**<u>TABLE 4: INTERNATIONAL COMPARISON OF ROAD FREIGHT TRANSPORT PRICES</u>**

||**US cents tkm**|**Year**|**Source**|
|---|---|---|---|
|**Latin America**||||
|Central America|17|2012|1/|
|Brazil|3.5|2007|2/|
|**Africa**||||
|Kenya|4|2010|3/|
|Uganda|8.5|2010|3/|
|Rwanda|9|2010|3/|
|Niger|13|2010|3/|
|Congo|12|2010|3/<br>|
|Burundi|11|2010|3/|
|Burkina Faso|9|2010|3/|
|Durban‐ Lusaka Corridor|6|2007|2/|
|Lome‐ Ouagadougou Corridor|7|2007|2/|
|Mombasa‐Kampala Corridor|8|2007|2/|
|Duoala‐ Ndjarrena Corridor|11|2007|2/|
|Zambia|3.7‐5.6||5/|
|**Asia**||2006||
|China|5|2007|2/|
|Pakistan|2|2007|2/|
|**Advanced Countries**||||
|USA|2‐10.8||2/,3/,4|
|France|5|2009|2/|

**_Source:_** _1/   World Bank LCSSD Economics Unit Trucking Survey (2012); 2/ Teravaninthorn, Supee and Raballand, Gael (2009) Transport Prices and Costs in Africa: A Review of the Main Corridor. The World Bank; 3/  Kabanguka, Jean Kizito (2010) Corridor Logistics Initiatives. Presented at the SSATP Annual Meetings 2010 (The World Bank); 4/  McKinsey & Company (2011) Building India: Transforming the nation's logistics infrastructure. Infrastructure Practice.  5/Raballand, G., C. Kunaka, B. Giersing (2008). The Impact of Regional Liberalization and Harmonization in Road Transport Services: A Focus on Zambia and Lessons for Landlocked Countries (The World Bank) WPS4482._ Public

Of even greater significance in explaining high road freight prices is the role of imperfect competition, particularly on national routes – routes with no international overland border crossing. Through econometric analysis of the determinants of prices, this paper provides evidence of anti-competitive pricing: Routes served by fewer firms show higher prices, when accounting for differences in costs and demand. Moreover, the number of firms on a route is dramatically lower relative to demand on national routes, where average markups over cost are significantly higher than on international routes. Service on such routes, which connect points within a country to and from air and sea ports, is essential for extraregional trade, which represents 84 percent of Central American trade volumes. Averaging 8 US cents per ton-kilometer on national routes (and 32 cents in Panama), excess markups due to imperfect competition account for at least 35 percent of mean prices on national routes throughout the region.

The precise mechanisms limiting domestic competition are not clear and likely differ between countries. In some of the countries of the region formal requirements for entry, although seemingly reasonable and surmountable, effectively become barriers to entry in implementation. In some cases, the market is informally partitioned, with permission to operate depending on implicit agreement not to infringe a dominant firm’s territory. Although it is not possible to identify the precise mechanisms which limit competition, prohibitions on foreign competition are likely to play a role. The structure of any market is dynamic and likely involves fluctuating levels of competition. However, it is easier to sustain anticompetitive behavior within a country, where various actors know each other and understand the rules restraining competition, whether tacit or explicit. In Central America, although foreign-registered companies can engage in cross-border freight delivery, cabotage – the provision of service on national routes by a foreign-registered truck – is prohibited. This restriction is reinforced by a prohibition on forming a trucking company with majority foreign ownership.

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