5 January 2018

Kenya: Goods Shortage Stalls Kenya SGR Cargo Business

Cargo shortage has hit the standard gauge railway's goods haulage business that was launched on Monday, forcing Kenya Railways to delay the daily service.

The second cargo train that was expected in Nairobi on Wednesday was still stuck at Mombasa port awaiting containers amid increased imports via Kenya's sole sea port.

Kenya Railways Thursday said the train will leave Mombasa once the wagons are full to capacity, raising fears that investors are still opting for road transport.

"The second SGR freight train, which was expected to come to today (Thursday), is not full. We will let you know when it will arrive in Nairobi once it's full," said a Kenya Railways official who sought anonymity given the sensitivity of the matter.

The Monday cargo train hauled of 104 containers. This comes amid increased traffic at Mombasa port, helped by an expansion of its handling capacity. The port handles more than one million containers annually. Imports account for more than 80 per cent of the cargo or a daily average of 2,000 containers.

This has raised questions on why the SGR is struggling for containers. The new railway was expected to haul a huge chunk of containers and take pressure off the congested roads.

Kenya Railways earlier said it costs Ksh50,000 (about $500) to ferry a 20-foot container from Mombasa port to the Nairobi inland container depot (ICD).

Truckers charge between Ksh60,000 and Ksh80,000 ($600 - $800), depending on the weight and type of cargo. However, there are concerns that transporting goods by the SGR might not be cheaper, with some stakeholders saying cargo owners will spend between Ksh15,000 and Ksh20,000 ($150 - $200) on the last mile transport to industries within Nairobi depending on the distance from an ICD.

Mombasa handled 22.8 million tonnes of cargo between January and September compared with 20.6 million in the same period last year.

Imports accounted for 19.3 million tonnes, up from 17.4 million in the same period in 2016, an increase of 10.4 per cent.

The port, a major trade gateway to East Africa, handles imports such as fuel for Uganda, Burundi, Rwanda, South Sudan and the eastern Democratic Republic of Congo.

In 2016, Kenya commissioned the first phase of the second container terminal to provide an additional cargo-handling capacity of 550,000 containers per year.


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