Transpot: Why moving goods by rail is costlier than road

Direct cost implications of hauling cargo by the Standard Gauge Railway (SGR) to Inland Container Depot (ICD) in Nairobi is higher than earlier estimated, stakeholders in the cargo and logistics business warn 

They said the high cost is detrimental to the cost of doing business which ultimately trickles down to the final consumer. 

Kenya Groupage Cargo Handling Association (KGCHA) Chairman Solomon Muema, says currently the cost of moving a one fourty-foot container from Mombasa to Nairobi and back for the empty container by truck averages Sh85,000  plus VAT.

On the other hand transportation of container via SGR to Nairobi is $450 equivalent of Sh45,000 but again after clearance at the ICD there is an additional cost of last mile charges which on average is $250 to $350 (Sh25,000 to Sh35,000)

Total charges

That alone, Muema says brings the total charges to Sh80,000 yet the consignee has to return the empty container to Mombasa either by truck with an additional charge of Sh25,000 to Sh30,000 or take to ICD and use SGR, which is an additional Sh15,000.

“Now you see the cost of using SGR to ferry container and return the empty to Mombasa we are talking of an average of Sh125,000 which is way more than the fixed cost of Sh85,000 levied by trucks,” he says.

Besides, he said in addition to the Sh125,000, there is the re-marshaling and the storage charges  of Sh11,000 per twenty-foot containers and Sh16,500 per fourty-foot containers, which kicks in immediately after the four days free time are over at the ICD.

Importers have also to pay demurrage fees for delayed return of transportation containers if SGR fail to hand back the empty container in time.

Normally, importers are supposed to remove their goods from the port within four days after shipping. After the four days, the shippers are slapped with storage fee and later a demurrage fee is imposed on the import.