Vessel shortage to lock out hundreds of used cars from Kenya

This is as a result of a continued shortage of special ships for carrying wheeled cargo mainly motor vehicles.

The shortage, which started being witnessed towards the end of the year, has been attributed to an increase in production of vehicles and high demand in other markets.

Global automakers reported easing of the semi-conductor chip shortage at the beginning of the fourth quarter, which had affected the industry in the past two years.

This has seen a rise in production with Japan's major automakers combined production rising by 14.4 per cent year-on-year to 2.11 million units in October, as the impact of the Covid-19 pandemic on manufacturing and supply chain eased.

The country accounts for about 80 per cent of used-car imported into Kenya with other markets being United Kingdom, United Arab Emirates, Singapore and South Africa.

According to industry data, six of the eight major national manufacturers - all except Nissan Motor Co. and Mitsubishi Motors – have reported an increase in production.

This has eased the shortage that had come with higher prices, forcing owners to hold on longer to their units before putting them up in the second-hand market.

The few vessels available are also calling at more ports, adding to the time it takes before berthing at the Port of Mombasa.

Most now takes more than 40 days to sail to Mombasa.

Pre-Covid, shipping transit times between Japan and Mombasa was between 26 to 30 days, while sailing from Europe can take between 20 and 40 days depending on the departure and destination ports, as most vessels call at a number of other ports on their way to Kenya.

Vehicles manufactured or whose first date of registration is 2015 are not eligible to enter Kenya after December 31, which is about nine days away.

Kenya does not allow importation of vehicles that are eight years and above.

“The vessels scarcity has not improved so we are definitely going to have units coming in a after the deadline,” Car Importers Association of Kenya (CIAK) chairman Peter Otieno told the Star.

There are three vessels expected between Saturday and December 28 bringing in 1,799 units.

At the height of the pandemic in 2020, the government was forced to ease the eight-year rule, which allowed entry of about 18,000 units that had arrived late, as a result of disruption in the shipping industry that was caused by the pandemic.

It was the same case last year for units that arrived late, but applied only to those that had been purchased, inspected and cleared for shipment on time.

Importers were hit by losses in 2014 when more than 2,000 used motor vehicles registered in 2006 were locked out of the country.

As per the law, only right hand drive motor vehicles whose year of first registration is from January 1, 2016 and later are allowed into the country effective January 1, 2023.

Further, used or secondhand vehicles from Japan, United Arab Emirates, United Kingdom, Thailand, Singapore and South Africa should be accompanied with a Certificate of Roadworthiness issued by Quality Inspection Services Inc. Japan (QISJ), whose contract it recently renewed.

“Any vehicle registered in 2015 or earlier, arriving after December 31, 2022 will be deemed not compliant and shall be rejected at the importer’s expense,” the Kenya Bureau of Standards says.

Importers are however counting on previous arrangements to clear late imports whose delay are as a result of disruption in the shipping industry.

“We have a good relationship with Kebs and we believe we can look at the causes of the delays and find a solution,” Otieno told the Star on telephone.

He said the association has also been working with its members to ensure the December 31 deadline is met after the losses incurred in 2014.

On average, Kenya imports between 7,000 and 8,000 units per month but this goes up to 12,000 units in the last months of the year, when the unit prices also begin to drop in the import source markets.

Meanwhile, automakers are expecting a continued rise in manufacturing of new units.

Toyota Motor Corp. saw its sales increase 23 per cent to 771,382 vehicles in October as its global sales increased by 22 per cent to 832,373 units.

Honda production rose 1.1 per cent to 330,002 units, the fifth consecutive monthly increase.

Suzuki on the other hand reported a 14.1 percent, while Subaru jumped 43.1 per cent.

Nissan's year-on-year output however fell 2.4 percent to 297,801 units in October, joining Mitsubishi, which also reported a drop.