The Transporter Issue 20

ISSUE 020

APRIL-JUNE 2013

A PUBLICATION OF THE KENYA TRANSPORTERS ASSOCIATION LIMITED

The Executive

ORDER Roadblocks along the Northern Corridor abolished Agencies operating at the port to report to KPA MD Cut transit time between Mombasa and Malaba from 13 to five days KeNHA to install high speed weigh-in-motion scales Transit trucks to be weighed only at Mariakani

The Transporter

Trade

APR - JUN 2013

Eliminate trade barriers, Uganda tells Kenyatta pg. 46

The Transporter

APR - JUN 2013

A member of The CIC Insurance Group, CIC Plaza, Mara Road, Upperhill Tel: 020 282 3000, 0703 099 120 or 0735 750 885, callc@cic.co.ke

Content

R COVE STORY

The Executive

Transporter

The

ISSUE 020

Apr - Jun 2013

IN THIS ISSUE KTA Briefs

2

Events

2

Global

6

ORDER 36

REGULARS

INTERGRATION

KTA NEWS

Truck World

8

Truck & Trailer

14

KTA boosts road safety

12

TATOA visits KTA, affirms

16

regional ties

22

24

EALA passes OSBP BILL

LOGISTICS EAC integration enhanced

World Bank to fund

KITALE-JUBA ROAD INFRASTRUCTURE

ECONOMICS EA’s economy to grow in

KSh19.5 Billion EAC

LINK ROAD APPROVED

43

TRADE

36

2014 - AfDB

INFRASTRUCTURE Dongo Kundu bypass:

40

Sh.1 Billion released

TRADE

Eliminate trade barriers, Uganda tells

KENYATTA

46

CFSs told to operate round

44

the clock

PORT NEWS Construction of terminal on schedule

OPINION

Taxation should not Finance RAILWAY PROJECT

26

The Transporter

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APR - JUN 2013

50

Transporter

The

A publication of the Kenya Transporters Association Limited

BOARD OF DIRECTORS

Paul Maiyo Kiprop Bundotich Hassan Bayusuf Gulam Yusuf Iqbal A. Bayusuf Salad Awale Imran Pasta Zahir Kara Shakil Khan ACTING CEO

Wellington Kiverenge SALES CO-ORDINATOR

Julius Ngugi LAYOUT, DESIGN & EDITORIAL CONSULTANTS

Efman Communications creative@efmancommunications.com

All inquiries: Tel: +254 41 231 19 58 Fax: +254 41 231 20 15 Mobile: +254 734 656 566

+254 715 679 263 Email: thetransporter@kta.co.ke The Transporter is published quaterly by the Kenya Transporters Association Limited (KTA Ltd).

The views expressed are those of the authors and do not represent the official view of the Kenya Transporters Association Limited (KTA Ltd). Neither KTA Ltd nor Efman Communications, or any other person acting on their behalf, may be held responsible for the use to which information contained in this publication may be put, or any errors, which, despite careful preparation and checking, may appear.

Individual advertisers are solely responsible for the content of advertising material which they submit to us, including ensuring that it complies with relevant legislation. We accept no responsibility for the content of advertising material, including, without limitation, any error, omission or inaccuracy therein.

APR - JUN 2013

Editorial Word from the CEO

T

hese are interesting times for the transport industry and moreso for heavy commercial transporters. This being our second issue of the year, we have attempted to highlight on the key sector achievements in the second quater of 2013.

The passing of the East Africa Vehicle Load Control Act heralds a new page for transport in East Africa - and even more encouraging is the emerging trend to facilitate trade by easing the burden to free and faster movement of goods from the Port of Mombasa and along the Northern Corridor. The East Africa Vehicle Load Control Act offers practicable and sustainable mechanisms for controlling overloading.

For instance, the Act harmonizes vehicle load limits and sets the stage for harmonized enforcement of axle load regulations.

KTA appreciates that axle load management is multi-disciplinary and multi-stakeholder effort and that sucessfull enforcement will require complementarity. To this end, we held a members meeting in the month of June to discuss the new regulations and to encourage compliance by our members. We are encouraged that, indeed, the commitment to comply is a live.

However, we are also aware of the hiccups inherent to the exercise and are working closely with all relevant stakeholders to put in place sustainable interventions.

We also welcome the presidential directive on 24/7 operationalization of the Port and other measures being put in place to facilitate trade along the Northern Corridor. The Port of Mombasa has in the past been bedevilled with inefficiencies mostly occassioned by system breakdown, tedious and often duplicated cargo clearance processes and

an overwhelmed cargo delivery and offtake infrastructure. We believe full implementation of 24/7 will go along way in freeing the Port and mitigating delays caused by breakdowns and cargo clearance processes. We also implore on the government to expand the infrastructure within the vicinity of the Port.

Another significant event was the visit by Tanzania Truck Owners Association (TATOA) to the KTA Secretariat - KTA and other regional road transport associations have been working closely to establish an umbrella regional body that will enhance participation of East Africa’s transporters in transport matters.

Regional intergration is largely viewed as key to sustainable and meaningful economic, political and social development in East Africa and the visit gave impetus to our on-going efforts to bring together all road transporters in the region.

Going forward, it is important that all stakeholders support efforts to reduce the cost of transport and trade. We expect that with the establishment of the National Transport and Safety Authority, licensing and inspection process will be streamlined and that there will be better coordination of road safety initiatives.

I welcome you to critically look at some of the issues emerging in this edition with a view to enhancing interventions and driving forward the growth agenda.

Thank you.

The Transporter

D.T DOBIE

The Transporter

APR - JUN 2013

Updates KTA BRIEFS Change of Guard Jane Njeru, who has been KTA’s CEO has left the organization to pursue other interests and KTA wishes her all the best.

Wellington Kiverenge (pictured below) takes over on acting capacity.

Events

Catch up with what’s been happening within the transport and logistics industry around the Eastern Africa region The Transporter has continued to draw interest from a variety of transport industry players. Here is what David Adolwa of Trade Hub East Africa had to say about our 19th edition: “Let me take this opportunity to congratulate you and your team for the Excellence in your latest issue of the Transporter. Everyone here agrees it is WORLD CLASS. We are really proud of the work you have done to mature and improve this magazine.”

The Transporter goes digital!

COVER

PHOTO

The Transporter Magazine is now accessible in the KTA website, facebook and twitter. All editions of The Transporter Magazine will be uploaded in our facebook account and twitter handle. We will be reviewing and verifying the contents in these sites regularly with an intention of sharing with KTA Members, advertisers, prospective clients and stakeholders information that will enhance their businesses.

By doing so, this will undoubtedly increase your product visibility as an advertiser. We have also uploaded the KTA Weekly e-newsletter in the three digital sites.

To access the digital edition of the magazine kindly visit: www.kta.co.ke

Kenya Transporters Association Limited A police officer directs a truck through a mobile weigh bridge mounted at the port of Mombasa.

HAVE YOUR SAY If you have any comments about The Transporter Magazine, then please send them to: thetransporter@kta.co.ke or The Transporter Magazine, Sea View Plaza, Mama Ngina Drive. P.O Box 88502-80100 Mombasa.

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APR - JUN 2013

@KTALtd1

The Transporter

advertise with us Call: Julius on 0738 246768 or Email: thetransporter@kta.co.ke

The Transporter

The Transporter

APR - JUN 2013

Advertiser’s Feature

SECURE YOUR CARGO WITH SGS OMNISTM ECTS

F

or many years organisations have used numerous different GPS technologies to try and keep a watchful eye over their vehicle’s location.

This technology was often used to capture direction of travel, speed and braking data. Although effective in their own limited way, these Fleet Management Systems are not able to monitor the status of the actual cargo be it dry bulk, liquid or petroleum that the vehicle is carrying. Whilst having visibility over the vehicle is important more often companies are more concerned about the security of their precious cargo.

Technology is only one part of the solution, which when used in isolation can only have limited success. The SGS OMNIS solution combines the latest in high end electronic seals along with sophis-

4

APR - JUN 2013

ticated electronic cargo tracking software and SGS’ own internal expertise to secure cargo providing complete end-to-end visibility with full container intrusion monitoring. SGS Electronic Cargo Tracking System (ECTS) enables automatic tracking and monitoring, reporting and protection of cargo as it is transported from origin to destination and across borders. SGS currently provides the ECTS service from major loading points in Kenya including but not limited to: Mombasa, Nairobi, Nakuru, Kisumu & Eldoret, through to the border points and onward into Uganda and Tanzania and expanding shortly to Rwanda and South Sudan. The SGS ECTS system will alert you of an irregularity with the cargo, such as for example: the trailer has been disconnected from the truck, the vehicle has deviated from the authorised

route or the container’s electronic seal has been tampered with. SGS ECTS will secure your cargo in real time when in transit and in storage curbing shrinkage, pilferage or petroleum cargo contamination.

In addition to offering the ECTS solution to commercial clients, SGS have passed both the technical and business requirements as laid out in the customisation documents set by the Kenya Revenue Authority.

The benefits of the SGS ECTS solution include: • A competitive service at the right price for your business with further price reductions recently implemented.

• Transit vehicles installed with SGS ECTS devices will be allowed to convey goods not under Customs control:

Assistance can be provided

in applying for the neces-

sary Local Goods License.

This additional license

allows for optimum usage

of the vehicle as they can

be used to carry local cargo.

• Goods may be monitored all the way from Kenya to its destination in neighboring land locked countries providing evidence of cargo exportation:

Allowing for faster bond

cancellation and improving

your company’s cash flow reserves.

• Insurance premiums may be reduced in relation to both vehicle and cargo premiums.

• SGS ECTS can assist in identifying operational choke points and delays throughout journeys allowing client operational teams proactively resolve potential supply chain delays.

• KRA approved ECTS solutions provide a waiver for the TGL License fee • The solution can help to identify unaccounted fuel shortages or fuel contamination by securing & alerting hatch or valve tampering and giving you full visibility on precious and high value cargo.

The Transporter

TM

The Transporter

WWW.SGS.CO.KE

APR - JUN 2013

Global OHIO

PARIS EU Set to Enhance Road Safety

Austria ‘Bottleneck’ for Turkish Trucks

APOLLO TYRES Ltd and Cooper Tire & Rubber Co. announced the execution of a definitive merger agreement under which a wholly-owned subsidiary of Apollo will acquire Cooper in an all-cash transaction valued at approximately $2.5 billion.

Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Cooper stockholders will receive $35.00 per share in cash. The transaction represents a 40% premium to Cooper’s 30-day volume-weighted average price.

This combination will bring together two companies with highly complementary brands, geographic presence, and technological expertise.

Apollo was founded in 1972, and Cooper, the 11th-largest tire company in the world by revenue, was founded in 1914 and today supplies tires worldwide through brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon. The combined company will be the seventhlargest tire company in the world and will have a strong presence in high-growth end-markets across four continents. The transaction is expected to be immediately accretive to Apollo’s earnings.

EU is promoting the adoption of a new generation of digital tachographs for trucks and buses in order to ensure compliance with EU rules. Innovations include devices that can read on-board recording devices from a distance, facilitating driving and rest times.

In particular, smart tachographs would be fitted to new vehicles within three years once the Commission has set out the technical specifications, aiming to put an end to fraud and tampering and ensure that all trucks over 3.5 tonnes are in line with EU legislation. Within 15 years, the tachographs would have to be fitted to all EU-registered trucks and buses in international transport.

As Mrs Silvia Ticau (S&D, RO) stated: “Parliament’s main goal was to improve enforcement of social legislation and to verify that drivers and companies respect driving and resting times, so as to better protect drivers’ working conditions and prevent social dumping.”

These devices will automatically record speed and distance, start and final location, making it possible to monitor the driving or resting status of the driver. They will also enable easy downloading and even remote checking, via wireless data transmission.

