Tanzania’s successful port business forces Kenya to reevaluate its business model
Kenya has been implementing measures to revive the declining cargo sector at its ports as a result of competition from Tanzania’s ports.
The Government Clearing Agency (GCA) will handle cargo held by regional governments; further measures include a reduction in port fees and a doubling of the transit cargo storage term.
Kenya is eliminating destination fees, resulting in savings of up to $1,200 per 40-foot container for importers from its landlocked East African Community partners using the Port of Mombasa.
Cabinet Secretary for Mining, Blue Economy, and Maritime Salim Mvurya issued a directive for government agencies to use the Kenya National Shipping Line (KNSL) for cargo clearance.
“I’ve sent a circular to all government departments about the clearance of their cargo by KNSL under GCA,” Mvurya said.
According to the CS, the measure is intended to revitalize organizations with the potential to contribute to Kenya’s economy, as well as to safeguard the safety and secrecy of important government cargo.
Private clearing companies will lose lucrative transactions and over 20 million metric tons of freight as a result of this.
A summary of data from Kenya’s National Bureau of Statistics indicates that around 52% of cargo processed at various border posts belongs to government ministries, departments, and agencies.
The GCA has proven ineffectual over the years, requiring the government to clear items through private agents.
However, the Kenya International Freight and Warehousing Association (Kifwa) is now contesting the government’s intention to combine government-owned freight, which began three months ago, claiming that the government should assist rather than do business.
Kifwa Chairman Roy Mwanthi noted that the government owned 51% of the 33.9 million metric tonnes of cargo handled in 2022 at the port of Mombasa, and the move will affect the delivery of project materials in remote areas because the government lacks the capacity to clear and forward such massive amounts of cargo.
The announcement was a setback for Kifwa, which was planning to impose new cargo handling tariffs and set minimum service prices. According to the lobby, the additional levies will go into effect on December 1 and are intended 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,” Mr. Mwanthi stated.
“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 and $167 for a 40-foot container or 1.5 percent of the total cost, insurance, and freight (CIF),” as seen in the East African, an East African news publication.
“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 charging $100 and $200 as transfer charges for 20 and 40-foot containers respectively,” the publication added.
