Racing the Rails: Bus Competition Strategies Amid Tanzania’s Standard Gauge Railway (SGR) Disruption

Abstract

Amid ongoing global efforts to modernise transportation, countries are investing in advanced rail systems to improve mobility, ease congestion, and promote regional integration. Tanzania’s Standard Gauge Railway (SGR) links inland cities with Dar es Salaam, providing faster, more comfortable, and cost-effective travel options that are increasingly rivalling long-distance bus services. This study examined the impact of the SGR on bus operators on the Dar es Salaam–Morogoro and Morogoro–Dodoma routes, focusing on fare strategies, passenger demand, and profitability. Employing a mixed-methods approach, the research collected quantitative data from 164 transport stakeholders and conducted 12 key informant interviews. Grounded in Porter’s Five Forces Model and Intermodal Competition Theory, the study utilised descriptive statistics and multiple regression analysis to evaluate four key hypotheses. The findings indicate that the primary reason for the decline in profit is the decrease in passenger numbers, rather than fare cuts. 61% of respondents reported a drop in ridership as travellers increasingly favoured the SGR. Regression analysis revealed that fare reductions had a significant impact on profits (β = 0.757, p < 0.001, R² = 0.52), although this strategy was not widely adopted by many firms. The strongest predictor of operational challenges was the shift toward the SGR (β = 1.099, p < 0.001, R² = 0.41), confirming a modal transition. Operational efficiency did not significantly mediate the link between load factor and profitability (β = 0.230, p = 0.180). Nonetheless, firm size played a significant role in cost management success (β = 0.416, p = 0.018, R² = 0.17), with larger firms demonstrating greater resilience. The study concludes that the SGR has fundamentally transformed intercity travel in Tanzania, threatening smaller bus operators while favouring larger companies that benefit from economies of scale. Implementing demand-driven strategies, promoting intermodal integration, and providing policy support for small operators are essential for maintaining sector sustainability. These insights provide valuable empirical evidence to guide transport policies and strategic planning in emerging economies.