TURKEY’S exports to Europe may face further difficulties due to the limitations on Turkish trucks to find alternative routes following the closure of a major highway in Austria in December 2012.

“After the termination of the Rolling Road (ÖKOMBI) between the Wels – Szeged line, Hungary has allocated additional transit permits to Turkey but Austria has not,” Fatih Şener, executive board chairman of Istanbul-based International Transporters Association (UND), told the Daily News by phone. Şener added that Austria had become a bottleneck for Turkish transporters while competitors could transit through the same route, but Austrian officials told HDN that this measure was not only focused on Turkish haulers.

Turkish truck drivers have insisted that they still have problems gaining access to Turkey’s leading European markets, mainly Germany and France, through Austria, claiming that Austria has been “unfairly restricting” their passage by declining to offer alternative routes after one of its major highways was closed for almost half a year. Austrian officials said they had offered adequate alternatives and good opportunities for Turkish transporters on the way to Europe.

www.truckinginfo.com

www.neurope.eu

www.hurriyetdailynews.com

INDUSTRY NEWS

Apollo Tyres to Acquire Cooper Tire & Rubber Company

INSTABUL

Tambo Springs Set to Become Largest Inland Port in Africa The proposed Tambo Springs Inland Port and Logistics Gateway is expected to be the largest inland port in Africa once completed, Gauteng MEC for Roads and Transport Dr Ismail Vadi said at a post-Budget Vote media briefing recently.

He indicated that the project’s development was progressing well and that it would come on stream in 2017, as Johannesburg’s current inland port, City Deep, reached capacity.

The inland port, which would be located along the N3, about 21 km from Heidelberg, would host all aspects of warehousing, distribution, manufacturing and shipping through enhanced supply-chain and operating efficiencies.

The Gauteng Department of Roads and Transport was currently developing a terminal master plan for the project, as well as detailed road designs for the K148/N3 interchange.

The Tambo Springs Development Company (TSDC), which is developing the 1,037 ha multi- modal freight gateway in partnership with government, expects to start construction on the inland port this year and finish the project by 2017.

The completion of Tambo Springs would result in Gauteng’s current freight logistics capacity doubling, the TSDC noted on its website. Vadi said the freight hub would link road and rail transport to and from South Africa’s major freight routes and other freight hubs, including City Deep, which was about 33 km away.

www.engeneeringnews.co.za

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APR - JUN 2013

The Transporter

TRANSNICK LTD.

Transporters of loose cargo, bulk dry cargo, containerised cargo, clinker and gypsum within Kenya and outside.

P.O.BOX 10172-80100, Mombasa,Kenya | Phone: + 254 727 452 225 | FAX: + 254 41 548 56 74 | Email:info@transnick.com

The Transporter

APRAPR - JUN 2013 - JUN 2012

Truck

world

A quick look at what’s happening in the truck industry and what manufacturers are up to.

3 MAN trucks cross record milestone 1 million Kms over 5 years with no major repairs Volvo unveils 600-Horse VNX Heavy Hauler

Mercedes-Benz Actros wins international design award again The Mercedes-Benz Actros 1851 GigaSpace is the greenest truck around, according to two of Germany’s leading commercial vehicle publications, ‘Trucker’ and ‘VerkehrsRundschau’.

With fuel consumption almost a litre lower than that of the second-placed vehicle, coupled with reduced CO2 emissions, the Actros beat off competition to secure top spot in independent tests conducted along a standardised route.

Equipped with a cruise control system which recognises the topography of the route ahead and acts to deliver optimum fuel consumption, the 1851 was joined by two other variants of Actros in the top 10 of this environmental ranking.

New Canter introduced Mitsubishi Fuso has introduced its new 2014-model-year Fuso Canter FE and FG Series commercial medium-duty trucks. A longer 169.3-in. wheelbase for the class 3 Canter FE125, a side-mounted fuel tank, and a Clarion Bluetooth radio are all new options.

The longer wheelbase for the FE125 model will allow the application of bodies up to 20 ft long in a truck that has a GVWR of 12,500 lb and a payload capacity of 7095 lb.

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APR - JUN 2013

Volvo Trucks used the Mid-America Trucking Show to introduce a new heavy-haul tractor, the VNX, designed for extreme-gross-weight applications. It sports a Volvo integrated powertrain featuring a newly introduced D16 engine with 600 hp and 2050 lb ft of torque spinning through an I-Shift automated manual transmission. The 16-liter engine is new to North America but has been offered in European and other markets for some time.

Developed for applications up to 225,000 lb GVW, the VNX is ideal for long combination vehicles, heavy-equipment hauling, aggregate, low-boy, logging, oil-field, and mining operations, says Volvo. Demonstrator models will be available early this summer, and customers will be able to place orders in the fall.

Volvo’s I-Shift automated manual transmission is now a standard feature across the company’s product lineup. Its integrated sensors identify truck load and road grade to place the truck in the right gear for the conditions. The result is said to be optimum shifts, improved fuel efficiency, and extending clutch life and service intervals.

Available in 6x4 and 8x4 configurations, the VNX offers a wide range of heavy-haul components to ensure it’s properly spec’d for the job. Front axle ratings range from 16,000 to 20,000 lb with parabolic springs. The VNX is available with 385 wide-base, 425 and 445 tires to match front-axle load capacity. Available rear-axle ratings range from 46,000 to 52,000 lb in regular, dual-track, and wide-track tandem configurations. Dual steering gears and a 20,000-lb steerable pusher axle are also available as options.

The VNX provides an obviously increased ride height to accommodate more articulation and front ramp angle. A signature feature of the VNX is its distinct metallic, honeycombpatterned grille and bright-finish steel bumper with center tow pin. A steel ‘moose’ bumper with center tow pin is also available.

MAN Truck & Bus recently announced that three MAN TGA 33.480 BBS WW belonging to Saif Bin Darwish Civil Engineering Contractors achieved a record milestone by crossing 1 million kilometers over 5 years with no history of any major repairs or overhauls.

With 50% heavy duty off-road operation and an annual mileage of 200.000 km, the trucks perform immaculately in the tough environment of the UAE. The vehicles are part of a fleet of 750 MAN trucks operating for Saif Bin Darwish which has one of the biggest MAN fleets in UAE. Reflecting the high maintenance standards set by the group’s truck maintenance department and the high quality standards of MAN products, the engine, axles and reduction hubs of the trucks have never been opened during their operating lifetime. In one vehicle the transmission has only been opened once during this period and only one synchromesh for a single gear was replaced.

According to R.D. Pepler, General Manager, Plant Division of Saif Bin Darwish Civil Engineering Contractors, “Reaching over 1 million kilometers with our MAN TGA trucks did not surprise us as we have been buying MAN since 30 years and have trusted in MAN quality ever since. However the excellent condition of the trucks is due to our MAN trained maintenance expertise and frequency.”

According Rudolf Wiegand, Vice President After Sales Middle East and Africa, MAN Truck & Bus, “Low maintenance costs and no major repairs over 5 years lifetime of the trucks is a significant achievement and I commend the service team at Saif Bin Darwish for this. The result also reflects our core message of being ‘CONSISTENTLY EFFICIENT’ with our world class, technologically innovative products.”

The Transporter

KYEVALUKI SERVICES LIMITED TRANSPORTERS, MERCHANTS, COMMERCIAL & GENERAL COMMISSION AGENTS

Offering safe, affordable and convenient transportation services in an effective and efficient manner

KYEVALUKI

Associated with

P.O. Box 8482 - 00300 Nairobi, Tel: 020 2121852/ 2121539 Fax: 020 2109180 Cell: 0722 949976/ 0734 130000 Email: ekanui@yahoo.com

"AT YOUR BECK AND CALL" The Transporter SHREEJI ROAD - OFF NORTH AIRPORT ROAD, EMBAKASI P.O. BOX 8482 – 00300 NAIROBI - KENYAAPR - JUN 2013 11 TELEPHONE NOS: +254 020 2121539 / 2121852 MOBILE (S) +254 722949976 / 736968845 FAX: +254 0202109180 EMAIL: info@kyevaluki.co.ke

Advertiser’s Feature CIC Motor Commercial Plus Cover

Keeping your Business on track

D

id you know you can get your monthly loan repayments paid while your vehicle is undergoing repair and at the same time have your commercial vehicle protected against the rampant incidents of Riots and terror attack? These are some of the exceptional benefits of Motor Commercial Plus Insurance Cover, a product offered by CIC General Insurance Ltd. The subsidiary of CIC Insurance Group is confident that the product has gone a long way in supporting Kenya’s fast growing Transport and Logistics industry by helping transporters haul goods without worrying about the inherent risks and their adverse financial impact.

This innovation has kept businesses on track through fast claims settlement in keeping with our slogan “ We keep our word”, unmatched customer service and the fact that the cover is all encompassing.

Ms Milcah Kinyua, the Assistant General Manager CIC General In-

APR - JUN 2013

surance says the introduction of the product, known as the Motor Commercial Plus, unlike other products in the market, was specifically designed for heavy commercial vehicles.

Policyholders receive a vehicle tracking device and further an occupational personal accident cover with death and permanent disability benefits for driver and loader up to Ksh100, 000.

This innovative product was in response to the changing insurance needs of our customers and it was designed to lessen the burden of businessmen who are faced with numerous business risks on a daily basis”, says Ms Milcah.

Other additional benefits of the cover include repair facilitation within the COMESA region, reimbursement of Cost of alternative cargo transportation following an accident, loss of income following an accident, loss of goods through theft by employees, carrier’s liability cover and enhanced windscreen and towing limits.

“We have shed the conventions and gone beyond the beaten path of many insurance covers, and with this Policy, we give our customers cover for employees that is; Work Injury

Benefit Cover (WIBA) for driver and loader as well as Employer’s liability extension” adds Milcah.

“To ease the burden of excess, the product is packaged with a material damage excess protector and further offers a Nil theft excess courtesy of our credible tracking company partners who also manage fleets at a reasonable cost” says Milcah.

The cover is for transporters who ordinarily carry their own goods as well as those engaged in general cartage.

The Company generated premium income of Ksh 1.8b, which was about 28% of the total revenue from motor commercial alone a sign of the level of confidence that the transporters have in the product.

We also underwrite all classes of general business including but not limited to Fire , Burglary, Public liability, employee benefit related policies (WIBA, Employer’s liability and Group personal accident), Goods in Transit, Marine ,engineering , agriculture and personal insurances like motor private.

The Transporter

Email: info@i-spyafrica.com, control@i-spyafrica.com Hotline No’s: (+254) 0789 789 789, (+254) 0786 786 330, 0734 767767 Web: www.i-spyafrica.com

The Transporter

APR JAN -- JUN MAR2013 2012 |

13

KTA News

KTA Boosts

ROAD SAFETY Driver training in the heavy commercial sub sector is one way of mitigating road carnage. At the Heavy Commercial Vehicle Drivers Development Institute, drivers drawn from across the region are trained on how to handle modern trucks.

I

nadequae training for heavy commercial truck drivers and operators has been singled out as a key factor contributing to rising accidents, loss of cargo and equipment along the Northern Corridor.

A recent Training Needs Assessment study sponsored by TradeMark East Africa says the corridor - considered to be the second most expensive transport route in Africa after Doula, Cameroun - Ndjamena, Chad corridor – has one of the highest vehicle maintainance costs.

The study has brought into sharp focus the role of driver training in the heavy commercial sub sector as one way of mitigating road carnage. KTA has taken a strategic role in adressing the training gaps and to this end, the Association has partnered with

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APR - JUN 2013

USAID-COMPETE to set up the first Heavy Commercial Vehicle Drivers Development Institute in East Africa.

