Kenyan truck companies still in business with entry of SGR

The amount of cargo moved through the Standard Gauge Railway (SGR) has been on the increase since it started operations in January 2018.

The new railway now moves about a fifth of all cargo imported through the Port of Mombasa to Nairobi and Naivasha, according the Kenya National Bureau of Statistics (KNBS). In some instances, such as containerised cargo, the SGR is moving up to 30 per cent of containers to the hinterland.

While the amount of cargo moving on SGR has steadily grown since its first year of operation in 2018, it is unlikely to rid the Mombasa-Nairobi highway off trucks that use the road to move goods to the rest of the country as well as the region.

This is because other than moving just about 20 per cent of the cargo imported to Kenya through Mombasa Port, and leaving about 80 per cent to the truckers, the volume of imports has also been growing.

Imports through the port have grown to 27.8 million metric tonnes in 2020, up from 25.5 million metric tonnes in 2018.

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This has meant that the two modes of transport – road and rail – have continued to co-exist despite earlier expectations that the new railway would displace a huge number of trucks on the highway.

Before commissioning SGR, the Transport Ministry and Kenya Railways Corporation had expected to rid Mombasa-Nairobi highway of some 600 trucks moving cargo.

The truckers and transport companies were advised to focus on the last mile bit of SGR, whereby they would move cargo from the Inland Container Depots to the premises of the owners.

Of course the road sector may have lost since according to a Competition Authority of Kenya study done in 2020, “prior to the launch of the SGR, it (road sector) accounted for more than 96 per cent of the total traffic flow along the Northern Corridor”.

The government has in the past tried to force cargo importers to use SGR, which has been met with opposition.

The Transport Ministry in the past submitted to Parliament that railroads are essential for cargo transportation and plays a major role in reducing wear and tear on the road, congestion and in turn the number of accidents.

“Railroads are the most efficient form of land transportation. One train can haul the equivalent of about 100 trucks thus helping in alleviating congestion,” said the ministry’s senior officials when they appeared before National Assembly’s Transport Committee that was looking into importers being forced to use SGR in 2020.

The ministry had argued at the time that the directive was due to the outbreak of Covid-19 and had been effected following consultations among the East African Community Heads of State.

“The rail offers fast and cost effective deliveries over long distances...the integration of the metre gauge and SGR can offer longer distances to make the service more attractive.”

The Shippers Council of East Africa noted that SGR is yet to hit its target of moving 40 per cent of all cargo imported through the Port of Mombasa.

“The SGR freight service was built with a target to haul a minimum of 40 per cent of the port throughput to Nairobi and beyond hence giving the desired relief to the road network. This target has not been achieved,” said SCEA.

“Even with the implementation of SGR, there is sufficient cargo available to sustain SGR and road transport.”

The Competition Authority of Kenya (CAK) noted that the different instances in which the government has directed importers to use SGR has amounted to anti-competitive behaviour.

“The government had since January 2018 instituted regulatory measures to ensure that all Nairobi bound cargo is transported by SGR. It is indicated that cargo allocation is done to aid the government to achieve the SGR cargo targets especially because of the loan repayments for this critical infrastructure,” said CAK.

“However, this distorts free trade and choice by shippers as to which mode of hinterland transportation they will choose for their import cargo.”