Importers decry high SGR charges, want lower rates
A report by a technical committee says it costs about 133.5pc more to transport cargo by rail
by Zachary Ochuodho
@zachuodho
Importers using the Standard Gauge Railways (SGR) to transport goods from Mombasa to Nairobi have decried the high cost they incur before their cargos reach their doorstep.
Comprising traders and manufacturers, the group wants the government to reduce transport charges to help cut the cost of doing business as had been promised when the SGR idea was rolled out.
They said the cost they incur for every container they ferry to Nairobi is high if they use SGR as compared to what they ordinary incur if they transport the same cargo by road.
“When our company uses SGR to transport goods from Mombasa to Nairobi, we pay more than if we transport the same item by road,” Chief Executive Officer of East African Cables, Paul Muigai told Business Hub. He said the raw materials they use are imported and for them to reach their doorstep, they have realised they spend Sh10,000 more per every container.
The outcry over high transport cost of cargo by SGR comes after a joint technical committee appointed in March to look into the efficiency and cost-effectiveness of transportation of cargo using SGR revealed that it costs an average 133.5 per cent more to transport cargo using the rail system. It found that average transport for 20ft and 40ft container from Mombasa to Nairobi by road is Sh66,950 and Sh87,550 while average transport for rail transport for 20ft and 40ft container from Mombasa to Nairobi is Sh146,260 and Sh218,360.
Kenya Association of Manufacturers (KAM) chief executive officer Phyllis Wakiaga said most members of the lobby body are concerned about high cost of transport and logistics services.
She said the two were a critical component of economic development and competitiveness of industries.
“Industrial performance is wrapped around the movement of products and cargo within the supply chain from farm to consumers,” said Wakiaga, adding that an efficient and cost-effective logistics system in the country is critical because a large amount of industrial inputs for the majority of sectors are imported.
Vincent Asige, Transport Manager at A.O. Bayusuf & Sons Ltd, said road transport is relatively cheaper today more than it used to be because roads leading to and out of Mombasa port have been upgraded and traffic jams no longer exist.
Forcing consumers
He said there is need to leave consumers of the transport system - roads and railways - to choose which one of the two suits them better instead of forcing consumers to use SGR even if it is expensive and add no value for their services.
Wakiaga said inefficiencies in the logistics supply chain cause manufacturers to incur huge costs, including demurrages, warehouse rent and port charges.
She said the inefficiencies were likely to impact on the competitiveness of local industry due to high operation costs. She urged the government to implement what the joint technical committee, formed in March, recommended.
Wakiaga said the committee had recommended that only four agencies namely Kenya Ports Authority, Kenya Railways, Kenya Revenue Authority, and Kenya Bureau of Standards should be allowed to operate at the Mombasa Port.
A report by the Joint Technical Committee on the improvement of efficient and cost-effective transportation of cargo using SGR calls for reduction in the number of government agencies working at the port and inland container deport in Nairobi from 28 to four critical agencies.
“It has been observed that the cost of doing business and efficiency at the port is dependent on the actions by the government agencies, shipping lines and cargo owners and the time each of the players takes to execute their actions are crucial,” the report stated.
Roman Gishinga Waena of the dockworkers’ union said Shippers Council of Eastern Africa and importers have reported huge losses in demurrage charges as a result of delays to transport empty containers back to Mombasa.
RAILWAY SYSTEM
• The government suspended the controversial order on transportation of cargo from Mombasa to Nairobi by use of the Standard Gauge Railway early this month to pave way for stakeholder consultations.
• The suspension came hours after the National Assembly directed Transport and Infrastructure Cabinet Secretary James Macharia to appear before the Transport Committee to explain the directive which the ministry had issued a week earlier.
Importers decry high SGR charges, want lower rates
Importers protest over SGR directive
By
FRANKLINE SUNDAY | August 7th 2019 at 12:00:00 GMT +0300
Importers say the move to force them to use the SGR freight train will raise operating costs.[Gideon Maundu, Standard]
Importers and cargo transporters have opposed the Government’s directive that all goods destined to Nairobi and beyond be shipped using the Standard Gauge Railway (SGR).
The notice issued last week by the Kenya Ports Authority (KPA) and Kenya Revenue Authority (KRA) comes into effect today. This is despite the growing worry of job losses and higher operating costs.
“This is giving the SGR a monopoly, which is illegal in Kenya and will also push other cargo transporters out of business,” said Excel Trucking Chief Executive Francis Omondi.
The directive compels all importers who use the Port of Mombasa to exclusively move their cargo through the SGR starting today.
“All imported cargo for delivery to Nairobi and the hinterland shall be conveyed by standard gauge railway (SGR) and cleared at the Inland Container Depot, Nairobi,” said the notice.
However, cargo transporters who spoke to The Standard said the Government’s move will raise the cost of doing business, with the costs passed on to consumers.
The Government has also been accused of issuing the directive without engaging stakeholders and addressing the inefficiencies associated with the port and the Inland Container Depot (ICD) in Embakasi.
“There are a lot of inefficiencies at the port and the ICD that the Government needs to address because they translate to delays in clearing goods and higher operating costs for importers,” said Mr Omondi.
Kenya Transporters Association Chief Executive Mercy Ireri said thousands of jobs stand to be lost directly, including drivers, mechanics and support staff as well as indirectly along the country’s trucking routes.
“If the SGR carries 800 containers each day, this translates to 800 drivers and their dependents left without a livelihood each day,” she said. It costs Sh75,000 to transport a container from Mombasa to the ICD in Nairobi where owners have to collect them at an extra cost. Trucking the same costs Sh80,000, with the cargo sent to the owner’s doorstep.
“We understand the idea is to utilise the SGR but the government should not force importers on the rail because it does not make economic sense,” said Kenya Auto Bazar Association CEO Charles Munyori.
Importers protest over SGR directive
