SHIPPING FEE

Mombasa Port's demurrage charges still high – importers

KMA has directed free period of up to seven days for containers

In Summary

•Clearing agents and importers say they are still incurring huge losses on high demurrage costs at the Port of Mombasa.

•Tanzania is giving up to 80 days for containers headed to the hinterland compared to an average 21 days in Kenya.

Containers being offloaded from a ship at the Port of Mombasa.
Containers being offloaded from a ship at the Port of Mombasa.

Importers maintain that the Port of Dar es Salaam still has an edge over Mombasa on demurrage charges despite the extended free period for containers.

Clearing agents and importers yesterday said despite the Kenya Maritime Authority’s directive they are still incurring huge losses on high demurrage costs at the Port of Mombasa, where shipping lines are slapping them with a minimum bill of $25 (Sh2,674) per container, per day, in case of delays.

Most containers, mainly on transit, delay by between four and seven days as a result of a slow clearance process and high truck turn-around between Mombasa and key transit destinations of Kampala, Kigali, DR Congo and South Sudan.

 

This translates to demurrage costs of up to $150 (Sh16, 044) per container, a charge payable to the owner of a chartered ship on failure to load or discharge the ship within the agreed time.

KMA has issued a directive, effective July 1, asking shipping lines to extend free period on return of empty containers by an additional seven days and three days for transit and local traffic respectively.

According to the outgoing Director General George Okong’o, measures put in place to contain the spread of Covid-19 have partly led to delays in clearance and movement of cargo at the Port of Mombasa and along the Northern Corridor.

“The directive will be valid until the Covid-19 pandemic challenges subside,” Okong’o notes in the notice issued last Friday.

This means that cargo currently held at the border posts will enjoy seven extra days free of demurrage penalties by shipping lines.

The Kenya International Freight and Warehousing Association (Kifwa) however yesterday said seven days are not enough for transit goods where truck-turn around has doubled.

For instance, it now takes between nine and fourteen days for a truck to do a return trip between Mombasa and Kampala, from four days pre-Covid period.

 

The seven extra days directed by the maritime regulator means imports will now enjoy at least 21 days as most shipping lines give between 11 and 14 free days.

Users of Dar es Salaam however enjoy up to 80 days for transiting to far points such as DR Congo.

“The seven days directed by KMA is a mockery of traders’ expectations,”

Kifwa national chairman Roy Mwanthi told the Star, “Most importers are still considering Dar es Salaam as the most favourable port on demurrage costs.”

He said the Port of Mombasa risks losing business to Dar es Salaam.

“Our clients are already incurring huge costs on drivers, border delays so most are now starting to direct their cargoes to Dar es Salaam as opposed to Kenya where they end up paying demurrage, “said Mwanthi, calling on KMA to consider more days.

The Shippers Council of Eastern Africa (SCEA) has however welcomed the move by KMA saying it will help cushion transporters and importers, though a number are still affected with demurrage.

He unlike Tanzania where the regulator intervened early to cushion traders, shipping lines operating in Kenya have been adamant to give more days.

Langat said reduced working hours by shipping lines’ offices in the country, a reduction on Kenya Ports Authority’s working shift to contain the spread of Covid-19, and slow clearance processes have led to delays on cargo evacuation.

This adds to border delays that are affecting return of containers to Mombasa.

“We had asked for ten extra days for the current circumstances but KMA’s directive for seven days is equally good. Demurrage is very expensive,” SCEA CEO Gilbert Langat said in a telephone interview yesterday.

Meanwhile, transport costs between Mombasa and key East Africa transit destinations have increased by between $300 (Sh31, 980) and $1000 (Sh106, 600), blamed on cross-border delays occasioned by Covid-19 control measures.