End-to-end cargo plan to weed out brokers, cut freight costs – KPA

Kenya Ports Authority will not drop plans to offer traders end-to-end logistics services targeted at the transit market, managing director William Ruto now says.

This is despite clearing agents and a section of transporters in the country protesting, arguing the move will push them out of business, as multinationals, mainly shipping lines, reap big from clearing and road transport businesses.

According to Ruto, the decision is informed by industry trends where traders, mainly importers, are exploited by brokers whom 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 on businesses and output in key industrial areas.

In a telephone interview with the Star, Ruto said the authority would work with industry stakeholders to ensure smooth cargo delivery and return of containers, which will save traders time and exposure to demurrage.

Demurrage is a fee payable to ship owners on the failure to load or discharge the ship within an agreed time period. The minimum bill is at between $25 (Sh3, 956) and $30 (Sh4, 747) per container, per day, in case of delays.

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.

Under the new initiative, KPA plans to work with shipping lines and pre-qualified transporters to ensure on time delivery of cargo from the point of origin to last point of delivery.

Importers have the option of paying the shipping line for shipment to Mombasa and the last-mile delivery, or work with KPA, which in turns will pay the transporter on a monthly basis.

No container deposits will be required under the arrangement with KPA, translating to an ease of doing business for traders using the Port of Mombasa.

They can opt to have their preferred agent clear the goods before being transported, Ruto explained.

Using the KPA arrangement is however optional, Ruto said, but believes it will give traders a more efficient way of moving their goods.

“It is one’s choice but 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 told the Star.

Clearing agents have however opposed the move saying KPA will be overstepping its mandate.

“We urge KPA to stick to their mandate which is to operate, maintain, manage and develop ports within the country. It has no business engaging in provision of logistics services,” Kenya International Freight and Warehousing Association national chairman, Roy Mwanthi, said.

He said the move threatens local firms as it favour multinationals with financial muscles, with shipping lines expected to seal off the business from the point of loading at international ports to the final destination.

Ruto said the service is optional and only targeted at the transit market.

The move comes in the wake of an aggressive campaign by KPA to retain Mombasa as the most preferred port in the region, as Tanzania pushes to increase her transit business through Dar es Salaam Port.

Uganda is the biggest transit market for Kenya, accounting for about 83.2 per cent of transit cargo.

South Sudan takes up 9.9 per cent while DR Congo, Tanzania and Rwanda account for about 7.2 per cent, 3.2 per cent and 2.4 per cent respectively.