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Shipping & Logistics

SGR cargo trains down 50pc as pandemic chokes trade

SGR containers
A consignment of containers being transported by SGR from the Port of Mombasa to Nairobi’s ICD. FILE PHOTO | NMG 

Pressure on the international trade and more restrictions around port operations have seen the number of cargo trains on the Standard Gauge Railway fall by half in the first four months of the year as the Coronavirus continues to bite off a chunk of the economy.

Data from Nairobi’s Inland Container Deport (ICD) show that the number of trains transporting cargo from Mombasa to Nairobi dropped to an average of six in April, compared to the average of 10 recorded in the final quarter of 2019.

The drop has also been registered in the volume of cargo which also recorded an almost 50 percent drop on a monthly average between January and March to 267,531 tonnes in the compared to last year’s 515,682 tonnes every month.

A drop in cargo volumes, which makes the main revenue channel for the line built by loans from China, now adds to the pain of operating the railway line whose passenger services were halted from April 6 due to the Covid-19 pandemic.

The ICDN data now contradicts claims by the SGR operator that it was doing an average of 14 freight trains on average in a tweet that depicted even more cargo volumes in April. The April 25 tweet titled ‘Kenya SGR freight services boost cargo movement amid Covid-19 pandemic,’ went ahead to quote a Chinese news outlet with presence in Kenya.

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The 2020 Economic Survey show that freight services which is currently adversely affected was behind its revenue rise to Sh13.5 billion in its second year of full operations, comprising both freight and passenger services.

Cargo revenues even rose further after the train services began charging fully in January 2019 as the promotional tariffs came to an end.

The revenues however were not enough to meet operation costs, which are estimated at more than Sh1.5 billion a month for the Mombasa-Nairobi railway line only.

The cost is expected to significantly increase after the launch of the Nairobi-Suswa operations, built at a cost of Sh150 billion loan and whose performance has been largely below expectation with the ICDN data showing that only one cargo train was used on the line last year after it was launched in October.

“Activities are quite slow here at the ICD and we are worried that revue targets will be quite hard to achieve with the reduction in the number of trains we receive here. Ordinarily we do 11 to 12 trains per day, now it drops all the way to four on some days,” a Kenya Revenue Authority official based at the ICD told Shipping&Logistics, requesting for anonymity for fear of reprisal as SGR data has largely remained secret and conflicting.

At the current rate, freight services, which generated Sh11.86 billion last year, may record much lower revenue even as the cargo volumes which had climbed 43.5 percent to ferry 4,159 tonnes in 2019, according to data released by the Kenya National Bureau of Statistics, take a similar plunge.

SGR operations which are in third year of operation have kept Kenya Railways Corporation on toes even as internal analysis last year revealed that the railway regulator had expected the line to earn some Sh24 billion from the cargo service in the year to June 2019, a target it missed by close to 50 percent.

Kenya Railways performance analysis attributed the below target performance to reduced limited storage capacity at the Embakasi Inland Container Depot (ICDN), slow use of the Nairobi freight terminal that handles cargo not stored in containers and cost tariff.

“There were several instances when the ICDN facility was congested, which impacted heavily on turnaround of resources and thus contributing to movement of low volumes. Closure of some lines also impacted on loading capacity of trains,” Kenya Railways wrote on the December report.

Cargo charges on the SGR line from Mombasa to Nairobi were increased by up to 79 percent from January last year in a bid to raise more revenue to pay the Chinese operator.

The move did not go down well with some transporters who said their transport costs shot up by nearly 50 percent when they used the rail due to extra fees, more time spent clearing goods at the Nairobi train depot and the need to send a truck to collect the goods from there.

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