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Zirtbur- .'Little,3Hnt J~t Zirtbur- .'Little,3hnt. CAMBRIDGE 42, MASSACHUSETTS ECONOMIC STUDY OF INLAND TRANSPORTATION IN EGYPT Report to U. S. Government Foreign Operations Administration Under Contract S CC-21504 C-58780-13 ARTHUR D. LITTLE, INC. Cambridge 42, Massachusetts May 15, 1954 iii TABLE OF CONTENTS Page INTRODUCTION AND SUMMARY 1 A. ORIGIN AND SCOPE OF THE STUDY 1 B. ECONOMIC GAINS FROM IMPROVED TRANSPORTATION 1 C. CONCLUSIONS 2 D, SUMMARY 3 1. Railways 3 2. Roads 4 3. Waterways 4 4. Traffic 5 5. Transport Cost to the Shipper 5 6. Organization and Finance 5 II. HISTORICAL BACKGROUND OF EGYPTIAN TRANSPORTATION 7 A. EGYPTIAN TRANSPORTATION IN 1800 7 B. TRANSPORT DEVELOPMENT UNDER MOHAMMED ALY 7 C. RAILWAYS 9 D. PORTS AND CANALS 9 I. TRANSPORTATION ROUTES 11 A. RAILWAYS 11 1. The Egyptian State Railways 11 2. Light Railways 12 3. Adequacy of Rail Routes 12 4. Extensions Proposed by the Egyptian State Railways 13 5. Rail Distances from Cairo to the Principal Towns 13 6. Maintenance and Rebuilding of Track 13 iv TABLE OF CONTENTS (Continued) Page III. TRANSPORTATION ROUTES (Continued) B. ROADS 15 1. The Road Network 16 2. Need for More and Better Roads 17 C. WATERWAYS 18 1. Inland Navigation Routes 18 2. Obstructions to Navigation 19 3. The Mahmudiya Canal 20 4. Proposed Canal Construction and Improvement 20 D. PIPELINES 22 1. Light Products Pipeline 22 2. Projected Fuel-Oil Pipeline 22 IV. EQUIPMENT FOR FREIGHT TRANSPORTATION 24 A. EGYPTIAN STATE RAILWAYS 24 1. Inventory of Equipment as of December 31, 1952 24 2. Equipment Capacity 25 3. Age of Equipment 26 B. ROAD TRANSPORT 26 C. INLAND WATER TRANSPORT 27 V. INTERNAL FREIGHT TRAFFIC 29 A. EGYPTIAN STATE RAILWAYS 29 1. Freight Traffic 29 2. Length of Haul 32 3. Trends of Traffic 32 V TABLE OF CONTENTS (Continued) Page V. INTERNAL FREIGHT TRAFFIC (Continued) B. ROAD TRANSPORT 33 1. Growth of Highway Trucking 34 2. Freight Hauled by Truck 35 3. Licensing of Long-Haul Trucks 35 C. INLAND WATER TRANSPORTATION 36 VI. COST OF TRANSPORTATION TO THE SHIPPER 38 A. FREIGHT RATES OF EGYPTIAN STATE RAILWAYS 38 B. MOTOR TRUCK RATES 41 C. RATES FOR INLAND WATER TRANSPORT BY BARGE 45 VII. TRANSPORT ORGANIZATION AND FINANCIAL RESULTS 48 A. ORGANIZATION AND CONTROL 48 1. Egyptian State Railways 48 2. Motor Trucks 49 3. Inland Water Transport 50 B. FINANCIAL RESULTS 51 1. Egyptian State Railways 51 2. Motor Trucks and all Road Transportation 52 3. Inland Barge Navigation 52 VIII. PLANNED AND PROPOSED OUTLAYS FOR TRANSPORTATION IMPROVEMENT 54 A. RAILWAYS, PIPELINES 54 B. ROADS 56 C. WATERWAYS 57 I. INTRODUCTION AND SUMMARY This report is an economic survey of interior transportation of com­ modities in Egypt. It contains the available basic information concerning freight transportation by rail, road, and water, in terms of routes, equipment, traffic, rates, organization, and projects for transportation improvement. A. ORIGIN AND SCOPE OF THE STUDY The study has been made as a subsidiary project in partial fulfillment of the agreement between the United States Technical Co-operation Administra­ tion and the Government of Egypt for the assessment of Egypt's industrial poten­ tial. The purpose is two-fold. First, it is intended to inform officials of the Government of Egypt concerned with the planning and operating of transporta­ tion, and also interested officials of the United States Operations Mission to Egypt and its parent organization in Washington, the Foreign Operations Adminis­ tration. Second, it is intended to sipply background information for further studies of transportation of an engineering nature. An engineering survey of transportation is one of the studies to be :arried on by Arthur D. Little, Inc., under the extended program approved by the 1954 agreement between the United States Operations Mission and the Government of Egypt. 1 B. ECONOMIC GAINS FROM IMPROVED TRANSPORTATION Cheap transportation is necessary if industry is to achieve its poteitial in Egypt, and if industry and other sectors of the economy are to be permitted to make their largest possible contribution to the growth of the total national o.itput and to the living standards and the productive capital of the country. In the 19th century, Egypt, like other developing economies, was opened up to trade and secured access to markets for its produce, through the introduction of new, more efficient modes of transport. Railways and canals 1 Highway engineering and related problems have been investigated as a part of the initial program of industrial studies in Egypt by Arthur D. Little, Inc. The Egyptian Highway Study (in two sections, dated July 15, 1953 and May 30, 1954) reports on construction methods, road system planning, and related problems. 