Cargo order hits Mombasa hard
The Standard Gauge Railway (SGR) has uprooted business from Mombasa to Nairobi’s Embakasi Inland Container Depot (ICD), disrupting the multi-billion-dollar logistics business.
This follows a directive requiring all import and export cargo to be transported via the SGR as part of Government efforts to aid Chinese investors to recoup the Sh327 billion investment in the railway project.
Among the immediate concerns for Mombasa is impending job losses, with projections that nearly half of the country’s imported cargo will be cleared at the Embakasi ICD by December.
Kenya Railways Corporation (KRC) Managing Director Atanas Maina said the change was inevitable while acknowledging that it was bound to create resistance.
“In the long-term, we expect that businesses will be affected, but the bigger picture here is that it will be for a common good,” said Mr Maina.
He projected that 11 cargo trains would be in operation daily by December, moving nearly 1,200 containers in what could further deepen the woes of transporters.
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In a bid to attract more importers, KRC has slashed transportation costs between Nairobi and Mombasa by more than half, albeit on a promotional tariff.
Introductory prices for a standard container to Nairobi – commonly referred to as “up” direction – have gone down from Sh55,000 to Sh25,000, and Sh15,000 in the opposite direction.
Business operators in Mombasa said earlier this week they were already preparing for massive layoffs and called on the Government to allow Container Freight Stations (CFSs) to operate as free trade zones.
State offers more incentives to woo importers to use SGR
“There is a looming job crisis in Mombasa because CFS operations are being scaled down and cargo is being forced on SGR,” said Hezron Awiti, a former Kenya International and Warehousing Association chairman.
Already, unplanned warehouses are mushrooming near the ICD to cash in on the anticipated additional traffic on the already-congested Mombasa Road.
Container Freight Stations Association of Kenya Chief Executive Daniel Nzeki said the lobby had sought a formula to divide the cargo to cushion members against losses.
“I hope our proposal to share cargo between our members and the SGR will be considered,” said Mr Nzeki in an interview.
Transport Principal Secretary Paul Maringa admitted the directive would eventually lead to job losses as more logistics moved to Nairobi and later, when the planned Naivasha dry port started operating.
“It is awkward to be a shipper, a shipping agent, owner of a CFS and a tracker… if this is who you are then you do not want any business out of your hands,” said Mr Maringa.
Among the biggest likely casualties are multinational logistics companies that control the cargo business through the value chain – from sourcing abroad to delivering to the customer using trucks.
Port traffic up by 10 per cent, says KPA
Cargo handled at the Embakasi ICD has already soared four-fold since January, putting the livelihoods of the thousands of employees of cargo handling facilities in Mombasa in limbo.
Kenya Ports Authority told The Standard last week that the shift of cargo to the SGR was voluntary, contradicting an earlier directive issued by the Ministry of Transport that it was compulsory.
Simon Gatimu, an official at the SGR office in Mombasa, said they were urging clients to check the location of their cargo from their offices but some still insisted on going to the port.
Kenya Railways has also been running advertisements urging transporters to check the status of their cargo on their website to facilitate haulage and ease congestion at the ICD.