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Shipping & Logistics

Inland depots to spur logistics sector

SGR
Standard Gauge Railway train. FILE PHOTO | NMG 

The news that Uganda will set up a dry depot alongside another one being built by the Kenyan government in Naivasha has excited the logistics sector, with expectations of major benefits accruing from a network of inland container depots (ICDs) across the country.

Experts have hailed Uganda’s dry port as the only way of securing transit business with Kenya’s largest trade partner even as they expressed hope that more of such facilities will be set up in other areas with potential to serve as “logistics hubs.”

Other towns earmarked for development of dry ports are Taveta and Voi, with the business community in Nanyuki expressing their interest to see a similar facility will also be set up in the town after revelations that the Nairobi-Nanyuki railway line would be revived.

Although the facilities have not been efficient in the past with the one in Eldoret having failed to attract goods and business, ICDs have for a long time been seen as the panacea for Kenya’s hold onto regional cargo handling business that has eluded the Mombasa port over the years.

Recently when President Yoweri Museveni visited Mombasa, President Uhuru Kenyatta said Kenya would provide land for Uganda to construct a dry port as the Standard Gauge Railway (SGR) is extended to Naivasha. There have also been talks that Rwanda, Democratic Republic of Congo (DRC) and South Sudan may follow suit.

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Shippers Council of Eastern Africa (SCEA) chief executive officer Gilbert Lang’at said should Uganda build the dry port, this would secure all Ugandan cargo which would be transported to the ICD via rail.

“The ease of rail transport will definitely entice Ugandan authorities who have been thinking of other alternatives through Tanzania,” he said.

Viewed as catalysts to other logistics businesses including consolidation, packaging and value addition, the dry ports are expected to spur economic growth as investors set their businesses around the “logistics hubs’ to exploit the benefits of accessing raw materials cheaply. Already, businesses are positioning to establish centres in Naivasha so as to exploit the opportunities the two dry ports present.

Kenya Ports Authority (KPA) general manager operations Captain William Ruto said KPA had floated a tender for a firm that would conduct feasibility studies on the building of a dry port in Taveta, adding that they were waiting for relevant authorisations. The ICD is expected to handle transit cargo that pass through the Mombasa port to landlocked countries of Burundi and Rwanda and northern Tanzania.

“The ICD at Embakasi has helped in the delivery of upcountry goods, holding at least 60 per cent of domestic cargo, easing pressure at the port. Dry ports shorten the logistics chain because goods are transferred to these areas where manufacturers can easily access their raw materials,” Mr Ruto said. The ICD was upgraded from a capacity of 80,000 TEUs to the current 450,000 TEUs at a cost of Sh23 billion.

The opening of the one-stop border post (OSBP) in Taveta has improved efficiency at the border. Under an OSBP, customs and immigration procedures are undertaken by officials from the bordering countries housed under one roof.

One of the key factors that contributed to the poor performance of the Eldoret ICD and Kisumu port is lack of rail link from the port of Mombasa. With the SGR linking the two dry ports in Naivasha and Kisumu port, Mr Ruto said the seamless link is expected to improve their performance.

Kenya Railways Corporation acting managing director Philip Mainga said dry depots would spur growth in value addition in the manufacturing sector since industries would be set up in areas where the depots are built in order to benefit from easy access to raw materials.

“Since the dry ports will have a rail link to the port, transport of raw materials will be convenient. We also expect that industries in the agricultural sector in value addition and packaging will also thrive,” he said. Mr Mainga said they would also support revival of the Nairobi-Nanyuki one-metre gauge railway.

Last year, the county governments of Nairobi, Kiambu, Murang’a, Kirinyaga, Nyeri, Laikipia, Nyandarua and Isiolo agreed to commit Sh25 billion on revival of the 240-kilometre line from Nairobi to Nanyuki in Laikipia County.

Laikipia county Kenya National Chamber of Commerce and Industry (KNCCI) former chairman Jibs Gitonga said revival of the line would be a big boost to businesses in Nanyuki and suggested that a dry port should also be built in the town.

“We expect that once the line is refurbished, we will also have a dry port in Nanyuki. There is great potential in Laikipia especially in agriculture and horticultural sector that will benefit from access to raw materials,” said Mr Gitonga.

However, the success of the dry ports will highly depend on a number of logistical factors including efficiency at the Mombasa port, rail network and how fast the Kenya Revenue Authority (KRA) customs department releases goods, SCEA said.

“Efficiency will be key because if delays become the order of the day at the ICDs, the envisaged gains will be lost. The transport chain from the ICDs to the depots should be seamless, with no room for bureaucratic procedures,” said Mr Lang’at.

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