STREAMLINING

New law to axe rogue clearing agents, address cargo delays

The Kenya Customs Agents and Freight Forwarders Bill 2020 targets to professionalize clearing business, address port delays and improve revenue collections.

In Summary

•According to FEAFFA President Fred Seka, the new regulation is meant to streamline cargo clearance by ending the deployment of untrained agents.

•It is aimed at ending cargo delays at ports, improve cargo flow, improve revenue collection by the revenue authorities and lowering the cost of doing business.

Federation of East African Freight Forwarders Associations President Seka Fred(R) with Kenya International Freight Forwarders Warehousing Association (KIFWA) National Chairman Roy Mwanthi during a presser in Nairobi on January 21 2020./VICTOR IMBOTO
Federation of East African Freight Forwarders Associations President Seka Fred(R) with Kenya International Freight Forwarders Warehousing Association (KIFWA) National Chairman Roy Mwanthi during a presser in Nairobi on January 21 2020./VICTOR IMBOTO

Players in the clearing and forwarding sector are pushing for a new law to help streamline industry operations and kick out rogue clearing agents.

The Kenya International Freight Forwarders Association (KIFWA) and the Federation of East African Freight Forwarders Associations (FEAFFA), in partnership with other relevant industry associations, want the adoption of the Kenya Customs Agents and Freight Forwarders Bill 2020.

The Bill unveiled in Nairobi on Tuesday is drawn towards enhancing professionalism in service delivery and compliance to the existing regulations , the associations said.

It is aimed at ending cargo delays at ports, improve cargo flow, improve revenue collection by the revenue authorities and lowering the cost of doing business.

According to FEAFFA President Fred Seka, the new regulation is meant to streamline cargo clearance by ending the deployment of untrained agents, promoting fair competition, protecting industry players from unfair liability and supplementing existing government regulations.

It will introduce mandatory registration and training of all customs agents and freight forwarders and fines and penalties for non-compliance and misconduct.

“Kenya trades over 30 million tonnes of cargo within the East African community and the volumes keep growing, putting ever more pressure on a system that is inherently inefficient due to the lack of obligatory qualifications,” said Seka.

The consequent delays are costing shippers as much as Sh25.6 billion annually in extra demurrage charges.

The proposed bill will require all customs agents to demonstrate their understanding of the clearance processes, valuations, classification, rules of origin and management of the changing regional regulatory regime.

They must also understand clearing systems, digital gadgets and portals in the country they operate in.

 

This will make for a step change in cargo efficiency, with 62.5 per cent of Kenya’s customs agents and freight forwarders currently lacking the skills to ably clear goods, according to the International Journal of Supply Chain and Logistics.

The skill gaps have resulted in frequent clearance errors, across the wrong tariff classification and valuation, the wrong duty and tax payments, cargo entry errors in the system, and acquisition of the wrong certificates, all of which frequently add extra delays.

“The result has been spiraling shipping costs, which are now three times higher than in other countries and making nearly all of our goods more expensive to consumers,” KIFWA national chairman Roy Mwanthi noted.

For instance, the Embakasi Inland Container Depot receives about 5,600 containers every week, for clearance from Mombasa and the clearance process is supposed to take four days,according to the KPA Tariff Charter.

Agents however are only managing to clear 48 per cent of the arriving freight within the four-day time-frame.

To address this, the bill seeks to formalise the East Africa Customs and Freight Forwarders Professional Certification (EACFFPC) exam and make it mandatory in order for customs agents and freight forwarders to get licenses from the revenue authority.

Of the over 8,000 customs agents operating in the country, only 3,000 have taken the exam over the last decade on a voluntary basis.

"Mandatory certification and continuing professional development will ensure professionals stay abreast with the necessary skills required in the sector,” said Mwanthi.

The Kenya National Bureau of Statistics reports that Kenya handles Sh578 billion worth of exports and Sh1.4 trillion of imports a year, with annual cargo expected to increase to over 50 million tonnes a year by 2030.

It takes Kenya an average of 39 days to export and clear goods compared to global averages of 15 to 26 days, according to the World Bank.