SGR cargo revenue decline after cut in freight charges



SGR cargo train. FILE PHOTO | NMG

Revenue from cargo ferried via the Standard Gauge Railway (SGR) dropped by 2.7 percent in the three months to March, despite an increase in tonnage after the operator cut charges of moving goods on the line to boost business.

Data from Kenya Railways Corporation (KRC) show earnings from the railway line were recorded at Sh3.08 billion compared to Sh3.17 billion in the corresponding period last year.

The drop was despite an increase in cargo volumes by 10.4 percent to 1.535 million tonnes from 1.39 million tonnes.

Haulage charges per tonne averaged Sh2,439.10 in the quarter, a drop of Sh375.51 from the corresponding period in 2020.

KRC in December 2021 gazetted promotional tariffs to ferry cargo from the Mombasa port to Malaba at $860 (Sh100,198) for a 20-foot container weighing up to 30 tonnes, and $960 (Sh111,849) for a container weighing above 30 tonnes.

Charges on a 40-foot container weighing up to 30 tonnes stood at $1,110 (Sh129,326) while those above 30 tonnes were levied $1,260 (Sh146,802).

Kenya Association of Manufacturers (KAM) has been calling for a reduction in transport costs and a set up a framework with KRC for competitive rates to enhance the movement of their inputs and finished goods.

The lobby has cited challenges including delayed transfer of containers from Mombasa to Nairobi Inland Container Depot (ICD), and high dwell time on account of poor coordination among government agencies that intervene during the clearance of cargo.

There are also cases of erroneous haulage of containers meant for Mombasa-based industries to the Nairobi ICD, resulting in a lengthy repatriation process.

“Whilst the SGR rates are competitive compared to road transport rates, inefficiency within the SGR supply chain makes it less attractive and even more expensive compared to road transport,’’ in the Manufacturing sector agenda for 2022.

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