OUTCRY

Cargo verification fee costly to businesses–KAM

KPA on Tuesday introduced charges of between 80$ and $120

In Summary

•The charges are an additional cost to businesses, the Kenya Association of Manufacturers says.

•Clearing agents and shippers have also protested the charges.

Containers at the port of Mombasa./FILE
Containers at the port of Mombasa./FILE

Manufacturers are warning that the re-introduction of cargo verification fee will push up the cost of doing business at a time when firms are already struggling to stay afloat.

Kenya Ports Authority (KPA) on Tuesday commenced charging 80 (about Sh8,500) as a verification fee for a 20-foot container while a 40-foot container now attracts a $120(about Sh12,800) fee.

It has contracted Mercantile Cargo Terminal Operations Limited to provide container-stripping services during verification, mainly done on the call of the Kenya Revenue Authority and the Kenya Bureau of Standards to curb tax cheats and contrabands.

 

Yesterday, the Kenya Association of Manufacturers joined the Kenya International Freight and Warehousing Association (KIFWA) and the Shippers Council of Eastern Africa (SCEA) in protesting the charges, whose implementation now enters the third day.

“We have since written to the KPA managing director to register our concerns on the introduced fee, which will undoubtedly increase the logistics costs and cost of doing business in the country,” KAM chief executive Phyllis Wakiaga said.

According to KAM, the introduction of the verification fee plus VAT  is “high and impractical” to implement since KPA requires all payments to be made prior to the exercise.

“Whilst the proposed verification fee shall be used to pay personnel hired by KPA on behalf of Kebs and KRA to offer verification services, it should not be passed on to the importer, but rather, should be catered for by the institution requesting for it,” Wakiaga said.

The associations' members are heavy importers of raw material for the manufacture of key products such as plastic, foodstuff, furniture, paints, agro-processing, and textile.

There has been an outcry by Kifwa and SCEA to defer the charges since February when KPA first attempted to introduce the fee.

The two have maintained that the fees be met by state agencies calling for verification. They also insist KPA tariffs on container handling should cater for the same.

 

Clearing agents at the Inland Container Depot-Nairobi (ICDN) in February grounded tools causing a cargo clearing backlog at the facility, which currently handles almost 50 per cent of cargo coming through the Port of Mombasa.

KPA was forced to withdraw the charges before re-introducing them this week.

Yesterday, Kifwa renewed its call on KPA to reconsider its position, noting that importers are already incurring numerous charges at the port, even as business remains low in the wake of the coronavirus.

“While financial institutions and other entities are giving reliefs to help cope with Covid-19, KPA is increasing the cost of doing business. This is punitive,” Kifwa national chairman Roy Mwanthi said.

The SCEA, through chief executive Gilbert Langat has maintained that any charges being introduced “must go through the normal tariff review.”   

The Star has established that KAM, SCEA, Kifwa and the Kenya Private Sector Alliance (Kepsa) are set for a meeting tomorrow, to deliberate on the container charges.

An average 200 to 300 containers are verified everyday, according to KPA

"Kenya Ports Authority has outsourced labor for this purpose to ensure a reliable and steady supply of labor,” Peter Masinde, head of Inland Container Depot said in a notice.

A stalemate is likely to lead to port congestion as Kifwa says its members have been forced to pay the charges on behalf of their clients, which could be a challenge going forward.

“After delivering the container, the importer tells you to go and seek waiver from KPA which does not happen. It means clearing agents will be working for losses,” Mwanthi noted.

There are also concerns that teams used to strip containers are paid an average Sh2,000 per container, which is way below what is being charged.

“We are concerned that some unethical practices may arise to increase the numbers targeted. We have been through this before in CFS allocation. How transparent are our systems?” Langat posed.