State orders ship agents to transport goods on SGR

The Standard Gauge Railway (SGR) line freight train along the Port Reitz Beach Management Unit lane to enter the port of Mombasa, January 14, 2018.. [PHOTO:GIDEON MAUNDU/STANDARD].

Importers using Mombasa port will now be required to use the Standard Gauge Railway (SGR) to move their goods as authorities attempt to increase the amount of cargo on the service.

In a letter by the Kenya Ports Authority, Kenya Maritime Authority and Kenya Railway Corporation to shipping lines and importers, cargo owners must move a fraction of their cargo to Nairobi and beyond on the SGR and to the ICD to promote the two facilities.

“The purpose of this communication is to notify you that KPA will, with immediate effect, nominate the above referenced cargo to the ICD-Nairobi to meet the daily capacity for SGR as may be advised by KR from time to time,” said the letter to the Kenya Ships Agents Association dated February 17.

Struggled for clients

The freight service, which started operations in December last year, has struggled to find clients despite rock bottom prices.

Initially, Kenya Railways had projected the SGR to attract cargo shippers but it failed to live up to expectations and in the first week, the train only hauled freight a couple of times rather than the planned daily runs.

While the train plies the route daily nowadays, there is barely enough cargo.

The Ministry of Transport is thus pushing importers to use the service as well as the Inland Container Depot (ICD) in Embakasi, Nairobi, which was refurbished recently.

By “above referenced cargo” the letter refers to all goods that have not been directed for clearance and storage at Mombasa’s numerous container freight stations (CFS) - which have claimed the directive is a conspiracy to throw them out of business.

It said KPA and KR will ensure that the cargo was moved efficiently and the timely return of empty containers in line with the various consultations held with shipping agents.

The agencies said Transport Cabinet Secretary James Macharia had acceded to the agents’ request for a short-term promotional tariff to enable “you test the functionality  and efficiency of SGR freight services and the newly upgraded ICD.”

Under the promotional tariff, importers pay Sh15,000 ($150) to move a 20-foot container from Mombasa and Sh20,000 ($200) for a 40-foot container. The offer, which has been running from January 5, is a huge discount in comparison to the Sh39,900 standard charges for a 20-foot container.

It is also cheaper than transporting by road that can cost between Sh80,000 and Sh100,000.

According to KPA officials manning the ICD, though the cargo trains have been making daily trips between Port Reitz in Mombasa and Embakasi, their capacity is grossly under-utilised.

 “At times the number of containers is just a handful. You can tell this by the number of trucks that are coming into the depot to collect cargo, they are not many,” said an official who did not want to be identified.

Transport firms have claimed that the Government is promoting the SGR with subsidies to throw them out of business.

Critics say the Government has gone overboard in the quest to raise adequate cargo for the SGR, even as the move received support from a section of clearing and forwarding agents.

At a press conference on Thursday, a section of clearing agents led by Kenya International Freight and Warehousing Association (Kifwa) chairman William Ojonyo backed the Government’s push to use SGR freight services, saying it makes business sense to them and cargo owners as it means lower costs of moving cargo.

Keep schedule

He, however, urged SGR to keep to operational schedules and return empty containers to Mombasa from Nairobi ICD in good time.

“We are also asking SGR to accept our request that all cargo be cleared from Mombasa port on arrival and the ICDN. This is because there is now space at the port and there is no more congestion that can warrant transfer of cargo to private depots,” said Mr Ojonyo.

“Our responsibility in returning empty containers should end when we take them to the ICDN.”

The group appealed to KPA to increase free days - when newly arrived cargo does not attract storage charges - from four to 11 to allow for clearance.

Yesterday, another group of clearing agents said it is still contesting the removal of cargo to the ICDN by rail.

“We are still having consultative meetings over the Government’s directive to move unnominated containers to Nairobi. KPA has not yet rescinded that decision,” said Kifwa secretary Ahmed Shimbwa.