Shipping & Logistics

Truckers face tough road as new pipeline, SGR set to take off

The SGR locomotives and passenger coaches. FILE PHOTO | NMG
The SGR locomotives and passenger coaches. FILE PHOTO | NMG  

Every time the construction of a new cross-border logistics facility begins, truckers in Kenya have always expressed concerns about the future of their well-established businesses.

With the completion date of a new pipeline and the standard gauge railway (SGR) line both set for June, truckers say their traditional place between Mombasa port and retail stores can no longer be guaranteed.

As for SGR, the Nairobi Internal Container Depot is being upgraded to clear at least 40 per cent of cargo imported through the Port of Mombasa.

Similarly, by end of July, the Kenya Pipeline Company is set to complete the replacement of its 450km 14-inch diameter pipeline in a bid to boost the current 830,000 litres per hour flow rate to about one million litres per hour.

“When we begin using the new pipeline from Mombasa to Nairobi, we expect to remove some 700 trucks from the road. It will also be cheaper for our customers and there will be security of supply in Nairobi and beyond,” said KPC Managing Director Joe Sang.

The new 20-inch pipeline done at a cost of Sh48 billion line was expected to be completed in April but has been delayed, meaning the trucks should have been idle by now.

Moreover, the 1 million litres of fuel per hour flow rate is expected hit 1.9 million litres per hour by 2023 and 2.6 million litres per hour by 2044 to meet demand for petroleum products for Kenya and the region.

Although the Kenya Transporters Association, which had estimated that 2,500 trucks leave Mombasa daily could not be reached for comment, individual transporters expressed worry that a piece of their cake was under threat.

Kenya Petroleum Independent Dealers Association chairman Joseph Karanja said the new pipeline infrastructure was particularly a reason to worry for transporters because they will only be left with far flung areas to serve. He, however, allayed fears that they will be completely thrown out of business.

“That is only one corridor affected and I think the SGR and the pipeline cannot get to the interior areas where our services will still be needed. For now we are not worried, but if other plans come up that will significantly affect our business then we will have to think about it and plan appropriately,” Mr Karanja said.

His future fears are not far from reality. The pipeline network is set to be devolved in far flung areas in a plan meant to boost supplies to the interiors. In fact, KPC has signed another Sh1.7 billion oil jetty project in Kisumu, which will see fuel ferried by ship to Entebbe further narrowing the last mile share.

Cargo logistics services company, Siginon Group managing director Meshack Kipturgo said road transporters will begin to realign their plans to begin trucking majorly from Nairobi as the cargo sourcing from Mombasa begins to reduce. He said most lorries stationed in Mombasa will have to shift to Nairobi to concentrate on the last mile where the mega infrastructure will not have reached.
“Logistic firms like us have no problem because we simply move cargo by whichever means but for truckers, they need to be worried and plan early with the shift from the long haul to the last mile,” Mr Kipturgo said.

“You will notice even fewer purchases of the long distance trucks because the main business is now to take the cargo to where there is no railway like isiolo or Nanyuki.”

The shift to the last mile, however, means the smaller trucks that have been completing the chain will have a new competitor, effectively disrupting the logistic relay from the port to the local stores.
Transporters have been reaping big with cargo throughput at the Port of Mombasa hitting a record high of 1.1 million TEUs in 2016 up from 894,000 TEUs in 2013, according to the 2017 Economic Survey.

The domination of the truck operators in ferrying cargo from Mombasa to various inland destinations is evident in the 9.4 per cent fall in railways services attributable to a 10.6 per cent drop in earnings from freight in 2017, according to the latest official data.

The real competition will, however, remain in the pricing with the SGR expected to be faster but not cheaper.

With one train expected to pull up to 200 containers between the port and the Embakasi Inland Container Depot (ICD) in Nairobi making a daily trip in eight hours, the truckers have a massive competitor.

Passenger buses will have their share of headache as the 120km per hour train hauls some estimated 1,000 people daily in four and half hours between the two cities.