The study also identifies vehicle maintenance, driver health and safety, trade logistics and fleet management and driver refresher courses as top priority areas in driver training.

“Having well trained drivers with adequate skills to safely handle different scenarios on the road and ensure cost effective usage of vehicles will save lives, cut downtime, protect cargo and vehicle and in the process enhance our business bottomlines and the economy,” said Kenya Transporters Association Chairman Mr. Paul Maiyo.

The Institute has adopted truck simulators and comprehensive theoretical modules to train drivers drawn from across the region. The Association

recently held a workshop in Mombasa to review and validate the training curriculum.

Mr Maiyo reiterated that the training is intended to instill transformational and practical driving techniques as well as eliciting a strong sense of responsibility and work ethics in drivers as a way of making roads safer and reducing casualties and related costs.

The Institute has so far rolled out two pilot training sessions on the new traffic Laws, defensive driving techniques between December 2012 and February 2013.

Road safety has been reserved remarkable prominence in our discourses in the last decade.

According to experts, there can be no meaningful and sustainable economic and social development in a society if its productive populace is continously annihilated in road accidents - The Global Report on Road Safety-2013, estimates that 1.24 million lives are lost each year to road traffic crashes while between 20-50 million non-fatal injuries are recorded within the same period.

Almost 60 per cent of the road fatalities involve young people aged between 15-44 years.

According to the report, Africa records the highest road fatality rate at 24.1 per 100 000 people. Kenya alone records over 3000 deaths and 10 000 injuries each year. These are worrying figures for a country that is focussing on economic growth.

In addition, the United Nations has identified mitigation of road accidents as a key priority area. Faced with unprecedented incidences of road accident injuries and fatalities, the Nations of the world came together in 2010 to proclaim 2011–2020 as the Decade of Action for Road Safety through resolution 64/255 of the UN General Assembly with the core objective of stabilizing and reducing the increasing trend in traffic accidents - the Decade of Action for Road Safety plans to save an estimated 5 million lives over the decade.

In the Global Plan of Action, five pillars - Road safety management, Safer roads and mobility, Safer vehicles, safer road users and Post crash response - were adopted to provide governments and other stakeholders with practical tools and a framework for implementing road safety programs.

The plan also identifies training and education as imperative to road safety.

The Transporter

Awale Transporters Limited

GENERAL TRANSPORTERS & COMMISSION AGENTS

Your Transport of Choice Vision: Driven by business ethics,

our aim is to be the transport of choice in East, Central Africa and southern Sudan.

We strive to be the safest, most reliable and environmentally friendly company.

Mission: We are dedicated to providing

Head Office: Mombasa-Nairobi Road, Miritini ?

P.O Box 89058, Mombasa-Kenya ?

Tel: +254 20 2053425 ? Fax: +254 20 2053426?

Mobile: 0737 577077 ? E - Mail: info@atl.co.ke ?

Nairobi Office: P.O Box 47452, Nairobi-Kenya? Tel: 020 212361?

Juba Office: P.O Box 242, Juba- South Sudan?

Tel: +254 477246112/249 955 120744?

E-Mail: atljuba@hotmail.com

our valued customers with 24/7 services unsurpassed in terms of safety, speed of service-delivery and cost effectiveness.

‌.we specialize in: Containerized Cargo Conventional Cargo Project cargo Oil products

www.awaletransporters.com The Transporter

APR - JUN 2013

Truck&Trailer INOVATIONS, TRENDS

& DEVELOPMENTS

TRP all-makes reman brakes

SmartWay verified hybrid

tyre

CONTINENTAL TYRE’S Conti Hybrid HD3 is now verified by the U.S. EPA’s SmartWay Transport Partnership as a low-rolling-resistance drive tire for class 8, linehaul tractor trailers.

EPA has determined that certain tire models can reduce NOx emissions and fuel use by 3% or more, relative to the best selling new tires in that application, according to the SmartWay website. There are now 20 Continental new and retreaded truck tire products verified

by SmartWay. Introduced earlier this year, the Conti Hybrid HD3 is a third-generation long-haul highway drive tire, named ‘hybrid’ because it allows operation in a combined highway and regional application. With advanced tread-cap compounding, a self-stabilizing rib-block pattern, and minimized tread deformation from a stiff shoulder, users can expect the tire to have more than a 10% improvement in rolling resistance compared to the company’s HDR2 and HDL2 DL, Continental says.

The tire is available in sizes 295/75R22.5, 11R22.5, and 11R24.5, and will be offered as a ContiTread retread product in late 2013. www.truckinginfo.com

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OCT - DEC APR JUN2012 2013

TRP has introduced an aftermarket brake program that offers brake linings for both 20,000- and 23,000-lb applications.

The program offers a range of reman brakes for medium- and heavy-duty trucks and trailers in many different applications, from city delivery to heavy-haul. The range also includes severe-service brake products for high-heat, high-duty-cycle applications like bus transport, refuse collection, and construction. These brakes are engineered to perform to new-brake standards, the company says, at a significant saving over the cost of new brakes.

Single brake shoes and kits are available in 15-by-4- and 16.5-by-7-inch sizes for both tractors and trailers. All products offered in the TRP program meet FMVSS 121 standards.

In the 20,000-lb GAWR range, there are three grades of friction material for single www.todaystrucking.com and tandem axles.

SAF-Holland’s CBX40 gets Auto-PosiLift

SAF-HOLLAND is now offering Auto-PosiLift axle-lift technology as an option on SAF CBX40 tandem-axle slider suspensions. It combines CBX PosiLift components and Meritor WABCO ABS with built-in functionality. A sensor in the system’s airspring supply line reads air-spring pressure and determines whether to raise the front axle or leave it in the down position, automatically, with no driver interaction.

The CBX40 with Auto-PosiLift was initially developed for multi-stop beverage distribution fleets but other varying-load operations are also targets - such as LTL, fleets backhauling empty, and food service. The benefits are said to include “significant” fuel savings, reduced tire wear, and reduced toll charges.

Compliant with DOT regulations, the system is programmed to read the air pressure in the rear-axle air springs each time a delivery or pick-up is made.

As daily deliveries diminish the load, the total weight capacity of a closed tandemaxle suspension is eventually not required, thus allowing the front axle of the tandem suspension to be raised. Running in this configuration could amount to as much as 70% of a vehicle’s total daily miles, the company says. Operating with the front axle of the tandem raised greatly increases fuel efficiency, vehicle tire life, suspension component life, and brake/wheel-end service intervals.

www.todaystrucking.com The Transporter

filters and BY-PASS FILTRATION SYSTEM Systems

KLEENOIL HYDRAULIC UNIT

More than 70% of hydraulic failures are caused by contaminants in the oil.

Heavily contaminated oil can reduce power by as much as 15-20% slowing the machine response and taking longer to perform an operation.

By following a few basic tips listed below, the life of piston rods, seals, valves and pumps can be more than doubled.

By maintaining the hydraulic fluid in as new condition, the life of the same components can be increased ten-fold.

PARTICLES BREED PARTICLES An abrasive article passing through the system scrapes off further particles.

SCALE IN MICRONS

Average diameter of human hair

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APR - JUNTRUCK 2013 17 CHECK

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KTA News

TATOA visits KTA, affirms regional ties

T

he Kenya Transporters Association (KTA) and Tanzania Truck Owners Association (TATOA) have moved to cement co-operation between the two regional transport bodies. TATOA visited KTA secretariat office in Mombasa on a fact finding mission on May 17. During the two-day visit, deliberations focussed on sharing the Northern and Central Corridor experiences in comparison to those of the Southern Africa corridors.

Speaking during the visit at the Secretariat, head of TATOA delegation, Vice Chairperson Angelina Ngalula empasized the need for KTA and TATOA to work together, saying this was the surest way to resolving the critical choke points along the corridors. KTA and TATOA have been keen on the formation of a regional road transport association to be named Federation of East Africa Road Transport Associations (FEARTA).

“The transit corridors are the critical arteries feeding our economies. It’s therefore imperative that we collectively address the issues that impede trade facilitation along these corridors as a matter of priority.” said

Ms Ngalula. Among other memebrs in the TATOA team included Executive Members Mr. Omar Kiponza, Mr. Elias Lukumay and Mr. Alistair James.

The two corridors - Northern and Central are the most important transit routes in East Africa accounting for over 95 per cent in cargo transit volumes. The Northern Corridor connects the Port of Mombasa to Uganda, Rwanda, Burundi, Southern Sudan, parts of eastern Democratic Republic of Congo (DRC), and parts of northern Tanzania. It also links the East African Community (EAC) to the peripherial states such as Ethiopia.

The Central Corridor connects the Port of Dar-Es Salaam to Rwanda, Burundi and DRC. The East Africa Common Market Protocol (CMP) also identifies trade facilitation - through free movement of people, goods and services - as a key priority area in East Africa Community integration.

The move by the two regional transport bodies to come together gives the necessary impetus to regional integration. The cooperation between KTA and TATOA comes against a backdrop of high transport and lo-

gistics costs along the Northern and Central Corridors occasioned by unharmonised laws on customs procedures and vehicle load control, numerous and inefficient weighbridges, corruption and arbitrary charges, unco-ordinated policy implementation and over-stretched road infrastructure capacity among others.

The officals visited the Mariakani weighbridge during which TATOA bosses had a first hand experience of the the weighbridge operations in Kenya.

The transport bodies have singled out cartels operating at the weighbridges as the main cause of overloading on the transit routes.

“While we appreciate the government’s efforts to improve the road infrastructure, we remain congnizant of the fact that overloading may persist if the conspiracy between overloaders and unscrupulous weighbridge officers and police to allow overloaded trucks through the weighbridges is not nipped in the bud,” said KTA chairman Paul Maiyo.

“Brokers are pulling back the gains made in controlling overloading. We ask the government to move with speed and stop them.

Furthermore, KTA ought to be accorded a supervisory role at the weighbridge in order to curb overloading and corruption,” added KTA director Kiprop Bundotich.

KTA is also seeking authority to vet and endorse transporters prior to renewal of the annual road license as is the case in Tanzania.

The TATOA delegation also paid a visit to the East Africa Heavy Commercial Drivers Development Institute - an initiative of KTA and USAID COMPETE. The Institute is situated in Mombasa along Mbaraki road and offers high level training to truck drivers across East Africa using state of the art truck simulators and a comprehensive curriculum that covers, among others, road safety and regional trade/customs laws and regulations.

SGS now KTA Associate member SGS Kenya Limited has joined KTA as an Associate Member. The company has been in operation since 1950 and serves as Regional HQ for Kenya Uganda, Burundi, Rwanda, South Sudan and Ethiopia.

With their Accredited ISO 17025 Laboratories, they are able to test petroleum and petrochemical products and environmental samples. Laboratory accreditations include FOSFA, GAFTA and NEMA. Their services include ECTS, PVoC, Anti-Counterfeit solutions and Trade Net. “We are the leader in Inspection, Testing, Verification and Certification in East Africa and we support governments, institutions and partner organisations by applying valuable trade knowledge to verify trade information and set up electronic business processing and scanning operations,” said Mr. Vincent Tibbs-Regional ECTs Manager.

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APR - JUN 2013

The Transporter

The Transporter

APR - JUN 2013

Cover Story

The Executive

ORDER The East Africa Vehicle Load Control Bill decriminalizes overloading and prefers instant fines, harmonizes weighbridge management and introduces a monitoring system on overloading which could lead to a transporter being denied access to some routes.

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APR - JUN 2013

Roadblocks along the Northern Corridor abolished Agencies operating at the port to report to KPA MD Cut transit time between Mombasa and Malaba from 13 to five days KeNHA to install high speed weigh-in-motion scales Transit trucks to be weighed only at Mariakani

The Transporter

T

ransporters have hailed the government’s initiatives to reduce cargo congestion at Mombasa port and ease movement of goods along the Northern Corridor.

