SGR: A great disadvantage-Transport Investors

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Forget about a rosy picture where speed combines with efficiency in the cargo haulage to cut production costs as painted by government officials – and to some extent, private sector players.

To a number of transport sector investors, the period after June 1, the date chosen by government for rollout of the first phase of Kenya’s standard gauge railway (SGR) represents an apocalypse of some sort.

According to Chiraz Yusuf, managing director of Ocean Engineering, a manufacturer of steel trailers and truck bodies in Mombasa, his firm is already reeling from the shock of SGR.

He says  the projection that SGR will cut the travel downtime from Mombasa to Nairobi has already put doubts on cargo business and they have recorded low sales in the number of trailers sold since October last year.

“My firm has been selling an average 10 trailers a month from October 2016 down from about 30 trailers a month. I today fear that I will be out of business once the railway starts running, and so I am diversifying to repair works and selling trailer spares,” Yusuf says

He says Truckers were the first group of investors to strongly voice their opposition against the SGR when the government first mooted the idea nearly six years ago. They received the support of clearing and forwarding agents, dock workers union and container freight stations (CFSs).

Lately, Mombasa County joined the fray with Governor Hassan Joho accusing the State of scheming to move part of the county’s economy upcountry with plans to build a dry port in Naivasha in the second phase of SGR.

Out of all these players, only the CFSs have had their concerns addressed directly after the Kenya Port Authority allocated 40 per cent of its cargo to their facilities.

According to the Data from Kenya National Bureau of Statistics, the number of new vehicle registration for trailers last year are decreasing from previous years by a considerable margin.

By September 2016 new registrations stood at 2,142 compared to 3,905 in 2015 and 2,925 in 2014.

Yusuf, “Most cargo businesses have shelved their plans to expand their fleet waiting to see what the effects of the SGR will be in their sector.”

Government information on SGR estimates that cargo transportation by road will decrease to 50 per cent from the current 95 per cent when the project is up and running, therefore reducing the number of trucks on roads.

It also forecasts that this will lower the cost of business due to less transit time while using the train and a higher container loading capacity of 4000 tonnes per train.

Long distance bus companies are also unsure of how the dynamics will play out in their segment of the market with the arrival of fast train from June.