IMPACT

Local industries, traders feel heat of global vessel shortage

This is on increased trade in Europe-China and the US.

In Summary

•There is also a container shortage which has affected imports and exports.

•The surge in containerised cargo shipping demand has seen only a few units coming to lesser active markets, with major global ports experiencing massive delays.

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

A biting vessel shortage is hurting Kenya's imports Kenya's imports and exports pushing up the cost of doing business and finished goods.

The shortage of ships coming to Kenya and the East Africa region has entered its fourth month, pushing up freight charges by up to 25 per cent.

This has further caused a shortage of containers with local manufacturers and exporters saying they are not accessing the key units to load their goods.

“This has impacted on the cost of doing business due to increased freight charges as a result of the high demand vis-a-vis low supply of containers within the region,” the Kenya Association of Manufacturers CEO Phyllis Wakiaga told the Star.

Manufacturers are also facing shortages in raw materials and intermediate goods as well as disruptions in scheduled production.

Wakiaga said the shortage has an impact on the competitiveness of local industries.

International freight charges have gone up by between 20–25 per cent, according to the Shippers Council of Eastern Africa (SCEA), affecting the cost of importing raw material and finished goods.

This partly explains the rising cost of living where month-on-month overall rate of inflation has been going up from 5.76 per cent in April, 5.87 per cent in May and the latest being the 6.32 per cent reported in June.

Some of the notable increases over the period have been recorded on the landed cost of fuel products at the Port of Mombasa.

Before Covid-19, it cost an average of $1,400 (Sh151,984 )to ship a 40ft container from most ports to Mombasa. This has gone up to between$3,600 (Sh390,816) and $3,700(Sh401,672), according to SCEA.

The vessel delay has been hugely pegged on increased trade between Europe and Asia after a slow down at the height of the Covid-19 pandemic last year.

There is also increased shipping activities in North Europe and the US west coast, resulting in an escalation of supply chain uncertainty.

With global trade picking, most shipping lines are said to schedule voyages on key international trade routes and major global ports leaving a few feeder vessels to serve smaller ports.

“A lot of big carriers have focused on China and Europe with only smaller vessels coming to the East Africa,” SCEA chief executive Gilbert Lang’at noted.

The surge in containerised cargo shipping demand has seen only a few units coming to lesser active markets, with major global ports experiencing massive delays.

In a catch-22 scenario, shipping lines have been accusing ports for the delays, while ports blame carriers for not meeting their berthing windows.

In the local market, the container shortage has affected import and export volumes, with cargo hauled on the Standard Gauge Railway slightly dropping in the past three months.

Official Kenya Railways Corporation data shows cargo tonnage was at 378,977 tonnes in the month of June, a slight drop from 383,109 tonnes that had been recorded in May, and 451,208 tonnes in April.