KENYA Railways Corporation (KRC) has stopped operating double-stack trains from the Port of Mombasa to Nairobi because of a significant drop in cargo volumes.
This method had been introduced in February in a bid to increase the volume of traffic on the Standard Gauge Railway (SGR) freight service.
Cancelling the service means KRC now operates four or five freight trains per day rather than the eight it operated in February and March when there was an unprecedented surge in cargo volume.
At peak demand, 1216 containers were arriving in the Kenyan capital Nairobi each day. For the SGR, March was a record month with 25,104 TEUs delivered by rail.
“The second quarter volumes have been quite low, meaning it could not have made any sense to continue running the double stark trains,” said Mr Wycliffe Wanda, Kenya International Freight and Warehousing Association chief executive.
The decline in volume is a concern as it was hoped that increased SGR freight traffic could help raise funds to repay Chinese loans used to build the Mombasa - Nairobi - Suswa SGR line. KRC also requires revenue to meet management financial obligations for Africa Star Railway Operation Company, the China Communications Construction Company subsidiary that operates passenger and freight services.
According to documents tabled in parliament, in the 2020-21 financial year, Kenya paid Sh 59bn ($ US 542.7m) to cater for payment for pending certificates and management fees for the SGR operations. For the same financial year, Kenya is expected to pay Sh 26.6bn and Sh 36.2bn in the next financial year to service loans from China Exim Bank for the SGR construction.
An in-depth analysis of African railways will appear in the July issue of IRJ.