Contrary to tenets a capitalist market where buyers and sellers are free to buy and sell goods and services of their choice which Kenya aspires to, the government is now adopting habits of a communist state where businesses have no freedom of choice but tow the government’s line irrespective of price and services offered.
According to a government directive, all cargo consignments from Mombasa port destined for Nairobi must be transported by train, locking out road truckers.
However, the Kenya International Freight and Warehousing Association (Kifwa) have decried the move and wants the government to allow shippers to have an option of using alternative means of transport other than rail in the wake of revised rates.
Kifwa National Chairman William Ojonyo says forcing shippers to use the SGR is a wrong move that will impact negatively on the economy.
“Shippers should be allowed to decide how their cargo should be transported in a country where we have a multi-modal system of transport. What the government is doing with mandatory use of the SGR is creating a monopoly that goes against the WTO agreement," said Mr Ojonyo.
The cost of transporting cargo by road ranges between Sh85,000 ($850) and Sh95,000 ($950) for a 40-foot container compared with the Standard Gauge Railway charges of Sh100,000 ($1000).
The new freight rates, which are 79 per cent higher than the promotional rates, will also have a negative effect on consumers as manufacturers are set to increase the cost of goods in line with the higher tariffs.
Cargo owners will also have to spend between Sh15,000 ($150) and Sh20,000 ($200) on the last mile transport to industries within Nairobi, depending on the distance from the landing depot, further increasing the overall cost of transporting goods via SGR.
Persistent delays at Nairobi’s Inland Container Depot (ICD) also rakes in more costs, something which has irked shippers in the region forcing them to ditch Kenya’s standard gauge railway services.
Shippers in Uganda, the destination of over 70 per cent of Mombasa Port’s transit cargo, say they are back to trucking cargo after the ICD delays exposed their businesses to high demurrage charges.
“Even risk-takers like myself, the well-known early adopters of everything new, have said no to SGR until its operations are streamlined,” said Ms. Jennifer Mwijukye, chief executive of Kampala-based Unifreight Cargo Handling Company.
“The last time I tried the SGR, our containers stayed in Nairobi for two months,”
Mr Ojonyo said the exorbitant charges are bad for the economy as they will increase the cost of living.
“With an increase in the SGR cost shippers should be allowed to have an option of using different modes of transport,” said Mr Ojonyo.
Economist Toni Watima echo’s Ojonyo’s sentiments and says the government’s move to force shippers to use the SGR and at the same time increasing freight charges is illegality that will impact negatively on consumers.
“Shippers will obviously pass the cost to the consumer. When you create a monopoly, obviously the cost has to go up and it has to be passed on to someone,” said Mr Watima.
The government’s bias towards the SGR at the expense of other transporters amounts to unfair trade practice.
These favours include concessionary rates for SGR users and indirect orders to importers to use SGR when goods land at the port.
“The government is abusing its power by forcing shippers on the SGR, it should be their choice of what mode of transport suits them,” Mr Watima added, pointing out that the shippers’ council should move to court to stop the move.