Estimation of Road user costs of Freight Vehicles in Ethiopia: the case of Addis Ababa-Djibouti Corridor

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Date

2017-11

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Addis Ababa University

Abstract

Transport cost covers almost two-third of the total logistics costs and so its determination requires a through consideration. The objective of this thesis was to estimate the road user costs of freight vehicles along the Addis Ababa–Djibouti corridor. Specifically, it was aimed at assessing the existing freight cost determination procedure and suggest a road user costs which could be a reference for determination of freight rates. The two basic steps in these study were assessment of the existing condition on freight rate determination and estimation of the road user costs by vehicles. The primary data collection method were interview and questionnaire, where data was collected from five transport companies. Data on existing tariff determination procedure, parameters considered for tariff determination, profit margin for the practical use and existing freight rate between the years 2014-2016 were collected. Secondary data were on the input data of HDM-4 and on characteristics of the freight vehicles on the corridor. The determination of road user costs considered two scenarios, fully loaded and empty freight vehicles. For both of the scenarios; a one trip case was taken into account based on the current most common practice. The trip from Addis Ababa- Djibouti was taken to be with empty freight vehicles while the reverse was assumed fully loaded. Road user costs was assumed to comprise the travel time cost and the vehicle operating cost. Based on the findings, the common vehicles on the corridor have a capacity between 20-40 tonnes. These freight vehicles are owned either by transport companies or association with a ratio of 1:4. About 52.5% of the vehicles are between service years of 1-10 while 21.8% of the vehicles are above 20 years and the rest are in between. The practical tariff setting procedure is far from scientific method but lies on estimation from the previous experience. The profit margin is various within the available companies and ranges from a minimum of 10-15% to a maximum of above 35%. The estimated road used costs was on annual basis and both fully loaded and empty running vehicles’ road user costs are at substantially the same. The road user costs has an incremental flow from year to year, projecting to five successive years starting from the analysis period. The section-wise pattern of the road user costs has similarity with the traffic volume. It could be concluded that the current tariff setting practice is unscientific, and this should call for attention as the transport cost is the main cost component in the logistics system. The majority of the vehicles are owned by associations and less by the transport companies. This may call for stimation of Road user costs of freight vehicles: A case of Addis Ababa Djibouti Corridor attention for further revision as it was known that the association are less organized. Future research direction could be on determining road user costs considering both external and internal cost components, and detail analysis on the impact of the current tariffing practice.

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Keywords

Freight vehicles, Tariff, Road Users Cost

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