Joint efforts needed to enhance efficiency in regional cargo business

This article was also published in the  The Standard

Seaports play a key role in in the economic growth of a nation and neighbouring land locked countries. With the majority of global trade facilitated by sea, developing strong, well-functioning transport infrastructure that connects with the hinterland is a key element of growth for emerging regional markets.

Given the importance of the Port of Mombasa for international trade for Kenya and countries in East and Central Africa, efficiency and unified operations, cannot be taken for granted.

Development and management of ports is a major objective of economic development in many countries. As ownership and operations of seaports have traditionally been in the public sector, restructuring has often been a slow and frustrating process.

However, for Kenya, the new Kenya Transport and Logistics Network (KTLN) is meant to enhance efficiency and coordination by fortifying public-private sector dialogue and leveraging on the efficiencies and synergies of relevant state agencies.

It is hoped that through KTLN, Kenya will achieve its strategic agenda of becoming a regional logistics hub. Additionally, the Lamu Port-South Sudan-Ethiopia-Transport corridor (LAPPSET) is expected to give Kenya an edge over other players in the region.

Without a doubt, efficient transport and trade facilitation require highly specialized managerial and operational skills as well as use of modern technologies.

In recent times, the Port of Mombasa has reported improved efficiency it attributed to construction of the second Container Terminal, improved cargo handling services and faster transfer of cargo via the standard gauge railway. In 2019 alone, the port handled 1.425 million Twenty-Foot Equivalent Units (teus) representing a 7.3% growth over the previous year.

The Port of Mombasa is projected to handle above 2.5 million teus by 2022 after the completion of the second Container Terminal, which is expected to increase the holding capacity by more than 950,000 teus.

Actually, rail freight demand between Naivasha and the Nairobi Inland Container Depots (ICD), and the Port of Mombasa has significantly increased, with the operator hauling 264,696 containers between January and August this year.

Despite the growth, partnering with business operators remains critical, to ensure efficiency and sustainability of transport and trade not only in Kenya but the larger East and Central Africa region.

In the context of the COVID-19 pandemic, lower trade volumes and falling freight rates, governments have to increasingly seek partnerships with private sector players for strategic engagement in operating and maintaining port infrastructure and services.

However, all is not lost, the current construction, modernization, and upgrading of our dry ports with associated rail and road networks will definitely facilitate the trucking of cargo between Mombasa to designated intermodal yards.

The movement of cargo from the designated intermodal destinations is an ideal platform for private sector players to ensure the efficiency and sustainability of transport and trade in order to leverage private sector capital with the aim of redefining how goods flow across the continent.

As we ponder over our COVID-19 recovery, and assume a new normal, this is an ideal time for all stakeholders in the transport and logistics industry to work together to bring about the growth we have always desired as a regional business hub.

The writer is a Communication Consultant

Ends

Cargo transportation could heavily contribute to post COVID -19 economic recovery

This article was also published in the Star Freight is key in post COVID–19 economic recovery and in the Business Daily How cargo will play key role in economic recovery after corona

Kenya as a country is currently going through a bruising cycle. From the sporadic inflation movement in 2019, to the current Covid-19 pandemic that is yet to fully showcase its impact on not only Kenya’s economy but the continent at large.

Already, unemployment is on the rise, the economy is taking a hard beating and we do not know for how long.

The government is working on stimulus checks to help jump start the economy during our recovery journey. Indeed, the ability of stimulus programs to boast the economy quickly by getting cash into mwananchi’s hand is welcomed. However, this has to be complemented with many other initiatives.

Job creation and optimization of existing infrastructure will be key in the next phase of recovery as we seek to create jobs, raise real wages, and bolster the various sectors that have been hard hit including hospitality, aviation and manufacturing. To the greatest extent possible, these investments should be targeted to the workers, families, and communities and lowest end of the economic pyramid.

As the supply chains around the world are disrupted, business leaders must prepare for the effects on production, transport and logistics, and customer demand.

For a start, the country’s investment in the sea, air and rail networks provides an ideal platform to rebuild our economy and safeguard our position as the regional economic hub. The Port of Mombasa in conjunction with the now fully operational Standard Gauge Railway cargo transport network should lead in generating revenue for our country by ensuring that we efficiently deliver all the delayed cargo to the hinterland- not just in Kenya but the region at large.

For Kenya Ports Authority, this is the time to optimize the expanded yards and berths to handle more cargo, ride on the revamped ICT system and modernized cargo handling equipment to literally dominate the EAC market.  The Inland container depots (ICD) should be a beehive of activities, that will employ and re-engage the youth labour resources in clearing and processing the cargo to regional markets.

On the other hand, rail transporters like Africa Star Railway Operation Company should be at the forefront in offering significant cost efficiency for cargo haulage into the ports to enable the truckers and other last mile players to deliver the goods to the end users at an affordable cost. As a local feeder, an affordable road transport will definitely impact the cost of consumer goods.

Even at its lowest, once back in operation, our regional flier Kenya Airways, has the ability and capacity to airlift cargo shipments that will be vital today in the re-connectivity and regional economies.

To ensure these measures deliver all round economic value to the different economic segments, all the industry beneficiaries of the tax waivers and exemptions should be required to retain all their workforce and ensure that they are optimizing the youthful resources in linking up the regional market partners.

Even as we grapple on where to channel our resources in the recovery stage, we have to be cognizant that infrastructure optimization has the effects of contributing to this ‘economic resuscitation’ and is expected to contribute to future economic growth.

To set priorities and better evaluate potential outcomes, the government could set a mechanism for calculating projects’ economic and social impacts, and a system for measuring and reporting performance. For now, a transparent pipeline of well-planned projects, with appropriate risk-adjusted returns, could help to attract public and private investment into the infrastructure ecosystem.

The uncertainty and turbulence in the economy locally and across the world, the reality, of course, is that many players in the transport infrastructure sector will have some level of debt going into this. Some layoffs and drastic cost measures will be inevitable, however, operational improvement might just be the pivot point in ensuring that the costs of transport is fairly shared across the different players and not hipped onto the consumer of the transported goods.