Better Roads and Automation cut East Africa Freight costs
The cost of transporting a 40 foot (ft) container between Mombasa and Kampala, Kenya’s biggest transit trade market, has gone down 34.2 percent in the last four years on the back of better roads, reduced police checks and efficiency at weighing points, new report shows. Road freight costs decreased to Sh230,858 ($2,237) in 2016 from Sh350,880 in 2011.
Automation at weigh stations greatly enhanced efficiencies shows the 2016 Logistic Performance Survey launched in Nairobi last week by the Shippers Council of Eastern Africa (SCEA).
This comes at a time new rail transport under development in the region is expected to increase competition for road transporters. The standard gauge railway (SGR), which starts its freight services early next year will charge Sh51,650 ($500) to transport a 20ft container between Mombasa and Nairobi and Sh103,300 ($1,000) for a 40ft container.
According to the report, which analysed the performance of trade logistics of the East African Community’s member states with respect the indicators of time, cost and complexity against those of the world’s leading trade hub, road freight cost from Mombasa to Bujumbura decreased to Sh515,277 in 2016 from Sh825,600 in 2011. Cost from Mombasa to Nairobi for a 40-foot container declined from Sh134,160 in 2011 to an average of Sh90,712 in 2016.
The average cost of transporting a 20ft container by sea was Sh186,792 and Sh279,672) for a 40ft container from the United Kingdom (UK) to Mombasa by sea. On the other hand, it cost Sh213,624 and Sh318,888 for a 20ft and 40ft containers respectively from the UK to Dar es Salaam, Tanzania. In rail transport, the survey indicates that charges from Mombasa to Kampala have steadily declined over the last three years from a high of Sh247,680 in 2014 to Sh72,240 in 2016 as a result of steep competition from road freight.
“Capacity and inefficiency challenges of the current railway means that the rail transport will continue to struggle to compare with road freight. Once the SGR train is fully operational, the challenges to the meter gauge rail will be compounded further,” said SCEA chief executive, Gilbert Langat during the report’s launch
Source: TradeMark East Africa