2 made Egypt a part of the world economy, bringing its commodities into the chan­ nels of international trade. They permitted the country to increase the purchas­ ing power of its exports and enabled it, through importation, to enjoy the fruits of international specialization in production. The present study is justified by the importance of transportation for the development of an economy. This importance is all-pervading; neither agriculture nor industry can flourish and grow without efficient transportation. Cheap transportation is often the key to ready access to markets. Both agricul­ ture and industry need not only markets but also cheap raw materials. These are particularly imperative for industry since it is characterized by a processing or fabrication of primary products originating elsewhere Consumer purchasing power is another vital factor for agricultural prosperity and industrial development. Larger income from agriculture arises from greater sales of agricultural produce made possible by cheaper, faster and more efficient transport of agricultural products. Thus transport improve­ ment contributes doubly through agriculture to the expansion of industry, not obly lowering delivered prices of agricultural products sought by industry but also by increasing industrial markets in agricultural arcas. Further progress is possible in securing maximum benefits for Egypt from railways and inland waterways, despite their relatively advanced state of development, chiefly through lowering costs and freight rates. Larger frontiers remain to be exploited, both intensively and extensively, by development of roads to a degree commensurate with railways and water transport. C. CONCLUSIONS The current state of internal freight transportation in Egypt may be characterized tentatively as follows: (1) Routes. As to routes, railways appear relatively adequate al­ though extensions have been projected and extensive deferred maintenance is present. More and better roads are greatly needed; access to many localities by motor vehicle and even by carts or wagons has been difficult if not impossible. Improvements in the condition and operation of existing inland waterways have been urged, and new waterways have been suggested. Improvements and ex­ tensions of all transportation routes now planned or proposed would go far toward meeting Egypt's needs for transportation routes. (2) Equipment. The capacity of transportation equipment now on hand is adequate for current needs, and indeed, in the case of barges, exceeds the present reduced demand. Much railway rolling stock is over-age, and an 3 extensive replacement program has been projected. Barge traffic will expand with the opening of projected fertilizer and iron and steel plants; capacity can be increased up to 50 percent if existing barges are lengthened. (3) Spending for transport improvement. Transportation facilities are now the object of greater emphasis by the government of Egypt. In the budget for the fiscal year ending June 30, 1954 a total of LE 9, 107, 000 was allocated for spending on transportation facilities--for extensions, improve­ ments, and replacements. A projected ten-year road program would cost at least LE 30, 000, 000. The Egyptian State Railways seeks to spend LE 42, 680,000 on equipment and track replacements and -LE 9, 000, 000 on new lines in a similar period. Improvements in waterways are being projected. (4) Economic condition. Generalizing on the apparent economic condition of the internal transportation industries, it appears that: (a) the Egyptian State Railways have suffered large losses of traffic chiefly to trucks; (b) barge operators are handicapped in competing for traffic, and (c) all trans­ portation suffers financially from more severe competition brought on by a slump of traffic since 1951, traceable perhaps chiefly to the reduction of imports under exchange controls in line with lessened foreign exchange earnings from Egypt's chief exports. The statement may be hazarded that the cheapest and most efficient modes of organization and operation of internal transportation in Egypt have yet to be established. An economically rational transportation policy is needed as well as physical improvements, to assure the country the efficient, reasonably low-cost transportation whi ch is essential to the further development of Egypt's internal and international trade and its industry and agriculture. D. SUMMARY 1. Railways Egypt's railways consist of 3740 kilometers of main lines reaching most economically important parts of the country, supplemented by auxiliary and narrow gauge lines. The equipment of The Egyptian State Railways includes 17, 500 freight-carrying vehicles, with a capacity of about 200, 000 tons. Capacity is approximately sufficient for current traffic. Nearly all of the ap­ proximately 800 passenger and freight locomotives are steam in type. The Egyptian State Railways have budgeted -LE 2, 500, 000 to be spent on new works in the fiscal year ending June 30, 1954. In addition the Permanent Council for the Development of National Production budgeted LE 2, 360, 000 4 for additional railway capital outlays. The Council also budgeted LE 1, 000, 000 for a fuel oil pipeline projected from Suez to Cairo and to be operated by the Railways, which haul most of the internal traffic in petroleum products.
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