Shipping & Logistics

What starves modern rail line of cargo

President Uhuru Kenyatta flags off a container when he launched the upgraded Inland Container Depot at Embakasi. FILE PHOTO | NMG
President Uhuru Kenyatta flags off a container when he launched the upgraded Inland Container Depot at Embakasi. FILE PHOTO | NMG 

Players in the shipping and logistics business have spoken on the rocky start of the cargo train on the standard gauge railway, including delays tied to limited cargo.

They have blamed efficiency hiccups and lack of a clear agreement between the SGR operator and cargo owners for the cargo shortage that has hit the SGR goods haulage launched on Monday, forcing Kenya Railways to delay the daily service.

Performance of the rail freight sector needs to be stimulated by improving customer service to boost uptake of the service. Shippers reckon the cargo shortage is an artificial one caused by unclear operational steps.

For example, they say, it is not clear who between the Kenya Ports Authority (KPA) and the railway firm will handle the cargo invoices.

After the expansion of the Mombasa port, it was anticipated that growth in volume of cargo would automatically boost hauling.

“But this is not the case because of technical hitches in sections of the value chain despite the SGR launching its goods haulage business just the other day,” said a maritime operator.

These reservations have been registered despite assurances by Kenya Railways Corporation that the offloading of cargo at the Mombasa Port, transport and delivery is “now very efficient.”

Delays were reported to have hit the second cargo train that finally arrived at the newly expanded Embakasi Inland Container Depot (ICD) in Nairobi on Saturday.

KR said the train was stuck at Mombasa port awaiting containers, raising fears that investors were still opting for road transport.

However, the Kenya Railways managing director Atanas Maina explains cargo is assigned to the SGR trains via a Through Bill of Lading (TBL) which makes ICD the port of discharge, enhancing efficiency.

“Shippers, Kenya Railways, Kenya Ports Authority and Kenya Revenue Authority are involved. We expect this to pick significantly in the coming months now that ICD expansion is complete. We can run up to four trains for a start but have capacity for up to 13 trains,” said Mr Maina.

Clearing and forwarding agents, however, say the success of the commercial operations will be determined by efficiency of loading cargo wagons from the port for the Embakasi ICD.

“This traffic time is crucial and will determine having more nominations to ICD,” said Kenya International Freight and Warehousing Association (Kifwa) chairman William Ojonyo.

The ICD houses representatives of revenue authorities from Rwanda, Uganda, Burundi and Kenya who will clear the goods.

Mr Ojonyo said cargo owners need to be convinced there was value for money.

“It is important to realise that the biggest and most important users of SGR are cargo owners who through their clearing agents must make the preferential decision based on a number of factors,” said Mr Ojonyo.

He cited how fast the containers will leave the vessel to the final point of clearance, free period offered to the cargo owner before storage accrual, the competence of the handlers on the ground, as well as empty container returns and liabilities.

“We, therefore, need to meet the clearing agents demands and maximise the use of the facility,” he said.

President Uhuru Kenyatta’s administration is banking on the railway to move 40 per cent of cargo handled by Mombasa port from roads to the SGR as it relies on the modern train service to reduce the damage caused by trucks to highways, reduce accidents and cut costs and delays in trade. 

The trains are expected to shorten the time it takes to transfer cargo from Mombasa to Nairobi by more than half. The trucks at the moment take a whole day.

Traders pay $500 (about Sh51,702) and $ 700 (Sh72,383) to transport a 20-foot and 40-foot container respectively.

These charges exclude the last mile transportation costs but are inclusive of terminal placement charges. Transporters have been charging about Sh80,000 per 20-foot equivalent units container from Mombasa to Nairobi.

Trains have been conducting cargo haulage pilot tests since the beginning of December last year. “For the dry run, we did about 70 trains. Close to 6,000 TEUs. Roughly 170,000 tonnes,” said Mr Maina.

Imports accounted for 19.3 million tonnes, up from 17.4 million in the same period in 2016, an increase of 10.4 per cent.

The port handles imports such as fuel for Uganda, Burundi, Rwanda, South Sudan and the eastern DRC.