Publication: Road Freight in Central America: Five Explanations to High Costs of Service Provision
Loading...
Date
2012-06
ISSN
Published
2012-06
Author(s)
Editor(s)
Abstract
An efficient system to transport goods domestically and internationally is a key element of the logistics chain. Road freight transport has a direct impact on poverty as it employs millions of people and generates a significant portion of Gross Domestic Product, or GDP, especially in low and middle-income countries. Trucking is the primary form of transportation for domestic, trans-border, and international cargo, in Central America. Road freight transport is now vital to production, distribution, and mobilization, driving economic, social, and environmental progress. In short, trucking is the backbone of economies around the world. In the past 20 years, the industry has advanced as technology has improved communication, management, productivity, including vehicle efficiency. Their objective in doing so is to expand markets, generate wealth on the basis of efficient specialization, introduce competition, and lower costs for production, distribution, services, and research and development. When road freight transport services are efficient, they support these objectives; when they are not they act as nontariff barriers to trade, creating delays, raising costs, worsening congestion and pollution. Such barriers prolong and destabilize delivery schedules, hinder 'just in time' inventory management and industrial processes, and impede the efficient combination of factors of production.
Link to Data Set
Citation
“World Bank. 2012. Road Freight in Central America: Five Explanations to High Costs of Service Provision. © World Bank. http://hdl.handle.net/10986/27105 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Guangzhou Green Trucks Pilot Project : Background Analysis Report(Clean Air Initiative for Asian Cities Center and the World Bank, Washington, DC, 2010-05)This document was devloped as it initiated a pilot project - dubbed Guangzhou Green Trucks Pilot Project in support of Guangzhou's efforts to improve air quality in preparation for the 2010 Asian Games. The goal of this project was to develop a proof of concept for a truck program in Guangdong Province, and possibly China, that aims to: Enhance the fuel economy of the truck fleet, Reduce black carbon and other air pollutants from trucks and consequently obtain GHG emission savings.The project was implemented by the Clean Air Initiative for Asian Cities Center (CAI-Asia Center), in cooperation with Cascade Sierra Solutions, US EPA and World Bank, and with support from Guangzhou Environmental Protection Bureau (GEPB), Guangzhou Transport Committee (GTC), and Guangzhou Project Management Office (PMO) for the World Bank.The pilot project aims to contribute to addressing three problems related to trucks in Guangzhou and the wider Guangdong province simultaneously: (a) fuel costs and security; (b) air pollution and associated health impacts, and (c) greenhouse gas emissions and climate change. The scope of the pilot was limited to Guangdong Province, focusing on diesel trucks accessing or passing through the city of Guangzhou and surrounding cities, like Shenzhen. Aside from GHG emissions, the scope includes black carbon and other air pollutants from trucks because of their potential interacting effects and contribution to climate change, and because air pollution is an important local concern. The pilot project consisted of the following components, each with its own output: Background analysis, Survey of Guangzhou truck sector, Driver training course for fuel efficiency of trucks and a Technology pilot.Publication Sudan’s Infrastructure : A Continental Perspective(2011-09-01)Improvements in infrastructure across Sudan in recent years have contributed 1.7 percentage points to the country's per capita growth. Consistent with trends in other countries, the ICT revolution that swept Africa contributed more than any other sector to growth in Sudan. Raising the infrastructure endowment of all parts of Sudan to that of the region's best performer -- Mauritius -- could boost annual growth by about 3.5 percentage points. Sudan has heavily invested in infrastructure in recent years. Notable achievements include tripling power-generation capacity, liberalizing the ICT sector, and connecting to an undersea fiber-optic cable. Looking ahead, Sudan's most pressing infrastructure challenges lie in the water and transport sectors. In the water sector, the country needs to dramatically improve access to safe sources of water and sanitation while improving utility efficiency. In the transport sector the country needs to vastly expand rural and international connectivity and improve quality across the network. Sudan presently spends about $1.5 billion per year on infrastructure, with $580 million a year lost to inefficiencies. Even if the inefficiencies were eliminated, however, Sudan would face an infrastructure funding gap of $2.9 billion per year. This gap could be reduced by half by choosing lower-cost water, sanitation, and road-surfacing technologies, and could be bridged by continuing to capture financing from the private sector and abroad.Publication What Drives the High Price of Road Freight Transport in Central America?(World Bank, Washington, DC, 2014-04)In Central America, like many other developing regions, high transport costs are cited as an impediment to trade and economic growth. Prices for road freight transport -- a key mode of transport comprising a significant share of total transport costs for intra- and extra-regional trade, are particularly high. Averaging 17 cents per ton-kilometer on main trading routes, these rates stand out even relative to other inefficient developing country markets (e.g., central and west Africa). However, the policy and other factors associated with increased prices have not been well understood. This paper uses data from a survey of trucking companies operating on the region's main trade corridors to analyze the determinants of firms' costs of providing service, as well as the effect of market structure and competition on prices. The analysis finds that whereas improved cost efficiencies could reduce prices by 3 cents per ton-kilometer, increased competition on national routes -- those entirely within a nation's borders -- would reduce prices by significantly more. Although there are many trucking companies, including small and somewhat informal operators, the degree of competition varies by route because of domestic restraints on competition and the prohibition on international competition on national routes. The paper shows empirically that imperfect competition accounts for at least 35 percent of mean prices on