Last month, President Uhuru Kenyatta ordered port stakeholders to come up with measures of ensuring that the port was efficient and movement of goods along the corridor was smooth.

This followed a series of meetings with Ugandan President Yoweri Museveni and Rwanda’s Paul Kagame. The two countries have over the years raised concerns over delays at Mombasa port and the corridor, which is the land locked countries’ artery linking them with the rest of the world, but has however been cited as contributing to trade hindrance due to non-tariff barriers (NTBs).

President Kenyatta further appointed a committee comprising of all government agencies involved in cargo clearance, including Kenya Revenue Authority, Kenya Ports Authority, Kenya Bureau of Standards, Kenya Plant Health Inspectorate Services and Kenya Maritime Authority among others.

KPA managing director Gichiri Ndua was given full mandate to coordinate cargo clearance, and all officers at the port now report to him, which has resulted to efficiency since delays which were caused by different agencies doing their verification at different times for instance, have been minimized.

During a meeting held in Mombasa at the Bandari College by stakeholders, Inspector General of Police David Kimaiyo ordered all roadblocks along the corridor removed to ease movement of trucks.

“I direct that all road blocks along this route be removed so that vehicles can move without hindrance,” he said, however adding that

The Transporter

routine checks and patrols would be carried out at any point as is normal with security operations.

So far, transporters have said that the removal of the road blocks has yielded positive results. The police manning these check points had become notorious by asking for bribes from truck drivers.

Transporters said the move would improve truck turnaround, which would translate to increased business. “We support the government in all its initiatives because when there are traffic snarl ups we are the ones who suffer since there is a low turnaround,” said Wellington

that comes with AEOs,” she said, adding that the Container Freight Stations (CFSs) were also allowed to handle transit and export cargo.

At the same time, Simba (KRA online cargo clearance system) is being upgraded to address frequent downturns. Technicians from Senegal have been working on the system over the past one month and after it is complete, the system would easily be integrated with the National Single Window system expected to go live in December.

The stakeholders also moved to stem overloading, one of the other serious ills afflicting the heavy

Kiverenge, acting Kenya Transporters Association (KTA) chief executive officer.

Transport and Infrastructure Cabinet Secretary Michael Kamau said President Kenyatta was especially keen on reduction of transit time of trucks between Mombasa and Malaba border from 13 days to a maximum of five.

The revenue authority also relaxed some rules to allow faster clearance of cargo, and according to commissioner of customs Beatrice Memo, importers are now allowed to lodge their documents before the vessel arrives at the port.

“We also encourage importers to apply for Authorized Economic Operator (AEO) status which allows you to clear goods faster but the problem with traders is that they don’t want to go through the vetting

commercial transport. Delays at weighbridges have been causing huge losses in the sector. In the new measures, transit trucks would only be weighed once at Mariakani, after which they would proceed with the journey to the border.

During a meeting to sensitize KTA members and stakeholders on the East Africa Load Control Bill that was passed by the EAC Legislative Assembly, Muita Ngatia who is in charge of the department at Kenya National Highways Authority (KeNHA) said the rules would address overloading.

“Overloading leads to faster deterioration and destruction of roads, destroys the flexible nature of pavement leading to disintegration, creates imbalance in business and hurt the compliant transporters,” he said.

There are nine installed weighbridges at Mtwapa, MariAPR - JUN 2013

Cover Story

GOING HI-TECH: Improvements earmarked for Mariakani, Athi River, Gilgil and Webuye weighbridges include installation of high speed weigh in motion (HSWIM) scales and installation of automatic number plate recognition cameras.

THE NUMBERS

Sh900M

Amount of money set aside

by KeNHA for upgrading weighbridges over the next three years

56 tonnes The permissible GVW proposed by the East Africa Vehicle Load Control Bill Act for a seven-axle truck.

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APR - JUN 2013

akani, Athi River, Isinya, Gilgil, Juja, Busia, Eldoret and Webuye.

Mobile weighbridges are also used on a quarterly basis for network management.

The improvements earmarked for Mariakani, Athi River, Gilgil and Webuye weighbridges include installation of high speed weigh in motion (HSWIM) scales, installation of automatic number plate recognition cameras, installation of automatic data loggers in all the weighbridges and Traffic control centres at Athi River, Mariakani and Webuye. “Commissioning of the Mariakani and Mlolongo high speed weigh-

bridges will be done in August, with the rest expected to be ready

by October 2013. KeNHA has set aside close to Sh900 Milllion for upgrading the weighbridges over the next three years,� said Mr Ngatia.

Mr Ngatia also informed KTA members that unlike in the past when only the transporter was charged which was deemed unfair, all parties responsible for overloading will be prosecuted in accordance with the law.

The East Africa Vehicle Load Control Bill Act which proposes to increase the maximum permissible GVW to 56 tonnes for seven-axle The Transporter

trucks at eight tonnes per axle is also expected to boost efficiency along the corridor. It decriminalizes overloading and prefers instant fines; harmonizes weighbridge management; introduces demerit point system on overloading which could lead to, on attaining a threshold, banning on a route or road, higher fines and finally losing operation license.

The Bill also creates an offence for bypassing, absconding or avoiding a weighbridge station; legalizes the use of Super single tyres (width greater than 385mm); outlaws dummy/dead axles but allows Liftable axles only if the vehicle is fitted with Manufacturer’s dead man switch (sensor), or air suspension, or with automatic dropdown when loaded. A five per cent tolerance is taken into consideration in weighing trucks in all weighbridges and only the overload above the allowance is charged.

Transporters have said they expect the new rules, which come into effect immediately the EAC states endorse them in November, will address overloading once and for all.

“Going by the rules, we are confident that overloading will be a thing of the past and we support the authorities,” Mr Kiverenge said in an interview.

The other initiative was that of rerouting vehicles at the Changamwe roundabout, which involved trucks using designated routes, although this was initially faced by challenges of the bad condition of the Refinery road with truckers calling on the government to speed up repairs.

According to KeNHA coast regional manager Kevin Nyabuto, the authority had taken over the route and the reconstruction would be completed soon. Transport logistics experts say that these and a raft of other measures put in place to decongest Mombasa port and ensure smooth flow of movement of trucks along the corridor, are expected to improve trade within the EAC.

The Transporter

Truck drivers protest over corruption at weighbridges The Mombasa-Nairobi highway between Mombasa and Mariakani stretch has been the topic of controversy between the Kenya Transporters Association (KTA) and Kenya National Highways Authority (KeNHA) with truck drivers faulting KeNHA for mismanaging the Mariakani weighbridge and failing to repair the road.

Recently, hundreds of commuters were stranded along the highway, after trucks blocked the road following failure of one of the weighing machines. Travelers heading to and from Mombasa were stuck in the jam that stretched for more than 10 kilometers on both sides of the road and lasted for more than 16 hours.

Truck drivers protested over the company contracted to manage the weighbridges alleging that some of the workers were involved in corruption that resulted to poor management of the weighbridge.

Mr Hamisi Nzole, one of the drivers, alleged that some workers at the weighbridge were sabotaging operations for their own benefit, adding that the machines broke down frequently. “They are reluctant to repair the machines and this is very frustrating. The

government should install weighbridges at the points of loading especially the Mombasa Port to reduce inconveniences along the highway,” he said.

Mr John Kilimbo, another truck driver alleged that brokers were to blame for the mess at the weighbridge which has continued to encourage corruption, adding that the breakdowns were artificial and aimed at discrediting some of the operators.

“We are concerned that some transporters are overloading and have positioned brokers at Mariakani who collude with some officials to ensure the overloaded trucks pass the bridge,” said Mr Kilimbo.

The police officer in charge of the weighbridge Mr Simon Olenkiti said the traffic jam was caused by frequent break down of the weighing machines. “The tedious process of procuring new machines abroad has been one of the major hindrances,” said Mr Olenkiti.

However, it is anticipated that once the Dongo Kundu bypass, which has a road compliment that links the port of Mombasa with the NairobiMombasa road, the problem might be solved.

APR - JUN 2013

21

Integration

EALA Passes OSBP BILL The law makes provision for the application of border control and institutional arrangements in the co-ordination and monitoring of the one stop border posts.

T

he East Africa Lefgislative Assembly (EALA) has passed the One Stop Border Posts Bill, 2012, paving way for it to become Law if assented to by the EAC Heads of State.

The object of the Bill, initiated by the EAC Council of Ministers, is to provide for the establishment of One Stop Border Posts (OSBP) in the community in order to facilitate trade through efficient movement of goods and people. Under the arrangement, partner states will implement one stop border processes by establishing and designating control zones at respective stations.

The Bill in addition seeks to extend partner states’ national laws relating to border control officers of adjoining states permitting their

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free movement within the controlled zone(s) in the performance of their duties without producing passports but will need their national identity cards. The Bill also makes provision for the application of border control laws and provides for institutional arrangements in the co-ordination and monitoring of the one stop border posts. However, the Bill does not affect the rights of any adjoining Partner State(s) to take temporary measures in the interest of defence, security, public safety and public order.

Common Border posts designated in the EAC as OSBPs include the Taveta-Holili border and the Namanga border (Kenya-United Republic of Tanzania), Busia and Malaba borders (Kenya – Uganda) and the Kanyaru-Akanyaru border

(Burundi-Rwanda). Others are the Mutukula border (United Republic of Tanzania-Uganda), GasenyiNemba border (Burundi, Rwanda) and Lungalunga-Horohoro border (Kenya – Tanzania).

Debate on the Bill was preceded by the tabling of a Report of the Committee on Communications, Trade and Investment presented by the Chairperson, Mr Dan Kidega. The report underscores the need for Partner States to develop, upgrade and modernise the required infrastructural facilities and to enhance technological advancement to enable efficient and effective implementation of the Bill.

The report was filed after public hearings held in the Partner States on March 6-12, 2013 and April 11, 2013 to collate views from different stakeholders. The Committee The Transporter

Integration is people centred and we must make the process easy to implement the Common Market Protocol

at that point received views from customs officials, clearing and forwarding agents and members of the business community among others.

The report urges the Council of Ministers to conduct sensitization programs on the OSBP to the populace and to fast-track the processing of the relevant regulations.

“The OSBP has been operating on some border points on bilateral arrangements within the Partner States; therefore the law is critical because it provides a regional legal framework,” the report said

in part.

At debate time, Hon. Shy-Rose S. Bhanji commended the Council of Ministers for initiating the Bill and noted that it would reduce the unnecessary bureaucracies at the border posts. “This is a major achievement and we want the capacities of the personnel at the borders to be built so as to enhance service delivery,” the legislator said. Hon. Mike Sebalu noted that it was necessary for the OSBP initiative to be rolled out to all borders when finances permit so as to demystify free movement.

START WITH CONFIDENCE

“Integration is people centred and we must make the processes easy to implement the Common Market Protocol,” he noted. Hon. Joseph Kiangoi said the Bill would enable the region to open up for trade terming the region ‘a major economic bloc’ in the continent. Hon. Frederic Ngenzebuhoro said the implementation of the Bill would reduce corruption and significantly eliminate bribes.

The Chair of the EAC Council of Ministers, Hon. Shem Bageine said that the spirit of working together (EALA and the Council of Ministers) would be the hallmark towards ensuring integration. He reiterated the Council’s pledge to put in place regulations to support the Act when implemented. “It is our desire and aspiration for example that during the implementation of the Act, the terms and conditions of staff working together to facilitate the OSBP are harmonised to retain staff of high calibre,” the Minister stated.

The Bill successfully passed through the second reading with amendments during the Committee Stage before it was passed for its third reading.

