The Kenya Railways Corporation (KRC) is aiming to increase its presence in the courier business, hoping to capitalise on the current demand for services in this sector, which is currently dominated by an informal delivery network built around upcountry matatus.

The State-owned rail firm has applied for a national courier business permit, signalling KRC’s plans to expand parcel services beyond the Nairobi-Mombasa SGR corridor where it rolled out earlier this year.

A permit approval from the Communications Authority (CA) would allow the State Corporation to collect, sort, transport and deliver parcels and documents across Kenya under a national intra-country courier licence.

“We’ll do the bulk of the deliveries on the Nairobi-Mombasa line, but we’re also extending to our other routes. We’re not doing last-mile deliveries so clients will pick the parcels from our stations,” said KRC managing director Philip Mainga in a phone interview.

“We’re also looking to partner with other courier operators who’ll pick the parcels and do last-mile deliveries.”

KRC launched a dedicated same-day parcel service between Nairobi and Mombasa earlier this year, using the SGR to move consignments between the two cities.

The rail firm says it will use railway stations as collection and distribution points while leaving the final leg of deliveries to customers or partner courier firms.

The approach allows KRC to concentrate on the long-distance movement where rail has an established network while avoiding the cost and operational complexity of building a nationwide last-mile fleet.

Read: Cargo, passenger surge lifts SGR revenue to Sh21bn in 2025

The proposed model comes as the courier market undergoes a structural shift from letter delivery towards parcels and logistics, even as overall domestic volumes remain volatile.

Latest data by CA shows that domestic parcel traffic fell 6.1 per cent to 3.7 million in the quarter ended March, down from 3.9 million in the preceding three months.

This came as domestic letters recorded a sharper contraction, falling 20.1 per cent to 636,566 from 796,578 over the same period.

The decline in letters reflects the continued substitution of physical correspondence by email, messaging platforms and other digital communication, leaving parcels as the more relevant growth segment for postal and courier operators.

The State Corporation is entering the market as e-commerce expands demand for delivery services.

Matatus have emerged as a low-cost alternative for moving parcels between Nairobi and upcountry towns, putting pressure on conventional courier operators.

The sector has also seen competition emerge outside the conventional courier model as matatus and buses become widely used to move parcels between towns along established passenger routes.

Operators on upcountry routes offer a network of collection points through transport stages, giving traders and individuals an alternative to formal courier branches.

The model has also been adopted by newer logistics businesses, with some platforms using the existing matatu network to move parcels while providing tracking and delivery guarantees.

KRC’s entry also comes as Kenya’s courier industry adjusts to the growth of online commerce, which has increased demand for movement of goods from sellers to customers.

Kenya’s digital economy has expanded the role of delivery networks for small businesses selling through websites, social media and online marketplaces, making logistics an increasingly important part of the retail chain.

The government’s own review of the postal and courier market structure identifies e-commerce and digital platforms among the forces reshaping the sector, noting the shift from traditional letter mail towards parcel and logistics services.

The CA has been reviewing the licensing framework to address changes in market concentration, competition, service segmentation and the emergence of digital platforms.

The regulator’s latest market review is intended to partly remove entry barriers and clarify licensing categories as competition increases.

The regulator says the market is moving towards a parcel-driven and logistics-oriented model as traditional postal traffic loses ground.

“As the market evolves from traditional letter mail to parcel-driven and logistics-oriented models, our regulatory approach must also adapt to remain relevant and forward-looking,” said CA Director-General David Mugonyi.

That shift has opened space for operators with existing transport infrastructure to enter the market, such as KRC, which already has railway stations, trains and established freight operations along several corridors.

The corporation has also been seeking to expand the commercial use of its railway network beyond passenger services and traditional freight.

KRC has announced plans to reopen and develop additional railway routes, including the Gilgil-Nyahururu branch, while rehabilitation of the Voi-Taveta line is under way.

kmwangi@ke.nationmedia.com