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Transport companies are at risk of switching to the informal sector

Rachid Tahri, Secretary General of the Transport and Logistics Federation – CGEM. Ph.Sradni

Soaring fuel prices are of great concern to transport professionals. Guest on the program “Le Matin”, “L’Info en Face”, Rachid Tahri, Secretary General of the Federation of Transport and Logistics – CGEM, believes that in view of the current situation, there is a risk heavy enough for some formal companies to switch to the informal, because their survival is at stake.

The mad rise in fuel prices, which has happened according to the geopolitical situation, is becoming very worrying, and even very alarming. Invited to the program “Le Matin”, “L’Info en Face”, Rachid Tahri, Secretary General of the Federation of Transport and Logistics – CGEM, is very clear on this subject. “We must surely be alarmed, because every week there is a price increase which remains incomprehensible even if the economic context is complicated. Unfortunately in Morocco, we have regular increases while globally at the level of the Federation we are unable to pass on these increases to the services provided to customers”. However, some carriers, which are not part of the Federation, are forced to increase the prices of their services according to increases in diesel prices. On this point, it should be remembered that the transport sector is dominated by the informal sector and small businesses only have one or two vehicles. “Given the current situation, there is a fairly heavy risk that some formal companies will switch to the informal, because their survival is at stake”, underlines Tahri.

Saving indexing

To cope with these increases, the government has drawn on the country’s treasury to provide direct financial aid to companies in the sector, starting on April 1. “This grant is commendable. Nevertheless, it is insufficient, because it was a function of the starting situation with a diesel price of 12.50 DH per litre. Today, on a price exceeded 15 DH per litre. We are aware that the State has major financial concerns and it is for this reason that we have asked our supervisory minister to activate the project relating to the indexation of diesel prices”, specifies Tahri. Here, it should be noted that this is an old complaint from the Transport and Logistics Federation and which has never been resolved. Today, with these incredible increases in fuel prices, the government is under great pressure to reconsider its position in relation to this so-called indexation measure. “Our supervisory minister is listening and we claim that this project will succeed”, specifies Tahri.

No to subsidies at the pump!

Either way, the government has been adamant there will be no direct subsidy at the pump. Faith of Nadia Fettah Alaoui, Minister of Economy and Finance. There will also be no caps on pump prices or margins. It is also out of the question to grant tax breaks on fuels. This creates a bit of confusion in people’s minds. What to do then? For the secretary general of the Transport and Logistics Federation, other mechanisms must be found, because if we touch fuel, ICT and VAT, we will have an impact on public investments”.

30% increase in operating expenses

That said, the sector is not only suffering from the rise in fuel prices (40% of expenses), other operating expenses have also been impacted. These include, among others, the increase in maritime freight and the price of inputs. Overall, companies in the sector have seen their operating costs rise by 30%. “We pass on the ocean freight as it is, because we can’t do anything about it, but we try to play on the margins,” notes Tahri. This situation can only lead to the decline of the economy. In other countries, there is, of course, a rise in prices, but there is also a growth in demand, because state subsidies, whether for professionals or for individuals, are significant. Which is not the case in Morocco, which means that demand is falling today,” explains Tahri.

Eyes on Jouahri

The sluggish economic situation and the lack of visibility as to the end of the crisis have prompted the Moroccan government to review its growth ambitions. What scared a change in the key rate. A deal that worries transport and logistics professionals who believe that “the rates of credits already practiced are very high”. “If the Central Bank raises the key rate, this will impact investments in the sector. Lately, transport companies have invested a lot, especially in trucks, even during the Covid-19 period. There have been a lot of orders, but they are slow to be made because of the problem of the shortage of connectors”, underlines Tahri.

Ready for decarbonization?

The other big challenge for the sector, and one that could well help it, is decarbonization. Indeed, in Europe, the latter will be required from 2023 to be generalized in 2026. The question to be asked at this level is whether Moroccan carriers are ready. For Tahri, “we can’t pretend to be. Moreover, this is the case even in Europe. Regarding international transport, we have the same standards. On the other hand, the national carriers will have to make the effort”, declared the secretary general of the Federation of transport and logistics.

Jalal Baazi


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