While Kenya’s Standard Gauge Railway offers a cheaper more efficient transport option for cargo it has also resulted in job losses.
The multibillion-shilling SGR offers its services to landlocked countries in East Africa, and so far container traffic has grown fourfold, with the Inland Container Depot (ICD) in Nairobi handling up to seven cargo trains daily from just one when the freight service was launched in December 2017.
The ICD has also benefited after cargo clearance was moved from Mombasa to Nairobi. In 2019, the SGR hauled close to nine million tonnes of cargo to Nairobi after the government introduced ex-hook railage where cargo is offloaded directly from the ship to the wagon.
Uganda’s business community has lauded the project as it has reduced time taken to clear and transport their cargo from one week to a few days.
Uganda’s consular in Mombasa, Katureebe Tayebwa, said the SGR was timely as more than 80 per cent of transit cargo handled at the port of Mombasa is destined for Kampala.
“We support the SGR and despite a few issues with some transporters we hope to resolve them once the Naivasha terminal becomes fully operational,” said Mr Tayebwa.
A section of Mombasa-based Ugandan transporters has joined Kenyan long-haul transporters and logistics companies to protest the loss of business since the SGR started its operations and subsequent move of cargo clearance to Nairobi’s ICD.
“We have lost business after SGR freight trains were introduced and our government does not allow us to voice our concerns,” said a Ugandan transporter who wished to remain anonymous.
Kenyan transporters have also accused the government of violating the World Trade Organisation agreement whose rules on trade facilitation allow for free flow of cargo.
But, according to Gilbert Lagat from the Shippers Council of Eastern Africa, importers should choose the most convenient, cheap and secure transport means, and in this case it is the SGR.
“The SGR offers a fast mode of transport, hence it’s of benefit to importers who want their cargo delivered on time,” he said.
In Mombasa, transport companies have either scaled-down operations, branched out to other businesses or completely shut down. Since last year, Mombasa-based transporters and affiliated sectors have been holding protest marches every Monday to condemn the government’s move of forcing importers and exporters to use the SGR and have cargo cleared in Nairobi.
However, for truck body-building companies like Trans Trailers there has been an increase in demand for trucks with low loaders and extendables for abnormal cargo that cannot be ferried by the SGR according to Bonthula Rao, the firm’s general manager.
Transport firms that have lost business to the SGR are having their trucks fabricated into specialised trucks as they seek to remain afloat.
“Demand for refurbishments of trucks has increased and we attribute this to a business shift to transportation of specialised cargo,” said Mr Rao.
But other companies have had to take drastic measures, and the Paris-headquartered Bollore Transport and Logistics Group is one of them. The company was forced to relocate from Mombasa to Nairobi.
According to Jason Reynard the firm’s chief executive for East Africa, it was inevitable to restructure the company’s operations including relocating sea freight import operations from Mombasa to Nairobi to survive in the new operating environment while anticipating further changes in the industry.
“The diversification of the business ensures we can survive during periods of disruption,” said Mr Reynard.
“The SGR has changed our human resource requirements and this resulted in redundancies for a number of roles specifically in our freight forwarding and CFS operations since 2018. This has affected about five per cent of our current workforce,” said Mr Reynard in response to industry talk that Bollore was either firing all employees or quitting Kenya.
The EastAfrican has established that a number of Bollore’s staff in Mombasa have been sent on compulsory leave.
Mr Reynard said they have invested millions in assets and equipment in Kenya with the company recording exponential growth in its supply chain and warehousing division.
“The Kenya business plays an important role for our regional and global operations and our Nairobi office will continue to host our East Africa headquarters. Our project division in the past five years has recorded major growth due to major infrastructure projects in the region such as the Karuma Hydropower Project in Uganda,” he said.
Other Mombasa-based companies such Hakika Transporters, Volcanic Holdings and Transporters, and Pearl Logistics have sold some of their trucks while others have branched out into real estate.
In Mombasa, transport companies have either scaled-down operations, branched out to other businesses or completely shut down. From last year, Mombasa-based transporters and affiliated sectors have been holding protest marches every Monday to condemn the government’s move of forcing importers and exporters to use the SGR and have cargo cleared in Nairobi.
A section of Mombasa-based Ugandan transporters has joined Kenyan long-haul transporters and logistics companies to protest the loss of business since the SGR started its operations.
Cargo throughput at the Inland Container Depot (ICD) in Nairobi grew by 61.1 per cent from 257,972 TEUs in December 2018 to 415,650 TEUs this year, according to Kenya Ports Authority (KPA) latest data.
The increased performance is attributable to more daily SGR trains between Mombasa and Nairobi where an average of 10 trains leave daily for the ICD Nairobi. To manage the traffic, the KPA management has put in place a number of measures aimed at streamlining operations to enhance efficiency and reduce congestion which include installation of smart gates for ease of in and out traffic, joint verification, improved ICT systems.
The KPA, Kenya Revenue Authority and SGR Operator systems are also now interfaced to ease cargo clearance. As a results cargo dwell time dropped from 11 days in December, 2018 to four days by the end of last year.