High transport costs in East Africa pose a serious challenge in the region’s ability to effectively compete with the rest of the world in trade, the Kenya Shippers Council (KSC) has said.
KSC chief executive Gilbert Langat said the cost of transporting goods is 60-70 per cent higher than the US and Europe and 30 per cent higher than Southern Sudan.
“This state of affairs is expected to reduce economic growth by one per cent annually, especially in landlocked Burundi, Rwanda and Uganda, whose development depends on transit solutions in neighbouring Kenya and Tanzania,” Mr Langat said in Nairobi during the recent launch of the council’s Logistic Performance Index for East Africa.
“The ports of Dar es Salaam and Mombasa have cumulatively experienced an annual average growth in cargo of 8.8 per cent occasioned by growth in regional trade. These ports have over the past decade experienced delays and congestion,” he said.
The landlocked countries of Rwanda and Burundi have complained about the delays in clearing goods imported.
A recent report by Trademark East Africa revealed that it takes up to 71 days to import goods to Burundi from any of the other four East African Community member states.
Out of the five EAC member states, only Tanzania and Kenya have direct access to the sea through Dar es Salaam, Tanga, Mombasa and Malindi harbours.
Langat said a number of reforms are currently underway, including 24 hour operations, construction of additional terminal facilities, automation of the container handling processes, improvement in documentation and cargo clearance.
He said the Northern Corridor, which links the port of Mombasa to landlocked Uganda, Rwanda and Burundi, with links to northern Tanzania, the Democratic Republic of Congo, South Sudan, Ethiopia and Somalia, accounts for annual cargo volumes in excess of 10 million tonnes and combined transit and trans-shipment traffic of more than two million tonnes.
The Central Corridor, which connects the port of Dar es Salaam with Burundi, Rwanda, Uganda and the DRC, also accounts for the same cargo volumes as its northern counterpart.
“Trade along these corridors has a positive impact on the region and many initiatives have been undertaken to improve corridor efficiency,” he said.
However, performance is still hampered by high transport costs, inadequate physical infrastructure and national policies that are incompatible with the EAC goals of regional integration in order to address key transport and logistics challenges in the region, Mr Langat said both businesses and policy makers need to fully understand the bottlenecks that exist in the transport and logistics chain in the region.
He added that the task can only be done through a major analysis of the logistics processes and links in the East African transport system in the form of an annual logistics performance index.
It is the first such index, compare performance in the trade logistics indicators of time, cost and complexity with those of the world’s leading trade hubs.
The data can be used to identify key bottlenecks in EAC and help frame the needs and priorities in trade facilitation and logistics reform.
The indicators focus on time spent clearing goods at ports, on inland transport and while crossing borders; the cost of freight across all modes of transport, terminal handling costs at ports of entry; and the number of documents, agencies, signatures, physical and electronic inspections required per trade transaction.
Additionally, the information examines the perception of shippers about freight and clearance times, and infrastructure adequacy.
“The KSC and other business associations will use the indicators to interpret the performance of the logistics chain in East Africa,” Mr Langat said.
Mr Langat added that the problem should be addressed urgently.
Report by Xinhua