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Promotional tariff and marketing triple Naivasha ICD cargo volumes

Naivasha Inland Container Depot cargo volume has recorded a significant increase despite the Kenya Railway (KR) rescinding on mandatory use of Standard Gauge Railway (SGR) two months ago which is attributed to promotional tariff and intense marketing.

RWANDAIR

Data from the Northern Corridor Quarterly Performance Dashboard reveals that both road and railway delivered a total of 3,381 Twenty Feet Equivalent Units (TEUs) to the Naivasha ICD within the first two months of operation; 874 TEUs in May, increasing to 2,507 TEUs in June 2020. A total of 2,325 TEUs were hauled by rail while 1,056 TEUs were delivered by road.

Out of the 2,325 TEUs hauled by train, 2,245 TEUs were import cargo, 70 TEUs were export cargo while 10 TEUs were empty return containers. A total of 24 trains made calls to the ICD with import cargo, while only six trains handled export cargo.

Since it started operations in June, the KR has been using promotional tariffs. Initial charges for 20-foot containers stood at $600 while charges for 40-foot containers stood at $850. To promote the usage and competitiveness of Naivasha ICD, KR introduced a 90-day stimulus tariff dubbed ‘Madaraka Express Freight Service’ from Mombasa to Naivasha, effective June 2020, where the freight charges were reduced to $480 for 20-foot containers and $680 for 40-foot containers.

Two months after being operational, the Inland Container Depot (ICD) at Naivasha has positioned itself as an essential node; connecting road and railway networks, with a marshalling area having the capacity to hold over 700 trucks at any given time. The 45,000-square-meter facility can handle over two million tonnes of cargo annually.

By handling cargo destined for Uganda, Rwanda, South Sudan, Ethiopia, Burundi and the Democratic Republic of Congo, the facility reduces the transit distance for the Member States by more than 570km.

The Naivasha ICD operates under a One Stop Centre (OSC) model where all government agencies clear cargo. The OSC at ICD Naivasha is set to house all regional Revenue Authorities; including Kenya Revenue Authority (KRA), Uganda Revenue Authority (URA), Rwanda Revenue Authority (RRA), Tanzania Revenue Authority (TRA) and “Office Burundais des Recettes” (OBR).

The ICD at Naivasha was commissioned in May 2020 to enhance the throughput at the port of Mombasa, decongest the Port of Mombasa and the ICD in Nairobi, as well as fast clearance of cargo and improved container handling.

For faster operations and reduced human contact in line with the regional guidelines and measures to reduce the spread of COVID-19 pandemic, KRA through a press release issued on 26th May 2020 reported that all cargo hauled to the Naivasha ICD facility would be visible to importers and clearing agents through a list on the KRA website that would be updated progressively on a daily basis.

When the directive for mandatory use of SGR Naivasha depot was made, the Ugandan government requested to be given an option in using the facility. The Minister for Roads and Infrastructure in Uganda Eng Edward Katumba wrote to his Kenyan counterpart James Macharia, saying that this decision was arrived at after the notice was reviewed by his ministry and the private sector.

He further said that if the Kenya government made it more attractive, big industry players like Bollore Logistics, Mukwano Group of Companies and others could be encouraged to start using this facility because of economies of scale.

The Kenya International Freight and Warehousing Association (KIFWA) Board of Directors also asked the industry players to promote Through Bill of Lading for the Naivasha ICD bound cargo to cushion importers against high demurrage charges likely to be incurred on delay in delivery of empty containers.

The contract on international carriage of goods by sea has set clear guidelines on where the obligations of the shipping line commences and ends. TBL refers to a single bill of lading covering receipt of the cargo at the point of origin for delivery to the ultimate consignee at a named place in the hinterland, either Embakasi Internal Container Depot (ICD) or Naivasha ICD in case of Kenya’s SGR.

For those using TBL at the ICDs, the responsibility of returning the container to the shipping line is minimized. The importer will need to adhere to the rules set out in the ‘Guarantee Form’ that the shipping lines issues when it hands over the container and the cargo to the consignee at ICD.

“The ‘Guarantee Form’ clearly indicates where and when they will return the container to and the numbers of days they have in which to honour this agreement,” Kenya Ships Agents Association (KSAA) Chief Executive Mr Juma Tellah said in an earlier interview.

The role of Naivasha as a tool to ease transit cargo came into sharp focus in a June meeting to discuss the new normal in logistics organized by African Logistics Properties (ALP), which pointed out a need to create supportive infrastructure to enable the facility to handle more goods.

As it stands out today, according to Gilbert Langat of Shippers Council of East Africa (SCEA), it was more costly to use the facility since it was not clear on whether to use TBL, lack of designated empty container drop points and last mile transport.

The government has already started rehabilitating the Medium Gauge Railway line between Nakuru and Kisumu.

For any feedback, contacts us via[email protected]/[email protected]/[email protected]; Mobile: +254703971679 / +254733780240

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