Transport

Regional shippers now shun SGR over costly depot delays

inland

The Inland Container Depot (ICD) in Nairobi’s Embakasi. FILE PHOTO | NMG

Persistent delays at Nairobi’s Inland Container Depot (ICD) have spilled into other East African states, forcing shippers in the region to ditch Kenya’s standard gauge railway services.

Shippers in Uganda, the destination of over 70 per cent of Mombasa Port’s transit cargo, say they are back to trucking cargo after the ICD delays exposed their businesses to high demurrage charges.

“Even risk takers like myself, the well-known early adopters of everything new, have said no to SGR until its operations are streamlined,” says Ms Jennifer Mwijukye, chief executive of Kampala-based Unifreight Cargo Handling Company. “The last time I tried the SGR, our containers stayed in Nairobi for two months.”

Early this year, the government directed that all goods heading to Nairobi and destinations beyond it be cleared at the ICD instead of Mombasa port.

According to Kenya International Freight and Warehousing Association (KIFWA), 98 per cent of containers that pass through the Embakasi ICID have incurred demurrage charges due to the regulatory delays.

“It has become impossible to clear containers within the four-day grace period because Kenya Revenue Authority insists on 100 per cent verification of containers that pass through the ICD,” says Kifwa chairman William Ojonyo.

To beat that trap, however, most importers are said to be declaring false destinations for their cargo to gain access to Mombasa-based container freight stations from where they are trucked to the landlocked states.

“SGR would make economic sense if it were to deliver goods directly to Kampala but in this case where cargo has to pass through the ICD, the final freight cost is far much higher than what we pay to ferry them all the way by trucks,” said Ms Ms Mwijukye.

The sentiments are shared by Mr Businge Rwabogo, general operations manager in charge of Kampala-based Mukwano Group of Companies.

“We import between 200 and 250 containers of raw materials through Mombasa port every month but all of that arrive in Kampala by trucks,” Mr Rwabogo said during a recent media tour organised by East African Business Council and GIZ.

That decision means Mukwano Groups now pays Sh180,000 per truckload of goods compared to Sh60,000 on every wagon of the train if there was a functioning railway line between Mombasa and Kampala.

“Even if we were to import through Tanzania, we still need a functioning railway line between Dar and Mwanza and a ship serving between Mwanza and Port Bell to cut costs.”

Kenya and Uganda have been working on a joint SGR project between Mombasa and Kampala via Kisumu and Malaba border point.

On paper, Uganda’s Standard Gauge Railway will link Mombasa port to Kampala, Rwanda, South Sudan. The line from Malaba runs all the way to Kampala and Kigali while its section to Kisumu links SGR to serve Uganda through Lake Victoria ports of Jinja, Masaka and Entebbe.

On the ground, however, Rwanda has shown interest to link up its SGR line to Tanzania’s while Uganda has of late suspended its train project citing Nairobi’s delay in raising financing for the Kisumu-Malaba section.

Ms Mwijukye, who also sits in Uganda’s transport masterplan committee, says the SGR and the century-old metre gauge railway would feed into an ideal multimodal transport system that the private sector wish to see in place.

“But as a matter of priority, the government is keen on upgrading transport facilities on Lake Victoria and road network to our landlocked neighbours.”

She said Uganda is keen on upgrading Bukasa port to boost flow of goods from Kisumu, and port Bell in Luzira to boost exports to DRC.