Why transporting goods via SGR is a Bad Idea

Transporting your goods from the port of Mombasa could is much better and cheaper than using SGR. A part from the hidden costs of using the rail, you will also have to grapple with serious logistical inconveniences.

A Report by the Joint Technical Committee on the Improvement of Efficiency and Cost-Effectiveness of Transportation of Cargo Using SGR suggests that no transporter will opt for the new rail against road unless the State arm-twists them.

The report shows that Government figures have only been capturing the headline figure while avoiding the cargo handling costs that make using the Mombasa-Nairobi cargo service an expensive option.

Double the cost

While it costs Sh50,000 ($500) to move a 20-foot (ft) container from the SGR terminus in Miritini to the Inland Container Depot (ICD) in Nairobi, costs associated with the handling and storage of cargo at the port tend to push up this cost by more than 100 per cent, which in effect sees cargo owners part with a total of Sh142,000 ($1,420).

This is in comparison to road transport where cargo owners would pay truckers Sh65,000 to have a similar 20-foot container moved from Mombasa to Nairobi. A 40-foot container costs Sh85,000 by road.

“The difference between road and rail for 20-foot and 40-foot containers amount to Sh77,000 ($770) (118 per cent increase) and Sh127,000 ($1,270) (149 per cent increase), respectively,” says the report.

The additional costs are incurred due to re-marshalling, storage and demurrage.

Additional costs are also met on the price of empty return by rail, shipping line margins and Kenya Ports Authority (KPA) shunting of empties to container depots.

Mind-boggling payments

“To begin with, the demurrage charges we were to incur are mind-boggling. For example, when we ferry cargo from the port of Mombasa through the SGR, we have to pay again for that container to be returned empty, unlike trucks where we are not charged. This is something that is not sustainable.”

A major logistics company in East Africa, Uganda’s Unifreight, is another importer that has openly shunned SGR.

Jennifer Mwijukye, the founder and managing director of Unifreight, said Ugandan importers had threatened to boycott the Mombasa port and take their business to Dar if Kenya compelled them to use the rail.

“We were serious and I was in that meeting with Kenyan officials. When they saw we would not back down, they beat a hasty retreat and changed the narrative. They would only compel Kenyan importers and leave the rest of us,” said Ms Mwijukye in an interview in Kampala.

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