Road Haulage In Ghana (GIMPA - Mar 09)


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An introduction and overview of the current practices and trends in the Ghanaian road transport sector

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  • Saturday, October 3, 2009 GIMPA Lecture Road Haulage in Ghana: Current Trends and Challenges
  • Tema-Aflao-Lome, Southern Togo Takoradi-ELUBO, Southern Ivory Coast (M) Kumasi-NIABLE, Central Ivory Coast (m) Unsafe Sunyani-Berekum-AOUYAKROU, Central Ivory Coast (M) Saturday, October 3, 2009 GIMPA Lecture Road Haulage in Ghana: Current Trends and Challenges
  • See Figure Above Saturday, October 3, 2009 GIMPA Lecture Road Haulage in Ghana: Current Trends and Challenges
  • Road Haulage In Ghana (GIMPA - Mar 09)

    2. 2. Lecture Objective <ul><li>Describe Road Haulage Market in Ghana </li></ul><ul><li>Analyze industry challenges and trends </li></ul><ul><li>Highlight transport-related operations </li></ul><ul><li>Explain diversification experience </li></ul>
    3. 3. Why Ghana Roads? <ul><li>Better Port and Infrastructure in Ivory Coast </li></ul><ul><li>More Trade in Nigeria </li></ul><ul><li>Ghana is the country of choice by elimination </li></ul>(Source: WTO website,, Aug.2008 ) Abidjan Tema Nb. Of Berths 34 11 gen. + 2 spec. Max. Dredge 12.5m 12m Quayside Cranes 4 3 Railway Link Yes No Tot. Merchandise Trade 2006 2007 Ghana $12.4b $13.9b Nigeria $80b $94b
    4. 4. Advantages of Ghanaian Roads <ul><li>Less risky transport routes in region (Compare to Ivory Coast) </li></ul><ul><li>Less corruption at entry points (Compare to Nigeria) </li></ul><ul><li>Increasingly Efficient Ports, reducing shipping costs </li></ul><ul><li>Shipping Lines have shifted from neighboring countries to Ghana </li></ul>
    5. 5. Disadvantages of Ghanaian Roads <ul><li>Not well maintained road network compared to neighbors </li></ul><ul><li>Low Capacity, especially on the coastal main road </li></ul><ul><li>Bottlenecks </li></ul><ul><li>Reckless drivers </li></ul><ul><li>Disadvantages are not limiting, but could offer guidelines for further improvement </li></ul>
    6. 6. Road Network Around Ghana
    7. 7. Port Activity in West Africa
    8. 8. <ul><li>Type </li></ul><ul><li>Handling Method </li></ul><ul><li>Bagged Goods (Cocoa Beans, Shea Nuts, Cashew, Rice, Sugar, Cotton, Fertilizer, Cement) </li></ul><ul><li>Bulk Goods (Wood, Wheat, Construction Material, Mining Extracts) </li></ul><ul><li>Liquid Bulk (petroleum, liq. gas) </li></ul><ul><li>General Cargo (Cars, Live Animals, Goods) </li></ul><ul><li>Containerized/Liner Cargo (Standardized 20ft./40ft.) </li></ul><ul><li>Manual loading in std. 40’ trailer (sided/flat) or larger. Either directly on-board or on a pallet </li></ul><ul><li>Loaded directly using Machinery. Usually Tipper Bucket </li></ul><ul><li>Pumped into liquid-holding compartments on special trailer </li></ul><ul><li>Can use any trailer, depending on type of load </li></ul><ul><li>Loaded with forklift/Toplifter on flatbed trailer with hooks </li></ul>Cargo Types and Handling
    9. 9. Total Merchandise Trade in Ghana (Source: WTO website,, Aug.2008 ) 2005 2006 2007 Exports $2,802m $3,735m $4,320m Imports $5,755m $6,500m $7,980m
    10. 10. Total Throughput at Ghana Ports (in Tons) (source: Shipping Review, Jan - Mar 2008, vol. 10, no. 1)
    11. 11. Transport Hubs in Ghana Greater Accra: Tema (Main Port for Import) Accra (Major Consumer Market) Takoradi-Sekondi Hub: Takoradi Port (Main port for Export) Gateway for Western Region Kumasi-Accra-Takoradi Hub: Bulk of Internal transport Major Trade Network Connects to rest of Ghana & Region
