@BusinessDaily

KUNYIHA: How to resolve the current transport infrastructure

7 days ago, 19:34

By: Mucai Kunyiha

A good transport system is a crucial ingredient for a thriving manufacturing sector owing to its function in the supply chain that impacts on quality and cost of production. It catalyses export business by ensuring timely and quality delivery to the global market, thereby generating Foreign Direct Investments and additional sources of revenue for the country.

Kenya has, in the recent past, seen several infrastructure projects initiated especially in the transport sub-sectors including road, rail, maritime and non-motorized transport, all intended to improve logistics and supply chain efficiency.

Notable infrastructure developments include completion and operationalization of phase one of the Second Container Terminal at Mombasa Port and the completion of the expansion of the Inland Container Depot Nairobi (ICDN).

Additionally, we had the construction of the first three berths of the Lamu Port, expansion of gates and yard capacity, installation of the Integrated Port Security System and the successful completion of the first Phase of the Standard Gauge Railway (SGR).

Though well intended, these new developments have had teething problems in their implementation that have inevitably doubled, and in some cases, tripled the cost of logistics and transportation.

Such implementation challenges are not unusual in large projects and their occurrence should not overshadow the bigger picture. However, these challenges must be acknowledged for solutions and short-term impactful measures to be created in collaboration with stakeholders, so as to get back on track towards making Kenya a competitive environment with world-class infrastructure.

The development and operationalization of SGR Phase one was expected to among other things, reduce freight transport tariff charges from US$0.20 per tonne-kilometre on average to US$0.083 per tonne-kilometre, and reduce transit time of freight trains from 30 hours on the average to less than eight hours in the Mombasa–Nairobi section. Due to the logistical, storage and planning challenges around the port, these gains are yet to be realized.

There are a few suggestions on how to move forward from the current predicament.

First, to curb the soaring demurrage and storage costs, we need to review the period given to importers during which they can clear their cargo free of charge.

This needs to be aligned with cargo clearing agencies service charters which provide for more than 4-days for clearing of goods.

Secondly, the SGR operator ought to provide a ‘door-to-door’ service on the delivery of goods by rail. Currently the co-ordination between the rail operator, clearing agents and transporters is below optimal, creating log-jams both in and outside ICD Nairobi as well as the Port.

Thirdly, as a country, we need to first track the development of harmonised verification standards that will be used by the Kenya Bureau of Standards, the Multi-Agency Team and any other body charged with the point of departure quality checks.

Fourth, the recurrent issue of system downtime is also one that compounds the challenges faced with logistics and movement of cargo.

MUCAI KUNYIHA, Vice Chairman, Kenya Association of Manufacturers.


Read More


Category: business news markets lifestyle

Suggested

1 hours ago, 20:02
@BusinessDaily - By: Sam Kiplagat
Investor loses bid to stop demolition of plush Gigiri hotel

A Nairobi court has allowed City Hall to demolish a multi-million shilling hotel situated in the upmarket area of Gigiri. ...

Category: business news
8 hours ago, 12:31
@BusinessDaily - By: The Citizen
Kenyan firm lost bid for TZ cashews despite higher price

Report: A Kenyan company was among two private companies that bid for Tanzanian cashew nuts at a higher price than that set by the government. ...

Category: business opinion news
4 hours ago, 16:39
@BusinessDaily - By: Lynette Mukami
Uhuru raps State agencies for frustrating SMEs

Mr Kenyatta urged the State agencies to shed their gate-keeping mentality and instead facilitate trade ...

Category: business opinion news
7 hours ago, 14:10
@BusinessDaily - By: Victor Raballa
Kisumu County cracks down on lakeside carwashes

He expressed concern that waste form carwashes was choking Lake Victoria and drying up rivers ...

Category: business news
1 minute ago
@AfricaNews - By: Africanews
Egyptian firms to build Tanzania's 'controversial' $3 bn dam | Africanews

Magufuli said on Tuesday the East African country was moving ahead with the project due to improved revenue collection by the government, without giving details. ...

Category: africa africa_business business news
8 hours ago, 13:20
@BusinessDaily - By: Patrick Lang'at
Uhuru tasks Judiciary in anti-corruption war

President Kenyatta terms bail terms given to graft suspects as “ridiculous". ...