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APR - JUN 2013

23

Integration

World Bank to fund KITALE-JUBA ROAD PROJECT

T

he World Bank will finance construction of the 600-kilometre Kitale-Juba road to improve Kenya’s trade relations with South Sudan, the Deputy President Willliam Ruto announced recently. The road, to cost Sh50 billion, will be constructed from this year.

Although South Sudan is now the second biggest transit destination for cargo generated at the port of Mombasa, most of it is transported through Uganda since Kitale-Juba road in its current state is impassible.

Ideally, it would be easy to use the Kitale-Lokichoggio road which would reduce the border crossing to one and also reduce the distance to Juba by about 400 kilometres.

But the road cannot handle heavy commercial vehicles. Crossing of two border points causes serious delays, with trucks waiting for up to 3 days at the Malaba border.

Cases of insecurity and attacks especially on Kenyan transporters are very common between the Uganda- Sudan border point and Juba, according to truck drivers.

Uganda constructed a road connecting Kampala, Gulu in the northern part of the country and

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Juba. This has made Uganda a huge trading partner with Southern Sudan especially on vegetables and other food stuffs from Uganda.

Also, Kenyans intending to travel to Juba have to pass through Kampala to get to South Sudan.

“They erect barriers across the road to extort money from drivers and a slight blunder can cost a driver or a turn-boy life. What angers us is that despite the number of incidents and attacks occurring every day, authorities in Kenya have not been able to address the problem” Abubkari Suleiman, a truck driver said.

Maritime experts say that the volume of South Sudan cargo handled by the port of Mombasa would increase dramatically when the problem of road infrastructure is fixed.

Last year, the port handled 766,656 tons of cargo compared to 417,032 tons handled in 2011, the Kenya Ports Authority managing director Gichiri Ndua said early this year.

This accounts for 11.6 per cent share of total transit traffic in 2012 up from 7.6 per cent in 2011. In 2011, cargo volumes grew by more than 80 percent.

An inter-ministerial secretariat

that was spearheading second transport corridor, the Lamu Port Southern Sudan Ethiopia Transport (LAPSSET), estimated that the entry of Southern Sudan into the regional economies would see unrestricted demand of cargo rising upwards of 32 million tons per annum.

Southern Sudan relies on Port Sudan in the Northern Sudan and based on the history of the two countries, South would welcome an alternative, which ideally is Kenya.

Lamu port, whose construction has already commenced, is expected to address South Sudan logistic needs. The distance between Juba and Port Sudan is about 4,000 Kilometres while the distance between Juba and Lamu is only 1,500 Kms. Southern Sudan investors in cargo handling logistics have also generated keen interest with Mombasa to position themselves for the new opportunities, Yowa Soso, the general manager of B $ S Group of Companies, which started operations of transport and cargo clearing early this last year said in an interview last year.

The Transporter

The Transporter

APR - JUN 2013

Opinion Taxation should not finance

RAILWAY PROJECT

By HUMPHREY KISEMBE

It will also prove an uphill task to commercialize Kenya Railways Corporation as it is technically insolvent, with liabilities standing at Sh59.44 billion against Sh9.33 billion in total assets as at June 2011.

T

he mention by Treasury Cabinet Secretary in this year’s budget that Sh22 billion will be set aside for construction of a two-track standard gauge railway line from Mombasa to Kisumu elated me. The railway line will undoubtedly improve turn-round time and significantly reduce the cost of freight by as much as 79 percent.

However, my mood dampened when he proposed tax measures that will assist in raising capital for the proposed project. I do not believe an amendment to the Customs and Excise Act to introduce a Railway Development Levy of 1.5 percent on all imported goods is the right way to go about raising funds for this noble initiative.

A single track freight line with a few locomotives and simple signaling, running across a flat, geologically sound, sparsely populated landscape in a developing country might be built for as little as US$ 2 million per kilometer including electrical and mechanical equipment.

It will therefore require 2.4 billion dollars (Sh204 billion) to build the 1200 Kilometres line from Mombasa to Kisumu. With Sh22 billion, and a statement mentioning The African Development Bank, the World Bank and the European Union to be financing a number of projects in infrastructure with regional dimension, the Cabinet Secretary does not clearly indicate what he intends to do to realize the projected deficit. This is what prompted me to share a few insights on the best policy options for raising capital for investment in rail infrastructure.

My approach is a simple guide to how a new railway might be financed and a review of the limitations of privatization and private sector participation in the ownership and operation of railway systems.

Government Participation Rail infrastructure is very expensive

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APR - JUN 2013

and the amount of money shippers are able to pay in freight charges is not enough to repay the costs of building and maintaining the lines. In many cases, there isn’t even enough money coming from freight charges to pay for the day-to-day operating costs like energy bills and staff wages. The government therefore has to cover the shortfall. They must not only provide the infrastructure, but also support the operations and maintenance costs. The government will pay for these costs out of taxes, as proposed by the CS in his 1.5 per cent levy on imported goods.

Commercial Participation In recent years, governments have overcome perceived inefficiencies of public financial management by turning to private commercial sector for financing. In some cases, government owned utilities have been sold to the private sector at attractive prices to buyers who may have to spend a lot of money restructuring the organization to turn them profitable.

Railways are more difficult to sell since they have high infrastructure and maintenance costs. The income from operations is low since freight rates are restricted to low levels due to politically assisted competition from the road freight transportation.

It will further prove an uphill task to commercialize KRC as it is technically insolvent, with liabilities standing at Sh59.44 billion against Sh9.33 billion in total assets as at June 2011.

This notwithstanding, some progress has been made in “converting” publicly owned railway companies to private ownership but only by offering inducements, guarantees and/or financial subsidies to the new owners.

This is because the numbers simply do not stack up when it comes to return on investment. In fact, as already mentioned, they rarely add up when it comes to just the cost of day-to-day operations making it difficult for a railway to make profits.

Efficiency “Efficient” really means “cost effective use of resources”. This is why the private sector can be helpful in running or maintaining a railway system. For some extraordinary reason, governments all over the world seem unable to control their management so that public services are run efficiently. That’s why the private sector can be useful in improving efficiency in running railway systems. An example of this efficiency is in the UK, where one metro system under public management employs 40 persons per kilometer of route operated and another, more efficient, privately operated system uses only 16 persons per kilometer.

In reality, the money available from the freight box on many railways is rarely enough to cover the cost of operations, particularly for older systems which require a lot of maintenance. In this case, some sort of financial support is inevitable. The trick for governments is to make sure that this support is properly managed, which is why the UK has adopted a policy of offering franchises to railway operators on the basis of the lowest amount of support needed. In Kenya, this has worked well with the Magadi Soda Line.

Open Access Open access means giving any suitably qualified railway operator the chance to provide a service over anyone’s route. There is a lot to be said for open access in theory - it removes the image of monopoly which railways have and it stimulates competition, which should drive down prices and drive up service and reliability. Unfortunately, examples so far seen in Europe are not encouraging as constant changes in tariffs and timings and endless restrictions have made it very difficult to obtain quality service at cost effective rates.

Contd. Page 32 The Transporter

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27

Logistics

EAC integration

ENHANCED

“The Finnish government believes that supporting increased trade in the region will accelerate economic growth and create jobs, with the ultimate goal of poverty reduction.”

T

rademark East Africa (TMEA) has received 4 million Euros from Finland to support its work in enhancing trade across the East African Community to eliminate non-tariff barriers and foster economic growth.

TMEA and its partners are trying to reduce the cost of transport to and within East Africa – some of the highest in the world – and also reduce the cost of imports and grow private sector commerce and government revenues.

“East Africa’s potential has never been greater; East Africa is an increasingly important and vibrant player in the world economy,” Minister for International Development Heidi Hautala said at the signing ceremony in Dar es Salaam in May this year.

“TMEA is a key strategic partner in growing trade and prosperity and Facilitating regional trade is an effective means to alleviate poverty

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APR - JUN 2013

and create wealth. It must also be remembered that integration is not only about economics but it also enhances peace and stability,” she added.

TMEA supports multiple partners across the region to achieve growth in trade and Finland’s strategy for cooperation puts more emphasis on development and regional economic integration.

“The Finnish government believes that supporting increased trade in the region in combination with assistance to the private sector will accelerate economic growth and create jobs, with the ultimate goal of poverty reduction,” said a joint statement by TMEA and the Finish Embassy.

The visiting Minister for European Affairs and Foreign Trade, Alexander Stubb said: “I believe that free trade is the key for economic prosperity and development. The Finnish government is keen to create opportunities for business

partnerships, trade & investment and transfer of knowledge and technology. I am excited about TradeMark East Africa’s (TMEA) comprehensive programme to increase trade, reduce trade barriers and transport costs and increase the pace of economic integration in the region.”

The key areas for the grant will include work with TMEA’s core partners on reducing the costs of trade in the region, focusing on promotion of infrastructure projects such as port development and efficiency and infrastructure improvements at key border crossings in East Africa, said the joint statement.

Other areas of support include regional private sector growth, removal of non-tariff barriers and strengthening of trade environment and progress on East African regional integration.

“We will continue to focus its efforts on increasing trade and prosperity, primarily through investing where there will be the biggest impact for East Africa’s people and private sector. Our approach – under the leadership of the East African Community – is to focus on national implementation with an emphasis on reducing the high cost of trading across the region,” said TMEA CEO Frank Matsaert.

Matsaert said that the support will involve investing in key regional infrastructure projects that reduce trade costs and increase trade – such as one stop border posts (OSBPs) and the ports of Mombasa and Dar es Salaam – combined with improvements in systems to drive results.

“All these activities are essential to sustain the region’s growth rates and reduce poverty,” he added.

TMEA expects to reduce the cost of transport in East Africa by 15 per cent in 2015 through investments in infrastructure such as ports, one stop border posts and systems to streamline regulations. It also targets a 10 per cent increase in export values and 25 per cent increase in the share of intra-regional trade.

Other targeted areas include the Contd. Page 32 The Transporter

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 •  • 

•  •  

The Transporter

       

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The Transporter

The Transporter

APR - JUN 2013

31

Logistics

EAC integration ENHANCED implementation of EAC policies on the Customs Union and Common Market and 30 per cent reduction in cross border transit time.

East Africa transport corridors are rated as the most expensive in the world. The Shippers Council of East Africa (SCEA) last year released a report on the bottlenecks facing the logistics chain in the region. Titled Logistics Performance Index for East Africa, the report noted that due to delays and uncer-

Contd. from Page 28

tainties along the route, it takes up to 41 days for a container to reach Bujumbura (Burundi).

“While it takes 28 days to move a 40ft container from the port of Shanghai, China to Mombasa at a cost of US$600 (Sh51,000), it takes 41 days for the same container to reach Bujumbura from Mombasa at a cost of US$8,000 (Sh680,000),” the report says.

Insecurity along transport routes has been identified as one of the

Taxation should not finance RAILWAY PROJECT A further difficulty with open access is how to determine train timings.

Operators will usually determine when they wish to run a particular service and this timing will probably be dependent on connections with other trains. The route owner then has to decide how to allocate paths. In the UK, this has resulted in a series of complicated negotiations, shrouded in commercial strategies by the operators and with the rail route provider trying to show fairness as well as obtain the best commercial return for the paths they sell. In some areas, the routes have reached capacity and the provider is being urged to invest in infrastructure improvements to produce more train paths.

In the UK, charges for train paths have come in for some criticism, the operators complaining that they are too high. Well, they would, wouldn’t they? Whatever the truth of the matter, some operators seem to be making a commercial success of their service, while others are strug-

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APR - JUN 2013

gling to make ends meet. In addition, some operators have performed very badly, train punctuality having declined.

