Congestion at Mombasa port slows down trade in EAC bloc

Friday December 14 2012

Mombasa port will have to overcome numerous challenges before competing in the global maritime industry. Lined in neat ordered rows are long queues of containers at Mombasa terminal. That is the picture of a congested port — one where demand for stacking space of containers approaches its capacity due to cumulative higher charges.

Last year, the port handled some 19. 6 million tonnes of cargo, of which about four million tonnes were imports and five million tonnes were in transit to neighbouring countries.

In the same period, the port handled more than five million tonnes of traffic, up nearly 30 per cent since 2006, of which Uganda is the largest destination of transit cargo accounting for nearly 80 per cent of that figure — 4.2 million tonnes — with 90 per cent comprising imports. It is followed by Democratic Republic of Congo (DRC), which is the second-largest transit market taking up to eight per cent share of the total at 430,000 tonnes.

Of the total volumes handled through Mombasa, 72 per cent goes to Kenya’s domestic market, 22 per cent to Uganda, 2.3 per cent to the DRC, 1.5 per cent to Rwanda and less than one per cent to Tanzania, Burundi, South Sudan and Somalia.

Traffic through the port has grown over the last decade from 9.1 million tonnes in 2000 to 19.6 million tonnes in 2011, an increase of 7.4 per cent annually. The multipurpose port in East Africa has a number of issues accounting for delays in clearing cargo destined to Uganda and other regional states that depend on the facility for trade.

Too often, it’s not clear which player is responsible for a crisis at the port. With a number of institutions involved in handling cargo from the port — the Kenya Ports Authority (KPA), Kenya Revenue Authority (KRA), Kenya Bureau of Standards, Kenya Plant Health Inspectorate Services, Port Health Authority (PHA), Dairy Board of Kenya, National Bio-safety Authority, Anti-Counterfeit Agency and Port Police — as each player passes the buck to another, affecting container inflows and outflows in different ways.


READ: End this cargo congestion blame game

The maze containers go through at the port before they are forwarded to their final destination affects traders most because they incur demurrage charges for the extra time spent there.

Clearing is not only very complex but also a lengthy and cumbersome exercise, Maritime Freight Company Limited managing director PJ Shah said.

“Under Section 34 of the East African Community Customs Management Act 2004, an importer is required to enter goods to a Customs entry within 21 days after the commencement of discharge of cargoes from the carrying vessel,” he says.

TradeMark East Africa estimates that close to two thirds of shipments, about 20 per cent, experience non-tariff barriers — restrictions and limitations that act as hindrances to trade. These also hurt investor perceptions about a country.

TradeMark East Africa regional Trade and integration director Jose Maciel says companies spend about $145,000 (Sh12.5 million) a month on employees’ time and accommodation costs due to non-tariff barriers and delays.

Removing the hurdles would reduce the costs of transporting goods, thereby, slashing prices while increasing peoples’ purchasing power, lowering corruption, and inflation.

There is no uniform recognition of standards of goods at the border.

“There is lack of mutual recognition of standards marks and retesting of goods,” Mr Maciel says, adding that this increases the time it takes for goods to reach the market and costs associated with retesting goods.

Although the Kenya Ports Authority is investing in the second container terminal at Mombasa port, infrastructure to facilitate the transportation of cargo is still weak. The rail system still uses a narrow gauge track — about 1000mm, way below the capacity to handle the current weight of cargo.

“In 2011, the rail system lifted less than five per cent of port throughputs. Much of the rail network needs modification to take account of changing freight trends,” Anthony Hughes, an official from TradeMark East Africa, says.

The port’s container terminal has been stretched beyond its original capacity surpassing the 250,000 TEUs (twenty foot equivalent units) it was built to handle per year. It now grapples with up to 800,000 TEUs.

Speaking at the recent ground breaking ceremony to commence building of a second container terminal at Kilindini harbour, President Mwai Kibaki reiterated the need to expand the capacity of Mombasa port to position Kenya as a regional maritime hub.

He said that with an additional space for 1.2 million containers, the second container terminal would accommodate the current volumes and be well positioned to cater for the projected increase in excess of 960,000 Units by 2015.

President Kibaki further said the government is undertaking major investments in infrastructure to provide linkages necessary for the port to effectively play its role.

“In order for the Mombasa port to successfully play its role in the transport logistic chain, the road and rail transport systems must also be efficient. In this regard, we are undertaking major investments in road and rail infrastructure development,” he said.

Apart from congestion at the port, delays also occur from informal stops and check points at weighbridges with cumbersome clearance procedures. In effect, these slow cargo transportation. Truck drivers spend about one to three hours at each weighbridge.

Another bottleneck is roadblocks. The 2011 Business Climate Index Survey notes that Kenya has the highest roadblocks at 24, followed by Uganda, Burundi and Rwanda at 21, four and two, respectively.

KRA recently slapped a $300 cash bond — an equivalent of Sh25,815 (Ush780,000) — per container destined to Uganda, raising the cost of doing business for traders who were already affected by record-high demurrage charges.

To end this, industry players at a meeting in Mombasa suggested that an independent inter-ministerial transport committee be instituted to rectify all those issues surrounding the port.

“What we need now is a national maritime and transport authority that will co-ordinate all players to handle all the issues,” Captain Twalib Kharmis, the general manager of operations at the container depots and terminal, Mombasa said.

Uganda’s Trade minister Amelia Kyambadde said the government is in talks with regional players to harmonise trade.

“We are facilitating bi-lateral agreements between member states and drafting a law within the East African Community,” Ms Kyambadde said.

Diminishing space

Meanwhile, the indefinite strike called by the Kenya Transporters Association (KTA) to protest a new rule which limits weight loads on vehicles depending on the axle, threatens to paralyse East Africa’s main trade gateway.

READ: Transporters seek talks with ministry over axle load row

As the world’s largest exporter of black tea the disruptions at the port, where a weekly auction also features tea from producers like Burundi, could disrupt shipments.

“The tea and coffee we export is from the hinterland and has to be transported to Mombasa, so if the trucks are not working, that is obviously a problem for our export trade,” an official at KPA told Reuters on condition of anonymity.

The port also handles imports such as fuel for Uganda, Burundi, Rwanda, South Sudan and eastern Democratic Republic of Congo.

“A pile up is looming at the port. We are offloading ships, but there are no trucks to carry the cargo out of the port,” said the official. “Space is quickly diminishing and it might soon be a crisis if government and the transporters don’t agree quickly.”

Around 95 per cent of all the cargo coming in through the port is ferried to its final destination by road, with trucks the main mode of transport.

Chief executive Jane Njeru said the KTA’s 400 members who own about 50,000 trucks had been instructed to stop loading all cargo from the port.

“We want government to authorise that trucks be weighed by the gross vehicle weight system, and not the axle load system,” she said.

“Our trucks will remain parked at the yards. We know its already affecting the port, but that’s not our fault.”

Last month, the port was paralysed by two days of strikes, after more than half of KPA employees demanded permanent contracts.

[email protected] (Additional reporting by Reuters)