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Shipping & Logistics

Billions in investments at risk as transit cargo moves to Naivasha

Naivasha Inland Container Depot
The new Naivasha Inland Container Depot. FILE PHOTO | NMG 

Investment worth billions of shillings in logistics is expected to be rendered idle as a directive on evacuation of transit cargo from the Port of Mombasa to Naivasha takes effect this week. The move has also shifted clearing operations from the Port of Mombasa to Naivasha Inland Container Depot (ICD).

Transporters in Uganda and Kenya have opposed the order which took effect Tuesday, citing massive investment and job losses.

Players in Uganda, which accounts for more than a quarter of the business at the Port of Mombasa, has already petitioned Kenyan government through Ministry of Transport, Infrastructure, Housing and Urban Development Minister Edward Wamala to make it optional for them to evacuate cargo directly to Naivasha from Mombasa.

“I would like to refer to our meeting held by video conference on 19th May 2020 with our colleague from Republic of Rwanda where we considered appropriate measures and modalities of transportation to reduce human traffic movement without impacting negatively on transport of cargo across the borders,” said Mr Wamala in a statement addressed to Kenyan Transport Cabinet Secretary James Macharia.

“I also received your proposed ‘Notice on transit Cargo’ which I have reviewed with private sector and the option of using Naivasha ICD for transit cargo would not reduce human traffic movement as truck drivers will still be required to pick the containers from Naivasha to their destination.”

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He added: “Therefore, it is our considered opinion that the use of Naivasha ICD which is part of our long term regional infrastructure development should remain optional. If government of Kenya makes it more attractive, big industry players/shippers like Bollore, Mukwano Group of Companies and others can be encouraged to start using this facility because of economies of scale.”

According to Ugandan transporters, huge investment in Mombasa and Nairobi would go to waste if the directive is implemented without adequate time of transition.

“We have warehouses and depots in various towns in Kenya. Though the move is good, its still premature,” said one of Ugandan transporters.

Uganda remains a key trade partner for Kenya with its exports and imports passing through Mombasa currently standing at more than 10 million tonnes annually, accounting for about a third of the total cargo throughput at the port.

Kenya Transporters Association chief executive officer Dennis Ombok said the number of trucks plying Northern Corridor would be reduced by more than a half due to the directive which will lead to job losses.

“Hundreds of workers in clearing and forwarding and truck drivers will be directly affected but we should also note other businesses such as fuelling stations, marshalling yards among others will lose business among other players in the supply chain,” said Mr Ombok.

Mr Macharia said all transit cargo destined for Uganda, Rwanda and South Sudan will be transported via SGR for clearance at Naivasha ICD to reduce interactions along the Northern Corridor and thus facilitate containment of Covid-19.

Mr Macharia said it will be mandatory for all cargo imported through the Port of Mombasa to haul them through SGR, adding that all mechanism are being put in place — among them providing requisite office accommodation to the Kenya Revenue Authority, Uganda Revenue Authority, Rwanda Revenue Authority and the South Sudan Revenue Authority, deployment of the staff to the ICD Naivasha — to ensure smooth clearance of the cargo.

The CS said the move was agreed upon by four heads of State during their meeting on May 12.

"President Paul Kagame of Rwanda, President Uhuru Kenyatta (Kenya), President Yoweri Kaguta Museveni (Uganda) and President Salvar Kiir of South Sudan during last Consultative Meeting of the East African Community held by video conference considered appropriate cross-border transportation modalities to reduce human traffic movement without impacting negatively on transportation of cargo across the borders and the use of SGR is one of them," said Mr Macharia.

“The decision was reached by four Head of States early this month and I have communicated to Uganda Minister Wamala regarding his request to make it ''optional" and we hope he is satisfied with the explanation since before they had no objection. To other stakeholders who feel robbed of their business, we are engaging them in various platforms to explain to them reasons behind that decision and the advantages of using the service.”

He said the tariffs the government has offered to traders to haul the cargo from Mombasa to Naivasha are way cheaper than using road apart from the risks posed to the drivers, trucks and cargo when ferrying them from Mombasa using trucks.

“The reason of fast tracking the process of collecting cargo at Naivasha is to protect drivers from contracting Covid-19 and to importers, they will get their consignment 10 hours after being loaded in Mombasa compared to two days of using trucks. Also cases of cargo loss will be a thing of the past,” said the CS.

He added, “We are also ensuring the road between ICD and Maai Mahiu is in good condition.”

Early this month, Kenya Railways Corporation launched direct SGR freight service for all transit cargo to be ferried directly from Mombasa port to Naivasha ICD where trucks will pick them for onward transportation.

The new direct SGR cargo freight from Mombasa to Naivasha which will cost Sh60,000 for 20-feet container and Sh85,000 for 40-feet container of up to 20 tonnes and Sh91,000 for the same container weighing above 21 tonnes.

The freight train will reduce time taken to transport consignment to East African countries considering it reduces distance from the Port of Mombasa to Uganda by about 527km (46 percent). Traditionally, Ugandan imports and exports travel a distance of 1,144kms between Mombasa and Kampala along the Northern Corridor.

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