LOGISTICS

Transport costs still a concern for importers, shippers says

Traders in the country are facing high last mile charges on SGR use

In Summary

•The Shippers Council of Eastern Africa has said it is keen to make the cost of hauling cargo by rail more competitive.

•The use of Through Bill of Landing (TBL) to import is also forcing importers to pay additional costs.

Containers being offloaded from a ship at the Port of Mombasa/
Containers being offloaded from a ship at the Port of Mombasa/
Image: FILE

Cargo transportation cost  in Kenya is too high, the Shippers Council of Eastern Africa (SCEA) has complained.

They said there is unpredictability in the management of shipments from landing to return of empties  forcing importers to continue using the Through Bill of Landing (TBL) to import, leading to additional costs.

According to the shippers, TBL is used instead of the merchant haulage–the movement of a container directly by the merchant using his own nominated haulage contractor.

 

The use of TBL has seen traders incur heavier costs of between $150 (Sh16,275) and $380 (Sh 41,230) to move a container, shippers say.

The bill of lading covers the shipment from its origin all the way through to its destination including any inlands that may be required for the move.

This adds up to the last mile costs from the Inland Container Depot-Nairobi to the goods’ final destination where importers are paying an average $350 (Sh37,975).

This is after paying for rail haulage from Mombasa and cargo handling charges at the Nairobi container depot.

SCEA chairman Genesio Mugo said that the last mile costs for instance to the Industrial Area, Nairobi, remain high from an average of $100 (Sh10,850) in the years prior to 2018.

“The rise on the rates is informed by the high truck turnaround time at the ICDN averaging seven hours,” said Mugo.

In its 2019/2020 budget, the government announced that imported goods will not be re-inspected at the port of Mombasa once cleared at the port of origin, a move aimed at speeding up the flow of goods in the market and cutting on shipment costs.

 

The Kenya Bureau of Standards has however had a back and forth  position on the directive, which has seen cargo verification, conducted on arrival, hence the delays.

SCEA which held its annual general meeting last Wednesday has said it is keen to make the cost of hauling cargo by rail more competitive.

“This is an area of concern and which we shall be working with the government agencies and the Ships Agents Association to help streamline,” Mugo said.

The shippers have however termed the move by government to reduce state agencies inspecting cargo at points of entry as “best news in the recent times.”

Currently, Kenya Ports Authority, Kenya Railways Cooperation (KRC), Kenya Revenue Authority (KRA) and Kenya Bureau of Standards are the front line cargo handlers and verifiers.

Customs Management System(iCMS) coupled with the reforms of the KEBs PVOC programme, better efficiencies at the boarders and ICDN if well implemented hold the premise to a better performance in the logistics space, SCEA chief executive Gilbert Langat added.

“ While our focus still remains on time, costs and complexity of logistics, we undertake to engage more on research-based advocacy premised on costs implications of the painful areas,” Langat said.

Meanwhile, the council is also keen to address challenges in airfreight, which remains key to the importation of urgent shipment, spare parts and medicaments amongst others.

“I urge all those operators and users of airfreight to engage the council more so that together, issues impeding the sector too could be given all the due attention,” said Langat, “we are hopeful to a tumultuous free and improved business environment.”