An analysis of efficiency in the trucking industry in Tanzania.

The lacklustre performance of the distinctive trucking sector in Tanzania has concerned policy makers and analysts preoccupied with finding and instituting measures aimed at reinvigorating the economy, after years of suffering from the severe economic crisis. It is acknowledged that the revival of the economy is very much predicated on the proper functioning of the trucking sector; itself a victim of the crisis. Of greatest concern has been the operating environment, dictated in large part by the regulatory framework (legislative and administrative) governing operations in the sector, which has imposed attenuating circumstances to operational efficiency, causing non-optimality in firm performance. The need to examine the structure of the trucking industry and its effect on productive efficiency, productivity growth and identification of the main determinants of performance, and to propose remedial measures had become apparent. This forms the gist of this study. A performance analysis is carried out, much more deeply for the public subsector on account of data availability. The structure-conduct-performance (SCP) paradigm is used to show how the current structure has evolved; the effect of regulation on industry and firm performance is also examined. Cost and frontier production functions' estimations are conducted to identify determinants of performance, evaluate productive efficiency in relation to best practice technology and show its development overtime. Findings confirm the existence of inefficiencies and lack of productivity in the industry. Substantial cost saving possibilities exist in terms of expansion, to economic advantage, of the scale of trucking operations, improvement of capacity utilisation and rationalisation of the use of resources in the production of trucking services. Competitiveness requires institutionalisation of these cost saving measures.