Mozambique has the potential to be a major outlet for Southern Africa if it becomes more logistics friendly and integrates reforms to its infrastructure and services providers with Southern Africa. Mozambique corridors serve mainly transit trade to and from its neighboring countries of South Africa, Zambia, Malawi and Zimbabwe. Approximately 30 percent of this transit trade goes through Maputo Port and 50 percent through Beira Port. Without more transit traffic, the ports, roads, and railways will continue to operate at low rates of utilization.
Maputo port is close to the most important South African region and is the shortest route. It has a geographic advantage over Durban, South Africa's busiest port. It is closer to Johannesburg, 581 kilometers away by rail, compared with 750 kilometers distance between Durban port and Johannesburg. And the congestion at Durban makes Maputo attractive for shippers with time-sensitive goods.
Table 3.1: Distances in Southern Africa (see pdf document)
Beira port is the closest port to Zambia, Zimbabwe, and Lubumbashi (Democratic Republic of Congo). Traffic in transit currently accounts for 70 percent of goods imported from Beira. The average traffic to Zimbabwe is 50 trucks a day, to Malawi more than 100 a day, and to Zambia 5 a week. The large sediments of the Pungue River in Beira cripple the port. Capital dredging, which would be necessary to increase vessels size calling at Beira and then lower maritime transport prices, has not been carried out for 15 years. The current high tide draft is 10 meters, 30 so Beira cannot operate more than six hours a day31 unless vessels risk running aground. So, only small vessels with up to 800 TEU can enter the port. Expected to be functioning by 2010, a new dredge will have the capacity for capital dredging.
Nacala port, in Northern Mozambique, was intended to give Malawi a shorter connection to the ocean. It is a deep water port (up to 14 meters) with excellent maritime conditions. The port and railway were privatized in the late 1990s, but in 2007 it handled only about 1 million tons, and its loading and berthing infrastructures were still inadequate. The main road to Malawi is not paved after Nampula city and is impassable during the rainy season. And a stretch of the railway line connecting Malawi has never been rehabilitated. So, Nacala port continues to be uncompetitive for Malawian exporters, who prefer to truck their goods to Durban and Beira.
Figure 3.1: SADC Regional Transport Corridors (see pdf document)
Mozambique has undertaken major port and railway reforms and subsequently improved port efficiency and increased shipping lines frequency. Since January 2008, Maputo port has had larger ships calling directly, including those of such mega-carriers as MSC, OOCL and Delmas. But Mozambique ports remain largely served by feeder vessels: MSC runs feeder services from Durban to Maputo and Nacala (with 1,000 TEU vessels) and from Durban to Beira (with 600-800 TEU vessels) every 10 days.
However, the potential for corridor traffic remains mainly untapped. Even attracting only a small fraction of traffic from South Africa’s north-west could boost Maputo’s throughput. Traffic from and to Gauteng and Mpumalanga provinces is at least 700 million tons, so if Maputo were to capture just 1 percent of this traffic, its throughput would double and its port revenues would rise by tens of millions of dollars. Despite a rather successful concession, traffic in transit at the Maputo port remains relatively low, operating at less than 30 percent of capacity. Beira port also had operated at less than 40 percent of capacity for the last 5 years.
Figure 3.2: Maputo Port Throughput (see pdf document)
Figure 3.3: Maputo Port (see pdf document)
Figure 3.4: Beira Port (see pdf document)
Durban port congestion will not automatically make Mozambique a major outlet for South African shippers. If anything, competition for port services will increase. South Africa started to develop a new large port in Coega as a hub for all Southern Africa. When this port operates at full pace, the likelihood that South African shippers will shift from South Africa to Mozambique will be even lower.
Some large South African shippers still perceive the business climate as unpredictable and are reluctant to redirect their logistics routes. Corruption is more present in Maputo than in Durban (Sequeira and others, 2008). Bribes are paid on about 36 percent of all cargo movements for the port of Durban, costing an average of 7 percent of a one-way overland shipping rate for a standard 40 foot container. For Maputo, bribes are paid on about 54 percent of all cargo movements, and costing for 15 percent of the overland shipping rate for the same standard shipment. Unreliable logistics and poorly integrated trucking services make South African shippers even more reluctant to use Mozambican ports, especially Maputo. Moreover, scanning fees continue to be higher than world practices (Bolnick 2007, van Drune, Eric and Simme Veldman, 2008) and are levied even on bulk exports, such as coal and sugar. More important, the government’s decision to establish a scanning fee was seen by many South African shippers as a bad signal, deterring their shift from Durban to Maputo.
Road condition is not a major obstacle for trade on the main international corridors and the condition of the main North-South highway is usually good. Therefore the average transport speed on the main corridors is acceptable.
Table 3.2: Condition of the Mozambique road network in 2003 (see pdf document)
Transport prices are not abnormally high along international corridors. Compared with other major international corridors in Africa, transport prices from and to Mozambique are not abnormally high due to competition and low fixed costs.
Table 3.3: Shipping Rates from Johannesburg (see pdf document)
- Transport Reliability and Quality Matter
Mozambique is approximately 2,000 kilometers long between its northern and southern tips. While east-west transport linkages for rail and trucking are fairly well developed in Beira, Maputo, and Nampula, no rail lines run the north-south meridian of the country, roads are of variable quality, and bridges are missing from major river crossings. A truck originating in Nampula province, known for its cotton and cashew production, would have to navigate three countries just to arrive in Maputo. Ocean shipping from northern Mozambique to southern Mozambique costs as much as that from Asia to South Africa. Overall the efficiency of moving goods in Mozambique shows a large variance with a low mean. Some corridors function reasonably well, such as Maputo-South Africa but all have weak links in the full distribution chain. Many areas in the hinterland lack effective access to markets.