New Project Financing Obtaining commercial capital for expensive infrastructure projects requires that the entity in need of the money provides the investor with a reasonable rate of return on investment. If the pure commercial considerations show that this is not likely, there must be some sort of guarantee for the investor. If money is borrowed, the guarantee must provide that the interest will be paid and that the amount borrowed will be repaid.

Guarantees for public infrastructure projects usually have to be provided by the government - the so-called “sovereign guarantee”.

One way to get a project involved with private finance is to reduce the level of capital expenditure to be supplied by the commercial market. This will require the government to pay for part of the cost of the infrastructure.

Non-Tariff Barriers that EAC states face. The countries have also committed themselves to eliminate various checks that are fixed along the corridors, but this has dragged for long.

A study of transportation along the northern corridor found that the hidden costs of delays form 40 per cent of total logistics costs from Mombasa to Kampala. Furthermore, the 15 per cent drop in the total cost of transport that TMEA aims to achieve in 2015 is expected to lead to a 37 per cent increase in the volume of trade.

TMEA is also supporting creation of one border post in the region.

According to Uganda Revenue Authority (URA) officials, once com¬pleted, the OSBPs will reduce the time trucks take to cross border posts at Busia, Mutukula and Mirama Hills by 30 per cent.

Time spent in the transportation of containers from Mombasa Port to Kampala is expected to reduce by 15 per cent while the customs clearance time will reduce by 50 percent.

Contd. from Page 26

This can mean that the government will, say, pay for the cost of civil engineering work, while the private sector funds the purchase of trains, signaling, control, fare collection, power supply etc. - the electrical and mechanical parts of the system.

Put simply, it is treating the new railway project like a new road project.

The government builds the road but private industry supplies the trucks, buses and cars. For a new rail route, how much the government will pay will depend on the scope and type of railway being built.

The Way Forward The last 15 years have shown that the privatization of the railways in many parts of the world has not proved to be the success as projected. The options I have given above, coupled with succession planning needs so that future generations can run a better railway than we have been allowed to do, will definitely yield the results we are looking for.

The Transporter

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The Transporter

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Economics

EA’s economy to

GROW

in 2014 – AfDB

T

he Kenyan economy is expected to record a 4.5 per cent growth in 2013 and 5.2 per cent in 2014, slightly below the latest projections by the country’s Treasury estimate of six per cent, according to the Africa Development Bank (AfDB).

All the East African economies are expected to pick up in the remaining part of this year into 2014, riding on a strong showing in the agricultural, mining and energy sectors.

New data from the AfDB indicates that East African economies could grow by at least 5.5 per cent in 2013 and 5.8 per cent in 2014, above Africa’s average of 4.8 and 5.3 per cent in 2013 and 2014 respectively.

Projections by both World Bank and International Monetary Fund shows improved economic conditions in the remaining part of the year, riding on easing inflation across the region.

Treasury recently said the country will grow at a faster rate than in the past two years riding on renewed investor confidence following a peaceful General Election and favourable weather conditions that are expected to boost agriculture. Data shows agriculture accounted for 25.9 per cent

36

APR - JUN 2013

of Kenya’s Gross Domestic Product (GDP) in 2012, up from 23.8 per cent in 2011.

Tanzania’s medium-term growth prospects are around 6.9 per cent and will rise to seven per cent in 2014, through a significant boost from natural gas discoveries.

“The boom in natural gas production may eventually result in an even higher rate of growth in Tanzania,” said economists at the World Bank in their latest outlook on the economy.

Projections for Rwanda’s economy however remain bleak. AfDB said while Rwanda’s real GDP was on course to grow by a robust 7.7 per cent in 2012 driven by services and industry, growth was projected to slow down in 2013 and 2014, due to foreign aid suspension, tight fiscal and monetary policies and a weak global demand.

“Growth is expected to be sustained at 7.6 per cent in 2013, driven by an expansion in services and construction, and to stabilize at around seven per cent over the medium term,” said the IMF on May 20.

According to AfDB, Uganda’s growth could reach 4.9 per cent in 2013 and 5.5 per cent in 2014 but could be

lower if the suspension of budget support, announced by several donors in November 2012 is maintained.

“Resource-rich countries continue to benefit from relatively high commodity prices, although easing of global demand has reduced price levels.

Good harvests have boosted agricultural production in many countries and also helped to mitigate adverse effects of high international food prices on consumers,” said AfDB president Donald Kaberuka.

Burundi is likely to stagnate at four per cent although the mining sector could lift the economy. The economy has grown at an average of four per cent a year from 2005 up to 2012 but is still fragile.

ECONOMIC PROJECTION

6 4.5 3 1.5 0

Africa

East Africa

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Built for the African Road

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APR - JUN 2013

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Randon Success To Drive VW & MAN Commercial Vehicles Into The Market

C

heap is expensive if one is looking at it from a long term perspective.

This is what R.T. (East Africa) Ltd Chief Executive Officer Mr Yunis M. Darr says on the increasing entry of various new truck makes in the Kenyan market.

Although the company’s new brands, Volkswagen (VW) and MAN trucks introduced in 2012 may be considered expensive by some transporters importing second hand trucks and other lower entry makes, the perceived low price advantage is eventually diluted by the imminent high running costs and unforeseen maintenance requirements.

In what he calls pyramid philosophy, Darr says; “The initial cost of a truck to a transporter con-

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APR - JUN 2013

stitutes only 15 percent, the apex of a pyramid. The balance of 85 percent goes to operations and maintenance. This is where the philosophy of cheap is expensive hits home”.

Using a practical example of Multiple Hauliers, R.T. East Africa’s mother company, Darr said that the company witnessed an immediate turnaround when it stopped buying second hand trucks. And to reinforce his point he throws another one.

“If you are familiar with Titanic movie disaster you can understand my philosophy. The captain saw only the tip of the iceberg, little did he know that beneath it lay what would cause a serious disaster in history.”

The company’s VW assembly plant in industrial area, the second

in Africa after South Africa and the fourth in the world has a capacity to produce 50 units per month.

The plant has since it opened its doors late last year made 70 units, of which 30 are now on the road.

The desire to introduce an assembling unit and also sell the world number one truck MAN was created by the need to establish a one-stop-shop for customers on the East African market.

The firm which boasts of over seven years’ experience in the local and regional market, is also home to world renowned Randon trailers. It commenced operations in Kenya in March 2005 with the assembly of Randon Trailers, a leading trailer brand with its origin in Brazil.

Through the strategic partnership with RANDON® S.A IMPLEMENThe Transporter

We are now a total transport solutions provider majorly in the heavy commercial vehicle industry after we were awarded the franchise to start marketing and distributing Volkswagen (VW) Trucks & Buses and MAN trucks in 2012.

TOS the firm set up an assembly facility in Nairobi’s Industrial Area that also acts as a sole and major distribution point for Randon brand in Kenya, Uganda, Tanzania, Rwanda, Burundi, as well as South Sudan.

“We are now a total transport solutions provider majorly in the heavy commercial vehicle industry after we were awarded the franchise to start marketing and distributing Volkswagen (VW) Trucks & Buses and MAN trucks in 2012. This was courtesy of our proven track record on RANDON trailers in the market,” said Darr.

The company put its first VW truck on the road two years ago.

Based on the experience, says Darr, it has proven to be highly reliable. The truck is appropriate for the developing countries and can easily be repaired locally in the transporters facilities.

“One thing about the VW heavy commercial brand is that it is suitable for developing countries, which are characterized by rough terrains and unskilled manpower.

The VW prime mover does not come with a lot of electronics which is common with most of the main European brands in the market.

This makes it possible for mechanics to carry ‘first-aid’ repairs easily on the roadside when the situation demands”, says Darr.

Another strategy that the company is using to guarantee market presence is ensuring easy availability of spare parts. Due to the experience gained through Multiple Hauliers, which has been in haulage business for many years, The Transporter

R.T. (East Africa) Ltd

it is easy to asses the needs of our clients who are operating under similar circumstances, he says.

Offering strong after-sales support is one of the driving factors that have dictated the company growth and given RANDON trailers a strong presence in the market.

The firm will provide a 24/7 field service back up to its customers and it is in the process of creating service centers across the country. “We are putting up a service facility on Mombasa Road which is a transit route and having a fully equipped service centre here complete with spare parts will take our after sales support to the next level,” added the CEO. The firm will also introduce fully equipped field service units that will provide 24/7 back up services on the roads across the country.

This, coupled with its long experience in the industry is what has put the firm ahead of its competition.

“For us, the sky is the limit!” concludes Darr.

APR - JUN 2013

Infrastructure

Dongo Kundu Bypass: Sh1 BILLION RELEASED

The bypass is expected to present a permanent solution in opening up of south coast, which has severely been affected by malfunctioning ferries at the Likoni channel crossing.

D

ongo Kundu by pass is one of the roads earmarked for development this financial year. The Cabinet Secretary in charge of Transport and Infrastructure Eng. Michael Kamau disclosed this to parliament in a detailed report of the roads project the ministry is undertaking.

Japan International Cooperation Agency (JICA) has already availed Sh1 billion for the project that is expected to open up South Coast, improve uptake of cargo from Mombasa port and reduce congestion along Mombasa-Nairobi highway, he told the Transport, Public Works and Housing Parliament committee chaired by Starehe MP Maina Kamanda.

The roads department will not take

40

APR - JUN 2013

on board any new projects except nine that have secured development partner financing, he said.

Others include the National Urban Transport Improvement Project funded by International Development Association (IDA) to the tune of Sh3 billion and a government component of Sh20 million, the Sh2.4 billion EU funded MerrilleMarsabit road and the Sh1.25 billion Nuno-Modogashe road.

Other projects that the ministry will commence construction which are fully funded by the government are the Kibwezi-Kitui, Thua Bridge, and Magumu-Njambini, each costing Sh100 million, and the Rumuruti-Maralal road which will cost Sh300 million However, twelve road projects estimated to cost Sh97.3 billion have

been shelved after the Treasury failed to set aside Sh7.5 billion in the Budget.

A detailed brief submitted to Parliament last week listed the Narok-Northern Tanzania (185 km), Mukuyu-Kisii-Ahero (145km), Eldoret-Kapsabet-Chevakali (95km), Kisian-Busia (104km), Kanyoonyo-Embu (82km) and ItenNyaru (52km) roads as some of the projects that will not start in the financial year starting July.

Business community in South Coast sees Dongo Kundu by pass as a permanent solution in opening up of the area, which has severely been affected by malfunctioning ferries at the Likoni channel crossing.

Although two new ferries were acquired by Kenya Ferry Services The Transporter

(KFS) bringing to seven the total fleet, there is still an infrastructural constraint on both quaysides that limits the use of more than two ferries on the either sides- mainland or island.

The bypass is contained in a 2004 government master plan aimed at opening up the South Coast by improving the road network and increasing tourists visiting the area. It will also improve road links with Tanzania.

The proposed bypass will start near Miritini, about 10 kilometres away from Mombasa Island, West of Moi International Airport, on the central mainland and will connect to the South mainland along Likoni- Diani road.

The bypass, to pass at Dongo Kundu, approximately 17.5 kilometers long, will significantly influence changes in the region due to its significance to the port. It has already been agreed that the bypass will have an arm connecting with the new container terminal

being constructed at Port Reitz at Mombasa port.

“The bypass has increased the demand for the land past Miritini as CFS operators and transporters move their yards there,” said Mwenda Thuranira, a property agent in Mombasa and CEO of Myspace Properties.

All the containers generated by the second container terminal, which has the capacity to handle 1.2 million Twenty Foot Equivalent Units (TEUs) will be delivered through the by-pass.

The new container terminal will also be connected to the existing terminal with possibilities that all the containers generated from the port will be delivered through the by- pass, KPA corporate communication manager Benard Osero said in an earlier interview. Over 1000 containers are loaded out from the port each day.

