As anticipated, the standard gauge railway (SGR) is going through “market entry” rigours that any new business has to undergo.
We
have seen SGR adjust its operations, systems and tariffs to penetrate a
logistics arena that has been a virtual monopoly of road
transportation.
Transport dynamics are essentially market driven, with the client (cargo owner and passenger) having a major input on choices.
The
SGR business can be segmented into three logical phases— the Nairobi
destination, Western Kenya, and transit into Uganda— defined by the
project completion times.
There is also a classification into cargo and passengers which
are either from or to Mombasa. In the case of cargo it is imports,
exports or local transfers.
Each one of these areas
has unique opportunities and challenges requiring different approaches
to maximise business value. And from what we read, SGR appears to be
working on the right solutions to penetrate the market.
The
cargo owners are interested in the least total freight cost, and the
shortest cargo turnaround time. The passengers are keen on both the fare
cost and trip convenience.
As and when SGR enters Uganda, it will open up cargo transit opportunities with Rwanda, Eastern DRC and South Sudan.
Rail
transport economics are favoured by the longest possible distances as
these substantially reduce unit operating costs while multiplying
revenues.
For this reason, transit business should
always remain the ultimate prize for SGR with the government of Uganda
being a highly valued partner.
The main pushback and competition for SGR will remain road transporters and clearing/forwarding agents.
Road transport offers convenient and possibly cheaper, door-to-door service.
For
this reason, it should be accepted that there is a captive fraction of
long haul transport that will always remain on the road.
However,
SGR should aim at converting transporters and clearing agents into
value adding partnerships especially in utilisation of ICDs (Inland
Container Depots).
It is the ICD import/exports consignee model that presents the biggest potential for early SGR success.
The
test for SGR is to make ICDs work flawlessly by substantially improving
cargo and truck turnaround times by eliminating documentation and
operational delays.
Cargo clearance and forwarding
paperwork will need to be effectively transferred from Mombasa to
Nairobi and Naivasha, by integrating the Kenya Ports Authority, the
Kenya Revenue Authority and SGR systems into efficient real time systems
that work 7x24 hours.
Times from ship to loaded trucks at ICDs should reduce and approximate global benchmarks.
The
planned capacity expansion of Nairobi ICD and improvement of highway
truck access and egress should usher in efficient operations, without
aggravating the already congested Nairobi traffic. Improvements on
security can improve ICD productivity to 24 hours round the clock
operations.
To encourage the exporters from Western
Kenya and Uganda to use the ICDs, especially at Naivasha, it is
important to make available back-load cargo for return journeys to avoid
empty return journeys.
It
is such partnership and liaison with cargo importers, exporters and
transporters that will improve overall truck roundtrip economics, while
improving ICD and SGR usage
The passenger’s story is a more straightforward one.
The passenger’s story is a more straightforward one.
Apart from the train fare, the passenger is very sensitive to the “first mile” and “last mile” convenience, time and cost.
Convenient
passenger transfers and shuttles to and from Syokimau (Nairobi) and
Miritini (Mombasa) stations are a must if SGR wishes to maximise
passenger train usage.
SGR are apparently planning to enhance the passenger shuttle between Miritini and the Island. I will here make a very wild suggestion for Nairobi.
SGR are apparently planning to enhance the passenger shuttle between Miritini and the Island. I will here make a very wild suggestion for Nairobi.
Convert the Railway Golf Club area into a first-class passenger terminal for shuttles to Syokimau SGR station and also to JKIA.
Should
the SGR electrify? This is a decision that should be made jointly with
the Ugandan government. Otherwise, transportation all over the world is
going electric.
It is possible for SGR to make a quick
and profitable market entry by focusing on meeting cargo owners and
passenger expectations and creating win-win partnerships with road
transporters and clearing agents.
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