The national government's plan to impose cabotage regulations on the shipping and logistics sector has the potential to address industry challenges and spur growth.
Complex regulations can negatively impact a country's economic integration, typically a national goal. It could also lead to retaliation from other countries, hindering international trade.
Furthermore, the regulations could hurt tourism, with cruise ships showing little interest in Mombasa City as a preferred destination. In 2022, only two cruise ships docked at Mombasa, and there are plans for just three ships in 2023.
However, appropriate regulations could encourage more visits, boosting the country's tourism sector and economy.
The biggest challenge facing Kenya's shipping industry is the lack of capacity. According to a report by the United Nations Conference on Trade and Development (UNCTAD), Kenya has only 6.38 percent of the world's total ships and 8.94 percent of the global dead-weight tonnage, indicating that the country's contribution to international shipping is still minimal.
The local shipping providers are struggling with a capacity shortage and slow-paced development, which could lead to disruptions and shortages.
While regulations can be implemented to address capacity challenges by fostering partnerships and cooperation between local and foreign shipping companies, if not implemented carefully, such regulations could result in limited competition by foreign companies, leading to inflated prices for consumers and reduced market choices.
The government's proposed policy may increase shipping costs for businesses and industries, leading to potential inefficiencies in domestic shipping.
In conclusion, cabotage regulations could benefit the local shipping and maritime transport sector. However, engaging in careful and industry-wide consultation is essential to achieve a balance.
The rules should promote the industry's growth and avoid weakening the sector's change and the crucial aspect of international trade. Kenya would gain significantly if barriers and regulations were reduced to the bare minimum.
Logistics operations and procurement professional