    12. 12. Ghanaian Transport Corridors <ul><li>Vertical: Accra-Kumasi-Sunyani-Tamale-Bolgatanga-Navrongo-Ouagadougou </li></ul><ul><li>Horizontal: Abidjan-Takoradi-Accra-Tema-Aflao-Lome-Porto Novo-Lagos </li></ul>
    13. 13. Type of Road Haulage Companies <ul><li>Local Companies: Registered and Operating within Ghana (Alhaji Salia, Freight Links, Atlas, Allship, Tarzan, one-man operators) </li></ul><ul><li>Local-Transit Companies: Registered in Ghana, Operating Within Ghana and Across Border (Global Haulage, Antrak Ghana Ltd., Gelloq, Vehrad Transport) </li></ul><ul><li>Foreign-Transit Companies: Operating across Ghanaian Territory from Mali, Niger, Togo, Burkina Faso </li></ul><ul><li>Multinationals: Branch registered in Ghana, Operating within and across Ghana (Maersk Gh. Ltd.) </li></ul>
    14. 14. Types of Road Haulage Operations <ul><li>Regular: Transport company will actively seek customers to serve, all year long </li></ul><ul><li>Seasonal: Off-season, transport company (Usually cocoa haulers) will attempt to maintain minimal transport activity </li></ul><ul><li>One-off: Transport company agrees to move a specific consignment outside of regular transport activity </li></ul>
    15. 15. SWOT Analysis of the Transport Industry STRENGTHES OPPORTUNITIES Minimum Start-up Costs Readily Available Broad Range of Associated Services Strong Platform for Diversification Increasing Trade Through Ghana Oil Boom-Related Increased Spending Regulation of other Cash Crops Consolidation within Supply Chains Implementation of IT WEAKNESSES THREATS Low Barriers of Entry Low Regulation Barely Profitable Work Ethics Practice in Favor of Small Businesses Rising Overhead Costs Illegal Backlogging Industry Double Standards in Regulations Global Recession
    16. 16. Freight Calculation
    17. 17. Main Cost Factors <ul><li>Diesel </li></ul><ul><li>Tyres </li></ul><ul><li>Lubricants </li></ul><ul><li>Salaries </li></ul><ul><li>Road Expenses </li></ul><ul><li>Operating Fees (TMA/AMA, VIT, ¼ License, Roadworthiness, Insurance, Port Entry, GPHA Operating Permit) </li></ul><ul><li>Spare Parts </li></ul><ul><li>COST INCREASES NOT MATCHED BY FREIGHT RATE INCREASES!!! </li></ul>
    18. 18. Challenges of the Transport Industry <ul><li>High Regulation, Low Enforcement </li></ul><ul><li>Effort made to compete with regional standards </li></ul><ul><li>Plenty Regulations, Low Law-Enforcement </li></ul><ul><li>Bigger businesses are affected and controlled </li></ul><ul><li>Smaller Players are ignored out of Sympathy or ‘Connection’ </li></ul><ul><li>Illegal Haulage </li></ul><ul><li>Cargo Flow imbalance </li></ul><ul><li>Drivers are tempted to diverge due to lack of enough backhaul (One-Way Demand) </li></ul><ul><li>Cost is passed on to Transport Company </li></ul>
    19. 19. Tabulated Cost Increases (note: rate changes apply for period between 01-Jan-2006 & 01-Jan-2009) Rate Change 1 Rate Change 2 Rate Change 3 % Change DIESEL 0.71 GHC/L 1.19 GHC/L 0.89 GHC/L 24% WELDING GAS - 4.74 GHC/M3 5.61 GHC/M3 19% TYRES - 230 GHC/TYRE 300 GHC/TYRE 30% ENGINE OIL - 319 GHC/DRUM 335.5 GHC/DRUM 5% PORT TOLL 5.5 GHC/TRUCK 6.0 GHC/TRUCK 6.6 GHC/TRUCK 20% PORT LICENSE 455 GHC/YEAR 500 GHC/YEAR 575 GHC/YEAR 25% EURO FOREX RATE 1.20 $/EURO 1.50 $/EURO 1.32 $/EURO 10% MIN. WAGE 1.60 GHC/DAY 1.90 GHC/DAY 2.25 GHC/DAY 40% GHC FOREX RATE 0.94 GHC/$US 0.99 GHC/$US 1.25 GHC/$US 33% FREIGHT 2.7 GHC/TON 2.9 GHC/TON 3.8 GHC/TON 40%
    20. 20. Effect on Transport Market <ul><li>Lower freight due to availability of substitute supply </li></ul><ul><li>Larger players become less competitive </li></ul><ul><li>Stagnant growth due to rising inflation </li></ul><ul><li>Road safety and goods safety decrease; risk factor </li></ul><ul><li>Promotion of Bad Work Ethics </li></ul><ul><li>Transport no Longer a Profitable Industry </li></ul>
