High operating costs weigh on Unifreight’s profitability

CLOUDINE MATOLA

Transport and logistics giant Unifreight Africa has raised alarm over the mounting cost of doing business in Zimbabwe’s transport sector, which is significantly eroding profit margins, Business Times can report.

Group Chief Executive Officer Richard Clarke, revealed that Zimbabwe’s operating environment remains one of the most expensive in the region—particularly in terms of fuel, licensing, and regulatory obligations.

“In the transport sector specifically, operating costs in Zimbabwe are significantly higher than in neighbouring countries, which continues to squeeze margins,” Clarke said. “For example, fuel in Zimbabwe remains the most expensive in the region at around US$1.58 per litre, compared to about US$1.01 in Zambia. Vehicle registration and licensing fees are also exorbitantly high at roughly US$1,560 locally versus just US$132 in Zambia.”

He added that imported diesel attracts heavy duties—approximately US$0.55 per litre—further pushing up operating costs. Compounding this is a policy that compels exporters to surrender 25% of their foreign earnings for conversion into Zimbabwean dollars, a currency that cannot be freely converted back to US dollars at market rates.

“These factors make operating a cross-border fleet out of Zimbabwe less attractive and more costly than regional competitors,” Clarke noted.

Beyond these structural costs, the company is also grappling with Zimbabwe’s ongoing liquidity challenges. According to Clarke, the financial strain in the banking sector has restricted access to affordable capital, forcing both Unifreight and its clients to rely on short-term, high-cost financing options.

“Compounding cost pressures is the ongoing liquidity crunch in the banking sector. Many financial institutions have pulled back on lending, forcing companies, including Unifreight and our customers, to rely on shorter-term and more expensive financing,” he said. “This tight credit environment has led to elongated debtor payment cycles and cash flow gaps, requiring us to be proactive in managing working capital.”

Despite these macroeconomic headwinds, Clarke said Unifreight’s agile operating model and strategic responses have helped the company maintain operational resilience and remain on its growth trajectory.

“While these macroeconomic challenges have created headwinds for the entire industry, Unifreight’s proactive approach and adaptable business model have allowed us to withstand the pressure and continue growing. Our ability to flex our operations (for instance, adjusting the mix of local vs. cross-border assets) provides resilience in the face of external volatility,” Clarke said.

Operationally, Unifreight has recorded several notable achievements in the first quarter. The company posted an average fuel efficiency of 2.30 km per litre across its haulage fleet, and a fleet availability rate of 92%, ensuring the majority of trucks remained on the road. The firm also enhanced real-time visibility in its cross-border operations through live, geo-fenced tracking dashboards to monitor shipments and integrated 20 new FAW 28.380 FT trucks into its fleet to support growing demand.

Looking ahead, Clarke expressed confidence in the company’s prospects, noting that barring any further unforeseen economic disruptions, Unifreight is on course to meet its 2025 budgetary targets and deliver stronger earnings for the year.