KPA boss Manduku takes stock of SGR gains 10 months later

In this interactive series, we invite readers to send in questions to selected public figures. This week, Kenya Ports Authority managing director Daniel Manduku responds to your questions.

1. Since the Standard Gauge Railway (SGR) freight services began in January, I would like to know from the Kenya Ports Authority (KPA), as the guarantor of the Sh327 billion Chinese loan, how much has been earned so far in freight charges and who keeps the money? Charles Owuor, Mombasa

Kenya Railways oversees the management and operations of the SGR. However KPA, as a key partner, and since it has well-established systems, has been given the responsibility of billing and collection of dues to SGR.

Since the start of SGR cargo freight operations in January, a total of $16.2 million (about Sh1.6 billion) has been billed, collected and remitted to the SGR escrow account, which is under the custody of Kenya Railways.

We normally ensure that the remittances to the account are done on or before 15th of every month.

2. East African countries are investing in rail and road networks to link the region. The port of Mombasa should thus play a central part in serving the region. What would be KPA’s role in this interconnectedness? Francis Njuguna, Kibichoi

The port of Mombasa is the gateway to East and Central Africa.

We pride ourselves as playing a huge role in facilitating trade through cargo handling, and we are currently servicing eight countries, including Uganda, Rwanda, Burundi, Democratic Republic of Congo (DRC), Northern Tanzania, South Sudan, Ethiopia, and Somalia.

To ensure effective service delivery, KPA has elaborate plans to continue with infrastructural development and modernisation programmes.

These include construction of a new port in Lamu that is targeted to serve South Sudan and Ethiopia markets and rehabilitation of Kisumu port to offer regional connectivity through Lake Victoria.

The new Taveta-Holili-Singida route is also expected to ease connectivity to Northern Tanzania, Rwanda and Burundi markets.

3. When the newest berth was opened two years ago, residents of Mombasa thought that they had been saved from the numerous container yards in Port Reitz and Jomvu. What are you doing to confine port operations within the port? Samuel Wasonga, Migadini, Mombasa

In January after the commissioning of SGR cargo train, 442 twenty-foot equivalent unit (TEUS) of empty containers were transported by rail into the port translating to a daily average of seven tractors displaced from the road but as up to September, a monthly carriage by rail was 6,107 TUES of empty containers translating to a daily average of 101 tractors displaced from the road/empty containers depots within Mombasa residential areas.

Marketing of SGR use is progressing well and very soon this concern will be fully addressed.

4. Kenyans have started repaying Chinese loans, a bulk of which were used to build the SGR. In view of this, doesn’t it bother you that roads are still filled with cargo trucks or trailers? Anthony Claver Indah

At the onset of SGR operations earlier in the year, KRC was operating one train a day, currently there are eight trains ferrying 108 containers each from Mombasa everyday.

This translates to 864 TEUs. There is also one train that moves steel cargo and cereals from Mombasa to Nairobi.

Similarly, evacuation of empty containers from Nairobi to Mombasa is also by rail. This translates to many cargo trucks off our roads.

We expect that as SGR operations continue to take shape, the situation on the roads will steadily improve.

The government constructed the SGR to facilitate transportation of people and cargo at affordable rates.

It is a measure to reduce the cost of doing business in Kenya and to reduce the burden on our roads.

TRUCKS

The SGR currently terminates at Nairobi Inland Container Depot, and this means the last mile has to be served by trucks.

Nonetheless, the number of trailers/ trucks on the Nairobi-Mombasa highway has reduced significantly.

Compared to the global trend, some leading ports such as Rotterdam and Hamburg account for about 20 percent in the utilisation of sea-railway combined transportation, while the US holds the highest proportion of about 40 percent.

France takes up 30-35 percent and German accounts for 20 percent. Once SGR is complete up to Malaba, it is predicted that the container transport ratio in Mombasa port by railroad will reach 34 percent, 42 percent and 43 percent respectively in the initial stage, in the short-term and in the long term.

5. There has been talk that KPA is buying very costly machinery and equipment it does not actually need. What is your comment on this? Githuku Mungai, Nairobi

KPA’s purchase of equipment is driven by demand and the need to modernise port operations.

The authority has always done its purchase of equipment through open tenders.

Lately, KPA has purchased quite a number of equipment to serve SGR facility in Mombasa and Nairobi - which is a new business for us.