    21. 21. Hinterland Access in West Africa
    22. 22. Opportunity in the Industry <ul><li>Increasing cover of wireless communications between management and operators (Reduce lead time, improve control) </li></ul><ul><li>Availability of various online support services, ranging from free (Google maps & Account Management Software) to expensive (GPS Tracking, Tailor-made Comprehensive Packaged Information Systems) </li></ul>
    23. 23. <ul><li>Current Transport Market </li></ul><ul><li>Ideal Transport Market </li></ul>Desired Transition in Industry P Q D S1 E1 Q1 P1 S1 P1 P2 P Q D S2 E1 Q1 E2 Q2
    24. 24. Emerging Oil Industry <ul><li>Joint Venture; Tullow Oil Co. (UK) & Kosmos Co. Ltd. (Gh) </li></ul><ul><li>Many Benefits to Ghana </li></ul><ul><li>Increased Foreign Direct Investment </li></ul><ul><li>Increased Private (expats and families) and Public (additional revenue) Spending </li></ul><ul><li>Increased Import and Export </li></ul><ul><li>Requires Development of Transport Network </li></ul>
    25. 25. IMPLICATIONS ON ROAD SAFETY <ul><li>More Tankers on Along the Coastal Line </li></ul><ul><li>Higher Frequency of Tanker-Related Accidents </li></ul>
    26. 26. CAUSES OF TANKER-RELATED ACCIDENTS <ul><li>Fire (Roadside, Cigarettes, lighters) near a Leaking Tanker (Caused by Improper Vehicle Maintenance) </li></ul><ul><li>Off-Road Skidding (Attempt to Save/Steal Fuel) </li></ul><ul><li>Petroleum Traces on the Road </li></ul><ul><li>General Breakdowns </li></ul><ul><li>Driver Carelessness (Drunk-Driving, Over-speeding, Smoking, Lack of experience) </li></ul>
    27. 27. PREVENTION OF TANKER ACCIDENTS <ul><li>1. VEHICLE OWNER: </li></ul><ul><ul><li>Regular Maintenance of Tanker Vehicle </li></ul></ul><ul><ul><li>Periodic Checking of Valves for any Leakage </li></ul></ul><ul><ul><li>Encourage Driver to adopt good driving practices and stay alert on the road </li></ul></ul><ul><li>2. GOVERNMENT </li></ul><ul><ul><li>Regular Check on Road Conditions </li></ul></ul><ul><ul><li>Patrol Units Along Coastal Highways </li></ul></ul><ul><li>3. GENERAL PUBLIC </li></ul><ul><ul><li>Private Initiative to Prevent Accidents </li></ul></ul><ul><ul><li>Help Distressed Tankers/Drivers </li></ul></ul>
    28. 28. FLEET MANAGEMENT <ul><li>Maintaining Fleet in Good Condition </li></ul><ul><li>Maximizing Revenue, Minimizing Losses </li></ul><ul><li>Reducing Expenditure </li></ul><ul><li>Bookkeeping: Keeping Track of Truck Particulars and Operation </li></ul><ul><li>Maintenance: Prevention of Disruption of Operations </li></ul><ul><li>Human Resource Management </li></ul><ul><li>Dealing with Losses </li></ul><ul><li>Standardization </li></ul>
    29. 29. Transport Operational Diagram <ul><li>Fleet Management </li></ul><ul><li>Reporting to BOD </li></ul><ul><li>Managing Requests </li></ul><ul><li>Daily Operations </li></ul><ul><li>Fleet Maintenance </li></ul><ul><li>Fleet Bookkeeping </li></ul>
    31. 31. Fleet Maintenance <ul><li>Two Types of Maintenance Operations: </li></ul><ul><li>Regular Maintenance: Usually on Fixed Intervals </li></ul><ul><li>Irregular Maintenance: Wear-and-Tear or Accidents. Case-per-Case Basis </li></ul>Regular Maintenance Irregular Maintenance Wear and Tear Accident Lube Change Tyres Body work Diesel Clutch Chassis Minor Adjustment Paint & Bodywork Axles General Servicing Other Minor Parts Other Major Parts
    32. 32. Fleet Bookkeeping <ul><li>VERY IMPORTANT when comparing performances or reviewing maintenance history </li></ul><ul><li>Based on regular input from Workshop </li></ul><ul><li>Tabulation of Truck Particulars and History </li></ul><ul><li>Done at the executive level </li></ul><ul><li>Assists in regular reporting to top management; part of managerial accounting </li></ul>
