A new study has established that despite Nacala Corridor being cheaper, traffic on it has not picked up, translating into high transport costs.
The study titled A Political Economy Analysis of the Nacala and Beira corridors by the European Centre for Development Policy Management shows that Malawi faces higher transport costs than other countries within the 16-country Southern African Development Community (Sadc) trade bloc.
The study found that the cost of transport in the region is $7 (about K5180) per tonne per kilometre (km) compared to between $7 and $10 (about K7 400) per tonne per km in Malawi
Reads in part the study: “These high costs translate into other competitive disadvantages for Malawi.”
For instance, fertilisers cost about 25 percent more in Malawi than Zambia despite both countries being landlocked, with 60 percent of the price differential explained by the high transport cost in Malawi.
The study notes that though Nacala Port in the eastern part of Mozambique is the closest to Blantyre (about 700km) and Lilongwe (about 1 180km) and the most cost-effective on paper, it is not the favoured route for Malawian imports and exports.
As a result of this, the study reveals that majority of imports come through Durban in South Africa (more than 2 000km) followed by Beira (800km), while more exports pass through Beira in Mozambique.
It reads: “Malawi’s imports far outstrip exports leading to a segmented transport market.
“Import freight tends to be carried more by Mozambican road transporters through outsourcing by freight forwarders and shipping lines, implying more trucks and thus more competitive rates to Malawian exporters on their backhaul.”
Commenting on the study, National Working Group on Trade Policy chairperson Fredrick Changaya acknowledged that Nacala Corridor remains one of the country’s cost-effective routes, but lower input than anticipated has impacted its utilisation.
He said full utilisation would mean moderate priced products for the consumer.
But Changaya said transit time and derailment are key in determining commercial viability of the route.
“In business, you diversify sources of supply and that involves transportation of goods,” he said.
Ministry of Transport and Public Works spokesperson James Chakwera said the ministry wishes there was huge utilisation of the corridor to ease dependence on the roads.
The Nacala Corridor stretches from Chipata, Zambia passing through Liwonde in Malawi to Mozambique.