Shippers have termed a move by the government to force them to truck cargo via the standard gauge railway in the wake of increased charges as a violation of World Trade Organisation regulations, of which it is a signatory.
The Kenya International Freight and Warehousing Association (Kifwa) says WTO laws on trade facilitation allow for free flow of cargo at most cost-effective means.
Kifwa National Chairman William Ojonyo says that, with the increase in SGR cargo transportation cost, shippers should be given an option of using different modes of transport.
“Shippers should be allowed to decide how their cargo should be transported in a country where we have a multi-modal system of transport. What the government is doing with mandatory use of SGR is just creating a monopoly that goes against the WTO agreement,” said Mr Ojonyo.
Economist Toni Watima says the government’s move to force shippers to use SGR even with increased freight charges is an illegality that will impact negatively on the economy.
“Shippers will obviously pass the cost to the consumer. When you create a monopoly, obviously the cost has to go up and it has to be passed to someone,” said Mr Watima.
“The government is abusing its powers by forcing shippers on SGR, it should be their (shippers) choice to know what mode of transport suits them,” he said, pointing out that shipper’s council should move to court to stop that move.
On WTO, Mr Watima says the body has a problem in enforcing their laws to individual country and that shippers might not get reprieve from it.
All cargo consignments from the Port of Mombasa that are destined for Nairobi have to be transported by train, driving operators off roads.
The exception is made on hazardous goods that cannot be ferried by railway.
Mr Watima said the association would engage the government with a view to opening up options for shippers who feel that using the trains with the revised charges will be expensive to them.
The new rates, which are 79 per cent higher compared with the promotional rates that have been in place since the advent of SGR cargo business, will also have a negative effect on consumers as manufacturers are going to increase the cost of goods in line with the higher tariffs.
The cost of transporting cargo by road currently ranges between Sh85,000-95,000 for a 40-foot container compared with the new charges of SGR that will now be Sh100,000 for the same quantity.
Mr Ojonyo points out that the higher charges are not good for the economy as it will increase the cost of living.
Manufacturers too have protested the increase in rates pointing out that it will make the cost of doing business more expensive in the country.
"We propose the ministry to consider extending the implementation of promotional rate to June, 2019 and thereafter gradually increase at a rate of five per cent every six months. This is to allow the agencies in the industry to streamline their services," said KAM chief executive Phyllis Wakiaga.
Truckers have also weighed in on the matter, accusing the government of monopolising the transport sector, which they said was not a good move for the country’s economic growth.
“You do not just impose a mandatory rule to the shippers without giving options,” says Vanessa Evans, Rongai Workshop and Transport Limited managing director.