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Expert tips Malawi on fuel cost cutting

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By Chimwemwe Mangazi:

CHIKAONDA—This system is killing haulage capacity

Logistics expert, Pascal Chikaonda, has said Malawi must quit the Delivered Duty Unpaid (DDU) system of procuring fuel if it is to reduce importation costs.

Chikaonda, a former chief executive officer of Malawi Cargo Centre Limited, said the system was expensive.

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DDU system entails that a seller will assume liabilities and costs associated with delivering goods to a country, with the buyer assuming the duty fees or costs to bring the product into the country.

It is similar to Cost Insurance and Freight system, which are expensive and give power to the supplier to use a forwarder or transporter of his choice who may charge the buyer more in order to increase the profit on the transaction.

In an interview, Chikaonda said lack of aggressiveness among players in the transport sector was weakening the industry.

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“Using this system is killing haulage capacity, instead of growing it. In terms of policy, my view is that you are becoming more land-locked because, initially, the whole idea of the northern corridor was for Malawians to manage all the way to Dar es Salaam.

“The next step was for us to have ships and be able to buy FOB (Free on Board) and we should have been buying local insurance, thereby, preserving our forex,” he said.

In April this year, a group of concerned fuel haulers called on the government to abolish the DDU system, saying out of 300 transporters that are given the business, only 10 are locals.

At the time, president of the Road Transporters Association confirmed the concerns raised by the transporters, but was quick to indicate it was engaging authorities on the same.

Most of Malawi’s fuel imports are supplied via Mozambique and Tanzania.

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