New pipeline, SGR cargo trains leave truckers wallowing

An SGR cargo train leaves the Port of Mombasa in March. The government is keen to increase the number of containers ferried to Nairobi through the new railway line. [File,Standard]

At least 1,300 cargo trucks are to be pushed out of the Mombasa-Nairobi highway and out of business in the coming months.

The trucks will fall victim to the drive by the Standard Gauge Railway (SGR) to increase its freight services and recent completion of the new Mombasa-Nairobi pipeline.

Reports by experts paint a bleak future for the road truck haulage sector, with transporters now accusing the government of “skewing the free market economy” to favour other modes of transport to the detriment of road haulage industry.

Lower costs

The State has completed the construction of the Sh48 billion oil pipeline Line 5, which Kenya Pipeline Company (KPC) says will eliminate 700 trucks from the Mombasa-Nairobi highway in the near future.

Like the SGR freight service, the pipeline will take up key cargo traditionally hauled by truckers from Mombasa to the hinterland.

“In effect the project (Line 5) will also lower the cost of road maintenance by eliminating more than 700 trucks from the road daily at maximum utilisation,” said KPC Managing Director Joe Sang.

It will transport fuel at a flow rate of 750,000 litres per hour.

Early this week, Transport Cabinet Secretary James Macharia said more than 600 cargo trucks have moved out of the highway since the SGR freight service was launched in January. This takes the number of trucks to be moved out of the Mombasa-Nairobi Highway to 1,300.

In theory, this decongests the highway and reduces the likelihood of road carnage on the roads. So far, the SGR freight services ferries 500 containers to Nairobi daily, out of the 5,000 imported daily.

This means most cargo is still transported by road and truck, but the situation could change when the number of trains moving to Nairobi are increased and the holding capacity for the Inland Container Depot in Embakasi boosted.

KTA statistics indicate that there are more than 1,600 trucks operating along the northern corridor, which links the Port of Mombasa and the border town of Malaba.

These trucks could still enjoy a life line as long as the SGR line remains in progress beyond Nairobi and to the extent they could innovate to fill gaps untouched by the train service.

Yesterday, transporters estimated that more than 2,600 truck drivers will lose their jobs and that other sectors like spare shops and garages would be hit hard.

“Road haulage industry creates millions of direct and indirect jobs and the livelihoods of Kenyans are at stake should the State continue to push for use of the SGR,” says KTA administrator Mercy Ireri. 

“Truck owners are increasingly burdened with rising fuel prices, increasing bureaucracy and government policies that are seemingly intent on weakening the industry,” she said.

Peter Otieno, the chairman of Car Importers Association (CIA), said the recent move to increase duty for trucks from 10 to 25 per cent would also suppress the road haulage industry’s growth.

“It is illogical for the government to increase duty on non-luxurious vehicles which are movers of the economy,” said Otieno.

In Mombasa, several transport firms have either sold their fleets and shifted to the real estate sector or positioned themselves for the last mile. The last mile involves transporting cargo to the doorstep, literally, something which the SGR freight service does not provide.

“We have come into terms that the SGR is here with us. We have positioned ourselves for the last mile business,” said Meshack Kipturgo, Siginon’s Group managing director.

Mombasa based Sanghani Transporters says it decided to invest in the extractive or mining sector to generate cargo for its fleet in the light of the SGR project.

“We started the iron ore mining in Taita Taveta, which is aimed at creating cargo for our transport section,” said RK Sanghani, the firm’s managing director.

The Government’s targets to move 40 per cent of cargo arriving at the Port of Mombasa by the SGR to the Nairobi Inland Container Depot.

This optimistic target has, however, run into headwinds as the Nairobi ICD has been woefully unprepared to handle the sudden influx of containers into the facility.

This week, Macharia said that more than 30,000 containers have been moved by the SGR in the six months it has been in operation.

Forced use

KTA now accuses the government of forcing importers to use the SGR at discretionary rates, saying shippers should be allowed to choose their preferred mode of transport.

“In a free market economy, the government cannot force people to use the train. This also violates International Trade Clauses on Incoterms in respect to Place of Delivery,” said Ireri.

It costs Sh50,000 to ferry a 20-foot container from the port to the Nairobi Inland Container Depot (ICD) by the SGR. Truckers charge between Sh60,000 and Sh80,000 to ferry the same container from the port to Nairobi, depending on the weight and type of cargo.

Other sectors faced with uncertainty in the logistics sector include the Container Freight Station and clearing and forwarding firms in Mombasa, which are feeling the heat of direct haulage of cargo to the ICD by the train service.

Macharia says by November, 11 freight stations will be in operation.

He says the freight services has reduced the cost of doing business and brought order in the transportation sector.

He claims those in the trucking sector will not suffer as their vehicles will operate in the LAPSSET corridor. According to the CS, the SGR has created 30,000 jobs directly and indirectly and that road maintenance costs have also gone down.

“The savings for the economy on road repair, trucks maintenance, spares as well as time will be tremendous,” says the CS.