By ANTHONY KITIMO

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The opening up of  China, the biggest source of materials and goods for the region, has had no impact yet on Mombasa port operations.

Thierry Bidau, CMA-CGM Kenya East African Cluster general manager, said in a virtual meeting last week that import cargo volumes are expected to remain sluggish. The meeting was hosted by Africa Logistics Properties, a global warehouse operator.

The Covid-19 pandemic is still impacting the shipping industry worldwide, with Mombasa port recording a three per cent drop in the number of ships making call due to lack of cargo. Overall cargo volumes dropped by 17 per cent in the past three months.

Records from the Shippers Council of Eastern Africa (SCEA) show that liquid cargo, which accounts for the largest imports, registered a 12.5 per cent decrease, while conventional cargo recorded a one per cent drop.

Containerised cargo recorded a 4.1 per cent drop, and dry bulk cargo saw an increase of 1.7 per cent.

SCEA chief executive Gilbert Lagat said the drop in cargo volumes is due to strict Covid-19 measures affecting the global supply chain, with regional landlocked countries importing less cargo due to the increased costs from delays at border points.

SCEA said the huge drop in liquid cargo was attributed to the lockdown in the countries of origin, which resulted in the cancellation of vessel schedules with trade routes from China, especially on the Cosco and Evergreen shipping lines.

The meeting also discussed the “new normal” in the logistics chain, cross-border trading, and shipping.

“The total cargo volume handled by the port in the month of May stood at 2,371,220 tonnes compared with 3,169,740 tonnes in January this year. The total throughput in the first five months of this year dropped by 4.7 per cent compared with the same period in 2019,” said Mr Lagat.

HIGH STORAGE COSTS

In addition, shippers are paying higher storage costs at the Nairobi inland container depot, at $118,245 in April from $73,006.875 in March. The cost of storage is between $23,000 and $42,000 per week.

Kenyan-based company Rongai Workshop and Transport Ltd is avoiding the Northern Corridor route, as it takes between seven and nine days to move cargo from Mombasa to Kampala, up from the previous two to four days at the beginning of the year. Kampala shippers are paying an extra $1,000. Trucks to Kigali are now spending 14 to 16 days enroute, up from seven to eight days, and paying an extra $1,400.

To South Sudan, it takes 21 to 26 days up from eight to nine days, and costs an extra $2,400. Before the pandemic, the trip to Bujumbura took nine to 10 days. It now takes 19 to 20 days at $2,000 more.

Compared with the month of April, local imports recorded a 15 per cent decrease in turnaround time, transit imports 25 per cent, and local exports 28 per cent. Transit exports records the highest improvement, at 71 per cent.

The recent Mombasa-Naivasha direct cargo freight on the SGR has not helped the situation despite the 90-day promotional rates and 30-day free storage period.

To attract shippers to use the Naivasha Inland Container Depot from Mombasa, Kenya Railways reduced freight charges from $600 to $480 for a 20-foot container and from $850 to $680 for a 40-foot container.

“Naivasha ICD, which was meant to play a strategic role, has not yet put sufficient supportive infrastructural projects that can aid transit goods importers. As it stands today, it is not yet clear on whether to use Through Bill of Lading that would identify Naivasha as the landing point,” said Mr Lagat. “There are also no properly defined designated cargo drop-off points, cost on last mile transport is likely to be high as well as the railing back of empty containers.”

Joshua Rugema, chief executive of the East Africa Exchange Commodities, a Rwanda-based commodity e-trade platform, said that supportive infrastructure in Naivasha would see Rwanda invest in warehousing since they use the Northern Corridor in addition to the Central Corridor in Tanzania.

“Demand for warehousing in Kenya has increased by 30 per cent during Covid-19 time, and currently there is about 82 per cent warehouse utilisation. We need to invest more in warehousing services since the pandemic is here to stay,” said Mr Rugema. “Importers have opted to store their cargo in warehouses as they wait for governments in the region to ease containment measures, which has seen cost of transporting cargo from Mombasa to different East African countries double due to lack of trucks and increased costs of operation.”