Kenya logistics sector depicts growth-report

[divider style=”solid” top=”20″ bottom=”20″][dropcap]K[/dropcap]enya’s logistics market has continued to develop over the past decade, from the typical low specification warehouses commonly identified as ‘godowns’, to higher quality A- and B-grade warehouses.

With improved infrastructure, most operators are now considering relocating to less congested areas away from Nairobi City, such as Kiambu and Machakos counties where there is availability of relatively cheap land.

Logistics users are noted for considering ‘land banking’ for the development of bespoke facilities through a design-build model. However, some users prefer involving a land owner who is a developer as well to build a bespoke facility for lease or purchase.

New market entrants are noted for leasing an already existing warehouse unit to test the market before committing to developing a ‘build-to-suit’ unit.

Transport and Logistics users occupy the highest market share of approximately 26%, followed by manufacturing and engineering; and, wholesale, at 23% and 22% respectively.

The demand from these users are mainly driven by improved infrastructure; government support with regards to tax incentives and SEZ status; expanding retail platforms; and, Mombasa Port’s throughput growth.

The transport and storage industry registered a slight growth of 5.4% in Q3:2018 compared to 5.3% in the same quarter of 2017.

However, this growth declined from 7.8% registered in Q2:2018 which can be attributed to the increased cost of fuel effected in July 2018 from the introduction of 8% VAT.

The volume of port throughput grew by 10% in 2018, from 1.19 million Twenty-foot Equivalent Units (TEU) in 2017, to 1.31 million TEU in 2018.

This growth was driven by the performance of the Standard Gauge Railway (SGR) from Nairobi to Mombasa, which commenced commercial freight operations in January 2018. The next phase of the SGR, connecting Nairobi to Nakuru, is anticipated to be completed by the first half of 2019.

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