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With $11bn Bagamoyo port, Tanzania prepares to take on EA hub Mombasa

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Dar es Salaam port, which will be upgraded to allow more traffic. Experts predict a shift in the flow of trade from Kenya to Tanzania after the latter announced major infrastructure projects. Photos/FILE

Dar es Salaam port, which will be upgraded to allow more traffic. Experts predict a shift in the flow of trade from Kenya to Tanzania after the latter announced major infrastructure projects. Photos/FILE  Nation Media Group

By JOINT REPORT Special Correspondent

Posted  Saturday, May 11   2013 at  16:23

In Summary

  • The $11 billion Bagomoyo port will be bigger than the Dar es Salaam and Mombasa ports, tilting the scales of regional trade in favour of Tanzania.
  • Economists, business executives and trade experts say with the ongoing mega infrastructure projects, the region can expect a major shift in the flow of trade, with Tanzania set to have four ports by 2017, when Kenya will have only two.

Freight companies said Burundi and Rwanda were likely to divert most of their business to Tanzania. Rwanda had already begun doing so.

“More than 70 per cent of the cargo that previously went through Mombasa is now moving through Dar es Salaam. Kenya is likely to lose Rwanda and Burundi,” said Meshack Kipturgo, chief executive officer at Siginon Freight.

“It takes up to five days from the time a ship arrives to the time the trucks leave the port. This should come down to two days.”

Rwanda importers said extra costs charged at Mombasa port eat up their capital, advising port authorities to bear some of the fees as an incentive to attract more shippers.

“The delays eat up almost $1,500 on each trip. It costs about $5,000 to transport a container from Mombasa to Kigali and the delays result in importers losing $1,500 on each trip,” said Theodore Murenzi, secretary general of the Rwanda Transporters Association.

Kenya Ports Authority officials said the Bagamoyo port would be complementary to Mombasa port because the latter is operating beyond capacity.

Last year, the port handled 903,000 twenty-foot equivalent unit (teu) while Dar handled 580,000 teu. Mombasa port’s current capacity is 600,000 teu.

Meanwhile, KPA has progressed in the construction of the 1.2 million capacity second container terminal in Mombasa.

“The reclamation work on 100 acres from the Indian Ocean is almost over. Although the first phase was to stretch to 2016, contractors say it could be done by March 2015,” said KPA in a statement last week, adding the capacity is expected to hit a million teu this year.

Mombasa’s second terminal should be able to handle larger vessels, with a capacity of up to 6,000 containers. Previously, the port could only receive a ship carrying a maximum of 2,400 containers.

Data from KPA shows that Mombasa handled 20 per cent less cargo last year — 552,000 tonnes — destined for northern Tanzania and the inland countries of Rwanda, Uganda, Burundi and the DR Congo, a factor that industry players said was temporary.

“Some importers from the hinterland countries of Uganda, Burundi and Rwanda took the decision to use the Dar es Salaam port over fears that the general election in Kenya could be chaotic and disrupt the flow of goods as happened after the 2007 elections,” said Ms Munywe of the EA Shippers Council.

The stretched capacity of the Mombasa port is forcing it to turn down trans-shipment business, thus limiting Mombasa’s potential role as a regional hub.

According to Hannington Namara, CEO of the Rwanda Private Sector Federation, both ports are strategic for the country.

The overall cost of moving a tonne of freight along East Africa’s key trade routes is in the order of $200-$300, estimates the World Bank, and takes between 200 and 600 hours. The extensive dwell-times in ports and in Customs clearance accounts for about 80 per cent of the time.

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