Category: business news

@BusinessDaily

KUNYIHA: How to resolve the current transport infrastructure

7 days ago, 19:34

By: Mucai Kunyiha

A good transport system is a crucial ingredient for a thriving manufacturing sector owing to its function in the supply chain that impacts on quality and cost of production. It catalyses export business by ensuring timely and quality delivery to the global market, thereby generating Foreign Direct Investments and additional sources of revenue for the country.

Kenya has, in the recent past, seen several infrastructure projects initiated especially in the transport sub-sectors including road, rail, maritime and non-motorized transport, all intended to improve logistics and supply chain efficiency.

Notable infrastructure developments include completion and operationalization of phase one of the Second Container Terminal at Mombasa Port and the completion of the expansion of the Inland Container Depot Nairobi (ICDN).

Additionally, we had the construction of the first three berths of the Lamu Port, expansion of gates and yard capacity, installation of the Integrated Port Security System and the successful completion of the first Phase of the Standard Gauge Railway (SGR).

Though well intended, these new developments have had teething problems in their implementation that have inevitably doubled, and in some cases, tripled the cost of logistics and transportation.

Such implementation challenges are not unusual in large projects and their occurrence should not overshadow the bigger picture. However, these challenges must be acknowledged for solutions and short-term impactful measures to be created in collaboration with stakeholders, so as to get back on track towards making Kenya a competitive environment with world-class infrastructure.

The development and operationalization of SGR Phase one was expected to among other things, reduce freight transport tariff charges from US$0.20 per tonne-kilometre on average to US$0.083 per tonne-kilometre, and reduce transit time of freight trains from 30 hours on the average to less than eight hours in the Mombasa–Nairobi section. Due to the logistical, storage and planning challenges around the port, these gains are yet to be realized.

There are a few suggestions on how to move forward from the current predicament.

First, to curb the soaring demurrage and storage costs, we need to review the period given to importers during which they can clear their cargo free of charge.

This needs to be aligned with cargo clearing agencies service charters which provide for more than 4-days for clearing of goods.

Secondly, the SGR operator ought to provide a ‘door-to-door’ service on the delivery of goods by rail. Currently the co-ordination between the rail operator, clearing agents and transporters is below optimal, creating log-jams both in and outside ICD Nairobi as well as the Port.

Thirdly, as a country, we need to first track the development of harmonised verification standards that will be used by the Kenya Bureau of Standards, the Multi-Agency Team and any other body charged with the point of departure quality checks.

Fourth, the recurrent issue of system downtime is also one that compounds the challenges faced with logistics and movement of cargo.

MUCAI KUNYIHA, Vice Chairman, Kenya Association of Manufacturers.


Read More

Category: business news markets lifestyle

Suggested

1 hours ago, 20:02
@BusinessDaily - By: Sam Kiplagat
Investor loses bid to stop demolition of plush Gigiri hotel

A Nairobi court has allowed City Hall to demolish a multi-million shilling hotel situated in the upmarket area of Gigiri. ...

Category: business news
8 hours ago, 12:31
@BusinessDaily - By: The Citizen
Kenyan firm lost bid for TZ cashews despite higher price

Report: A Kenyan company was among two private companies that bid for Tanzanian cashew nuts at a higher price than that set by the government. ...

Category: business opinion news
4 hours ago, 16:39
@BusinessDaily - By: Lynette Mukami
Uhuru raps State agencies for frustrating SMEs

Mr Kenyatta urged the State agencies to shed their gate-keeping mentality and instead facilitate trade ...

Category: business opinion news
7 hours ago, 14:10
@BusinessDaily - By: Victor Raballa
Kisumu County cracks down on lakeside carwashes

He expressed concern that waste form carwashes was choking Lake Victoria and drying up rivers ...

Category: business news
1 minute ago
@AfricaNews - By: Africanews
Egyptian firms to build Tanzania's 'controversial' $3 bn dam | Africanews

Magufuli said on Tuesday the East African country was moving ahead with the project due to improved revenue collection by the government, without giving details. ...

Category: africa africa_business business news
8 hours ago, 13:20
@BusinessDaily - By: Patrick Lang'at
Uhuru tasks Judiciary in anti-corruption war

President Kenyatta terms bail terms given to graft suspects as “ridiculous". ...

Category: business news
Our App