High prices stifle Mombasa's ship chandling trade

The once lucrative trade involving the supply of products and services to ships calling at the port of Mombasa has now shifted in favour of Durban, South Africa since Kenya proved to be an expensive destination.

In Summary
  • Ship chandlers supply an assortment of products and services to visiting vessels looking to replenish their ship stores.
  • The supplies range from food items, cabin stores, engine stores, marine paint among others.

The once vibrant and profitable ship chandling business in Mombasa has dwindled courtesy of a combination of cost factors negatively impacting the local sector with high product prices.

According to stakeholders, the once-lucrative trade involving the supply of products and services to ships calling at the port of Mombasa has now shifted in favour of Durban, South Africa since Kenya proved to be an expensive destination.

“Business has disappeared these days and we only get the minimum of it compared to what it used to be,” said Abdallah Mohamed of Muses Mohamed & Company Ship Chandlers.

 

“Pricing of our local products is the main reason. Alongside that of course is the fact that Durban also offers better products in terms of quality and even in packaging,” he says.

Muses Mohamed & Company, a family-owned enterprise, is the oldest ship chandler in the republic with operations running for more than 100 years.

It was established in 1888 by Mohamed’s grandfather Ali Muses, who after serving as a seafarer in merchant vessels set up a ship supplies business upon his retirement.

Ship chandlers supply an assortment of products and services to visiting vessels looking to replenish their ship stores. The supplies range from food items, cabin stores, engine stores, marine paint among others.

Anything from agricultural produce, bed sheets, towels, soaps and toiletries and a whole array of engine spare parts from bolts and nuts to bearings and more are often required by ships.

Being the busiest habour in the East African region, Mombasa port attracts thousands of vessels of varying capacity each year.

Therefore small-scale private companies engaged in the ship supplies trade have always had the opportunity to service general cargo ships, passenger, naval, tankers and bulk ships.

 

According to stakeholders, given the bulk amounts normally required by ships, the extent of the impact on the local supply chain was once huge.

From farmers supplying fresh farm produce such as vegetables and fruits, to spare part businesses and other service providers, they all cashed in on the opportunities.

“Even laundry service providers in Mombasa used to attract a lot of business whenever ships needed to have their cabin stores cleaned,” hinted Andrew Mwangura, a local maritime expert.

Furthermore, with varying customers’ needs, ship chandlers also often provide services ranging from maintenance works, deck activities to bonded stores.

No price controls

However recent years have reportedly witnessed a continuous business down-turn.

According to Jamal Kitati of Mombasa Ship Chandlers, while insecurity resulting from piracy activities in the Indian Ocean also affected trade in recent years, nothing compares to the impact caused by ever-increasing prices.

“Our product prices are so high such that even when ships in need of supplies call at the port they often find that they cannot afford to purchase local goods,” Kitati told the Star.

“For example, a spare part that would go for four US dollars (about Shs400) in other places could cost double the price locally. And you see that is only the buying price which means if we have to resell at a profit then the pricing is even higher,” he said.

In his view, the 1990s and the period before were a favourable time for ship chandling fortunes, mostly attributed to price control measures by the government.

“These days there is no price control by the government and what you find is a situation whereby retailers have different crazy prices for similar items,” said Kitati.

Zero-rated goods and import costs

According to the managing director of Bamburi Ship Chandlers Mohammed Bawazir, which also makes Durban a cheaper destination for ship supplies is the fact that it enjoys zero-rated tax status for Value Added Tax.

“Durban is much cheaper because they are exempted from VAT. Here we are forced to charge vessel owners VAT,” said the managing director.

“Therefore we cannot compete with Durban and we cannot equally compete with Dubai or Singapore because in all these ports suppliers are zero-rated on these taxes,” he added.

And since most of the vessels transiting Mombasa also pass through either port of Dubai, Salala, Singapore and Durban itself then it only makes sense for ship owners to opt for those cheaper destinations, he says.

Reliance on the importation of fruits from Durban has also been cited as a disadvantage for Kenya. Import costs are passed over to end-users making the products expensive.