The Standard Gauge Railway has failed to achieve its goal of reducing container transportation costs by 30 per cent, a government committee has found.
The joint technical committee on the Improvement of Efficiency and Cost Effectiveness of Transportation of Cargo Using SGR said it costs an average 133.5 per cent more to transport cargo using the rail system.
Findings of the committee reveal that while moving goods via road costs Sh65,000 and Sh85,000 for 20ft and 40ft containers respectively, the average cost for transporting the same containers from Mombasa to Nairobi via rail is Sh142,000 and Sh212,000 respectively.
Inefficiencies in the SGR freight system, according to the report, are mainly as a result of duplication of roles by agencies involved, leading to increased processing time and higher cost of doing business.
There are currently 27 agencies operating at the port of Mombasa, contrary to international practices.
“The only processes required at the port are cargo movement from the vessel to rail side, cargo loading, train marshalling, cargo quality inspection and customs clearance,” the report stated.
This means that the only agencies who should be operating at the port are Kenya Ports Authority, Kenya Revenue Authority, Kenya Railways and Kenya Bureau of Standards.
According to the report, the remaining 23 agencies should carry out their cargo interventions including inspections outside the port to minimise on time it takes cargo to reach the owner’s door step from the moment the ship dock’s at the port.
“It is observed that cost of doing business and efficiency at the port is dependent on the actions by the government agencies at the port, shipping lines and cargo owners, and the time each of the players take to execute their actions is crucial,” the report stated.
The committee said additional costs are incurred due to re-marshalling and storage by KPA, last mile transportation to the port and a standard fee to return empty containers from Nairobi to Mombasa.
Other charges include KPA handling of empty containers, shunting cargo from the port to the shipping line depot, shipping line charges as well as demurrage.
According to Shippers Council of Eastern Africa, importers have reported losses in hundreds of millions in demurrage charges as a result of delays to transport empty containers back to Mombasa in the last year.
The committee recommended government intervention to scrap the additional costs excluding last mile transportation (Sh15,000-Sh20,000 ) and KPA empty cargo handling (Sh3,000-Sh4,500 ) to bring down SGR freight costs.
If implemented, it will see total rail cargo transportation come down to Sh68,000 and Sh102,000 for the 20ft and 40ft containers respectively.