Honeymoon over for SGR cargo shippers

A Cargo train carries wagons with containers headed to Mombasa from Nairobi. [Phillip Orwa/Standard]
It will be more costly to move cargo from Mombasa to Nairobi using the Standard Gauge Railway (SGR) beginning next week following hiked charges by Kenya Railways.

Cargo owners will from January 1, 2019 pay double the amount they have been paying in 2018 as the railway operator reverts to the original rates, ending promotional charges implemented earlier this year.

Under the promotional tariff, cargo owners have been paying Sh25,000 per 20-foot container and Sh35,000 for a 40-foot container - 50 per cent of the approved tariff.

Approved tariff

SEE ALSO :China dismisses debt trap claims on its lending

The discounted cost expires on December 31 and the approved tariff kicks in, where a 20-foot container will attract Sh50,000 ($500) while a 40-foot container will be charged Sh70,000 ($700).

“Kenya Railways wishes to notify members of the public that the promotional freight tariff will come to an end on December 31 and thereafter the Kenya Railway Tariff Book rates will become effective from January 1, 2019,” said the corporation in a notice yesterday.

The State-run firm also increased the cost of passenger ticket in March this year to Sh1,000 from the earlier Sh700.

Despite the hike, the Madaraka Express Freight Service charges could be lower when compared to trucks on roads that can cost anything between Sh80,000 and Sh100,000 per container.

The service, which will mark its first year of service on January 1, had initially experienced hiccups in attracting freighters to use the SGR and the discounted rates were among the incentives to get the buy-in of different importers bringing cargo to Nairobi and other parts of the country.

SEE ALSO :Numbers reveal how 31 companies' profits plunged

Other measures included discounted cargo handling charges at the Inland Container Depot in Nairobi, which was given a major upgrade to enable it cope with cargo from the SGR.

Kenya Ports Authority (KPA) in March reduced handling fees to Sh8,100 ($80) for a 20-foot container destined for the Kenyan market, a 22 per cent reduction from Sh10,400.

Handling a 40-foot container cost 23.5 per cent lower, with the new charges at Sh12,100 from Sh15,900.

The rates have since reversed to normal charges following an influx in cargo moved to Nairobi, which led to congestion at the ICD, with KPA being forced to lease additional storage space from neighbouring warehouses.

KPA also reduced to four the number of days that cargo owners can store containers at the ICD for free to deal with congestion. Previously it offered importers using the Embakasi facility seven days free storage.

SEE ALSO :Passengers crowd SGR for Easter

Underutilised

This was also a reduction from 11 days, which was a way of enticing business to use the depot during the days when the metre-gauge railway between Mombasa and Nairobi was underutilised.

KPA has also hiked storage charges for cargo staying at ICD for more than four days. For instance, cargo that is left uncollected for six days attracts a charge of Sh4,000 for a 20-foot container and Sh8,000 for a 40-foot container.

Register to advertise your products & services on our classifieds website Digger.co.ke and enjoy one month subscription free of charge and 3 free ads on the Standard newspaper.

Standard Gauge RailwaySGRCargo ownersKenya Railways