Does Kenya’s SGR Signal the Death of Cargo Truck Operators?

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January 10, 2017
Photo credit: The Star

Photo credit: The Star

On Monday, 9th January 2017 under the sweltering heat of the Port of Mombasa, four locomotives were off-loaded from a ship.

This was the strongest signal yet that the dawn of a brand new rail transportation system in Kenya is here with us.

The construction of the railway is currently at over 90 percent complete, resulting in over 440 kilometres of steel and concrete snaking through the landscape.

The SGR has been touted by many spectators as the cure-all for all transport and logistics problems for goods in transit from the Port of Mombasa to inland Kenya.

At the same time there are some jitters among transport operators that the SGR will push them out of business.

There is concern from operators of truck and bus along the northern corridor that the SGR will cause major losses of jobs and income.

But nothing could be further from the truth.

Here are three ways in which the SGR will be a partner as opposed to a competitor to existing road freight and logistics companies:

Improved Efficiency: At present the port of Mombasa is overwhelmed by cargo congestion. With the entry of the Standard Gauge Railway, we are likely to see an increased efficiency in clearance of cargo from the port. It is estimated that 4 trains will be operating every day. The Standard Gauge Railway will not “steal” what belongs to the road, but will aid in evacuating cargo more efficiently from the port. Consequently, there will be an influx of cargo to the port and the region will balloon as a regional transportation hub. There will be enough cargo for trucks.

Increased Competition: We are likely to witness increased competition between sector operators with regards to handling of goods. Upon inception of the SGR, there may follow an interesting interplay between inland container depot, cargo freight transporters and the rail operators in movement of goods on a daily basis from the port. This will be to the advantage to the consumers due to an expected reduction in rates of transportation.

Last-Mile Delivery: The Initial Phase of the SGR terminates in Nairobi. The consumers will still need to move the cargo from one mode of transport (rail) to the other (road) with reduced handling of the actual goods. This is referred to as intermodal logistics. The lifting of freight from port to rail and subsequently from rail to truck will require the expertise of logistics providers. There will still be need for truckers to cover the logistics for the last mile where the SGR presence does not exist inland and across the borders to our landlocked neighbours.

The mark of a good business enterprise is the ability to innovate and adapt to changing times. The advent of the SGR in Kenya will not edge out road cargo operators. On the contrary, it is a great opportunity to enhance the fluidity of freight transportation and the intermodal logistics in Kenya.

SIDOMAN Investment Ltd is ready to operate alongside the Standard Gauge Railway and to continue offering unparalleled logistics services to our existing and new clients.


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