“Using the bypass, trucks will easily avoid the congested Changamwe circuit by joining the highway

at Miritini along Mombasa-Nairobi highway,” Osero said.

Once the by-pass is operational, it will not be appropriate to bring cargo to the congested Changwame circuit and hence the reason why investors are now focusing more on land past Miritini.

The expanded port is targeting more transshipment and transit businesses with the volume of the cargo handled at the port growing by over 7 percent every year since 2005.

Besides the bypass, there are long term plans to have a Free Trade Zone near the port, one of the 97 flagship projects identified by the government to achieve vision 2030.

The suggested FTZ will be extended to Port Reitz container terminal.

When fully developed, Dongo Kundu FTZ is expected to comprise 6,200 individual sites housing 10,000 business units and facilities for warehousing, light industry and processing industry.

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Transport of import and export containers within Kenya General cargo transport Reefer transport Low loader transport Heavy lift and storage of containers in Mombasa and Rongai Contact us Head Office (Rongai)

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 The Transporter

APR OCT - DEC JUN 2013 2012

41

Advertisers Feature

Scaling the Heights:

TransAfrica Motors Ltd TransAfrica Motors (TAM) Limited one of the leading auto dealers in East Africa region was founded in 2005. TransAfrica Motors deals in leading global brands like First Automobile Works (FAW) and Dalian Forklifts. The founders of TransAfrica Motors are also involved in logistics, manufacturing, financial services (insurance) and mining.

TransAfrica Motors branch of networks ensures that we are able to serve our customers where they are.

We have invested in modern workshops that are fully equipped and showrooms in located strategic areas in major cities.

TransAfrica Motors has invested in a highly motivated team of employees equipped with knowledge, team, expertise and enthusiasm to make a difference in the purchasing experience of our customers.

Our onsite and offsite training programmes ensure that at all times our staff are abreast with the latest industry trends.

We have established relationships with finance institutions and other lenders to facilitate innovative financing options for our customers.

TAM has grown from a single branch in Nairobi, Kampala Street in the Industrial Area, to four branches in major towns in Kenya including two branches in Nairobi and one each in Kisumu, Mombasa and Nakuru.

The total staff compliment has grown to over 300 employees. Trans Africa Motors was successfully able to position FAW in the Kenyan market and alsogrow new brands.

CORPORATE PHILOSOPHY

Vision:

To be the most admired and respected auto dealer in the region, by providing quality service with integrity that exceeds customers expectation in terms of products, processes and performance and adding value to all our stakeholders.

42

APR - JUN 2013

Mission: Our mission is to consistently provide premier automobile products and after sales service to our customers.

We are committed to maintaining excellence, respect and integrity in all aspects of our operations and business conduct driven by motivated and empowered employees who are our valuable assets. Finally, as a responsible corporate citizen, we will conduct our business ethically and socially with great concern for all the stakeholders and the environment.

Core Values: Customer always - in all our business processes and decisions; Integrity – at all times; Team work – in all our efforts; Agility – to maintain market leadership and growth; Service excellence – that is uncompromised and; Environment – for a greener earth.

COMPETENCIES TransAfrica Motors has developed key competencies in the following areas:

Brand Positioning TransAfrica Motors through innovative marketing campaign was able to position new auto brands along established brands being sold by dominant auto dealers in the market.

TransAfrica Motors successfully launched FAW brand in the market.

FAW commercial motors are some of the leading trucks in the market and competes successfully with established Japanese brands like Isuzu, Nissan-Diesel and Mitsubishi.

TransAfrica Motors has also managed to attract loyal customers including corporations, not for profit organizations and households.

Sales and Marketing TransAfrica Motors has a very experienced and dynamic sales team

that seeks to fully comprehend and meet customers’ expectations. It was through the teams’ constant strive to achieve perfection that they successfully launched the first Chinese vehicle brand in East African region.

The team is constantly scanning and analyzing the market trends aimed at understanding and anticipating the preferences of the customer. The success of the sales and marketing team comes from years of experience backed by in house training and an environment where they are given room to be ingenious and self driven.

After Sales Service Just like the sales and marketing team, TransAfrica Motors after sales team provides 24/7 services including road rescue, vehicle recovery and a 24-hour hotline services. TransAfrica Motors workshops are equipped with ultra modern and computerized diagnostic machines. Our team is constantly being taken through refresher in house and manufacturer training courses. The combination of a well-trained and motivated team with well-equipped modern workshops affirms our commitment to providing our customers with exceptional after sales services of highest quality standard. The company has also invested in two dedicated service centres in Nairobi and Mombasa.

Parts and Accessories TransAfrica Motors has invested in a robust parts inventory management system that ensures that customer’s parts needs are satisfied fully at all time and instances of stock-out and mis-binning are totally eliminated. The system is centralized and connected to all branches and also workshops.

EAST AFRICA AUTO MARKET Kenya is the biggest auto market in East African region. New auto sales face fierce competition from second hand imported cars mainly from Japan, Singapore and United Kingdom.

However, new vehicles have recently registered an improvement in vehicle sales.

Sales for new vehicles is expected to grow as the Government introduces a directive requiring that all government fleet requirements are met by vehicles with a 45% local content minimum. New vehicles are assumed to meet the criteria.

Corporate consumer also buy only new vehicles and constitute a very important component of the market.

The Transporter

The proposed road forms part of the trunk road which links with the corridor No.5 of the EAC Regional Road Network Programme which spans from Tunduma in southern Tanzania to Moyale in northern Kenya.

Sh19.5 billion EAC LINK ROAD APPROVED

The road is expected to reduce cost of doing business, increase competitiveness of the region on the global market and promote regional integration.

T

he African Development Bank (AfDB) recently approved two loans totaling Sh19.5 billion (USD232.5m) for the 157.5-km road project from Arusha to Holili in Tanzania, and Taveta to Voi in Kenya.

The project involves transforming the Sakina to Usa River section of the road to a dual carriage way and improvement of Usa River – Moshi – Holili road. The existing Usa River - Moshi – Holili road will be widened to 7.0 m carriageway and two metres shoulders on either side.

On the Kenyan side, the project is located in Kenya’s Coast region, Taita Taveta County. The Holili-TavetaMwatate Road section is 135 km long consisting of Holili (border) to the end of the project at Mwatate (86.492

The Transporter

kms); the road from Mwatate to Wundanyi (15.580kms) and the proposed Taveta bypass (11.965 kms).

A statement from the regional bank issued when the fund was approved in Nairobi said the road will help reduce the cost of transport and enhance access to agricultural inputs and produce, larger markets and social services within the East Africa Community (EAC).

The proposed road forms part of the trunk road which links with the corridor No.5 of the EAC Regional Road Network Programme which spans from Tunduma in southern Tanzania to Moyale in northern Kenya.

In Kenya, the road links with Northern Corridor, which commences at the Port of Mombasa to the border town of Malaba and on to Kigali in

Rwanda. The regional road is the most important link between Tanzania and Kenya, with most of import and export traffic to and from Northern Tanzania passing through the port of Mombasa.

The road facilitates cross border trade with Kenya (through Holili) in Rombo District and the movement of people and goods including agricultural produce from Arusha and Kilimanjaro regions to market centres is through this road.

The road is also used by tourists from Arusha, through Kenya or directly through Kilimanjaro International Airport to other parts of Tanzania.

The project, apart from improving transport and transportation between Arusha and Voi and interconnect Contd. Page 45

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43

Trade

CFSs told to operate

ROUND THE CLOCK T he round the clock operations at the port of Mombasa started in 2007 through former President Mwai Kibaki’s directive is facing serious challenges since other operators have not been able to embrace it.

A port stakeholders meeting held in April this year observed that Container Freight Stations (CFS), critical logistic players handling all the domestic cargo, are yet to start operations throughout the night.

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It was also noted that the challenge of embracing 24/7 operations being experienced at the CFSs are compounded by other players like the banks and government inspection agencies that play a part in the process, who also do not work round the clock.

The slow pace at which port stakeholders have embraced the work schedule prompted President Uhuru Kenyatta to issue a decree in early June, in which he also directed firms engaged in clearing of cargo to adhere

to the 24/7 work formula.

He also gave Kenya Ports Authority (KPA) managing director powers to supervise all agencies operating at the port without reference to the relevant heads of such agencies.

Storage charges levied by CFS operators have also continued to generate controversy due to slow turn-around time at the port and the fact that CFS’s are profit making. The concept of CFS was implemented in 2007 when over 60 percent of the cargo

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Storage charges levied by CFS operators have also continued to generate controversy due to slow turn-around time at the port and the fact that CFSs are profit making. handled at the port attracted storage charges.

As a result, the operators were supposed to generate their profits by levying storage charges on overstayed cargo, a business model that is no longer feasible considering the cargo handling efficiency that is now in place, which has reduced the volume of cargo attracting storage charges to less than 30 percent. Although Kenya Ports Authority (KPA) has for sometimes now promised to review The Transporter

the business model with CFS operators, nothing concrete is yet to be negotiated.

KSC, which has now transformed to the Shippers Council of East Africa (SCEA), suggested that the free day period given should be counted from the moment cargo is delivered to CFS’s because the sevenday period is unrealistically short as sometimes discharge takes longer, leaving the shipper to incur the demurrage charges.

Shippers were also encouraged to nominate a preferred CFS and pay a mutually agreed premium in exchange for an extended period of clearance.

Another contentious issue discussed is elimination of clause 14.11 in the minor tariff adjustments announced last year by KPA that has become a source of confusion and misinterpretation by a section of CFS operators who charge verification fee. The shippers also raised the issue of customs risk management system that will eliminate the need for 100 per cent verification and the related charges among others.

Other issues that were highlighted include the need for Kenya as a country to adopt the concept of a port manager, which entails having a coordinating agency at the port.

Despite President Kenyatta’s declaration on the management of the port being under one authority, stakeholders however say it will take time before the directive is implemented.

The court injunction challenging implementation of the Commercial Maritime Regulations of 2010 and the implications of section 16 of these regulations have also been a subject of discussion during the stakeholders’ meetings.

Section 16 bars shipping lines from investing in other cargo handling logistics since these would lead to monopolization of services, create room for punitive charges and drive local business out of business. The section has been challenged in court by the shipping lines operating in Kenya.

Sh.19.5 Billion EAC

Link Road Approved Contd. from Page 43

areas, aims at improving the safety of the project road, AfDB said in a project brief late last year.

AfDB’s Regional Director for the East Africa Resource Centre, Gabriel Negatu said the road has been identified in the East African Regional Integration Strategy Paper (RISP 2011-2015) and the East African Transport Strategy and Regional Road Sector Development Program of November 2011 as a priority for intervention.

“The East African Community seeks to improve regional transport infrastructure to support economic and social development programs in the region, promote tourism and foster regional integration and at the same time reduce the cost of doing business by supporting cross-border and international trade,” Negatu said.

The Arusha-Holili/Taveta-Voi road is also one of the transport corridors of the EAC region meant to increase competitiveness of the region on the global market and promote regional integration.

While the Bank facility constitutes 89.1 per cent of the total project cost, Kenya will receive Sh9.5bn (USD113.12m) of the two loans approved by the AfDB board, with Tanzania being awarded Sh10bn (USD120 million).

The project, which is expected to be completed by December 2018, is also jointly financed by the Kenyan and Tanzanian governments contributing Sh1.3bn (USD15.6m) and Sh1bn (USD12.3m) respectively.

For Tanzania, the Second National Strategy for Growth and Reduction of Poverty or MKUKUTA II sets as a target raising the growth of the transport sector to 9.0 per cent by 2015, the statement said.

For Kenya, it said, the upgrading of the Voi-Taveta Road falls within Pillar I of Vision 2030, the country’s basis for socio-economic transformation.