Mozambique’s main deficiencies mostly derive from logistics and low transport reliability. Logistics professionals perceive Mozambique as not logistics friendly. Mozambique ranks 26 among 37 Sub-Saharan African countries and 136 among 155 countries worldwide, according to the 2010 Logistics Performance Index. Mozambique scores poorly on all components of the LPI (overall score of 2.29), with timeliness being the worst (score of 2.4), and international shipments, being the best (score of 2.77). Timeliness associated issues give a definite advantage to Durban, which scores significantly better (With and LPI of 3.46 and timeliness score of 3.57) over Maputo and other Mozambican ports.
Figure 3.5: Logistic Performance Index, 2010 (see pdf document)
Users of Mozambique ports, including Maputo, face unpredictability because of the absence of direct calls (except MOL). Due to low volumes, shipping lines do not call directly at Maputo (van Drune, Eric and Simme Veldman, 2008). Unpredictability for shippers using Maputo is even higher than for Durban because shipping agents or freight forwarders in Maputo seldom receive the accurate information on time from Durban. So, Maputo remains unattractive for many South African shippers. Cabotage seems to be underdeveloped in Mozambique because transport by sea is almost half the cost of transport by road. However, due to more cumbersome procedures and delays for cabotage, demand remains low.
- Building One Stop Border Posts
Mozambique should facilitate trade with South Africa to stimulate growth . The government needs to revise customs procedures and make some key investments to give the right signals. The most important action is to construct the One Stop Border Post (OSBP) at Lebombo/Ressano Garcia. All the customs clearance procedures including those at the dry ports, have to be streamlined, using risk profile analysis for inspections, deploying more information technology and so on. The scanning fees and criteria should be reviewed. It is also important that the software used by Mozambican and South African customs authorities be compatible.
Box 3.1: Trade Facilitation (see pdf document)
A One Stop Border Post with improved customs clearance procedures is expected to have a very positive impact on trade flows and on the use of the Maputo port. If Maputo port could capture only 1 percent of the cargo traffic generated by South Africa’s north-east region, its transit traffic would double. This would attract major shipping lines to establish direct calls and produce tens of millions of dollars in added revenue.
One Stop Border Posts have received substantial attention as a complement to trade liberalization and regional integration to improve intraregional trade and travel. Current examples include the One Stop Border Posts between Kenya and Uganda at Malaba, between Zambia and Zimbabwe at Chirundu, between Zimbabwe and Mozambique at Forbes/Machipanda, along the Trans-Kalahari Corridor, and in West Africa on borders of Ghana, Burkina Faso, Togo, and Mali.
Several bilateral technical working groups have been created to analyze the legal, regulatory and management issues, as well as information and communications technology and human resources. At the beginning of 2008, South Africa committed ZAR 600 million to establish the infrastructure for the OSBP. The opening is scheduled for April 2010.
- Road Corridors - Connecting the Hinterland?
Competition is relatively strong in the trucking industry on the main corridors . The margins for trucking companies are around 10 percent. Mozambican truckers remain afloat thanks to protection from South African operators (except on the Maputo corridor) and the use of second-hand trucks. Truck use is low because of low freight volumes, cumbersome procedures, and bad roads on some corridors. South African and Mozambican operators charge similar prices on the Maputo corridor.
Road corridors normally have significant spillovers in rural areas. But only 19 percent of Mozambicans live within one hour’s travel of an urban center of more than 50,000 people, and 45 percent within 3 hours travel time. To get the full spillovers from corridors, the government and its development partners should strive to develop a link between corridors and rural areas. Investing in the main corridors and in existing feeder roads (within 10 km of the corridors) would improve roads access only slightly. Considering only the five northern and central provinces where the major improvements in corridors take place, investments in feeder roads increases the share of “spatially connected" population by only 1.4 percentage points— from 48.8 to 50.2 percent. So, without investments in low-volume roads, corridor improvement (even if combined with feeder roads) would have a limited impact on rural access to roads.
- Recommendations to Realize the Potential
Some key infrastructure investments can catalyze private investment and create a sound logistics base for exports. The main ones are to build a One Stop Border Post at the border with South Africa, undertake the capital dredging of Beira port, and rebuild the main road linking Nacala to Malawi. For the rural areas to benefit from the development of the main transport corridors, investments should also be made in low-volume feeder roads. These investments have to be accompanied by institutional reforms to facilitate trade, such as streamlining customs procedures including pre-shipment inspection requirements, creating single SADC documents for imports and exports, facilitating payments mechanisms, and accelerating VAT refunds.
The government also needs to improve international air access and the domestic services. For both tourism and agribusiness (perishables goods) it is essential to have an effective coverage of domestic and international air service. It will be necessary to continue to implement fifth freedom rights for neighboring countries, allowing British Airways, KLM, and Air France to fly from other African cities to destinations in Mozambique) in line with SADC protocol agreements. It will also be necessary to enter code-share agreements with large airlines on key routes to Europe and to bring other players into the domestic market to increase supply and competition.
- Chapter Three: Logistics, in: Mozambique – Reshaping growth and creating jobs through trade and regional integration, Country Economic Memorandum March 2012, (disclosure date: 2012/08/20, 97 pages 6.79 mb).
