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Columnists

Prepare for shift to exclusive rail transport

The Mombasa-based container freight stations
The Mombasa-based container freight stations remain most exposed to the shift to rail. FILE PHOTO | NMG 

The case for shifting freight from road to rail cannot be gainsaid. Where people in authority go wrong is when they assume that such a fundamental policy shift can be achieved by fiat.

On Friday, the Kenya Revenue Authority (KRA) and the Kenya Ports Authority (KPA), put out a notice announcing that all imported cargo must be transported from the port to Nairobi through the standard gauge railway (SGR) starting, August 7.

In a nutshell, this is how the directive was framed: "All imported cargo for delivery to Nairobi and hinterland shall be conveyed by SGR and cleared at the Inland Container Depot (ICD) in Nairobi while all cargo intended for Mombasa and its environs shall be cleared at the Port of Mombasa.’’

But as it turned out, the government was forced to beat a hasty retreat after the controversial decision was greeted with public outrage. The logistics industry treated it as an attempt by the government to administer euthanasia not only to the road trucking business but the Mombasa-based container freight station business.

Yet all indications are that this is not the last time we will be hearing about the push to shift from road to rail.

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Apparently, during negotiations for the SGR, the Chinese forced the government to sign a ‘take-or-pay’ agreement implying that if the SGR does not get enough freight, the Kenya Ports Authority (KPA) must pay it.

A monopoly to the SGR on all freight emanating from Mombasa port was a key conditionality of the agreements the government signed with China.

The shift between modes must be a gradual process where investors are warned in advance to prepare for a new regime.

The Mombasa-based container freight stations remain most exposed to the shift to rail.

Which is a pity because the investment at risk is huge.

To be licensed to own a container freight station (CFSs), you are required to install modern equipment.

You must acquire a container yard and have features like rail siding, pavements for heavy duty equipment in stacking areas, boundary wall fencing and office buildings to host customs officials and warehousing facilities.

A CFS must invest in expensive equipment for loading and unloading containers, including rail yard gantry cranes and reach stackers.

The perimeter fencing and lighting must meet standards set by customs authorities.

There are many things the government can do to migrate traffic from roads to the SGR.

For instance, the government can introduce regulations on driver hours and emissions and assign specific tariffs for the SGR. For example, we can introduce regulations on truck size, weight and speed limits.

Trucking by road feeds a lucrative underground and businesses dealing with many things, including contraband.

And, influential segments of the political elite have interests in trucking.

I predict heavy resistance to migration of freight from road to rail.

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