully recognized by policy makers and development institutions active in low-income countries. In virtually all regions, much needs to be done when it comes to incentives for quality, economies of scale, introduction of competition, and consistency of enforcement of regulations within and across borders. The following areas are especially important.
Structure of the Trucking Industry Both LLDCs and transit countries could improve the structure of their trucking industries by replacing quantity with quality licensing, with high-quality requirements for international road freight companies that are compatible with the demands of clients in that market. Provision should also be made for licensed international road freight companies to accede to any system of AEOs that might be operating in the country. Meanwhile, but more difficult to implement, the domestic road freight market could be liberalized, with quality requirements for individual and small transport companies limited to safety and environmental standards. For medium-size transport companies, quality requirements could be more demanding to include managerial and financial standards.
Queuing Systems Queuing systems impose such high costs on trading companies that the harm outweighs any benefit from the employment generated by maintaining a larger than necessary trucking industry. It is easier to reform the queuing system for transit road freight than for domestic road freight in either an LLDC or its transit neighbor. It is recommended that queuing