The other machines purchased were for the phase one of the Second Container Terminal (CT2), which was a new facility.

As a matter of fact, owing to steady SGR cargo freight growth, we will still purchase equipment for our Nairobi ICD and we will also need additional equipment once phase two of the CT2 is ready.

6. Kenya International Freight Forwarders has been complaining of inordinate delays in clearing cargo, especially at the Inland Container Depot (ICD) in Embakasi, thus causing importers heavy losses. What is being done to resolve this? Suleiman Dahir, Nairobi

The delays in cargo clearance can be attributed mainly to the long stay container dwell-time, with importing customers failing to clear their containers on time.

I wish to assure all our customers that measures have been taken to address the challenges.

In the immediate term, this has entailed KPA transferring long-stay boxes to peripheral private areas to create room and regain fluidity.

In order to be able to track containers easily, a joint monitoring centre has been set up, championed by KPA, KRC and KRA for real time tracking of containers from Mombasa and throughout the value chain, which has drastically minimised the delays.

7. Last year, there was massive condemnation and politicised resistance to the construction of the Naivasha Inland Port; with many people arguing that the project will hinder and undermine the commercial interests of KPA, by among others crippling the operations of your inland container depots in Nairobi and Kisumu. Given that the Jubilee administration is very keen on the implementation of this project, what is KPA doing to remain competitive in cargo storage and warehousing? Dan Murugu, Nakuru

The Kenya Vision 2030 envisages development of industrial parks, business parks and Special Economic Zones (SEZ) to spur economic growth.

The aim of the Naivasha park is to improve the surrounding economic activities. It is expected that the freight flow from and to Naivasha will increase.

This investment is crucial to KPA because over time, with the increase in utilisation of the SGR, it is predicted that the modernised Nairobi ICD will have exhausted its capacity and will be facing constraints.

Naivasha will therefore serve to ease the constraints in the capacity of Nairobi ICD.

8. Militarism at the Dock Workers Union has reached an alarming level with open hostilities and multiple coups between rival camps representing port workers. What are you going to do to contain this menace? Dan Murugu, Nakuru

KPA has continued to enjoy industrial harmony in the recent years since the last strike by the Dock Workers Union (DWU) in June 2015.

To ensure business continuity at the port, we will consult, engage and involve the union through the established industrial relations platforms on all matters affecting the unionisable employees of the Authority.

9. Many CEOs managing public institutions are uncomfortable when the names Directorate of Criminal Investigation and Office of the Director of Public Prosecutions are mentioned in one sentence alongside the institutions they run. Sir, what makes you feel comfortable that you are not next to find yourself in this situation? Komen Moris, Eldoret

All institutions are expected to work within the rule of law and KPA is not an exception.

In its bid to comply with the existing laws, the authority has put in place several measures which include establishment of a fully-fledged department of ethics and integrity to combat corruption and unethical behaviour.

Second, in line with the Witness Protection Act 2006, we also have a whistle-blowing policy, which was enacted to protect those who report fraud, corruption or any unethical behaviour.

Finally, we have the KPA Code of Conduct and Ethics - which is paramount in instilling diligence and discipline among staff, thus discouraging corruption.

10. Why is KPA forcing traders to import their cargo through SGR when they can easily and efficiently do the same using other means? Fatuma Zamzam, Lamu

This is a good question much as it stems from information flow that may not have reached all Kenyans and traders at large.

The facts are that when the SGR operations begun in January, the Through Bill of Lading (TBL) cargo was less than five percent of the total local import cargo that passed through the port of Mombasa.

There has been significant increase of TBL cargo due to the fact that traders in the hinterland have embraced SGR as a mode of transport due to a number of factors; aggressive marketing strategies by shipping lines/KRC and KPA, low-cost of transport compared to road haulage, favourable tariffs, easy return of empty containers from ICD through last mile initiatives to the shipping lines, efficiency and safety.

As a result, the growth of TBL cargo has risen to about 75 percent as of September 30, while transit cargo is about 10-15 percent.

It is therefore not true that the importers and traders have been forced to use SGR as they are the ones who have imported their cargo as TBL to be cleared at ICD Nairobi.

The growth of TBL containers is testimony that SGR is viable and in the near future all cargo destined to the hinterland will be transported via SGR.