•The decision by KPA to back-pedal comes as a huge relief to SGR last mile operators who were bound to lose business.
•KPA had intended to have goods delivered to the doorstep of a client through a bill of lading or merchant haulage, at an extra fee, giving shipping lines an upper hand.
Image: JOHN CHESOLI
Kenya Ports Authority has finally bowed to pressure and withdrawn plans to offer end-to-end logistics services, in partnership with Chinese firm and a section of private players.
This follows a strong opposition from local clearing agents, through their lobby- Kenya International Freight and Warehousing Association (Kifwa), who have for the past month raised concerns over the authority’s plans.
KPA had late last year issued a tender as it sought to partner with foreign companies including shipping lines, to tap into the last-mile logistics business.
Managing director William Ruto had earlier told the Star that the move, which targeted the transit markets, was meant to weed out brokers and cut freight costs.
The decision, he said, had been informed by industry trends where traders, mainly importers, are exploited by brokers who apart from increasing the final cost of freight, at most times fail to deliver cargo on time.
This leads to high demurrage charges and increased freight costs, with the delays in delivering goods negatively impacting businesses and the Port of Mombasa-Northern Corridor competitiveness.
KPA hence had intended to have goods delivered to the doorstep of a client straight from the Port of Mombasa either through a bill of lading or merchant haulage, at an extra fee, giving shipping lines an upper hand over local firms.
It had engaged Chinese international container transportation and shipping company –COSCO Shipping Lines, a subsidiary of COSCO Shipping Holdings.
“We want to give them an option where importers can bypass brokers and ensure timely delivery and returns which means lower freight costs and avoiding demurrage costs. We are just facilitating,” Ruto had indicated.
However, Kifwa opposed the move, amid concern from other port stakeholders that the move was skewed to favour specific companies, with foreign companies gaining more at the expense of local players, some of whom would have been forced to fold.
It also emerged that KPA management had bypassed the board in making key decisions in the process.
“There has not been any concurrence....influential people are behind the scheme which stands to benefit some specific companies,” an internal source had told the Star.
Last week, clearing and forwarding agents threatened to paralyse ports and border operations unless KPA withdrew plans to venture into transport logistics.
The move had the potential of hitting up to 1,200 clearing and forwarding companies, transporters, and other cargo handlers at the Port of Mombasa and the Northern Corridor, which mainly serves Uganda, South Sudan, DR Congo, Burundi and Rwanda.
It was also a threat to the Standard Gauge Railway which has over 100 last-mile contracts with transporters picking cargo from the Nairobi and Naivasha Inland Container Depots.
The decision by KPA to back-pedal hence comes as a huge relief to SGR last mile operators who were bound to lose business.
Many vehicular transporters who ferry goods from the Embakasi and Naivasha inland container depots, after goods arrive by SGR freight, had cried foul after the announcement to involve a Chinese firm in the end-to-end delivery of cargo.
The firms had started preparing a petition to be presented in Parliament to stop the implementation, which would have given directive exclusive rights to a Chinese firm without following due process.
The Chinese firm has no transport and logistics experience in the business, they had indicated.
A meeting held on Tuesday between KPA, Kifwa, Kenya Transporters Association, shipping lines and other port stakeholders has since seen the authority withdraw the plans.
“The tender floated by KPA for last-mile delivery has been cancelled or rather withdrawn,” an official familiar with the meeting’s outcome told the Star yesterday, bringing to an end the plans by KPA to cash in on clearing and logistics business.
KPA has indicated the tender was “unresponsive.”
Kifwa national chairman Roy Mwanthi said: “ It was practically impossible for KPA to do what they wanted to do. Apart from going outside their mandate of operating the ports, it would have been against the Presidential directive on ensuring the port benefits locals and creates jobs.”
Meanwhile, KPA has been asked to negotiate with shipping lines to bring down “destination charges,” which are making Mombasa uncompetitive.
While Dar es Salaam charges an average of $100 per container on destination charges, Mombasa Port users are parting with between $250 and up to $700, which has seen Mombasa lose out to the neighbouring port.
Kenya Maritime Authority has called for several measures to address “the prevailing high cost of destination charges” at the port of Mombasa and improve the ease of doing business.
Among them is the Terminal Handling Charge (THC) raised as a destination charge, which it wants to be stopped with immediate effect.
“Recovery of any KPA services to shipping lines to be factored in the ocean freight,” KMA says in a notice.
It also wants the International Ship and Port Facilities Security (ISPS) Code as a destination charge to be stopped with immediate effect and if necessary, be incorporated in the ocean freight, among others.
Mombasa Port has been losing to Dar, which serves the region through the Central Corridor.
Mombasa used to command up to 70 per cent of transit business, according to the Shippers Council of Eastern Africa, but this has gone down to about 60 per cent in the last two years.