Truckers Feel the Pinch of Rising Prices of Crude

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Truckers Feel the Pinch of Rising Prices of Crude

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Business Daily (Nairobi)

May 22, 2008

News Article By Abyssinia Lati

Mr Sam Wanyoike of Thika has been in the truck transport business for the last three years, but profit margins have fallen to the lowest ebb ever.

"My profit has reduced by 10 per cent," he says, blaming the rising cost of diesel for the turn of events. Mr Wanyoike ferries cargo from Mombasa to Kampala in Uganda. His two 36-tonne trucks make four trips per month, when there are no delays at the port or breakdowns along the way.

A surge in demand for oil and instability in the Middle East are among factors behind the rise in fuel costs. Despite these challenges, Mr Wanyoike is not giving up. He is considering increasing his fleet to take advantage of emerging demand. "Sometimes there is a shortage of trucks," he said.

The trend is affecting all spheres of our lives; from farming to air fares and the cost of food. One of the explanations given for high food prices is that the processing industry uses oil as a source of energy.

In a bid to stay afloat, truckers have increased transport charges from Sh800 per tonne three years ago to Sh2,500 currently.

Moreover, the Kenya Transporters Association (KTA) is warning that transport charges between Mombasa and Kampala will rise further due to mounting fuel prices.

In Kenya, 90 per cent of goods are transported by road. The other alternative, the railway, is beset by problems despite its capacity to carry more in bulk.

Last October, Rift Valley Railways (RVR) announced that it was increasing cargo freight charges by 10 per cent to cover operational costs. RVR singled out the cost of fuel, saying it accounts for more that 50 per cent of expenses.

Apart from fuel, the rising price of spare parts has become a heavy burden to transporters. No one knows this better than Musoi Mutyetumo of Emali, who was forced to sell one of his two trucks and reduce the axles from four to three to reduce the high maintenance cost.

Trucks also need more frequent servicing because some sections of the Mombasa-Nairobi highway are under construction, leading to diversions onto poorly maintained earth roads.

"Even insurance is high. I used to pay Sh6,000 a month, now it is Sh20,000," Mr Mutyetumo said.

Fuel used in the aviation industry has also become more expensive, meaning fares for passengers and courier services like DHL Express have been revised upwards.

According to the International Air Transport Authority (IATA), the March 2007 price per barrel of jet fuel was $78.1 (Sh4,810). Now airlines are paying $144 (Sh8,867), reflecting a 70 per cent rise.

Kenya Airways is set to increase its ticket prices beginning June. According to the airline's managing director, Mr Titus Naikuni, the company spent Sh27 billion on jet fuel in the year to March 2008, compared to Sh15.9 billion the previous year.

For international airlines, Virgin Atlantic says raising ticket prices is inevitable. British Airways has already increased ticket prices. So, what alternatives are there? Biofuels have been floated as a cushion against rising oil prices. It will take many years before they reach a mass production level.

Mr Mutyetumo is considering withdrawing from the transport industry and concentrating on his other business, including a hardware store.

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