SGR making our transport cheaper,safer and more reliable

[RV Pundit]

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Naysayers don't want to admit such facts https://www.businessdailyafrica.com/corporate/shipping/Mombasa-port-makes-key-gains/4003122-5286206-1lte2wz/index.html

[Nefertiti]

I don't see SGR anywhere. Not a single mention. Calm down.

[RV Pundit]

I don't see SGR anywhere. Not a single mention. Calm down.

Why do you think cost of transportation of a container has dropped by 30% if not very competitive SGR tarrif being the main reason.... previously a container to Nairobi was 1000usd..now it's 70ousd.That is huge.At least 80% of cargo of 1.3m TEUS is bound hinterland.That like 1m *300usd savings...about 300m...ksh 30b...10% of SGR.. annually...if we extend past Nairobi... another's 30% making further savings of up to 500usd..that another 150m usd..so we are talking SGR saving the economy 50B annually.The economy just need 6 yrs to repay the debt... obviously KR and treasury will repay the loan in 20-30yrs.

[Nefertiti]

Roads have been patched all over in Kenya - that i saw in Dec 2017 - can cut tracking cost big. Is SGR cheaper than road? i heard something about GoK coercing cargo onto it.

[hk]

The reduction has more to do with improved efficiency of mombasa port. The port was dredged, a second container terminal was constructed and new equipment to handle cargo was installed funded by JICA. Also one of the few things uhuru has done right is ensure etracking seals on containers, so that once the container is inspected in mombasa it doesn't have to be stopped or inspected again until crossing border or final destination.

[RV Pundit]

I am in trucking business. When Jubilee's SGR's KR introduce promotional offer of 25-35k per container to Nairobi - there was no way trucks could compete without slashing their prices too to 60-80 from MSA to NBI.Otherwise northern corridor was fixed by Kibaki - there is nothing Jubilee has done on it - except complete the small stretch btw Malaba and Turbo - and small section btw Voi & Mariakani. Kisumu & Busia is starting to breakdown.What Jubilee did that improve efficiency at port - is well documented - reducing the red tape there - was Jubilee first assignment (also reflected elsewhere in "ease of doing business") - including OSOB - with Uganda reduced delay. E-tracking cost wise is an expense on the trucker - but benefits the consumers and KRA (no tax evasion or theft).

But bottomline - SGR was the main factor.

Ask any trucker - even Buzekis are crying now - SGR has put many truckers out of business. There is hardly any one buying a new truck now. Mombasa's Changamwe const - is becoming a ghost town - because trucking business is barely breaking even. All thanks to SGR.

But the economy is benefitting.

With completion of Phase 2A - I think action moves to Naivasha (Mai Mahiu/Suswa) - at least for 30% - that proceed to Uganda and rest - more stiff competition.

[hk]

I am in trucking business. When Jubilee's SGR's KR introduce promotional offer of 25-35k per container to Nairobi - there was no way trucks could compete without slashing their prices too to 60-80 from MSA to NBI.Otherwise northern corridor was fixed by Kibaki - there is nothing Jubilee has done on it - except complete the small stretch btw Malaba and Turbo - and small section btw Voi & Mariakani. Kisumu & Busia is starting to breakdown.What Jubilee did that improve efficiency at port - is well documented - reducing the red tape there - was Jubilee first assignment (also reflected elsewhere in "ease of doing business") - including OSOB - with Uganda reduced delay. E-tracking cost wise is an expense on the trucker - but benefits the consumers and KRA (no tax evasion or theft).

But bottomline - SGR was the main factor.

Ask any trucker - even Buzekis are crying now - SGR has put many truckers out of business. There is hardly any one buying a new truck now. Mombasa's Changamwe const - is becoming a ghost town - because trucking business is barely breaking even. All thanks to SGR.

But the economy is benefitting.

With completion of Phase 2A - I think action moves to Naivasha (Mai Mahiu/Suswa) - at least for 30% - that proceed to Uganda and rest - more stiff competition.

Trucking business is being decimated not cause sgr is cheaper but cause of  the mandatory directive to use it. Something the importers are challenging in court. 

[Kadudu]

Trucking business is being decimated not cause sgr is cheaper but cause of  the mandatory directive to use it. Something the importers are challenging in court.

If SGR is cheaper than trucks, why force transporters to use the SGR? There is no logic to this. Let the market forces decide which transport system will be used and in the end such discussions like this one here will be superfluous.

[hk]

Trucking business is being decimated not cause sgr is cheaper but cause of  the mandatory directive to use it. Something the importers are challenging in court.

If SGR is cheaper than trucks, why force transporters to use the SGR? There is no logic to this. Let the market forces decide which transport system will be used and in the end such discussions like this one here will be superfluous.

I agree. This is the most egregious aspect of SGR.  Like it wasn't enough that the damn thing was overpriced now importers are forced to use so it.

[Pajero]

SGR is nowhere cheaper than road transport,i have been importing cargo for last 15 years and i know.i used to pay between 60 to 80 k per container before SGR came upto my doorstep.There were no drop off charges,once the container is offloaded the truck goes back with the empty container and handsit back to the shipping line.

ENTER SGR,they started with promotional offers of between 25k to 35 k per container which became unviable and increased to  betweem 55k to 65 k.Ihave to pay last mile charges for my container to be delivered from ICD to my destination of about 30k to 35 k.Besides as a result of inefficiencies at the ICD,i part with another 10k to 15k per container as demurrage.

where is the logic? cost of business is still high,transport cost is still high,SGR has not lived to its purpose.

[RV Pundit]

Yes - and they need to stop doing that - once SGR is no longer an "infant" and they have sorted out their teething problems. For now - there is no denying - it made transport (overally) cheaper - because trucks have to compete.

