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Breakdown of operational transport cost for road users shows looming deficit

Breakdown of operational transport cost for road users shows looming deficit

By John Saunderson.

We know that transport costs are a significant part of the cost structure of all goods and services whether produced locally or imported. If transport costs are high, local goods will not be competitive with goods produced elsewhere, even if labour is relatively cheaper.

With high prices the inequitable distribution of income effects are felt even much harder by the low income household in especially rural areas where approximately half of the Namibian population resides. The high prices of goods and services and the lack of employment opportunities place additional strain on urban areas such as Windhoek, Oshakati and Swakopmund-Walvis Bay. This has its own set of impacts on other parts of the economy.

A good national transport system, in particular roads, is a pre-requisite for economic development for any country. More than 80% of all goods and passengers are transported by road in Namibia. That said, it is imperative that we as a country ensure that our national road network is managed at a standard that minimizes total transport costs (i.e minimizing the total cost to the economy).

In an ideal world the objective would be to minimize transport costs to the road user, and ultimately to the end consumer but that is not the case and we need to make our best collective effort to reduce the burden to authorities and road users alike, hence striving to achieve the economic optimum.

For that purpose, a premium is placed on the need to rehabilitate and maintain the national road network and network expansion is only warranted where it contributes to the net economic benefit derived from the network. Its size and the ability of the authorities to maintain that network, determine to a large extent the opex of any road, calculated post construction.

In Namibia however, general road condition and thus the safety of driving, is deteriorating leading to rising out-of-pocket expenses for road users, and a concomitant reduction in utility.

An independent analysis by Amir Consulting Services of the main transport corridors, i.e. the main North-South and East-West tarred roads, determined that under the existing funding conditions, the average cost of operating a small passenger car is estimated to be N$4.33/km and N$27.75/km for a 16-wheel truck. These costs apply to the next 4 years.

The total estimated cost to road users is not less than N$3.8 billion over the same period. This is an indication that operational constraints lie ahead, beyond the four-year window, for the majority of the population that owns or operates a road vehicle. These are direct financial costs to road users which could have been invested elsewhere.

Part of the solution is to address the contribution of heavy vehicles to road damage which is almost 100% of the damage, and the appropriate distribution of other road user accountabilities through the user-pay principle. This requires policy changes in areas such as Mass Distance Charges, Emissions taxes, etc. Potential solutions in those areas are real and achievable but then they should be explored urgently and pro-actively to ensure a better transport future.


 

About The Author

John Saunderson

John A. Saunderson lives in Otjiwarongo and is the Principal Transport Economist at Amir Consulting Services, with expertise in transport systems including operations, policy, regulation, infrastructure, strategy and management. He has worked on many projects for the Namibian Government, parastatals, engineering consultants, private individuals and business consulting firms on transport infrastructure plans, policy, regulation, economic analysis and business plans. He is a transport economist by profession having worked for the Roads Authority, the City of Windhoek and the Ministry of Works and Transport. Mr Saunderson obtained his B.Com (Hons) degree in Transport Economics from the University of Stellenbosch and his undergraduate degree in Transport from Rand Afrikaans University. He has been providing consulting services since 2007.

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