New $66.7m berth to confirm Kenya as regional trade hub

Saturday August 24 2013

Construction of Birth 19 underway in Mombasa. Pictures: File.

Construction of Birth 19 underway in Mombasa. Pictures: File.  

By A JOINT REPORT The EastAfrican

The new berth at Mombasa port, to be opened on Wednesday, is expected to boost Kenya’s standing as the hub of regional trade, in the face of growing competition from Tanzania.

Presidents Uhuru Kenyatta of Kenya, Yoweri Museveni of Uganda and Paul Kagame of Rwanda are expected to officially open the Ksh5.6 billion ($66.7 million) berth — the space where ships dock or anchor as they are offloaded or loaded — which is expected to raise the port’s capacity by 33 per cent.

KPA said on Friday that the facility will be officially commissioned by President Museveni, who is also the chairman of the East African Community.

Second terminal

The country is also pushing for the completion of a second container terminal at a cost of $320 million. Construction work on the project started in June last year, with the 1.2 million twenty-foot unit (teu) per annum terminal set to be commissioned in 2016.

Executives at the port said the terminal, which will have three berths, is 40 per cent complete.

The expected presence of the three presidents cements a new economic-political re-alignment shaping up in the EAC around Kenya, Uganda and Rwanda that could affect not just the pace of the bloc’s move towards a fully fledged federation, but its geopolitical positioning as well.

Agreed to overhaul

In a meeting in Uganda at the end of June, Presidents Kenyatta, Kagame and Museveni are said to have agreed to overhaul the region’s infrastructure in a deal that requires Kenya to fix inefficiency at the Mombasa port.

Rwanda and Uganda, like Burundi, are landlocked and rely on Kenya or Tanzania for international trade.

Immediately after the Entebbe meeting, President Kenyatta issued a directive to the Kenya Ports Authority to reform operations at the port with a view to reducing delays.

The directive also required institutions to work round the clock and abolished scanning of transit cargo and transshipment bonds.

The directive required alignment of organisations’ processes to be compatible with National Single Window Systems and removed roadblocks and weighbridges, save for the one at Mariakani.

It is understood each of the three presidents was given cross-border responsibilities: Kenya was to take the lead on the pipeline, Mombasa port and electricity generation and distribution; Rwanda on the Customs, single visa and EAC e-identity card; and Uganda on the railway and political federation.

The new berth, which is expected to enable faster clearance of goods, has seen the ship quay area at the port container terminal expanded to 840 metres and the container stacking yard expanded by about 15 acres.

This will allow it to handle three ships of 270 metres each or four ships of 200 metres each. The facility has been under construction since July 2011.

Gichiri Ndua, the KPA managing director, said with the new berth, the port will now be equipped to handle 800,000 twenty feet containers (teu), up from the current 600,000 teu per year.

“However the container terminal is still overstretched and is handling more than 300,000 teu above the required capacity. The new berth is expected to boost container handling operations at the port,” said Mr Ndua.

‘Too much’ cargo to handle

The Mombasa port handled 903,000 teu last year, a figure expected to rise to one million this year, meaning the port will still be handling more cargo than it is designed to handle.

Years of under-investment in the country’s transport infrastructure have put pressure on the Mombasa port, eroding its claim to be the region’s gateway and exposing it to competition from the Dar es Salaam port.

Thus, in the past three years, cargo meant for the hinterland of Uganda, Rwanda, DRC and Burundi passing through the port of Dar es Salaam has grown by an average of 25 per cent per year.

According to Trademark East Africa, despite Mombasa charging lower fees — the World Bank estimates Dar is 74 per cent more expensive for users than Mombasa.

Dar es Salaam has increased its share of Rwanda’s imports and exports to 68 per cent from 41 per cent in 2008, at the expense of Mombasa, whose share of that trade has shrunk to 32 per cent from 59 per cent .

Tanzania also accounted for 89 per cent of Burundi’s cargo at the end of that period, up from 76 per cent in 2008, compared with Mombasa’s 11 per cent.

Business leaders and trade experts said Kenya’s poor showing is attributable to delays in goods clearance at the port, at weighbridges and border posts.

“The long dwell-time at the port not only affects operations but also has a ripple effect on the entire supply chain,” said Meshack Kipturgo, the managing director at Siginon Group, a regional cargo logistics services company.

“Since Kenya has escalated its efforts to improve port efficiency, it could reclaim its position and overtake Tanzania again,” added Mr Kipturgo.

Tanzania has set its sights on dethroning Kenya as the region’s logistics hub, with the country announcing early in the year that it had struck a deal with China to construct an $11 billion port in Bagamoyo, some 70 kilometres from Dar es Salaam.

The Bagomoyo port will be bigger than the Dar and Mombasa ports combined, potentially tilting the scales of regional trade in favour of Tanzania. Bagamoyo will have the capacity to handle 20 million containers a year, compared with Mombasa’s installed capacity of 600,000 and Dar es Salaam’s 500,000.

Reforming operations at the Dar port as well as building the Bagamoyo port could add substantial numbers to the country’s GDP.

The World Bank estimates that if the Dar port were to achieve the level of efficiency of the Mombasa port, the country would earn an extra $1.7 billion per year — or about seven per cent of the country’s current GDP.

The presidents are also expected to open the Uganda Car Port in Mombasa. Located at Changamwe, five kilometres from the port, the Ksh240 million ($2.94 million) facility has the capacity to handle 3,500 vehicles and is the nearest CFS from the port.

The idea of the transit car depot was mooted in 2003, to handle vehicles destined for Uganda, South Sudan, Rwanda, DR Congo and Burundi, which rely on Mombasa for most of their imports.

Streamlined operations at port

As part of his directives, President Kenyatta placed all government officials working at the port under the command of the KPA chief executive. Port users had in the past lamented the lack of a single command.

The directive, said Kenya Transporters Association chairman Paul Maiyo, has seen new measures put in place to improve efficiency, easing clearance of goods and general trade. These changes include removing roadblocks on the Northern Corridor and weighing transit cargo once at Mariakani.

“The transit of goods had reduced from seven days to between three and five days, an indication that the new measures put in place to implement the directive are proving effective,” said Mr Maiyo, adding that plans are underway to reduce the transit to three days.

Comparatively, it takes four days to clear goods in Malaysia while the global standard is three days.

Truck turnaround time at Mombasa is six hours compared with 12 hours in Durban and Djibouti and 0.8 in Malaysia. The global standard is one hour.

Since the directive, KPA says that the number of containers leaving the port each day has increased from 1,147 to 1,223 in June and a record delivery of 1,759 in mid-July. The KPA management has set a new target of 2,000 containers a day.

Last year, KPA also dredged the harbour at the port of Mombasa. The new terminal will be 15 metres deep, while the existing terminal has been dredged to 12.5 metres. Increasing the depth allows bigger ships to dock at the facility, helping to drive down shipping costs.

Railway levy

Kenya has also introduced a new railway levy, charged at 1.5 per cent of the value of all imports, as it seeks to finance the construction of a $4.5 standard gauge railway track linking the port city of Mombasa to Malaba, on the border with Uganda.

The government plans to raise Ksh15 billion ($172 million) from the new levy. This is in addition to the Ksh22 billion ($252 million) that has been allocated for the project in the current financial year.

Reported by Peterson Thiong’o, Christabel Ligami and Githua Kihara