Ten months
after the launch of Kenya’s cargo service on the standard gauge railway line
between Mombasa and Nairobi, it has turned out to be a double-edged sword.
In its first
nine months, the service earned Kenya Railways more than $16 million, prompting
the operator to double the haulage capacity using double-stack wagons to the
Nairobi Inland Container Depot (ICD).
Already, the
trains’ daily tonnage has increased to over 800 containers, out of the 1,700
that arrive at the port of Mombasa.
The ramping up
of the operations has also seen the line ease the government’s payments of the
loan to China.
“Since the
start of SGR cargo freight operations in January, $16.2 million has been
billed, collected and remitted to the SGR escrow account, which is under the
custody of Kenya Railways,” said Kenya Ports Authority managing director Daniel
Manduku.
The launch of
the double-stack wagons, which Kenya Railways says will double the cargo
capacity hauled to Nairobi from Mombasa, comes as the Nairobi ICD struggles
with congestion. It has since acquired more land as it seeks to expand its
capacity.
The Kenya
International Freight and Warehousing Association (Kifwa) says the depot is
stretched, holding more than 8,000 twenty-foot equivalent units (TEUs) against
its capacity of 3,000 TEUs.
“We are seeing
more cargo being hauled to the Nairobi ICD, and coupled with the slow clearing
process, it is becoming congested,” said Kifwa national chairman William
Ojonyo.
Mr Manduku said
KPA has leased four storage facilities in Nairobi “to address cargo pile-up at
the ICD, which we expect to help clear our yard capacity.”
He said that a
joint monitoring centre has been set up for realtime tracking of containers
from Mombasa and throughout the value chain, which has drastically minimised
delays.
Scarcity of
long haul trucks
But, even as
Kenya Railways and the government celebrate the success of the freight service,
businesses in Mombasa that depend on the port economy have started reeling from
losses, as the faster, seemingly more efficient SGR cargo train takes over
cargo evacuation.
Truckers,
container freight stations (CFSs), and clearing agents continue to count
losses, with some logistics companies reported to have resorted to
restructuring that has seen thousands of job losses.
Omar Bakari,
56, a long-time truck driver on the Northern Corridor, told The EastAfrican in
Mombasa that currently, business is bad.
The
EastAfrican caught up with Mr Bakari as he prepared to transport mitumba (bales of
used clothes) from the Mombasa port to Kampala — cargo classified as high-risk
due to the possibility of being diverted to the Kenyan market.
“This is my
first trip this month and I am grateful,” he said. “Before the SGR cargo train,
I would do three trips in a month and take a week off, but now we spend more
time waiting for the goods than on the road. We have seen a reduction in
port-related business as a result of the SGR cargo service. My employer still
gets some business, but I know of companies that are struggling.”
The cargo train
handles about 40 per cent of the port cargo transport business, taking away
thousands of jobs.
“I have been
driving trucks for the past 21 years. I don’t know how long I will last in this
job,” Mr Bakari said.
As you drive
from Nairobi to Mombasa, the effects of the SGR cargo service are evident in
the scarcity of long haul trucks on the road and on the roadside.
From Mlolongo —
an outcrop town that got its name from the tens of trucks parked on the road
shoulders — to Salama, a town 100km east of Nairobi, and a popular rest haven
for long distance drivers, all the way to Mtito Andei, the Nairobi-Mombasa
highway is deserted. But about 50km heading into Mombasa at Mariakani, the
situation changes, with hundreds of empty trucks lining the roadside.
Steve Kitili,
34, who runs a CFS in Mombasa, saw good business for the past six years,
earning a promotion mid last year to become a manager. But not for long.
The CFS closed
in June, and the owner shifted base to Nairobi.
“I am now
depending on my wife’s income and it is not easy,” Mr Kitili said.
More losses
expected
With the
government keen on transporting about 250,000 containers by train by the end of
the year, there will certainly be more job losses in the port-related economy.
Truckers are
projected to incur $210 million in lost business. For the CFSs, the loss is
estimated at more than $100 million, at the end of the year.
As at June this
year, the Container Freight Station Association (CFSA) said that more than
3,200 workers had lost their jobs.
“We have let go
more than half our workers as businesses struggle. All these job losses have
happened here at the Mombasa port as a result of the reduction in trucked cargo
volumes,” said CFSA Chief Executive Daniel Nzeki.
The Kenya
Truckers Association also says several trucking firms have laid off hundreds of
drivers and Transport Cabinet Secretary James Macharia says that in the eight
months of the SGR cargo service operations, the government estimates that 1,300
trucks have been edged off the road, with the number bound to rise with the
introduction of the double-stack trains and improvements in the holding
capacity of the Nairobi ICD.
“Once the
entire stretch of the SGR line to western Kenya is built, we should see more
than 2,600 drivers out of employment,” KTA administrator Mercy Irei said.
Early this
month, Bollore Logistics, one of the region’s largest freight and logistic
firms sent workers home.
“We shall
consequently embark on restructuring the company into a leaner, more focused
and customer-centric organisation by combining teams, reducing layers and
stopping non-core or non-profitable activities. Regrettably, through this
process, some of our colleagues will exit the company,” Bollore Kenya Managing
Director Jean-Pascal Naud said.
