Kenya has kicked off policies to salvage shrinking cargo business at its ports due to competition from the port of Dar es Salaam.
Cargo owned by governments in the region will be handled by the Government Clearing Agency (GCA) while other policies include cutting port charges and doubling the storage period for transit cargo.
Kenya is scrapping destination charges, affording importers from the landlocked East African Community partners using the Port of Mombasa a saving of up to $1,200 per 40-feet container.
Salim Mvurya, the Cabinet Secretary for Mining, Blue Economy and Maritime, issued a circular directing government agency to clear cargo through the Kenya National Shipping Line (KNSL).
Read: Kenya transshipment cargo volume drops 20pc”I’ve sent a circular to all government departments about the clearance of their cargo by KNSL under GCA,” Mvurya said on October 23.
According to the minister, the move is meant to revitalise the institutions, which have capacity to contribute to Kenya’s economy, and to ensure safety and confidentiality in clearing of sensitive government cargo.
This will see private clearing agencies lose lucrative deals and over 20 million metric tonnes of cargo.
Data from the Kenya National Bureau of Statistics indicates that about 52 percent of cargo cleared at different border points belongs to government ministries, departments and agencies.
ProtestsOver the years, the GCA has been ineffective, forcing the government to clear goods through private agents.
But now the Kenya International Freight and Warehousing Association (Kifwa) is protesting the decision to consolidate government-owned cargo, whose implementation began three months ago, arguing that the government should facilitate business, not do business.
Kifwa Chairman Roy Mwanthi noted that 51 percent of the 33.9 million metric tonnes of cargo handled in 2022 at the port of Mombasa belonged to the government, and the move will affect delivery of project materials in far-flung areas as the government has no capacity to clear and forward such huge amounts of cargo.
Read: Dar reaps as Mombasa cargo volumes dipThe announcement has been a blow to Kifwa, which was preparing to impose new rates on cargo handling and to set minimum service fees.
The lobby had said new fees would take effect from December 1 and are meant to cushion against inflation.“We have not had minimum charges set for all our services we offer and this has brought in exploitation as some traders misused clearing agents and charged them as low as $20 to clear their cargo worth millions of shillings but this will end starting December 1,” said Mr Mwanthi.
In the new rates, the cost of obtaining an Import Declaration Form, which used to cost about $13.4, goes to a minimum of $34 on 20 or 40-foot containers handled on air, sea and land.
Clearing a 20-foot container will now cost a minimum of $100 fand $167 for a 40-foot container or 1.5 percent of the total cost, insurance and freight (CIF).
For export, clearing and forwarding agents will begin charging $100 for 20-feet and $150 for 40-feet for local dealers whereas transit cargo will be chargeg $100 and $200 as transfer charges for 20 and 40-foot containers respectively.
To import a vehicle of up to 2,000cc, a trader will have to part with $100 for the unit to be cleared whereas clearing a vehicle of between 2000cc to 3000cc will cost $134.
For vehicles above 3001cc, buses, trucks, lorries, and other special vehicles, the charge is $201 for each unit.
The association has also set minimum charges for other services including transshipment and bond extension.
Kifwa cited price undercutting as one of its justifications for the review.
Meanwhile, stiff competition from the Dar es Salaam port has forced Kenya to review business terms with South Sudan and the Democratic Republic of Congo, almost doubling the storage period for transit cargo destined for Juba and Kinshasa.
Read: Dar, Djibouti ports beat Mombasa in new rankingA presidential technical committee formed to review the charges after an outcry by port users recommended the policy shift to make the Northern Corridor more attractive.
New recommendationsAccording to a report released on October 24, goods destined for Juba and Kinshasa will now enjoy 45 days free storage from the current 20-25 days, while cargo destined for Uganda will benefit from two more days to enjoy 30-days free storage period.
Goods destined for Burundi and Rwanda will be given 35 days free storage, from the current 30 days.
Principal Secretary State Department of Shipping and Maritime Affairs Geoffrey Kainuko said the move would help retain and attract clients.
Introduction of arbitrary charges by shipping lines at the Mombasa port without approval by the Kenya Maritime Authority has been driving away users, leading to decline in cargo throughput.
In 2022, cargo handled through the port shrank by 1.9 percent to 33.9 million metric tonnes, from 34.6 million tonnes in 2021, despite container traffic increasing marginally to 1.45 million twenty-foot equivalent units.
Major shipping lines have been charging equipment management fees, ex-border charges, late documentation per bill of lading fee, container cleaning fees, and import documentation fees among others, which were revoked by the Tanzania Shipping Agencies Corporation that runs the Dar port.
Read: Customers outcry over Kenya port ‘illegal’ leviesThe destination charges were among 21 items President William Ruto asked in July to be looked into, as they had been identified as key barriers to trade.“The sub-committee proposes the following should not be raised as destination charges without justification and approval of KMA: X-border fee, equipment management/monitoring fee, late documentation fee, container protection essential, depot charges at drop-off points, logistics fee, import documentation fee, transit corridor fees, administration charge and ‘other charges,” the report by the presidential technical committee says.
Currently, shipping lines charge $50 for 20 feet container and $100 for 40 feet container. Importers also pay about $50 for x-border charge and the same for late documentation per bill of lading.
In the new charges, the manifest amendment fee will be capped at $30 from $59.
Kifwa Chairman Mwanthi said the recommendations are a big win and the association will continue to push for more reforms to make Mombasa port more attractive to businesses in the region.
Agayo Ogambi, who represented the Shippers Council of Eastern and Central Africa (SCEA) in the technical committee, said, “Our hope as SCEA is that after this focus on shipping line charges, a holistic review on costs – transport and logistics – will be undertaken to include CFS, port, penalties and related fees and charges and which make our logistics costs expensive. Compared to the Asian region our logistics costs are at 35 percent while in Asia it is at eight percent.”
Source : Zawya