TRUCKING COMPANIES STOP SERVICE TO KHARTOUM

C O N F I D E N T I A L KHARTOUM 002192

SIPDIS

SIPDIS

DEPARTMENT FOR AF/SPG AND AF/EPS
PLEASE PASS TO USAID FOR AFR

E.O. 12958: DECL: 09/10/2016
TAGS: EAID ELTN PGOV PHUM PREL SU
SUBJECT: TRUCKING COMPANIES STOP SERVICE TO KHARTOUM


Classified By: P/E Chief E. WHITAKER, reason: sections 1.4 (b) and (d)


1. (C) Summary: Trucking between Port Sudan and Khartoum has
been halted by a strike by trucking companies, purportedly
because of a dispute over a new tax imposed by Red Sea State.
The dispute has the potential to disrupt nearly all
shipments, including food and humanitarian supplies.
Truckers may attempt to use the dispute to increase rates in
an effort to make up for recent increases in fuel prices.
The stoppage is expected to continue for several days. End
Summary.


2. (C) The owner of the largest trucking company in Sudan,
Ahmed El-Nefeidi, told Charge and Emboffs on September 10 the
all truck transport between Port Sudan and Khartoum has been
stopped for the past four days. El-Nefeidi stated the reason
for the strike is a dispute with the state government of Red
Sea State over imposition of a new commodities tax of SD 5000
(USD 25) on all cargoes. However, in a separate conversation,
the chairman of a rival trucking company noted that the
stoppage also presents trucking firms with an opportunity to
increase tariffs and make up for increased fuel prices.


3. (C) El-Nefeidi explained that trucking companies are
seeking discussions with the governor of Red Sea State to try
to resolve the situation, but the governor will not be
available on Monday, September 11, as he will be organizing a
demonstration to protest UN Resolution 1706. The earliest
the governor will be free is September 12, and discussions
may take some time, so it is likely the stoppage will last
several days. El-Nefeidi also said that he has received
calls from the largest flour mill in Khartoum expressing
concern about the transport shutdown. Transportation of
flour, sugar, cement, and other commodities potentially will
be effected.


4. (C) El-Rayah Osman, the Chairman of Dambawi Transport,
another large trucking company, told Econoff that the
trucking industry in Sudan is facing serious problems of
over-capacity. Over the past couple of years the government
made USD 100 million in credit available through the Central
Bank for purchase of trucks. New operators entered the
transport sector in large numbers. Osman alleged that many
businessmen who obtained loans have connections to the
governing National Congress Party. The expectation was that
the transportation sector would boom as a result of the CPA,
the demand created by UN deployment, and rapid economic
growth in the South. The expected growth has not
materialized and the supply of trucks exceeds the demand.
The rates for moving cargo from Port Sudan to Khartoum has
fallen from about USD 140 to around USD 80 per ton in the
past year. Many of the new entrants to the sector are highly
leveraged, typically with two-year loans, and are facing
problems in making their payments. The recent increases in
fuel prices have put further pressure on the operators.
Osman predicted that the trucking companies will try to use
the dispute over the state tax to get the tariff back to
about USD 130 per ton.
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