Cargo transporters to pay less to transport containers from Mombasa to Nairobi

Cargo transporters will pay a maximum Sh49,500 to transport a 20-feet container from Mombasa to Nairobi on the standard gauge railway.

Kenya Railways has also announced that once the cargo service is in operation, the cost of transporting a fully loaded container for short distances has been set at Sh19,800 for a minimum distance of 200 kilometres.

This means that the minimum amount for any container on the SGR will be Sh19,800 for the short-haul destinations between the two cities.

The setting of maximum and minimum prices suggests that the prices could get lower.

Kenya Railways says agricultural inputs will enjoy a lower rate of Sh16,500 for the short-haul distances and a maximum cost Sh41,250 for the full distance between the port of Mombasa and the inland container depot.

This will cut cargo prices by between 30 to 50 per cent. Currently, it costs between Sh80,000 and Sh100,000 to transport a 20ft container using trucks between Mombasa and Nairobi.

The SGR is set to put truck operators under pressure and open up a price war. But given that there is a minimum distance, trucks may be left to transport cargo for distances of less than 200 kilometres.

Kenya Railways is currently doing tests on the freight line and it is expected to launch operations early next year.

President Uhuru Kenyatta during the weekend launched the new Sh22 billion inland container depot at Embakasi, whose capacity has been expanded from 180,000 tonnes to 450,000 tonnes.

Transport Cabinet Secretary James Macharia said Mombasa port is expected to see a 7.6 per cent annual increase in cargo.

“So far we have recorded a 25 per cent increase in cargo between 2012 and 2016, with tonnage increasing from 21.9 million tonnes to 27.4 million tonnes,” he said in a statement.

“This means that we have to clear cargo faster and more efficiently. The SGR will enable us to evacuate Nairobi-bound cargo directly from the port for clearance at the inland container depot, enabling the port to handle more cargo.”

Vehicle importers

Kenya Railways Managing Director Atanus Maina said motor vehicle importers will incur a cost of Sh3,300 to transport cars from the port to Nairobi while transit vehicles will be ferried at a cost of Sh2,640.

The firm said the maximum weight allowed on a 20ft container is 30 tonnes while the maximum allowed weight on a 40ft container is 35 tonnes.

The costs are, however, exclusive of handling charges and VAT. All goods destined for the local market will be subjected to 16 per cent VAT while transit goods and exports from Kenya will be zero-rated.

“Handlers of large cargo volumes between 4,000 and 40,000 tonnes will enjoy discounts of between five per cent and 20 per cent,” said Kenya Railways in a statement.