Trade volumes rising as port congestion worsens

Implication. The maze containers go through at the port before they are forwarded to their final destination affects traders most because they incur demurrage charges for extra time spent there.

Mombasa port will have to overcome numerous challenges before competing in the global maritime industry. Lined in neat ordered rows are long queues of containers at Mombasa terminal. That is the picture of a congested port –one where demand for stacking space of containers approaches its capacity due to cumulative higher charges.

Last year, the port handled some 19. 6 million tonnes of cargo, of which about 4 million tonnes were imports and 5 million tonnes were in transit to neighbouring countries.

Cargo volumes
In 2011, the same port handled more than 5 million tonnes of traffic, up nearly 30 per cent since 2006, of which Uganda is the largest destination of transit cargo accounting for nearly 80 per cent of that figure – 4.2 million tonnes – whereby 90 per cent is imports. It is followed by Democratic Republic of Congo, which is the second largest transit market taking up to 8 per cent share of the total at 430,000 tonnes.
Of the total volumes handled through Mombasa, 72 per cent of all port volumes goes to Kenya’s domestic market, 22 per cent for Uganda, 2.3 per cent for the Democratic Republic of Congo (DRC), 1.5 per cent for Rwanda and less than 1 per cent for Tanzania, Burundi, South Sudan and Somalia.
Traffic through Mombasa port has grown over the last decade from 9.1 million tonnes in 2000 to 19.3 tonnes in 2011, an increase of 7.4 per cent annually.

The multipurpose port in East Africa has a number of issues accounting for delays in clearing cargo destined to Uganda and other regional states that depend on the facility for trade.

Concerns
Too often, it’s not clear which player is responsible for a crisis at the port. With a number of players involved in handling cargo from the port—Kenya Ports Authority (KPA), Kenya Revenue Authority (KRA), Kenya Bureau of Standards, Kenya Plant Health Inspectorate Services, Port Health Authority (PHA), Dairy Board of Kenya, National Bio-safety Authority, Anti-Counterfeit Agency and Port Police— as each player passes the buck to another, affecting container inflows and outflows differently.

The maze containers go through at the port before they are forwarded to their final destination affects traders most because they incur demurrage charges for the extra time spent there.
Clearing is not only very complex but also a lengthy and cumbersome exercise, Mr P.J Shah, the managing director at Maritime freight company Limited, said.

“Under Section 34 of the East African Community Customs Management Act 2004, an importer is required to enter goods to a Customs entry within 21 days after the commencement of discharge of cargoes from the carrying vessel,” Mr Shah said.

TradeMark East Africa estimates that close to two thirds of shipments, about 20 per cent, experience Non-Tariff Barriers (NTBs)—restrictions and limitations that act as hindrances to trade. These also hurt investor perceptions about a country.

Regional Trade and Integration Director at TradeMark East Africa, Jose Maciel said companies spend approximately $145,000 per month on employees’ time and accommodation costs due to Non-tariff barriers and delays. Removing NTBs would reduce the costs of transporting goods; thereby, slashing prices while increasing peoples’ purchasing power, lowering corruption, and inflation.

There is no uniform recognition of standards of goods at the border. “There is lack of mutual recognition of standards marks and retesting of goods,” Mr Maciel said, adding that this increases the time it takes for goods to reach the market and costs associated with retesting goods.
Although Kenya Ports Authority is investing in the second container terminal at Mombasa, infrastructure to facilitate the transportation of cargo is still weak.

The rail system still uses a narrow gauge track—about 1000 mm, way below the capacity to handle the current weight of cargo.
“In 2011, the rail system lifted less than 5 per cent of port throughputs. Much of the rail network needs modification to take account of changing freight trends,” Mr Anthony Hughes, an official from TradeMark East Africa, said.

The port’s container terminal has been stretched beyond its original capacity surpassing the capacity of 250,000 TEUs (twenty foot equivalent units) it was built to handle per year. It now handles another 800,000 TEUs and projects to handle 20,000 TEUs by 2020.

Delays also occur from informal stops and check points. Some truck drivers must stop at weighbridges, inconveniencing them with cumbersome clearance procedures. In effect, these slow cargo transportation whereby about one to three hours are spent on each weigh bridge.

Another bottleneck is road blocks. The 2011 Business Climate Index survey notes that Kenya has the highest roadblocks at 24, followed by Uganda, Burundi and Rwanda at 21, four and two, respectively.
KRA recently slapped a $300 cash bond— an equivalent of Shs780,000—per container destined to Uganda, raising the cost of doing business for traders who were already affected by record-high demurrage charges.

Way forward
To end this, industry players at a meeting in Mombasa suggested that an independent inter-ministerial transport committee be instituted to rectify all those issues surrounding the port.
“What we need now is a national maritime and transport authority that will co-ordinate all players to handle all the issues,” Captain Twalib Kharmis, the general manager of operations at the container depots and terminal, Mombasa said.
Trade Minister, Amelia Kyambadde, said the government is in talks with regional players to harmonise trade.
“We are facilitating bi-lateral agreements between member states and drafting a law within the East African Community,” Ms Kyambadde said.