KPA wins shippers in push to transfer cargo to SGR from the roads

The Nairobi Inland Container Depot. FILE photo | nmg

What you need to know:

  • Getting shippers’ nod a major coup for the government after a series of talks.

Shipping lines have joined the government campaign to transfer more cargo from the roads to the standard gauge railway (SGR).

They are increasingly wooing importers to use a model where cargo terminates at the Nairobi Inland Container Depot as opposed to the port of Mombasa.

Technically known as through bill of lading (TBL), the model has been in use but it is expected to go up after the upgrade of the ICD since it benefits both the shippers and importers, especially on return of empty containers.

After a series of talks with the shippers, the Kenya Ports Authority (KPA) eventually got their nod.

“We have been holding talks with shipping lines and they have agreed to aggressively market the through bill of lading model to importers for cargo destined to Nairobi. This will help us in ensuring that more containers are loaded onto the trains,” the KPA operations general manager William Ruto said on Tuesday.

“This is a positive step towards increasing cargo transported using the trains. The challenge was on return of empty containers but if the destination of the goods is listed as the ICD, this will solve the problem,” Mr Ruto said in a telephone interview.

The agreement between the shipping line and the importer using the bill of lading model is that the container deposits will be refunded once the equipment is returned to the ICD, he added.

While under the bill of lading importers designate cargo directly to the Nairobi ICD, the model that is widely used today is the merchant haulage where goods are off loaded at the Mombasa port.

A bill of lading is a legal document that details type, quantity and destination of goods carried.

Moving empty containers on SGR to designated yards has no extra costs to the importers and has no logistical nightmares for the shippers who have to ensure that these empties are not damaged.

Importers and agents cited demands by shipping lines that empty containers be returned to designated yards in Mombasa as a hindrance to transport their goods to the 450,000 twenty-foot equivalent unit (teus) capacity ICD, upgraded at a cost of Sh23 billion. The Nairobi ICD was expanded from a capacity of 180,000 teus.

Shipping lines charge $200 (Sh20,000) and $400 (Sh40,000) as deposit for the 20-foot and 40-foot containers respectively and refunded when the containers are returned within 11 days after arrival of the vessel. A fine is imposed beyond the deadline and damages attract fees.

The lines had insisted the containers must be returned to the yards, presenting logistical nightmare for Kenya Railways which could only drop them at the port with importers incurring a cost of Sh10,000 to transfer each container to the designated yards.

Kenya Ship Agents Association (KSSA) executive officer Juma Tellah said the rates charged on the TBL mode include freight, rail haulage and cargo clearances. “Shipping lines encourage importers with cargo destined to Nairobi to use this model,” he said.

On Monday, the KPA said volumes of cargo at the ICD had gone up, with the facility receiving 9,735 containers since January.

They comprised of 7,248 imports, 1,151 exports and 1,336 empty containers. The ICD is now receiving 324 containers daily up from 108 in January, according to the authority.

Mr Ruto said even before importers embrace the bill of lading model, the KPA had set aside a yard where empty containers would be stored.

“Some shipping lines have also agreed to liaise with their customers on how the containers will be returned and damage assessed,” he added.

Government departments and agencies have been directed to transport imports to Nairobi via the SGR trains as the government moved to ensure that the Sh327 billion was put to good use.

In an attempt to woo freighters to use the trains, Kenya Railways lowered haulage rates to a flat fee of Sh35,000 for a 20-foot container and Sh40,000 for a 40-foot container from Mombasa to the ICD.

Local warehouses have said they will ensure that there was smooth flow of cargo via the SGR.

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