Trucking business is being decimated not cause sgr is cheaper but cause of  the mandatory directive to use it. Something the importers are challenging in court. 

[RV Pundit]

Gov has to sometimes use "unfair" means for the good of the economy. They protect infant industries from competition - but only for a short-while. SGR has few teething problems - ICD in Nairobi is congested - and there is last time issues - double charging of storage.

If SGR is cheaper than trucks, why force transporters to use the SGR? There is no logic to this. Let the market forces decide which transport system will be used and in the end such discussions like this one here will be superfluous.

[RV Pundit]

Be a little honest.I think cost was 100K - before - and you had to deal with all headaches at KPA (it wasn't like now - you container arrives in Nairobi the same day the ship docks) - then truck would take even a week( 2 days loading or waiting to load) when  the trucks breaks down - yes teething problems at ICD - but these are not new problems - these are problems transferred from Mombasa to Nairobi.

I think both KR, KRA and KPA are addressing teething problems in there....but last mile is going to a big problem (30-35k for Nairobi sounds exorbitant -10-20k should be more than enough) - I am sure KR can be a little intelligent and do the last mile themselves -- and charge an extra 10-15k.

Also once SGR start taking in heavy non-containerized cargos - like clinker directly to cement companies - they can make very good money - and don't have to gorge customers of containers -- probably eventually leave trucks to do containers.

SGR is nowhere cheaper than road transport,i have been importing cargo for last 15 years and i know.i used to pay between 60 to 80 k per container before SGR came upto my doorstep.There were no drop off charges,once the container is offloaded the truck goes back with the empty container and handsit back to the shipping line.

ENTER SGR,they started with promotional offers of between 25k to 35 k per container which became unviable and increased to  betweem 55k to 65 k.Ihave to pay last mile charges for my container to be delivered from ICD to my destination of about 30k to 35 k.Besides as a result of inefficiencies at the ICD,i part with another 10k to 15k per container as demurrage.

where is the logic? cost of business is still high,transport cost is still high,SGR has not lived to its purpose.

[hk]

Yes - and they need to stop doing that - once SGR is no longer an "infant" and they have sorted out their teething problems. For now - there is no denying - it made transport (overally) cheaper - because trucks have to compete.

Trucking business is being decimated not cause sgr is cheaper but cause of  the mandatory directive to use it. Something the importers are challenging in court. 

When will that be? And why do importers have to subsidize SGR by being forced to use  it despite SGR being more expensive? Government shouldn't be in the business of choosing winners, that should be left to the marketplace. This regulations and directives is what makes kenya a less freer market that inhibits innovations and development. 

[RV Pundit]

SGR is good thing - otherwise if left on it's own device - you'll be paying 100K to get your container to Nairobi - which similar to what you pay from China to Mombasa. Elsewhere transport cost is about half - so even that 70K - is not very ideal. Once we have export cargo - rather than empty containers - then we can bring it down to 40-50k like developed world.

We couldn't get China to fund SGR without some guarantee.....KPA signed a "Take or Pay" with KR. The same way we cannot just turn off diesel plants - even if we have excess power...we signed a take or pay in power sector. That is the only way you can leverage someones money.

Gov is there for the big picture...SGR is big picture. Gov has to think long term.

Long term the only reliable transport for bulk goods is modern RAILWAY. Trucks will do last mile.

When will that be? And why do importers have to subsidize SGR by being forced to use  it despite SGR being more expensive? Government shouldn't be in the business of choosing winners, that should be left to the marketplace. This regulations and directives is what makes kenya a less freer market that inhibits innovations and development. 

[hk]

SGR is good thing - otherwise if left on it's own device - you'll be paying 100K to get your container to Nairobi - which similar to what you pay from China to Mombasa. Elsewhere transport cost is about half - so even that 70K - is not very ideal. Once we have export cargo - rather than empty containers - then we can bring it down to 40-50k like developed world.

We couldn't get China to fund SGR without some guarantee.....KPA signed a "Take or Pay" with KR. The same way we cannot just turn off diesel plants - even if we have excess power...we signed a take or pay in power sector. That is the only way you can leverage someones money.

Gov is there for the big picture...SGR is big picture. Gov has to think long term.

Long term the only reliable transport for bulk goods is modern RAILWAY. Trucks will do last mile.

When will that be? And why do importers have to subsidize SGR by being forced to use  it despite SGR being more expensive? Government shouldn't be in the business of choosing winners, that should be left to the marketplace. This regulations and directives is what makes kenya a less freer market that inhibits innovations and development. 

Its cheaper to use trucks than SGR. The only reason why kpa and kra is forcing importers to use SGR is cause sgr can't compete in the marketplace. So technically government used $5b for a rail that's more expensive than trucks. Even the budget office has damning report of the projects initiated by jubilee https://www.the-star.co.ke/news/2019-09-28-house-budget-team-trashes-uhurus-mega-projects/ . Other than the kenyatta getting richer and Ruto becoming a billionaire  there's little return on investment for " jubilee development projects".

[gout]

What one final good/product has become cheaper as a result of SGR? Salt?? Cement?? Steel?? Mtumba??

[Kadudu]

What one final good/product has become cheaper as a result of SGR? Salt?? Cement?? Steel?? Mtumba??

Malayas in Nairobi. All have moved out of Mombasa and the Mombasa Nairobi route.

[RV Pundit]

Everything inflation has been under control the last few years.

What one final good/product has become cheaper as a result of SGR? Salt?? Cement?? Steel?? Mtumba??

[Pajero]

https://www.standardmedia.co.ke/business/article/2001345549/truth-behind-state-s-bid-to-run-truckers-off-mombasa-road

Pundito will spew all manner of theories,get the facts.