•KPA targets a Chinese company and other global shipping lines, with plans to have transit cargo shipped and delivered under a "vertical integration model".
•This will see the select shipping lines handle freight, local warehousing, clearing and forwarding, and last-mile cargo delivery.
Transporters and clearing agents will not allow Kenya Ports Authority to venture into last-mile cargo delivery, the port users now say, as they maintain their stance on the plan.
This comes as KPA takes a second shot on the end-to-end logistics plan which targets a Chinese company and other global shipping lines, with plans to have transit cargo shipped and delivered under a "vertical integration model".
This will see the select shipping lines handle freight, local warehousing, clearing and forwarding, and last-mile cargo delivery, which KPA says will help improve efficiency.
According to KPA managing director William Ruto, 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.
“The decision is informed by industry trends where brokers whom apart from increasing the final cost of freight, at most times fail to deliver cargo on time,” Ruto told the Star.
This leads to high demurrage charges and increased freight costs.
The first tender “was non-responsive,” according to KPA, as it moves to re-advertise.
The authority has been in talks with Chinese international container transportation and shipping company –COSCO Shipping Lines, a subsidiary of COSCO Shipping Holdings.
The first attempt was met by strong opposition from the Kenya International Freight and Warehousing Association (Kifwa) and the Kenya Transporters Association (KTA), which saw KPA bow to pressure and temporarily halted the proses.
However, the authority has reverted to its earlier plan, a move that has irked clearing agents and transporters in the country, who have warned of a complete withdrawal of their services if KPA goes ahead and partners with foreign companies in clearing and delivery of cargo.
Foreign-owned shipping lines control 92 per cent of Kenya’s international trade.
According to the two associations, the move means shipping lines and KPA will bypass local players in the logistics chain, leading to closure of companies.
“We are talking of massive job losses which we will not allow. Both KTA and Kifwa shall use all means at their disposal to resist the move to consign Kenyans to poverty,” Kifwa national chairman Roy Mwanthi said.
KTA chief executive Mercy Ireri said: “ Our position is the same. Nothing has changed.
According to KTA, a recent meeting chaired by Ruto agreed to shelve the end-to- end logistics solution proposed by KPA “until future consultations and agreements are reached by all stakeholders.”
KTA has a membership of over 200 companies (major transporters) and accounts for 96 per cent of the cargo leaving the Port of Mombasa.
Sources at Kenya Railways have also indicated the move could hit hard the Standard Gauge Railway freight operations, which now faces legal battles over existing contracts with road transporters for last-mile cargo delivery mainly from the Naivasha Inland Container Depot.
“There are over 100 contracts that are in place for last-mile cargo delivery with major transporters in the country from Inland Container Deports of Nairobi and Naivasha. If not careful, then we are looking at a huge mess,” the source at Kenya Railways told the Star.
Kifwa has further argued that the move will “kill’ small businesses and it goes against President William Ruto’s directive to revert port services to Mombasa, in a move that will ensure jobs are not lost, but instead open up more opportunities for locals.
In January, Kifwa, which has a membership of 1,200 clearing and forwarding companies, threatened to paralyse ports and border operations unless KPA stops plans to venture into the clearing and transport business.
“KPA should stick to its mandate which is to operate, maintain, manage, and develope ports within the country. It has no business engaging in provision of logistics services,” Mwanthi said.
The end-to-end cargo plan puts slightly over 10,000 jobs on the line where on average, a clearing firm employs at least 10 people according to Kifwa.
KTA also argued that there is no void in the country’s transport industry to warrant KPA to partner with multinationals in delivering cargo.
Instead, KPA and customs authorities should improve efficiency within the ports and border points to make the North Corridor more efficient, amid delays on container loading transfer and scanning.
There are also concerns over a high number of theft cases, mainly the breaking of seals on containers where consolidated cargo is stolen.
KPA management however said it continues to work with industry stakeholders to ensure port efficiency and smooth cargo delivery.
Shippers have supported the plan. However, stakeholders need to be involved for it to succeed, the Shippers Council of Eastern Africa acting CEO Agayo Ogambi said.
“The end-to-end solutions being mooted is welcome and will most probably be achieved through partnerships and cooperations with discussions with Kenya Railways on service delivery and pricing structure,” Ogambi told the Star on the telephone.
Others that must be involved, he said, are shipping lines and agents on the management of empty containers and a framework agreement with transporters for last-mile transport services.
“The port must be efficient and competitive. A lot of investment has be made and it is now timely for shippers and consumers to derive benefits from the investment,”Ogambi said.