    33. 33. Bookkeeping Data <ul><li>Oil Consumption </li></ul><ul><li>Truck Particulars </li></ul><ul><li>Renewable Fees Due Dates </li></ul><ul><li>Mileage </li></ul><ul><li>Fuel Consumption </li></ul><ul><li>Fuel Efficiency Formula: </li></ul><ul><li>1. Fuel Consumed (l) * 100/ Mileage (km) (result in l/100km) </li></ul><ul><li>2. Mileage (miles) / Fuel Consumed (galls) (result in mpg) </li></ul><ul><li>Compare Variations to Detect Possible Siphoning/Backlogging </li></ul>
    34. 34. Dispatch Example <ul><li>GW 3456 U (Consumption Set at 50 l / 100 km) </li></ul><ul><li>Tema - Kumasi (Pick up Consignment) - Tema </li></ul><ul><li>Give 180l Diesel </li></ul><ul><li>Write out Dispatch Form </li></ul><ul><li>Hand out Travel Expenses </li></ul><ul><li>Enter Mileage when Dispatched </li></ul><ul><li>Compare Actual Mileage against Computed One </li></ul><ul><li>Check Remaining Diesel in Tank </li></ul>
    35. 35. Dealing With Internal Losses <ul><li>Transport Business Difficult to Monitor, Especially with Larger Fleets </li></ul><ul><li>Allegory of Radar - Anti Radar </li></ul><ul><li>Who will Police the Police? </li></ul><ul><li>Always Expect Minor Losses as Part of Expenses </li></ul><ul><li>Balance Costs of Monitor Systems against Benefit </li></ul><ul><li>Usually Better off to Keep a Loose Watch </li></ul>
    36. 36. Minimizing Operational Expenses <ul><li>Keep Minimum Stocks </li></ul><ul><li>Closely Watch Diesel Stocks </li></ul><ul><li>Monitor Fuel Consumption Constantly </li></ul><ul><li>Supervise Regular Maintenance Operations </li></ul>
    37. 37. Vehicle Acquisition <ul><li>Two Types of Vehicle Acquisition </li></ul><ul><li>1. Brand New Truck </li></ul><ul><li>2. Used Trucks </li></ul><ul><li>Different need for each </li></ul><ul><li>Approach to acquisition is different </li></ul>
    38. 38. Brand New Truck Acquisition <ul><li>More Expensive on Short-Term </li></ul><ul><li>Long-Term usage </li></ul><ul><li>Requires Solid Financial Performance From Bank </li></ul><ul><li>Negotiation with Agent - Recommends model - Discount? </li></ul><ul><li>Contract Details </li></ul><ul><li>After-Sales Service Level </li></ul>
    39. 39. Used Truck Acquisition <ul><li>Low Cost vs. Reliability </li></ul><ul><li>Price Can be Bargained </li></ul><ul><li>Check for Spare Parts Supply </li></ul><ul><li>Could be Purchased for Using as Spare Parts </li></ul>
    40. 40. Fleet Standardization <ul><li>Standardization: Fewer models in a fleet </li></ul><ul><li>Aim of Standardization: Improve Operational Efficiency </li></ul>
    41. 41. Advantages of Standardization OPERATIONAL ADV. MANAGERIAL ADV. CORPORATE ADV. Interchangeable Parts Bookkeeping is easier Fewer Suppliers Bulk Purchases Possible Decision-Making is faster Better Image Lower Inventory Comparing Performance Better Finance Options Better Dispatch Control Reducing Losses
    42. 42. Road Haulage Insurance <ul><li>BETTER SAFE THAN SORRY!! </li></ul><ul><li>Types of Haulage-Related Insurance: </li></ul><ul><li>Goods Insurance: In-Transit or Storage </li></ul><ul><li>Truck Insurance: Against Accidents </li></ul><ul><li>Third-Party vs. Comprehensive </li></ul><ul><li>Insurance Brokers </li></ul>
    43. 43. Goods Insurance <ul><li>Theft and damage are likely scenarios </li></ul><ul><li>Waiver of Responsibility from the Transporter </li></ul><ul><li>Guarantee for Cargo Owner, at minimal expense </li></ul><ul><li>Based on Percentage Cost of Cargo </li></ul><ul><li>Factored as Operational Expense </li></ul><ul><li>Responsibility of cargo owner, but can be done by transporter on behalf of cargo owner as extra service </li></ul>