national routes. In addition, a lack of competition is likely to explain the persistence of an inefficient market structure, as well as a lack of innovation to reduce costs and enhance the quality of service.Publication Guatemala : Elements of a Transport and Logistics Strategy(World Bank, Washington, DC, 2015-01)This document has been produced by the World Bank to support the Government of Guatemala as it improves its transport and logistics sector management in pursuit of enhanced country competitiveness. It identifies and defines elements of a National Transport and Logistics Strategy (NTLS) through the development of a methodology which analyzes bottlenecks and related costs along the main logistics corridors. It does so with a view to (a) mobilizing support in the trading community (essentially private sector) for logistic service improvements, (b) identifying the need for broader public-sector reforms in transport which indirectly impact logistics performance, and (c) helping the Government to set sector priorities and hence to prioritize public investment. At the same time, it points out where improved data and monitoring of performance are needed in order to better quantify economic costs, diagnose key logistics issues, and track improved performance. It thereby proposes, as part of the set of recommended activities, to build the Government of Guatemala s capacity to measure performance and take action. While the document is based on sound analysis of some aspects of the country s logistics system, it must be considered primarily a starting point which is subject to broad country dissemination and debate by public and private stakeholders.Publication What Drives the High Price of Road Freight Transport in Central America?(World Bank, Washington, DC, 2013-12)In Central America, like many other developing regions, high transport costs are cited as an important impediment to trade and economic growth. Prices for road freight transport, a key mode of transport comprising a significant share of total transport costs for both intra, and extra, regional trade, are particularly high. Averaging 17 US cents per ton-kilometer on main trading routes, these rates stand out even relative to other inefficient developing country markets (e.g., central and west Africa). However, the policy and other factors associated with increased prices have not been well understood. Using data from a survey of trucking companies operating on the region's main trade corridors, this paper analyzes the primary drivers affecting firms' cost of providing service, as well as the effect of market structure and competition on markups and prices. We find that whereas improved cost efficiencies could reduce prices by 3 cents per ton?kilometer, increased competition on national routes, those entirely within a nation's borders, will reduce prices by significantly more. Although there are many trucking companies, including small and somewhat informal operators, the degree of competition varies by route due to domestic restraints on competition and the prohibition on international competition on national routes. Our empirical result shows that the effect of barriers to entry and imperfect competition on markups accounts for at least 35 percent of mean prices on national routes. Moreover, a lack of competition is likely to explain the persistence of an inefficient market structure and scale of operation, as well as a lack of innovation to reduce costs and enhance the quality of service.
Users also downloaded
Showing related downloaded files
Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.Publication The Journey Ahead(Washington, DC: World Bank, 2024-10-31)The Journey Ahead: Supporting Successful Migration in Europe and Central Asia provides an in-depth analysis of international migration in Europe and Central Asia (ECA) and the implications for policy making. By identifying challenges and opportunities associated with migration in the region, it aims to inform a more nuanced, evidencebased debate on the costs and benefits of cross-border mobility. Using data-driven insights and new analysis, the report shows that migration has been an engine of prosperity and has helped address some of ECA’s demographic and socioeconomic disparities. Yet, migration’s full economic potential remains untapped. The report identifies multiple barriers keeping migration from achieving its full potential. Crucially, it argues that policies in both origin and destination countries can help maximize the development impacts of migration and effectively manage the economic, social, and political costs. Drawing from a wide range of literature, country experiences, and novel analysis, The Journey Ahead presents actionable policy options to enhance the benefits of migration for destination and origin countries and migrants themselves. Some measures can be taken unilaterally by countries, whereas others require close bilateral or regional coordination. The recommendations are tailored to different types of migration— forced displacement as well as high-skilled and low-skilled economic migration—and from the perspectives of both sending and receiving countries. This report serves as a comprehensive resource for governments, development partners, and other stakeholders throughout Europe and Central Asia, where the richness and diversity of migration experiences provide valuable insights for policy makers in other regions of the world.Publication Lebanon Economic Monitor, Fall 2022(Washington, DC, 2022-11)The economy continues to contract, albeit at a somewhat slower pace. Public finances improved in 2021, but only because spending collapsed faster than revenue generation. Testament to the continued atrophy of Lebanon’s economy, the Lebanese Pound continues to depreciate sharply. The sharp deterioration in the currency continues to drive surging inflation, in triple digits since July 2020, impacting the poor and vulnerable the most. An unprecedented institutional vacuum will likely further delay any agreement on crisis resolution and much needed reforms; this includes prior actions as part of the April 2022 International Monetary Fund (IMF) staff-level agreement (SLA). Divergent views among key stakeholders on how to distribute the financial losses remains the main bottleneck for reaching an agreement on a comprehensive reform agenda. Lebanon needs to urgently adopt a domestic, equitable, and comprehensive solution that is predicated on: (i) addressing upfront the balance sheet impairments, (ii) restoring liquidity, and (iii) adhering to sound global practices of bail-in solutions based on a hierarchy of creditors (starting with banks’ shareholders) that protects small depositors.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.