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Connecting Landlocked Developing Countries to Markets
How can these high prices be explained? It has been common practice in French-speaking West Africa to regulate the right to operate international road transport services on the basis of a mandatory queuing system (tour de role), managed by state-owned national freight bureaus. They offer shipments to waiting truckers on a first-come, first-served basis. This has the effect of barring direct contracting between shippers and truckers. It runs counter to international best practice, in which confidential contracts directly between cargo owners and truckers have become a key to improved performance and superior quality of service. These systems apply exclusively to transit corridors in application of the quotas allocated between the LLDC and the transit country. Generally, the trucking industry of the transit country is judged stronger, so the quota protects the carriers of the LLDC. In some cases, these quotas grant the truckers the exclusive right to pick up cargo in their home country, implying 100 percent empty returns, a cost that someone has to pay for. Thus, the importers are penalized by also paying for the empty return of the truck to the transit country, whereas full backhauls decrease the cost to the importer, because the return cost can be charged to the exporter. Queuing systems also occur informally in some countries for domestic as well as freight traffic, notably in the Middle East, South Asia, and Africa, where traditionally independent drivers queue to get loads at the main origin point for freights. These arrangements have two adverse effects on corridor performance. First, they reduce truck use, thereby increasing unit costs per tonkm of carriage. The cost of transportation per kilometer increases as its fixed component is higher because the truck travels shorter distances than the international norm of 150,000 km per year. This phenomenon is evident in table 2.3, which shows that costs of transportation are very high in central Africa, where mandatory loading and queuing is strictly imposed. Detailed explanations and models are provided in Arvis et al. (2010) and Teravaninthorn and Raballand (2008). Furthermore, by restricting competition, queuing systems not only protect monopolistic pricing but also inhibit the development of the kinds of higher quality services required by modern supply chains, because there is no incentive to invest in better equipment or commercial services. The main transport markets in Africa are in the coastal countries, with their larger scale of economic activity. The framework for operation of the transportation sector, including the nature and level of regulation, has been set largely by these countries. The tendency to form cartels and price gouge nonetheless seems greater on shipments to and