Importers welcome SGR-MGR line, say more should be done
SHIPPING & LOGISTICS
By Macharia Kamau
| Jan 13th 2022 | 4 min read
SHIPPING & LOGISTICS
The move to connect the Standard Gauge Railway to the Metre Gauge Railway is expected to be a game-changer in the county’s import-export business.
The new initiative by Kenya Railways is expected to lure more firms to use the Northern Transport Corridor when importing or exporting goods to neighbouring landlocked countries.
Kenya Railways recently completed refurbishing the Metre Gauge Railway (MGR) between Naivasha and Malaba.
Also, construction of the SGR line from Suswa to Longonot where the connection to the MGR occurs has been completed.
Early this week, the corporation said it undertook a successful test run of the line. It stressed that the line is ready for business; cargo owners can now move cargo from Mombasa to Malaba on rail.
The corporation has also dropped charges for cargo using the railway from Mombasa Port to Malaba.
Players in the import-export business said this could be a game-changer but also noted that more remains to be done to make rail the preferred mode of transport for cargo owners.
“Railway provides for the best way to move cargo because it is safer in terms of accidents and there is less pilferage,” said Gilbert Langat, CEO Shippers Council of Eastern Africa (SCEA).
“The most significant thing is reduction of time… 36 hours between Mombasa and Malaba is substantial. Also the reduction of costs is significant.”
Importers will pay $800 (Sh90,680) for a 40 foot container moved on rail over the distance compared to upwards of $2,000 (Sh226,700) when using road transport.
“The challenge we have had with SGR has been the last mile. The cost of moving cargo from Mombasa to Naivasha on SGR is significantly lower, about $650 (Sh71 500) but to move this from Naivasha to Kampala, the cost is anything between $1600 (Sh176,000) and $2200 (Sh242,000). If you add up the last mile costs then it becomes more expensive to move cargo by railway,” said Mr Langat.
He added that government agencies manning the railway system and the ICDs including Kenya Railways and the Kenya Ports Authority (KPA) will need to ensure efficiency.
Kenya is also hoping to reclaim business lost to Tanzania’s Central Corridor. Traders moving goods to Rwanda and the Democratic Republic of Congo had ditched Kenya’s Northern Transport Corridor on account of higher costs and numerous non-tariff barriers such as roadblocks and efficiency.
“If it is cheaper, then it is better. We are competing with Dar es Salaam. If we get the cost and efficiency right, we will be okay,” Langat said.
In the trial run, cargo that was loaded at the Port of Mombasa and transported via SGR, was seamlessly transshipped onto MGR line at the Naivasha Inland Container Depot and further to Malaba.
Philip Mainga, managing director Kenya Railways, said the trial follows the completion of the 24 kilometres stretch of the MGR from the ICD to Longonot Town.
“We shall be undertaking a two-month trial of ferrying goods between the two countries before officially launching the exercise,” he said.
He said with a capacity to handle 120,000 TEUs (twenty-foot equivalent unit) annually, the Naivasha ICD facility will handle mostly transit cargo to the Great Lakes Region - Uganda, South Sudan, DR Congo, Northern Tanzania, Rwanda, and Burundi - which account for 30 per cent of imports and exports through the Port of Mombasa.
“Our clients will now enjoy seamless transportation of cargo from the Port of Mombasa to Malaba and onward to the East African region in a safe, reliable and cost-effective way,” he said.
The journey between the port city of Mombasa and Malaba border town takes 36 hours. This is in comparison to the about four days that it takes to truck cargo on road.
“This will not only reduce traffic on the road but also reduce the expenses incurred by companies and individuals while ferrying cargo,” Mainga said.
At the Naivasha ICD, local traders will be offered 30-day free storage with quick cargo processing and transshipment onto wagons.
“We will have regular, speedy and reliable delivery of cargo through well-organised train schedules with strict timetables for the evacuation of cargo and empty container repatriation from the Inland Container Terminals,” said Mainga.
Kenya Railways has also reduced tariffs charged on cargo ferried from Mombasa to Malaba by over 50 per cent.
This is as it tries to lure more firms to use the railway service but also due to concerns raised by the East Africa Community over high charges.
It expects that the new tariffs will increase cargo ferried through the railway. “There was concern over the high tariffs the country was charging but we have reviewed this by around 50 per cent,” Mainga said.
He revealed that Kenya Railways expects two trains carrying cargo from Mombasa to Mai Mahiu daily; local clients will be offered 30 days free storage at the Naivasha ICD.
“There are between eight and nine SGR trains every day and half of them are ferrying cargo. We expect this to rise in the coming days,” Maingi said. He stressed it would take 30 minutes to transfer cargo from the SGR to the MGR train.
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