Reports that Kenya has suspended a recent order that all transit cargo be transported using the Standard Gauge Railway to the Naivasha Inland Container Depot has offered temporary relief to investors in the logistics sector.
On Tuesday last week, Transport Cabinet Secretary James Macharia held a virtual meeting with Northern Corridor stakeholders where the directive was communicated after a heated discussion.
The meeting came hot on the heels of a letter from the Uganda government opposing the move to transfer the transit cargo to the new facility.
At the port of Mombasa, we confirmed that only long-stay transit containers were being railed to the Naivasha ICD. It was, however, not immediately possible to establish the number of such containers.
- READ MORE
- Job losses, SGR loan emerge in plan to merge parastatals
- Court sides with KPA in port tender
- Top KPA manager got tenders, court told
- Our hands were tied regarding SGR tender, says Kenya Railways
“Yes, transit railings is now optional,” confirmed Kenya Ports Authority (KPA) head of corporate services Bernard Osero.
Local and foreign clearing and forwarding firms, container freight stations and transport firms have warned that they risk collapsing if the State presses ahead with its decision to evacuate all cargo to the hinterland.
Alternatively, they will be forced to relocate to Nairobi, Naivasha or further up along the busy corridor. This, however, has done little to allay their fear that the economies of the coastal region and towns along the Mombasa-Nairobi highway will be destroyed.
Macharia had earlier stated that one of the reasons for using the railway was to protect truck drivers from contracting the coronavirus disease.
On average, 1,500 trucks laden with cargo leave Mombasa every day and there have been fears that the drivers and their turn-boys could be unknowingly spreading the highly contagious disease during their stops on the highway.
Transporters based at the Coast had previously taken to the streets to protest an order that all cargo be hauled to Nairobi using the SGR. But it is the entry of Uganda into the fray that appears to have driven this latest change of heart.
Transporters in the neighbouring country, which is the largest importer through the port of Mombasa, insist that cargo owners should be left to decide how their merchandise will be transported.
Unconfirmed reports indicate that part of Uganda's resistance emanates from the fact that the order to transport all transit cargo to Naivasha would cripple business ties and other operations at the port.
In recent years, Uganda, South Sudan and Rwanda have established cargo clearing stations and hired revenue officials in Mombasa and Nairobi.
Ugandan importers have also established transport companies to haul their cargo from Mombasa. These companies would be in danger of shutting down if the Naivasha order is effected.
The Kenya Transport Association (KTA), which had already teamed up with civil society to oppose the government directive, said it had suspended a programme of action to support cargo owners in their battle to freely choose their mode of transport.
KTA Chief Executive Daniel Ombok said they were keenly monitoring the situation, adding that they did not believe the government would stand by the decision to reverse the earlier directive on the haulage of transit containers by rail.
“I have had a reprieve after government rescinded its decision on the strengths of the letter of opposition from the Uganda government, but we are monitoring the situation. We hope the government will make the transportation of all cargo from the port optional and not restricted to rail,” said Ombok.
Last month, Ugandan Transport Minister Katumba Wamala wrote a letter to Macharia and demanded that cargo owners be allowed to decide whether they wanted their goods transported to Naivasha.
Uganda, with a share volume of 8.1 million tonnes last year, dominated the transit market share with 81.8 per cent. Total cargo throughput at the port stood at more than 34 million tonnes compared to 33 million tonnes recorded in 2018.
For weeks, one freight train has been operating daily to haul about 52 containers from the port to Naivasha.
“This has significantly decongested the container terminal at the port of Mombasa and also reduced interactions of people during this Covid-19 period,” said port officials.
KPA sources said the Naivasha ICD is expected to ease pressure on the Nairobi facility. Other benefits include increasing throughput for the port through enhanced efficiency in clearance of cargo and container handling, bringing port services closer to hinterland customers, and enhancing safety and security of transit cargo through rail service.
In a recent statement, Osero sought to allay fears that all goods were being transported by rail when he stated that nearly 80 per cent of cargo at the port was left for road transporters.
"The best business practice is that bulk cargo from the port, at least 40 per cent, should be transported by rail so as to save on huge costs of maintaining roads. We always focus on the big picture. This still leaves 60 per cent on the road. So far, the rail in general is transporting about 20 per cent of all port cargo to the hinterland."
Car Importers Association of Kenya chairman Peter Otieno said the coastal region should be allowed to benefit from its port business.
“In the past, the old railway transferred containers from the port to Nairobi and Kisumu ICDs and nobody made noise because the cargo owners had chosen to get their goods there. The government should not use Covid-19 or any other excuse to force a policy down the throats of cargo owners and shield SGR from fair competition,” said Otieno.
George Kidima, a Ugandan business representative based in Mombasa, welcomed the decision to allow cargo owners to choose how their goods are transported.
“Uganda and Kenya have enjoyed cordial relations and robust business and we want this to remain so. No trader should be forced to use a certain mode of transport. Those in the transport sector should be allowed to compete,” he said.