The corridor at completion will link the port of Mombasa to northern and northwestern Tanzania and the landlocked countries of Rwanda, Burundi, DRC and Uganda, providing an alternative route to the sea.

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45

Trade

Eliminate trade barriers, UGANDA TELLS KENYATTA Delays at borders in the region are higher compared to those at weighbridges and police roadblocks. The worst border point in terms of the time spent to get clearance is between Kenya and Tanzania - the report.

U

ganda private sector wants President Uhuru Kenyatta who has taken over the leadership mantle of East Africa’s largest economy to address non-tariff barriers facing the Northern Corridor- where most of its imports and exports pass.

The Private Sector Foundation (PSFU) hopes that his reign will reduce the constraints that have over the years negatively impacted on regional trade. “ We [private sector] shall begin eliminating the Non-tariff barriers,” the PSFU executive director Gideon Badagawa said recently.

The Northern Corridor Kenya’s stretch is the longest and Uganda has suffered from trade barriers along the corridor. Over 30 percent of the 20 million tonnes of cargo Mombasa port handled last year was Ugandan bound.

“We expect harmonization of polices, standards and development of the regional infrastructure to continue under his reign,” Badagawa said.

Apart from elimination of non-tariff

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barriers, Kampala City Traders Association Chairman, Mr Everist Kayondo wants old claims incurred during the 2007 post-election violence paid.

He said: “Ugandan traders lost more than Sh40 billion, after violence occurred following the disputed 2007 General Election in Kenya. These traders should first be cleared so that they can resume business.”

He was also of the view that the new leadership will do well to quickly deal with the elimination of the current weighbridge measurements—using the per axle method, instead of weighing the truck as a whole. Bribery is a major trade factor for those using the corridor, which is prompted by bureaucracy and delays.

A survey carried out last year by Transparency International Kenya (TI) and Trade Mark East Africa (TMEA) revealed that regulatory authorities along the East Africa transport corridors demand huge amount of bribes that have significantly increased the cost of doing

business.

On average, the highest bribes paid to the revenue authority officers were recorded by Tanzanian transporters, who incurred bribes amounting to US$2,656, followed

by Kenya at US$ 1,250, Uganda at US$490 and Rwanda at US$100, the report; Bribery as a non-tariff barrier to trade; a case study of East African trade corridor, said.

In the case of Tanzania, bribery costs per year consisted of about 18.6 per cent of the value of goods transported.

The survey covered the Northern and Central corridors- that form a vital trade link in the region.

“By reducing or eliminating tariffs and working to minimize nontariff barriers across the EAC, the governments in partner states can ease the flow of people and goods across borders. However, the problem of non-tariff barriers in the EAC is widespread and requires joint effort to eliminate it,” a TMEA official said.

Almost all private sector players interviewed, according to the report, The Transporter

cited the likelihood of unnecessary delays as the major reason that prompts bribery payments. This, it was noted, was a result of numerous documentations, slow pace of services, poor understanding of clearing procedures and high tax levels.

The survey further revealed that bribes were mainly demanded to speed up the service at various points, avoid full verification of goods and paying full tax and other charges payable.

Bribes were also offered to avoid investigation especially on fraud attempts, contraband and illegal goods or excess weight carried by the trucks, expired import licenses and speeding on the roads or parking offences.

“Truck drivers have devised various means of accounting for bribery expenses to their employers. The most common is road trip expense,” the report says and adds; “These are anticipated regular amounts given prior to the start of a journey and ad hoc miscellaneous expenses. In the transporters’ books of accounts, the bribes are normally disguised either as anticipated regular amounts or as ad hoc miscellaneous expenses.”

Lack of harmonization of load limit rules has compounded the problem of bribery. Although the East Africa Legislative Council (EALA) has enacted a legal regime that adopts a gross vehicle weight of 56 tonnes, The Transporter

Over 30 percent of the 20 million tonnes of cargo Mombasa port handled last year was Ugandan bound. it will only become a law when the heads of state of the five East Africa countries endorse it in their next summit in November.

Currently Rwanda and Burundi both have weighbridge regulations that specify trucks should not exceed a maximum of 53 tons. Kenya sets a limit of 52 tonnes while both Uganda and Tanzania allow 56 tonnes.

Delays at customs in the region are higher compared to weighbridge stations and police roadblocks, the survey report says. The worst customs stations in terms of the time spent to get clearance is between the Kenya and Tanzania borders.

Relevant stations in this respect are Namanga, Taveta, Holili, Horohoro,Lunga Lunga and Loitoktok. At these border stations, truck drivers spend an average of 68 hours to get customs clearance.

“This provides a good opportunity for drivers to offer bribes in order to speed up the process.”

There are huge time variances for customs clearance between EAC border stations; Kenya- Tanzania 68 hrs, Uganda-Kenya 14.8 hrs, Tanzania-Burundi 0.8 hrs, and Rwanda-Tanzania 72 hours.

The proportion of transporters who admitted paying bribes in the course of transporting goods

through both the Central and Northern Corridor were highest in Kenya with 86 per cent of transporters indicating they paid bribes, followed by Tanzania (82 per cent), Uganda (55 per cent), Burundi (50 per cent) and Rwanda (20 per cent).

The survey recommended various interventions to respond to the business environment to reduce opportunities and motivations for bribery. First, the bloc should harmonize such practices like custom codes, valuation standards and import clearance.

Harmonization will significantly reduce delays occasioned by import and export standards not allowable in member states. Partner states need to strengthen the advocacy capacity of their business associations that deal with transport, the report recommends.

This will enable such institutions to engage regulatory authorities in effective policy dialogue that would facilitate efficient and corrupt-free transportation within the region. Such capacity building could be facilitated with the support of donor resources since most business associations lack requisite financial resources to address the needs of their clients.

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47

Advertiser’s Feature DT Dobie held a Service Camp for the operators of Mercedes Benz trucks in Mombasa which gave fleet owners free detailed inspections. Below: Jost Forchner (left) the leader of the technical team from Germany, briefs Justin Muchiri a DT Dobie apprentice on the preparation of a report for a truck owner.

DT Dobie Launches country wide

TRUCK SERVICE CAMPS Mombasa, Kenya’s principal sea port and second city, was chosen by DT Dobie, the Mercedes Benz truck agents for Kenya to launch a series of country wide truck service camps.

Mombasa is the starting point for the Northern Corridor route through Kenya, Uganda, Rwanda and Burundi into the Eastern region of the Democratic Republic of Congo. Hundreds of trucks leave the port every day carrying petroleum products, containers and assorted loads on the long haul inland.

The coast service camp was run for 17 weeks by a combined team from the Truck Division of Mercedes Benz in Germany and DT Dobie senior technical team who carried out detailed inspections. This free service for fleet owners gave them full reports showing the work and spares needed to keep their trucks in top condition. A total of 245 prime movers were given visual mechanical and diagnostic health checks.

Following the success of the Mombasa camp similar events will be held along the Northern Corridor later in the year. These will take place in Nairobi, the capital city and Nakuru, Kisumu and Eldoret all of which are bases for transporters.

Jost Forchner, the leader of the technical team from Germany, commented, “Linking with Mercedes Benz truck dealers around the world to run service camps is part of our company’s strategy of back up for

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our customers. As the inspections which we carry out can be extremely detailed, we like to call ourselves “The Flying Doctors” because we travel around the world assisting customers.”

Steve Farrell, the Director for Aftersales at DT Dobie, explained, “D T Dobie are very proud to hold the first dedicated service camps in Africa along with Daimler. We appreciate that time is a premium for truck owners and the service camps are aimed at minimizing interruptions to the busy work schedules for their vehicles. The programme demonstrates our support for our customers by bringing a team of top technicians to assess the condition of their vehicles at a location near their bases.”

“We are convinced that workshop, parts and procurement managers of companies running fleets of Mercedes trucks will enhance their knowledge on achieving the best results from their investments.

Subjects covered include service maintenance contracts, service

packages and special parts offers. In addition, technicians working for fleet owners were given on site tips and best practice by our team.”

“The advantage of using genuine Mercedes Benz spares which carry a warranty unlike second tier parts, was emphasized for long term economy and safety. Joe Mungai, the DT Dobie Driver Trainer, Mercedes Benz Heavy Commercial Vehicles on hand to give guidance to explain the features of the latest Mercedes trucks to drivers. He also gave guidance on driving safely to reduce fuel consumption.”

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LEFT OR RIGHT?

Which side will EAC

DRIVE ON?

M

otorists operating in East African Community member countries will continue to drive on the ‘wrong’ sides of the road while crossing onto other members’ territories because traffic regulations in the bloc are yet to be harmonised.

East African Community’s (EAC) Deputy Secretary General in charge of Planning and Infrastructure Dr. Enos Bukuku said while the bloc was harmonizing a number of regulations that currently impede trade, business and free movement of people in the region, the issue about which side of the road all the five countries should adopt was yet to be decided.

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Rwanda and Burundi drive on the right side of the road, which means the vehicles used in the two countries have their steering wheels fixed on the left (LHD) of the vehicle, while Kenya, Uganda and Tanzania use the left side of the road with their vehicles featuring the right-hand-drive mode.

“But the five East African member states will eventually blend automatically,” said Dr. Bukuku, citing the case of Nigeria and Ghana which were compelled to change from driving on the left to the right in order to harmonize their traffic regulations with the other west and central African countries.

He was speaking during a regional journalists’ Networking Pro-

RHD & LHD Rwanda and Burundi drive on the right side of the road while Kenya, Uganda and Tanzania use the left side.

gramme meeting in Arusha, which was organized by the EAC, the East African Business Council and Germany’s GTZ institution.

Dr Bukuku’s office is in charge of planning and infrastructural development in the East African region which handles ongoing projects to build common road and rail networks linking the five member states.

Highways built under the coordination of the EAC secretariat, especially those linking countries with different driving sides such as Tanzania and Burundi, or Uganda and Rwanda, do not even have special inter-connecting hubs to switch motorists from the left to the right and vice-versa.

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49

Port News

100 hectares

Construction of terminal

ON SCHEDULE

T

he Kenya Ports Authority has substantially progressed in the construction of the 1.2 million Twenty Foot Equivalent units (TEU) capacity second Container Terminal as part of its continued efforts to expand capacity ahead of demand.

The project which was commissioned in 2012 is now 34 per cent complete with phase one scheduled to be ready by 2015, the KPA corporate department said in a recent statement. Its main objective is to expand container handling capacity of the port of Mombasa in order to match future trends, stay competitive in cargo handling and facilitate economic development in

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the Eastern and Central Africa region.

The new container terminal west of the current Container Terminal is being constructed on 100 hectares of reclaimed land and will have three berths that measure 230, 320 and 350 meters. The first phase involves construction of two berths for PostPanamax vessels of 60,000 DWT and Panama container ships of 20,000 DWT as well as a smaller berth. The 1.2 million TEU Terminal will increase the current overall port capacity by 15 million tons.

In 2012, the port of Mombasa handled a total of 21.92 million tons up from 19.95 million tons in 2011, a growth of 9.9 per cent. Container traffic rose to

of reclaimed land used for construction of the new container terminal

1.2 Million TEUs The expected handling capacity of the second contaner terminal at the Mombasa Port 903,463 TEUs from 770,804 TEUs handled in 2011, an increase of 17.2 per cent. In the same period, transit traffic realized a growth of 18.4 per cent, registering 6.63 million tons from 5.60 million tons in 2011. “The KPA management is upbeat and anticipates an upward growth especially now that the country is through with elections. It is projected that close to a million TEUs will be handled at the end of 2013 and a total throughput of about 22 million tons. The Authority projects to handle approximately 27 million tons total throughput and 1.3 TEUs by 2016,� the statement said.

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