    44. 44. Truck Insurance <ul><li>Responsibility of Transporter </li></ul><ul><li>Factored as Transport Operational Expense </li></ul><ul><li>Minimizes maintenance cost </li></ul><ul><li>Third-Party : Own truck not covered </li></ul><ul><li>Comprehensive: Policy covers all expenses </li></ul><ul><li>Certified Agents can Reduce Insurance Costs for Significant Savings! </li></ul>
    45. 45. <ul><li>Comprehensive Cover </li></ul><ul><li>Third Party Cover </li></ul><ul><li>Inform Insurance Company Immediately </li></ul><ul><li>Prepare Damage Report </li></ul><ul><li>Fill out Motor Claim Form </li></ul><ul><li>Keep Copies for Future Reference </li></ul><ul><li>Assess Damage </li></ul><ul><li>Attempt Amicable Dispute Resolution </li></ul><ul><li>If not, Follow Steps from Comprehensive </li></ul>Damage-Reporting Scenario
    46. 46. FUTURE OF TRANSPORT INDUSTRY <ul><li>Trendlines in Transport Industry </li></ul><ul><li>Short-Term: Decreasing Profit Margins </li></ul><ul><li>Medium-Term: Increasing Cargo Throughput </li></ul><ul><li>Long-Term: High Uncertainty </li></ul><ul><li>Expect more consolidation within the industry </li></ul><ul><li>Eventually, Higher Demand/Lower Supply </li></ul><ul><li>Transport as support activity, rather than core business </li></ul><ul><li>Longer Haulage When Road Network Improves </li></ul><ul><li>Diversification into more profitable sectors </li></ul>
    47. 47. Future Road Network in West Africa
    48. 48. TARZAN DIVERSIFICATION EXPERIENCE <ul><li>Transport as core business is not profitable </li></ul><ul><li>Forecast increase in overhead expenditure (salaries and wages, diesel cost, inflation, utilities) </li></ul><ul><li>Diversification into trade as a consensus decision </li></ul><ul><li>Transport and maintenance operations can provide platform for diversification; Synergy Effect </li></ul><ul><li>Blue Gallery was Born! </li></ul>
    49. 49. Hierarchy of Operations
    50. 50. Diversification Alternatives Transport Company Fixed Assets Human Resources Mobile Equipment Capital Construction Real-Estate Development Stevedoring Trade
    51. 51. Diversification Selection Criteria <ul><li>Long-Term vs. Short-Term Objectives </li></ul><ul><li>Consensus of Shareholders </li></ul><ul><li>Capacity Surplus </li></ul><ul><li>Economic Outlook </li></ul><ul><li>Market Mechanics </li></ul><ul><li>Personal Speculation </li></ul>
    52. 52. BLUE GALLERY <ul><li>High-End imported furniture in a modern and colorful ambiance </li></ul><ul><li>Marketing Concept (Branding is different from core business) </li></ul><ul><li>Manageability (Accounting, Operations) </li></ul><ul><li>Risky venture </li></ul><ul><li>High earning potential </li></ul>
    53. 53. Application of Synergy Effect <ul><li>‘ COST ABSORBTION’ AND ‘COST ALLOCATION’ SPREADING RISK AND COST </li></ul><ul><li>Lower transport and cargo-handling costs at Blue Gallery, due to Tarzan’s specialization </li></ul><ul><li>Maintenance cost shared with Tarzan, lowering overall running costs (masonry, cleaning, truck repairs) </li></ul><ul><li>Woodwork and carpentry will cost less at Tarzan </li></ul>
    54. 54. Opportunities for Blue Gallery <ul><li>Expanding into other Interior Design products </li></ul><ul><li>Adding Home Appliances and Sanitary Ware </li></ul><ul><li>Recruitment of Artisans and Designers </li></ul><ul><li>Mutually beneficial PR with Tarzan </li></ul>
    55. 55. VISIT BLUE GALLERY! <ul><li>Check Brochure </li></ul><ul><li> </li></ul><ul><li>Aflao Road, Opposite Shell Station </li></ul><ul><li>ALL ARE WELCOME!!! </li></ul>