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Study points at folly of using SGR over trucks

BUSINESS
By Patrick Beja | April 22nd 2021

A section of the Standard Gauge Railway. [Jonah Onyango, Standard]

A new study has poured cold water on Kenya’s ambitions of becoming the preferred transport corridor for neighbouring countries of Uganda, South Sudan, Rwanda, Burundi and Democratic Republic of Congo.

These countries account for about 30 per cent of imports and exports through the port of Mombasa.

The survey dubbed “A Private Sector Position Paper on Naivasha Inland Container Depot” was prepared by the Kenya Private Sector Alliance (Kepsa) and Shippers Council of East Africa (SCEA).

It claims it is cheaper to use the Meter Gauge Railway (MGR) to transport cargo directly from Mombasa to Kampala compared to using the Standard Gauge Railway (SGR) to Kampala through Naivasha ICD.

It is even cheaper to transport a container by road from Mombasa to Kampala compared to moving it from Mombasa by SGR to Naivasha ICD, and then by road to Kampala.

The Naivasha Inland Container Depot (ICD) was expected to increase trade flows that are beneficial to Northern Corridor countries by enhancing transportation of imports and exports.

“Their (traders) major concern was the high cost of end-to-end logistics and inefficiencies,” reads the report launched last November.

“Cost differences in margins ranging from $125 to $825 (Sh13,662 to Sh90,172) per container in favour of road transport, as realised in the study on comparative costs for different means of transport, are clear indicators that given the freedom of choice for a means of transport, cargo owners have been and will continue to choose road transport over SGR.”

The study used Kampala and Nakuru as the end destinations to demonstrate the high cost of using both SGR and the MGR compared to road.

It costs a difference of an average of $375 (Sh40,987) and $730 (Sh79,789) more to transport a 20-foot container and 40-foot container respectively from Mombasa to Kampala through ICD Naivasha and back compared to the use of ‘pure’ road transport.

The study found that Mombasa to Naivasha ICD by SGR then to Kampala by road (return journey) costs $2,580 (Sh281,994) for a 20-foot container. Mombasa to Kampala by road (return journey) for a 20-foot container costs $2,280 (Sh249,204). This represents a cost difference of $300 (Sh32,780).

It costs US$3010 (Sh328,993) to transport a 40-foot container from Mombasa to Naivasha by SGR then to Kampala by road (return journey) compared to $2,280 (Sh249,204) to transport such a container by road from Mombasa to Kampala and back, a cost difference of $730 (Sh79,789).

A 40-foot container from Mombasa to Naivasha ICD through SGR, then to Kampala through MGR (return trip) costs $3105 (Sh339,376). The same container moved from Mombasa to Kampala by road (return trip) costs $2280 (Sh249,204).

The cost difference stands at $825 (Sh90,172).

The ICD yard lies on a 10-acre land situated on the south-west side of Mai Mahiu township, approximately 13 kilometres from the town.

The facility lies within the proposed site of the Naivasha industrial park. The SGR passes along the southern border of the industrial park.

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