A Partnership that the Kenya Railways (KR) has entered into with the shipping lines has enhanced smooth operations of the Standard Gauge Railway (SGR) line, seeing an impressive growth of the cargo volumes going to ICD Embakasi in Nairobi. SGR started commercial cargo freight in January this year.
The service is rapidly gaining importance as a transport solution for the cargo destined to Kenya and the region after the shippers were convinced to adopt the Through Bill of Lading (TBL) freight model when they import the goods in the country. This is what has defined the recent partnerships with four shipping lines as KR seeks to promote Madaraka Express Freight Services.
Under the TBL model, importers are nominating their cargo destined for Nairobi and other inland destinations for delivery to the Inland Container Depot in Nairobi via the SGR line.
The shipping lines are therefore able to provide containers in bulk from one vessel instead of getting them in small quantities from different ships calling at the port of Mombasa, which was initially creating delays.
KR attributes the recent increase of the volume of the cargo being nominated to the ICD to the TBL. Today, KR is operating six freight trains daily from Mombasa to Nairobi, increasing one train every month with a target of operating 12 trains daily by December this year.
“KR has increased the number of loading points and identified loading bays for wagon supply and direct delivery of boxes, which has increased efficiency,” Mr. Atanas Maina, KR Managing Director told Freight Logistics magazine.
From only 964 Twenty Foot Equivalent Units (TEUs) delivered to ICD in the month of January, there has been a marked growth in numbers with volume increasing to 12,344 TEUs in the month of April. In the first four months of this year, SGR transported a total of 25,392 TEUs of which 22,117 TEUs went through the TBL model.
One of the key benefits of TBL to the shippers is in the convenience it brings in handling the empty containers. Since the point of offloading in the shipping documents is identified as the ICD Embakasi, the shippers are consequently supposed to deliver the empty containers to ICD and not to Mombasa empty container depots as is the case when cargo is cleared in Mombasa.
This shifts responsibility of taking empty container to Mombasa depots to shipping lines and also reduces the risk of delaying delivery of empty containers to the shipping lines, which comes with high demurrage charges.
KR has so far signed a TBL agreement with Pacific International Lines (PIL) Kenya Ltd, whose headquarters is based in Singapore. In the agreement, PIL (K) Ltd committed to support the service and continually market the use of the Madaraka Express Freight Service as the preferred mode of transport.
In a similar development, Kenya Railways signed yet another agreement with Wilhelmsen Ships Services, an agent of the Emirates Shipping Line.
KR has also entered into a contract with Compagnie maritime d’affrètement – Compagniegénérale maritime (CMA – CGM) as part of the corporation’s efforts in marketing the Madaraka Freight Service.
CMA – CGM is a major shipping line ranked as the third largest globally, going by the number of twenty-foot equivalent units (TEUs) handled, operating a fleet of 504 vessels that call at 420 ports in 160 countries.
“This is a positive step towards increasing cargo transportation via the SGR. It is a sign that customers have started appreciating the type of service we are offering, which basically aims at enhancing transport and logistics in the region. The TBL model makes it easier for customers to even transport empty containers back to the port after delivery,” Mr. Maina said.
Apart from the containers, SGR will also be able to move steel, bulk and loose cargo.
“We are currently transporting containers as we finalize with the infrastructure, required assets and procedures on how to move the other types of cargo,” Mr. Maina added.
KR has also extended the freight promotional tariff up to December 31 this year to bring more users of SGR on board. SGR freighters pay a flat fee of Ksh25, 000 ($250) for a 20-foot container and Ksh30, 000 ($300) for a 40-foot container from Mombasa to the Embakasi ICD.
KR will continue to charge Ksh15, 000 ($150) to transport a 20-foot container and Ksh20, 000 ($200) for a 40-foot export container and Ksh10, 000 ($100) for both the 20-foot container and40-foot empty container from the ICD to Mombasa.
The Madaraka Express passenger service also continues to make strides in the transport sector of our economy. Launched earlier, in 31st May last year, the passenger service train has operated very successfully having made Sh1.1 billion in revenue, which is attributed to consistently high booking rates.At no given time has the booking capacity gone lower than 90 per cent.
The train carried over 1.2 Million passengers in its first year of operation. Even though fare was raised from apromotional rate of Sh 700 to Sh 1,000 per passenger in the economy class, there has not been a reduction in bookings.
“The overall seat occupancy is about 96.7 per cent, which I think is tremendous,” Mr. Maina said.
Currently, there are two passenger trains using the SGR, making two trips from Mombasa to Nairobi per day and two in the opposite direction. By 1st June 2018, the trains, being managed by the China Road and Bridge Corporation, had made about 1,142 trips, according to Mr. Maina. He added that the operator has recently added five economy class coaches on the Nairobi-Mombasa Intercounty and the Mombasa-Nairobi Express trains on Fridays, Saturdays and Sundays, thereby catering for the huge passenger numbers experienced on these days.
The service’s uptake is largely attributed to the numerous benefits it holds over alternative modes such as unparalleled comfort of the coaches and the reduced travel time between the port city and Nairobi and back which averages at 5.5 hours.
In August 2017, the inter-county train service was introduced. It stops at all intermediate stations of Mariakani, Masienyi, Voi, Mtito Andei, Kibwezi, Emali and Athi River. This greatly widened KR customer base while extending the service to many Kenyans.
Another important aspect of Madaraka Express, according to the government, is the number of domestic tourists at the Coast. The hotel occupancy level in the Coast region has gone up.
“The service has presented new opportunities for Kenyans through job creation and technology transfer while helping in navigating transport challenges which had partly hindered Kenya from fully realizing its domestic potential,” Mr. Maina said, adding that the service has had a positive impact on the tourism sector by encouraging the growth of domestic tourism.
According to the Kenya Tourism Board (KTB), bed occupancy has increased to more than 90% up from 50% in previous years, a factor largely attributable to the Madaraka Express.
Currently the SGR Phase 2A construction is ongoing, with the section having reached Duka Moja. Just like Phase One (Msa- Nrb), many Kenyans are already enjoying the benefits of Phase 2A through the numerous employment opportunities at the various sites across the project. It is anticipated that this phase will be operational and servicing the country’s development agenda by June 2019.
Phase 2 of the SGR project takes the line to Malaba for onward connection to the Ugandan network. Due to the difficult terrain as well as the cost involved, the Phase 2 could not be developed as one unit and has been split up into three sub-phases, phase 2A from Nairobi to Naivasha (Mai Mahiu- Suswa), phase 2B, Naivasha to Kisumu (via Narok and Bomet) and phase 2C from Kisumu to Malaba (via Yala and Mumias).
SGR is expected to be a major boost for Kisumu town and Lake Victoria water transport system, according to the proposed plan. Prior to discontinuing rail services to Kisumu, the existing Kisumu port was handling approximately an annual 600,000 tonnes of freight destined for Uganda and Northern Tanzania.