Permit delays, high turn-around time costs shippers Sh1.2bn

This adds to demurrage which increases freight costs and final commodity prices.

In Summary

•According to the Shippers Council of Eastern Africa, the costs of logistics to products is at between 35 to 42 per cent.

•KenTrade has since acknowledged that about 20 per cent of state agencies are still struggling in approving permits on time.

Containers at the Nairobi ICD.
Containers at the Nairobi ICD.
Image: FILE

Delayed government approvals, alongside system downtimes continue to hurt shipping lines serving Kenya and the East Africa through the Mombasa port, shippers now say.

This has pushed up storage and demurrage charges with consumers having to bear increased costs through higher commodity prices.

According to the Shippers Council of Eastern Africa (SCEA), about 26 state agencies involved in trade facilitation still have delays in permits approval with regular increases in fees, which is hurting importers and exporters.

Shippers paid Sh1.2 billion in storage charges last year; SCEA said yesterday, a cost, which it says, could be reduced “when predictability and efficiencies are enhanced.”

“Contributing over 13.7 per cent to the GDP, the transport and logistics environment in Kenya continues to face a lot of challenges as evidenced by the costs of logistics to products of between 35 to 42 per cent,” SCEA chief executive, Agayo Ogambi, said yesterday.

He spoke during a stakeholders meeting in Nairobi, which coincided with the council’s Annual General Meeting.

The delays come despite systems automation including the use of the Single Window System being run by Kenya Trade Network Agency (KenTrade), which offers a one-stop shop for trade facilitation by both government and private sector players.

According to KenTrade, there are 41 government agencies facilitating trade through the Single Window System.

Some of the key agencies include Kenya Bureau of Standards (Kebs), Kenya Ports Authority, Kenya Revenue Authority, port health and Kenya Plant Health Inspectorate Service (KEPHIS), among others.

KenTrade has since acknowledged that about 20 per cent of state agencies are still struggling in approving permits on time.

“About 75 per cent to 80 per cent of state agencies make approvals within the set timelines,” KenTrade CEO David Ngarama noted.

Kenya Revenue Authority’s Integrated Customs Management Systems (iCMS) has also been having frequent downtimes.

This affects clearing of goods at entry and exit points, including the Jomo Kenyatta International Airport (JKIA), the Port of Mombasa, Inland Container Depots and Container Freight Stations (CFSs).

KRA's Customs and Border Control Department first introduced the iCMS in 2019, as it moved to replace the old Simba system, as a way of sealing tax cheats and make trade processes seamless.

The $8.45 million (Sh1.1 billion) system was first fronted in 2017 but failed to take off until July 2019.

KRA requires importers to submit Import Declaration Forms (IDFs), sea manifests, security bonds, cargo declarations and exemptions through iCMS, a rule that became effective on July 7, 2019. 

The authority’s head of trade facilitation under the Customs and Border Control department, Teressa Wanjagua, however, said KRA was doing everything possible to ensure smooth operations.

“We are committed in improving the ease of doing business in Kenya and attracting investments,” Wanjagua said.

KPA also defended its container turn-around time at the Port of Mombasa which it says currently averages 2.5 days, from 3.6 days in 2022, with a faster cargo dwell time of 2.9 days against a previous 3.9 days.

This has been achieved through among others, equipment modernisation and expansion of the port facilities, managing director William Ruto said.

This now leaves the ball with KRA and other state agencies involved in the issuance of import and export permits and clearance of goods.

Importers and exporters incur charges of between $30 (Sh3,855) and $90 (Sh 11,565) per day for cargo that has stayed beyond the free storage period and more than 24 days, depending on the size of the container.

Normally, domestic import containers are stored free for four days before starting to attract demurrage charges, while transit cargo has up to 15 days.

Containers released by KRA and not collected after 24 hours are charged $100 (Sh 12,850) and $200 (Sh 25,700) per day for 20ft and 40ft, respectively.

On delayed loading as a result of longer container turn-around time, shipping lines slap traders with a minimum bill of $25 (Sh3,212) per container, per day, in demurrage, a charge incurred when containers go beyond the free time offered by carriers. 


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