- Prices soar past regional peers, costing over 50% than Zambia
- Also boast steep registration fees, diesel duties suffocating trucking firms
- However, Freight titan Unifreight shifted gears, driving 58% volume growth
Harare- Despite the challenging economic environment marked by inflationary pressures and exchange rate volatility in Zimbabwe, the country still boasts the most expensive fuel prices in the Southern African Development Community (SADC) region, even though on petrol Seychelles is a little bit expensive.
This is attributable to the prevailing monopoly ethanol market, high fuel taxes, subdued competition, lack of adequate fuel infrastructure and vested interests.
It is followed by Malawi charging US$1.50 for petrol and US$1.65 for diesel. Mauritius is also high on the list as it demands US$1.56 for petrol while diesel costs US$1.44. Angola has the cheapest fuel in Africa as petrol costs US$0.36 while diesel is as low as US$0.16.
This elevated fuel cost, combined with steep vehicle registration fees of US$1,560 in Zimbabwe compared to just US$132 in Zambia, creates a tough operating environment for the country's trucking businesses.
This also goes to duty levies on diesel, making headaches for the transport sector. The high duties levied on diesel, currently at US$0.427 per litre, and the requirement to convert 25% of export proceeds into the local currency (ZiG), which cannot be freely converted back to US dollars at the controlled exchange rates set by the Reserve Bank, further compound the challenges.
According to Unifreight, a leading Zimbabwe-based freight company, these economic conditions posed significant hurdles for their business during the first 3 months to March 2024.
However, the company has managed to adapt through a flexible business model that allows them to adjust the number of cross-border assets as needed.
In the first quarter of 2024, Unifreight reported a 58% growth in volumes compared to the same period in 2023, representing a 135% increase from 2022 levels. The company offers a diverse range of services, including logistics, freight, and passenger transportation, serving clients across sub-Saharan Africa.
The group's service offerings include inter-city freight, general goods distribution, and an international courier service, under brands such as Skynet Worldwide Express, Swift, and Bulwark. The engineering division maintains the Unifreight fleet, procures parts for Yutong buses, and provides heavy haulage and abnormal freight transport services.
The group attributed its consistent growth to strategic fleet expansion and increased capacities.
Despite a 17% reduction in total yield per kilometre due to the nature of the Full Truck Load (FTL) market segment, the increased volumes have offset this reduction.
Unifreight plans to continue focusing on the wholesale consumer goods segment, which is the market segment least affected by the currency introduction.
The group has seen a shift in revenue contributions, with FTL's contribution increasing from 29% in 2023 to 41% in 2024 while tobacco remains a key revenue driver for the company, and despite a smaller tobacco crop trending towards 220 million kilograms for the season, Unifreight anticipates moving over 30% more volume from this sector after securing additional merchants in 2024.
Its investment in FAW28-380FT units has proven to be a reliable and cost-effective choice, with only minor issues experienced in the first 100 kilometres and a fuel efficiency averaging 2.34 kilometres per litre, well below the previous Shackman and Powerstar units.
The company plans to acquire a further 60 FAW28-380FT units before the end of the year to bolster its fleet and operational capabilities.
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