Job cuts loom as KPA orders importers to use SGR freight trains

The Standard Gauge Railway freight train moves along the Port Reitz Beach Management Unit lane to enter the port of Mombasa last month. This is the second SGR freight haul train to arrive at the port loaded with 48 TEU containers with coffee, personal goods, French beans and handicrafts for export. [Gideon Maundu, Standard]

Thousands of jobs are at stake following an order to importers to haul cargo from the port of Mombasa to Nairobi through the railway.

The directive issued by the Kenya Ports Authority (KPA) has left logistics and transport firms confused.

KPA ordered importers to transport all un-nominated cargo at the port to Nairobi via the Standard Gauge Railway (SGR) freight train.

This translates to 11 per cent of the approximated 500 containers released by the port every day.

Un-nominated cargo refers to goods that shippers or importers have not nominated or selected to preferred container freight stations (CFS) for storage. KPA is always at liberty to store the goods in any CFS it deems fit.

Stakeholders now believe the 21 CFSs, transporters and other actors in the Northern Corridor logistics sector face extinction, together with thousands of jobs and the economy of Mombasa, where close to 12,000 people are employed in the sector.

The port says the cargo must be towed by the freight train to the Inland Container Depot in Embakasi, Nairobi.

Eighty-nine per cent of import cargo is nominated to CFSs by individual owners each day, leaving 11 per cent that KPA can nominate to any CFS for storage and clearance.

Reduce cost

Some importers have welcomed the new directive, saying it will reduce the cost of storage and transport given that KPA gives a three-day window for importers to clear cargo without storage charges.

And there are reports more importers will abandon CFS and transport firms in favour of the freight train to save costs and prevent delays.

On Friday, Mombasa Governor Hassan Joho sparked a debate when he claimed importers were being forced to transport cargo using the SGR freight train in a bid by the State to demonstrate the new railroad was viable.

"Now it is mandatory to move containers and goods by SGR," said Mr Joho, adding that the alleged forced policy amounted to unfair trade practice that would kill thousands of jobs in the Northern Corridor.

"The emasculation of the port we have been talking about is now being implemented and we will go to court to challenge it," Joho said.

CFS and road transporters said they were already feeling the impact of the SGR freight trains, which were launched in December last year, and the modernisation of inland terminals.

Last Friday, KPA officials told port stakeholders of a decision to haul the un-nominated cargo to Embakasi, a move that could deny the CFSs in Mombasa and trucks business.

Logistics experts now predict a bleak future for clearing and forwarding agents, CFSs, warehouses and road transporters if KPA implements the new directive.

Cargo owners

Kenya International Freight and Warehousing Association (Kifwa) claimed KPA was forcing cargo owners to use the SGR instead of marketing it to ensure the “willing buyer-willing seller" principle was applied.

Yesterday, Kifwa Secretary Ahmed Shimbwa termed the order illegal since it was implemented without consulting stakeholders.

KPA Managing Director Catherine Mturi-Wairi however refuted claims of arbitrary allocation of containers to the SGR, saying they had consulted industry players.

“KPA and Kenya Railways continue to engage all industry players to ensure that SGR succeeds in terms of economies of scale and reduction of transport costs,” she said.

The ports chief said KPA and the railway agency had formed marketing teams to convince cargo owners to embrace railway services.