Shipping & Logistics

ICD directive to push up prices of imported goods for coastals

SGR cargo train
SGR cargo train at the Nairobi terminus station in April. Importers say transporting goods by rail to the ICD and then back to Mombasa will raise the price of goods for those living at the coast. PHOTO | JEFF ANGOTE | NMG 

Mombasa traders whose physical addresses are at the Coast have complained that the directive to clear their cargo from the Inland Container Depot (ICD) in Nairobi will increase costs of imported goods to residents in the region.

The importers said the order requiring all import and export cargo to be transported via the Standard Gauge Railway (SGR) to the ICD in Nairobi as part of government’s efforts to aid Chinese investors to recoup the Sh327 billion investment in the railway project has increased cost of doing business to them.

The group is now expected to cater for the cost of transporting goods back to Mombasa where they are destined, including mandatory rail charges from Mombasa to Nairobi before accessing the cargo.

Mr Michael Kabuga, one of the importers, said he was not informed about his consignment which was transported to Nairobi days after vessels docked at the Port of Mombasa leading to demurrage charges amounting to Sh109,446. Mr Kabuga said he is also expected to pay Sh85,000 rail transport cost from Nairobi to Mombasa.

“The government’s directive to ferry all cargo to Nairobi for clearance despite our physical addresses and Personal Identification Number (PIN) being in Mombasa is really affecting us as Mombasa business community. We are asking the government to rescind the order to enable us clear our cargo in Mombasa as it is intended for coast residents,” said Mr Kabuga.


He added, “We cannot stop importing products as we are business people but Mombasa residents will have to bear any extra cost resulting from such inconvenience and this we can do it by increasing the price of imported goods.”

In the documents and correspondence seen by the Business Daily, a number of importers whose cargo arrived at the Port of Mombasa from June 6 were directly transported to Nairobi via the SGR with the Kenya Revenue Authority confirming to have received such cargo.

The details on the cargo at the ICD. which has been categorised as ‘erroneously railed cargo’ mostly for Mombasa importers have to be cleared and rail charges paid before they are released.

Most of the consignments are incurring demurrages in Nairobi most ranging between Sh70,000 to Sh120,000 as cargo owners move with speed to clear them to reduce increasing storage charges. In the past two weeks, the Kenya Ports Authority has recorded 100 per cent ex hook-railage where more than 1,200 twenty-foot equivalent units (TEUs) are transported daily using rail direct from the vessels. Ex-hook railage, introduced with the SGR, means that cargo is offloaded from the ship and loaded straight to the waiting cargo trains. Kenya Railways has maintained that the business community has to adapt to the change, which will directly affect the way of doing business in Mombasa.

Kenya Railway has been running advertisements urging transporters to check the status of their cargo on their website to facilitate haulage and ease congestion at the ICD.

Since the introduction of SGR freight cargo about a year ago, Mombasa has turned into a ‘business shell’ as CFS move to Nairobi and Naivasha where the business is booming.

Mr Mohammed Ali, who has been importing and operating a spare shop in Changamwe for the past 12 years, said they have already acquired a plot in Naivasha while they have stocked their Nairobi branch.

“We have no otherwise but to close. We have sent about 15 workers home in our two outlets in Mombasa while the Nairobi outlet we are stocking it. We expect by the time Nairobi-Naivasha phase is complete, we shall have constructed a number of outlets in Naivasha,” said Mr Ali.

The ICD is currently under expansion to hold 450,000 TEUs annually, up from the current 180,000 TEUs.