EAC's rail freight tariffs beyond global average

The East African Community (EAC)'s rail freight tariffs are high compared to other regions of the world, a survey released on Thursday said.

According to the 2014 East Africa Logistics Performance Survey, the main reason is due to lack of effective concession agreements as well as inability by operators to invest to improve efficiency.

"However, a well developed railway system should be the best solution to reduce transportation costs," Shippers Council of East Africa (SCEA) Chief Executive Officer (CEO) Gilbert Langat said.

"The region therefore needs to establish clear guidelines to support logistics management for operators and intermediaries," Langat said.

He said governments need to invest in transport infrastructure to effectively promote international trade, adding that cross border projects will reduce transport costs especially for the landlocked countries.

He urged the trading bloc to eliminate the cases of delay so as to improve the ability of the EAC to compete effectively in the global economy.

SCEA Economists Humphrey Kisembe said one of the biggest challenges for air freight industry is the lack of transparent air freight charges. "The imposition of surcharges has affected the competitiveness of the sector," Kisembe said.

He said lack of access to credit has contributed to the underdevelopment of small and medium size enterprises as providers of logistics services.

According to the economist, the average truck in the EAC only covers 5,000-7,500 kilometers per month compared to the international average of 12,000 km.

"This indicates that transport corridors have inefficiencies such as delays at customs and weight bridges," Kisembe said.

Kenya's Transport Principal Secretary Nduva Muli said laws governing the railway business are currently been reviewed so as to spur increased investment in the sector.