Slow response to barriers drives up transit costs from Mombasa

A trail of trucks at Malaba border moments before they are cleared to enter Uganda. The procedure usually drags on for days, making traders incurr higher costs than they had actually anticipated. File Photo

Despite a fast growing local market, Uganda stills ponders about what button to press to have a seamless delivery of goods that mainly reach Uganda through Kenya after shipping in at Mombasa port.

When ships arrive at Mombasa, importers pay heavily for their goods to be cleared. The charges here include demurrage charges— costs charged by the customs ware house stations when the goods are stored and not cleared within the specified time of between Shs1.5 million to 2.5 million per day taken before a ship is allocated a berth and a new arbitrary charge, an Equipment Management Fee of about Shs 260,000 per container on a ship.

According to a source who is familiar with the operations in Mombasa but could not speak publically, the Equipment Management Fee was introduced by Maesrk, the largest shipping company in the region and now other companies are also adopting it.

From Mombasa by road to Kampala, the 1200-Kilometre Northern corridor route from Mombasa to Kampala route, is currently shorter and considered the ideal route for goods destined for Kampala compared to the alternative 1802-Kilometre central corridor route through Dar es Salaam to Kampala. But, inconsistencies in handling cargo via Mombasa and poor transport set ups make this route another costly venture for traders since they pay more charges to state authorities such as import duty, withholding tax, VAT and excise duty plus some off-the-record payments in form of bribes given to officials mainly at police road blocks and weighing bridges to quicken the checking process and let the trucks move on time. Mrs Sarah Nagawa, an importer of textile and shoes narrated her challenging experience from Mombasa to Kampala.

“It is always a very tough experience to get goods to Uganda after they reach Mombasa. At the port, we are charged heavily but our containers are delayed, mishandled and at times misplaced.”
She adds; “The more time you delay at Mombasa, the more you are charged yet it is usually not our problem that the containers take longer to be cleared. The problem comes from their side. Then, after leaving Mombasa, the endless police blocks and weigh bridges escalate the transport charges as more time is wasted.”

As a land locked country, Uganda has to depend on its naturally blessed neighbour, Kenya with a shorter route to the sea to access world markets to import and export her goods. However, Mombasa port has in the recent past been faced with its own problems that have lived on up to date. The main problem has been port congestion due to overstayed containers and increased activity compared to the size of the port. Others include continued breakdown in internet enabled clearing systems and quality of employees.

Time taken by goods in transit
With such delays and inconsistencies, recent findings indicate that after arriving at Mombasa, goods take about 44 days to reach Kampala—14 days more than the recommended 30 days. The days include 15 days taken before a ship is allocated a berth after docking at Mombasa, one week taken to discharge a container from a ship, 18 days taken for a ship to be moved from the port to Container Freighter Services (CFS) section, two days for a truck to move from the CFS to Nairobi and another two days taken for the truck to move from Nairobi via Malaba to Kampala.

Railway route
On the other hand, the railway which would have been the better alternative still has infrastructure issues to address. Although the Rift Valley Railway (RVR) CEO, Mr Brown Ondego, notes the railway can deliver goods from Mombasa to Kampala within 16 to 30 days, he is fast to note that the railway still needs sometime before it can become a more productive route.
Cargo freight constitutes 93 per cent of RVR’s business, though its impact on cargo transportation is minimal. Statistics from RVR show that in 2011, cargo transport grew by 8 per cent from 1,532,596 to 1,606,231 tonnes. This is less than 10 per cent of the whole freight cargo that moves from Mombasa. This little contribution is attributed to limited investments and prioritisation of the railwayline.

However, there is new hope in the train as the repairing of the Uganda-Kenya Railway has started after Rift Valley Railways (RVR) received $49 million, the first tranche of the $164 million from its development partners as part of the funds that will be used in upgrading and rehabilitating the over 100 year-old railway that is in bad shape.

In a telephone interview, the Kampala City Traders Association (KACITA) chairman, Mr Everest Kayondo, told Prosper that traders continue to face ‘terrible’ conditions during transportation, a factor that is reflected on the final prices charged.

“We find it very hard when transporting our goods. The delays we continue to face come from slow Mombasa documentations, whole cargo scanning due to Uganda Revenue Authority pressuring their Kenyan counterparts to thoroughly check particular cargo and congestion at both inland container depots and the outside warehouses,” Mr Kayondo said, adding: “The implications of these delays are more expenses and this is usually reflected on the prices charged. When you delay, ship charges increase, transporters ask for more money, off-loading and reloading costs due to numerous road blocks also increase. All these render doing business in the region hard.”

In a different interview, Mr Kassim Omar, the co-chair of National Monitoring Committee of Non-tariff barriers in Uganda said that transporting goods would take a shorter time if the Kenya Revenue Authority was not making life for the East African business community hard.

“The Kenyans have put a lot of weighing centers from Mombasa Port to the Malaba boarder. This is contrary to the two stop centres for the goods in transit agreed on between Kenya and partner countries. These stop points not only waste time but also increase on the costs of the business people transporting their goods to Uganda, since some traders have to pay (corrupt) to get over them. I do not believe that this is in the spirit of integration.”

He adds; “The weighing posts are not well calibrated. You will be surprised when at one point the containers weigh 2000 tonnes and the next point they rise or fall by 20 tonnes. This is a sign of exploitation to the side of traders. KRA also acts for cash bonds from used shoes, bags, motor vehicles and electronic gadgets which also add to the costs.”

Mr Kayondo advised; “Regional integration should become more economically motivated. There should be harmonisation of economic policies with in the region. This has been done before and proven successful. During the days of the first East African Community, there was economic harmony with no road blocks or boundaries to trade. Goods would be transported from place to place freely. Such policies should be re-introduced to cut on the current costs.”

Eng. Abraham Byandala, the minister of transport and works said: “As government, we are working to reduce the prevalent infrastructural problems. Plans of construction more railway lines are ongoing. We are upgrading our roads to ease trucks mobility. The other challenges fall in other ministries.”

With the issues at hand, there is an urgent need of overhauling the transport system both roads and the railway in addition to harmonising regional trade policies to save the local traders and consumers from heavy sundry and unplanned spending.