Study of Competition in the Road Freight Sector in the SADC Region - Case Study of Fertilizer Transport and Trading in Zambia, Tanzania and Malawi

The efficiency and affordability of transportation, particularly in the road freight sector, is a key enabler in achieving broader industrial policy, trade and regional integration goals in the SADC region. Competition, market structure and arrangements between firms in the road freight sector – as well as the relationship between road freight operators and large importers – play an important role in determining the price and trade of commodities between countries. The paper focuses on the transportation of fertilizer in Malawi, Tanzania and Zambia in seeking to understand the role that different actors including regional economic communities, policymakers, large importers and large exporters play in influencing market outcomes in road transportation. The paper also considers the structure of markets, main players, and prices and costs in each country. The main findings are that competitive outcomes in road freight in the context of fertilizer trading are driven by the inter-relationships between large transporters and users of transport, cross-border rivalry, and both small and large regulatory interventions to enhance outcomes in road transport. A reduction in relative prices in Zambia has been driven, among others, by a combination of increased competition in road transport and the prosecution of a cartel in fertilizer trading; whereas the benefits of entry in the Tanzanian fertilizer market may have been undermined by arrangements in transport and the entrenched position of incumbent multinational importers. In Malawi, a lack of rivalry at various levels of the value chain and regulatory barriers meant prices of fertilizer have been well above those in the comparator countries