Importers eye wagon ownership in bid to reduce transport costs


The Naivasha inland container depot. PHOTO | DENNIS ONSONGO | NMG

East African importers want to be allowed to own rail wagons to reduce transport costs which have been on the rise.

Private sector players called on relevant authorities to work on modalities to open up rail transport as is the case in developed countries such as South Africa, Brazil and a number of European countries, to allow them own wagons as a way of bringing down transport costs.

The traders said investing in freight wagons will increase cargo-handling capacity on rail and reduce on the expensive road transport. Truckers have already announced an increased cost of ferrying cargo by between 5 per cent and 10 per cent as a result of high fuel prices.

“Traders always seek convenient, cheap and safe ways of transportation. With East Africa developing rail systems, we can own wagons to reduce cost of transportation. We will then buy wagons instead of trucks to save due to economies of scale,” said Gilbert Lang’at, Shippers Council of Eastern Africa (SCEA) chief executive.

The players in the logistics industry argued that with the successful two-month trial of ferrying goods from Mombasa to Malaba through rail, owning a wagon can be cheaper than buying trucks.

Private sector players said buying wagons will also prevent road damage considering a wagon can carry more than two times the volumes a truck can carry.

“It is proving cheaper and faster to ferry cargo using rail, that is why we are asking for open access to railway. This can be achieved by allowing private sector to buy wagons and go into contract with Kenya Railways which will run the engines as it is in other countries abroad,” said Hassan Khalid, a clearing and forwarding agent in Mombasa.

Last week, the Kenya Transporters Association (KTA) declared an immediate increase of transport after the Kenya Energy and Petroleum Regulatory Authority (EPRA) announced a 10-year high fuel price in its latest monthly review.

KTA chairperson Newton Wang’oo said fuel contributes up to 35 percent of total direct transport costs and indirectly affects prices of tyres and spare parts which are all imported.

Mr Wang’oo said transporters’ margins can no longer sustain any rise in costs and have to pass on the burden to cargo owners.

The players said at the moment, the Kenya Railways Corporations (KRC) has less than 2,000 wagons yet Mombasa port receives more than 3,500 containers. This means there is a serious deficit of wagons.

If the proposal is concluded, players will join large importers such as Grain Bulk Handlers, Magadi Soda Company, among others, which have open access to rail for long term contracts to ferry their produce.

KRC managing director Philip Mainga has, however, dismissed claims that there is a shortage of wagons, maintaining the corporation has the capacity to haul all cargo from the Port of Mombasa.

Mr Mainga said KRC had increased freight capacity with 330 wagons built last year and re-commissioned 518 wagons that were damaged during offloading. This, he said, is in addition to the introduction of double-decker wagons to increase the amount of cargo ferried from Mombasa port to Nairobi and Naivasha by nearly a third.

In East Africa countries, companies undertaking heavy infrastructure projects have been entering into agreements with port authorities to handle their cargo at discounted prices and not railway authorities.

Recently Tanzania Ports Authority (TPA) struck a deal to ferry Dangote Cement Tanzania products that will increase the throughput of such products from the current 13,000 tonnes to 40,000 tonnes.

Last month, the Kenya Ports Authority (KPA) also signed a partnership with Total Energy Uganda to facilitate the haulage of cargo through Mombasa port for Tilenga Oil Project in Uganda.

Officials from Total Energy Uganda agreed to use the port to import volumes of cargo totalling to more than 500,000 metric tonnes starting this month.

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