Fleet owners say SGR is not a threat to their businesses

Dar es Salaam. Fleet owners have expressed confidence that they will continue serving domestic and foreign customers, even after the standard gauge railway (SGR) becomes fully operational.

Speaking on various occasions, transporters said that, in fact, the SGR might turn out to be a blessing in disguise as cargo throughput to Tanzania might significantly increase.

The government is currently expanding its railway network through the $10.4 billion SGR flagship project to complement the old and inefficient Metre Gauge Railway (MGR) system.

The SGR stretches from Dar es Salaam, on the Indian Ocean, to the upcountry termini of Mwanza, Kigoma and Mpanda on the shores of Lake Victoria and Tanganyika.

It consists of a 2,000-kilometre network that will be developed in various lots as follows: Dar es Salaam-Morogoro (300km); Morogoro-Makutupora (422 km); and Makutupora-Tabora (294km).

Other lots include Tabora-Isaka (130km); Isaka-Mwanza (249km); Tabora-Kigoma (506 km); and Kaliu-Mpanda (210km).

The SGR will then proceed to neighbouring Rwanda, Burundi, and the Democratic Republic of the Congo (DRC), according to its original plans.

Tanzania Railway Corporation's (TRC) latest report shows that while lots one and two stretching from Dar es Salaam to Makutupora have been executed by 98 percent and 94 percent, respectively, the contractor has started implementation of the project’s third phase.

Other lots were also at different levels of implementation following the signing of different contracts with contractors.

President Samia Suluhu Hassan has given specific orders for trains to start operating on lots one and two before July this year.

However, truck owners are confident that they will stay in business for the foreseeable future. Their confidence is shared by government officials, who have allayed fears that the fate of private transporters remains unknown as SGR becomes fully operational. Government officials further say that the SGR will complement rather than compete with the road transportation business, which has been bringing up to $2 billion to the country annually.

TRC director general Masanja Kadogosa told journalists recently that the government is ready to welcome the private sector to run SGR freight trains.

“Only Bakhresa Group, Mohamed Enterprises Limited and GSM have shown interest in operating their own trains on the SGR network,” he said.

Tanzania Truck Owners Association (Tatoa) chairman Elias Lukumay told members during the Annual General Meeting (AGM) recently that the SGR wasn’t a threat to the truck transportation business.

“Its operation will enable us to increase our market share because instead of receiving small ships with an average capacity of 50,000 tonnes of cargo, the country will be receiving marine vessels with an average capacity of between 100,000 and 200,000 tonnes,” he said. The revival of the Tanzania-Zambia Railways (Tazara) might also add to transporters' fortunes.

Tanzania Medium and Small Truck Owners Association (Tamstoa) chairman Chuki Shabani said truck operators should remain buoyant because SGR cannot penetrate everywhere and handle all the volume of cargo anticipated to significantly increase.

“We will continue to fulfil our responsibility of transporting cargo to final destinations, especially in the routes that the SGR network does not reach, including in remote destinations,” he told The Citizen.

Opening the Tatoa AGM in December last year, Prime Minister Kassim Majaliwa said the government’s efforts to improve transportation infrastructure are not intended to kill the road transportation subsector.

“Road transportation will keep growing and flourishing due to increased volumes of cargo entering the country through its ports,” he said.

The premier said between 2020/21 and 2022/23, imports into Tanzania increased by 18.1 percent from 18.87 million tonnes to 24.89 million tonnes, noting that over 95 percent of it was transported using trucks.

“You should expect a further increase in cargo following massive investments made in the country’s transportation infrastructure,” he said.

He called on stakeholders to get ready for the influx of cargo passing through the country’s ports as the government improves bilateral relations with players in neighbouring countries.

Academicians react

The University of Dar es Salaam (UDSM) economics lecturer, Prof Abel Kinyondo, said the fate of trucking will be determined by the efficiency or inefficiency of SGR operations.

He said efficient SGR operations would make rail transportation affordable, faster and more reliable, pushing truck owners to routes where the railway is nonexistent.

Truck owners, he said, would have to take their services to neighbouring, land-linked countries where there is still high demand.

He opined on the use of public-private partnerships (PPP) to procure SGR train waggons for operations in government-developed infrastructure.

“Inefficient SGR operations will frustrate players, leading to flourishment and continued dominance of trucks in the business. Therefore, owners are to make informed decisions after monitoring and evaluating the SGR performance,” he said.

A University of Iringa (UoI) lecturer, Prof Enock Wiketye, also concurred with Prof Kinyondo that the underperformance of SGR in Kenya and Tazara in Tanzania should serve as lessons for the proper management of SGR operations.

“Clients’ expectation is that SGR transportation would be cheaper and speedier. The experience of the SGR in Kenya shows that those expectations might end up unmet in the long term. In fact, we had a similar case with the Tazara. But such mistakes should be avoided as SGR becomes operational in Tanzania,” he said.

Notably, Prof Kinyondo advised truck owners to diversify their activities, including converting some of their trucks into buses to tap into the transport potential in areas that would not be served by the SGR.

“They should diversify their businesses. SGR is a huge investment in Tanzania. Studies say reducing transportation time by one day increases profit by 7.5 percent,” he told The Citizen in an interview.

A senior consultant and economist, Prof Samuel Wangwe, said that in developed countries, both trains and trucks can efficiently and effectively operate within the same economy.

“As the annual cargo volume passing through Tanzania continues to rise, transportation through trucks will face temporary challenges that will be restored to stability within a short period,” he said, emphasising that truck owners are challenged to go for the new routes.

A senior lecturer at the Open University of Tanzania, Dr Lawi Yohana, said efficient management and operation of SGR would influence the future of freight transport in the country.

“Trucking will be adversely affected, despite its significant contribution to the economy, through job creation and multiplier effects. Since railway transportation is effective and efficient globally, truck transporters will have no other option than looking for other routes,” he said.

The reduction of trucks on the country’s highways will reduce road damage, hence reducing the government’s expenditure on rehabilitation as well as minimising road accidents that have been claiming the lives of Tanzanians annually, according to him.

Traffic jams, he said, delay upcountry travellers from reaching their final destination, noting that a reduction of trucks on the roads will cut down travel time and hence stimulate the country’s economic growth.