SHIPPING COSTS

KMA intervenes on container delays charges at Mombasa port

Importers have decried high demurrage

In Summary

•Kenya Maritime Authority says it is engaging key players in the logistics chain, with a view of putting in place measures to handle delayed containers.

•Importers are charged a minimum of $25 (Sh2,660) per container, per day, in case of delays.

Containers at the Port of Mombasa's Second Container Terminal/
Containers at the Port of Mombasa's Second Container Terminal/
Image: CHARLES MGHENYI

Kenya is engaging shippers to increase free days for containers to cushion importers and traders from current high demurrage charges arising from delays in cargo movement due to the Covid-19 pandemic.

The moves comes as the Port of Mombasa faces competition from neighbouring Port of Dar es Salaam, where the Tanzania Shipping Agencies Corporation (TASAC) directed all shipping agents to extend demurrage free period for transit goods, effective June 10.

Demurrage is a fee payable to the owner of a chartered ship on failure to load or discharge the ship within the agreed time.

 

Kenya Maritime Authority (KMA) yesterday said it is engaging “key players” in the logistics chain, with a view of putting in place measures to handle delayed containers. 

“Shipping lines, are among those engaged to consider offering additional free days, on top of the initial free days already in place as per the contracts with the shippers,” KMA Director General, Major (Rtd) George Okongo told the Star in an interview.

The authority has powers to intervene on excessive demurrage charges, he said.

“Intervention on the matter on demurrage on containers is already in process and a directive will be issued in due cause,”Okongo affirmed.

A long lasting solution is however required which according to the authority, would be to improve  infrastructure and logistic systems to ensure efficiency and subsequently eliminate delays along the operation chain.

“Measures are being put in place to enhance efficiency of operations thereby reducing delays, which boil down to extra cost, will go a long way in assisting businesses reduce the negative effects of the pandemic,” Okongo said.

Tanzania has pushed shipping lines to extend demurrage free period by between 10 and 25 days on different destinations, mainly transit, giving its Dar es Salaam Port an edge over Mombasa.

 

Director General Emmanuel Ndomba directed that importers of cargo destined for Rwanda, through the Tanzania-Rwanda border of Rusumo, be given 55 days to return empties from 30 days.

Importers of DR Congo bound cargo through Rusumo have 80 days to return empties from 55 days while those using Tunduma border have 65 days, an increase from 55 days.

This makes it cheaper to use Dar es Salaam over Mombasa when factoring in demurrage costs where importers and clearing agents in Kenya have 21 days for Kampala bound cargo and 28 days for South Sudan and DR Congo.

Local cargo has between nine and 14 days before empties are returned.

Importers are charged a minimum of $25 (Sh2,660) per container, per day, in case of delays.

Clearing agents through the Kenya International Freight and Warehousing Association (Kifwa) last week warned Kenya risks losing transit business to Dar es Salaam which serves the hinterland through the Central Corridor.

“Some traders in South Sudan have told agents to use Dar es Salaam. If we don't watch out, we will have a dormant port,” Kifwa national chairman Roy Mwanthi told the Star.

The clearing agents have requested shipping lines a free demurrage period of 21 days for domestic cargo, 45 days for Kampala and Northern Tanzania and 60 days for Juba, DR Congo, Bujumbura and Kigali.

The truck-turn-around time between Mombasa and Kampala has increased from four days to more than 10 days in the wake of Covid-19, with delays on border clearance being the biggest challenge.