COVID-19 EFFECTS

Vessel delays, cancellations hurt Kenya's imports

KPA has been receiving an average 31 vessels

In Summary
  • Most affected cargoes are wheat imports, construction material, farm inputs and spare parts.
  • World Trade Organization has indicated global trade is expected to fall by between 13 % and 32% in 2020 as Covid-19 disrupts normal economic activity.
PILE-UP: Containers at the Port of Mombasa. KRA will allow advance clearance of cargo. Photo/File
PILE-UP: Containers at the Port of Mombasa. KRA will allow advance clearance of cargo. Photo/File

Kenya has recorded a spill-over of eight to 12 vessels every month since February, industry data shows, as cancellation and delays continue to hurt imports and the country's international trade.

This is as a result of disruption on the international supply chain occasioned by Covid-19 that has pushed the globe into the worst recession than that of 2009—International Monetary Fund (IMF) warned recently.

Most affected cargoes are wheat imports, construction material, farm inputs, and spare parts, a survey by African e-logistics firm–Kobo360 indicate, as the country continues to witness cancellations of an average 40 vessels month-on-month.

“We have spill-overs every month with cargo from Europe and Asia being the most affected,” Kobo360 Kenya Country Manager Dennis Kathurima told the Star in an interview.

The country is a heavy importer of wheat from Russia, Canada, Ukraine, and Germany.

Kenya Ports Authority (KPA) data shows the country has been receiving an average of 31 vessels since the first week of March.

Last month, KPA reported a week-on-week vessel arrival variance with a few blank sailings despite overall imports remaining high compared to last year.

A blank sailing means a vessel is skipping one port, or that the entire string is canceled. A string is a set of ports served weekly by a carrier.

We have not been that much affected. I can say port operations have been steady,” KPA head of corporate affairs Bernard Osero told the Star on the telephone.

“Most vessels scheduled to call at the port came, save for a slight slowdown on titanium carrying vessels most which are from China,” he added.

In Africa, the number of delayed vessels has increased to around 90 per cent of incoming port traffic, Kobo360 indicates.

“The reduction of goods moved across the continent has gone up to 40 per cent,” Kathurima noted, with industrial production dropping by 39 per cent.

The firm has however reported an increase in production in the agro sector, which has increased by 18 per cent.

“We have also seen an increase in the production and movement of pharmaceuticals, up by 50 per cent. The production of FMCG(Fast-moving consumer goods) has also gone up, increasing by another five per cent within the last four weeks,” Kathurima said.

 

Bulk carriers, container vessels, general cargo ships and oil tankers top the list of vessel type calling at the Port of Mombasa, which also serves the East Africa hinterland mainly Uganda, South Sudan, Rwanda and DR Congo.

Top imports include bulk clinker, wheat, steel, motor vehicles, and industrial input.

According to statistics by Kenya Trade Network Agency (KenTrade), state agency under the National Treasury mandated to facilitate cross border trade, there has been a decrease of over 50 per cent in the number of permits applied for importing various commodities between January and April as compared to a similar period last year.

The value of imports dropped to Sh54.9 billion in January compared to Sh89.6 billion in January 2019.

Last Friday, Treasury CS Ukur Yatani said the impact of Covid-19 to the domestic economy is being felt in key sectors of trade, “through imports from China and the rest of the world, as well as exports to Kenya’s trading partners.

Manufacturing and construction have suffered as a result of subdued importation of intermediate goods.

Other affected sectors are tourism due to disruption in global travel and closure of hotels, and transport and storage services due to low demand for transportation of imported goods as well as exports.

“Agriculture sector has been affected by the low global demand for agricultural exports especially horticulture, tea, and coffee, ”Yatani noted.

China remains a top import source for Kenya with the value of imports slightly increasing by 1.6 per cent to Sh376.7 billion in 2019, Economic Survey 2020 shows.

A survey by the Kenya Association of Manufacturers (KAM) conducted in the first quarter of 2020 revealed 77.97 per cent of companies under its umbrella source their inputs or export to China.

Out of the 22.03 per cent that neither source inputs nor export to China, 55.56 per cent of them faces a risk of supply chain disruption due to reliance on suppliers who source them from China.

“We have gleaned that a disruption in the global supply chains has seen local manufactures anticipate challenges in diminishing stock and constraints to fulfill clients’ orders,” KAM CEO Phyllis Wakiaga said.

There have also been hikes in the cost of raw materials as transport cost rises and increased costs of finished products, the association notes.

Top imports from China include electrical equipment and accessories, mechanical appliances, nuclear reactors, railway or tramway locomotives, iron and steel, furniture and textile.

The World Trade Organization has indicated global trade is expected to fall by between 13 per cent and 32 per cent in 2020 as the Covid-19 pandemic disrupts normal economic activity and life around the world.