to commit to a longer term fixed volume contract for at least some of its transport needs. Ideally, this should be focused on containerized freight. This is already being done by some private operators on the regional corridors (for example, Bridge Shipping and Grindrod on the north‐south corridor). However, the private sector cannot do this without explicit support from Transnet. There are various ways to do this, including Transnet setting up a small specialist business unit that uses ICT systems, in partnership with the logistics companies, to consolidate volumes. Alternatively, the private sector could do this through a concession on the north‐south corridor specifically aimed at servicing consolidated volumes by small exporters.

# **Box 9: Coordinated export logistics: the case of Peruvian asparagus growers**

When the Peruvian asparagus sector began to export to the US market in the late 1990s they faced challenges of high air freight costs combined with serious quality control problems (due to lack of cool chain facilities). The industry, despite having no history of formal cooperation across the competitive exporters, decided to cooperate to establish a common export platform. With support from the government the export sector established a company ( _Frio Aero_ ) and invested in the construction of a cold storage and logistics consolidation warehouse at the airport. The venture was highly successful. It contributed to lower cost and more predictable freight flows, and also resulted in higher quality exports – which in turn spurred massive growth in the export industry over the following decade. The success of the cooperative initiative led them to establish a second service company (Peruvian Institute for Asparagus and Horticultural Crops) focused on providing market information and R&D support to the industry.

Both the government and the private sector have a role in overcoming the market failures that restrict the consolidation of volumes from small exporters – particularly given limited information on the availability of cargo flows and the challenges of coordinating these flows. Even with private sector logistics companies offering consolidation services, support for improved information flows can significantly reduce transaction costs involved in organizing these consolidations. One reason for this is that shippers seldom exchange information to coordinate transport needs despite the fact that they will have similar requirements, markets, and potential inbound supply (e.g. agricultural inputs and machinery) during the same periods of time.

Without the coordination coming from within the shipping community, consolidation becomes more difficult. Cargo portals are one solution that has been adopted to address this problem in other countries, although these have tended to be used mainly for road freight.

# **Box 10: Trucker's billboards to coordinate small volume shipments: the case of Zambia**

The Truckers’ Billboard is a system that has been tried in several places to improve coordination of small shipments and help fill empty transport backhaul legs. It is a matching system where road transporters can advertise spare capacity and shippers can advertise their need for trucking services. It also creates a mechanism for price negotiation that is likely to lower the price. One such example is the TransZam website (www.transzam.org) which enables clients to post information on loads that require transport, and provides transport operators with an opportunity to advertise available capacity. The posts detail the origin and the destination, the cargo to be transported, the type of packaging and the weight of the cargo. The site also features a directory of transport operators, including the name of a contact person, telephone contacts and email addresses and other information such as the size of the operators' fleet and the capacity of the trucks.

There are some cases where logistics coordination and consolidation has taken place through industry initiative – this is most common in export agricultural sectors, particularly in time‐sensitive, high‐value horticultural products such as citrus. Firms, through their industry associations, can cooperate to consolidate volumes and engage directly with Transnet, or collectively partner with logistics providers. The role of STER will be fundamental in the success of such an endeavor, as it will regulate access terms (and associated tariffs) for TFR, as well as offer mediation if there is a lack of cooperation from Transnet.

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