Zimbabwe’s exorbitant fuel prices affecting transp...

Zimbabwe’s exorbitant fuel prices affecting transport industry

Nyashadzashe Ndoro

CHIEF REPORTER

Zimbabwe Stock Exchange listed Transport and logistics company Unifreight Africa, has released its quarter 1 trading update for 2024, highlighting significant growth in volumes but also revealing the challenges faced by the Zimbabwean transport sector.

Despite a 58% increase in volumes compared to the prior year, Unifreight’s total yield per kilometre has decreased by 17% due to the nature of the Full Truck Load market segment, which the company has been aggressively marketing.

The reduction in yield is offset by the increased volumes being moved, but it still poses a challenge for the company.

The Zimbabwean transport sector is also facing significant regional challenges.

According to Unifreight, fuel prices in Zimbabwe are the highest in the region, with a pump price of US$1.68 compared to US$1.11 in Zambia. Vehicle registration costs are also exorbitantly high, at US$1 560 compared to only US$132 in Zambia. These costs make operating a cross-border fleet in Zimbabwe less attractive.

The leading transportation company further states that duties levied on diesel stand at US$0.427c, and 25% of export proceeds are converted into the new Zimbabwean currency, ZiG, which cannot be freely converted back into USD at the controlled exchange rates published by the Reserve Bank.

This poses a significant challenge for companies like Unifreight that operate in the region.

Despite these challenges, Unifreight remains optimistic about its prospects for the year, with a flexible business model that allows it to adjust its assets running cross-border as needed. The company has made over ZiG13m in Q1 2024 and is on track to achieve its budget.

The high fuel prices, vehicle registration costs, and duties on diesel are all contributing to a difficult operating environment.

The company said tobacco remains its key revenue driver.

“Tobacco continues to be a key revenue driver. Most major merchants have chosen Swift for the safe and reliable transportation of their tobacco from the regional floors to Harare. Despite a smaller tobacco crop trending towards 220mKG for the season, we anticipate moving over 30% more volume from this sector after securing additional merchants in 2024,” Peter Annesley, the company’s chairman said.