NAIROBI, Kenya, Mar 8 – The Kenya Shippers Council has called on the government and the international community to urgently address the issue of piracy which has led to a huge rise in transportation costs.
Chief Executive Officer Gilbert Langat said on Friday that the threat of piracy has forced shipping lines to introduce a myriad of charges which are passed on to the end consumer.
“The shipping line has to recover their costs so freights rates have gone up by a substantial percentage and so have war risk charges, fuel adjustment factors, voyage time and a host of other costs,” he said.
The Gulf of Aden has over the last two years been invaded by Somali pirates who hijack vessels and demand huge ransoms from the shipping lines. It is estimated for instance that the capture of NV Delvina with 15,050 tonnes of wheat grains cargo led to the loss of production capacity and lack of sales and eventually resulted in a loss of $3.6million.
Mr Langat said the vice had also affected the competitiveness of East African businesses as well as the small scale farmers who lose contracts when they fail to deliver their fresh produce to the international markets on time.
“Our fresh produce which is moved by sea has lost market. We for example move a lot of avocados but they have a shelf life and if it used to take 21 days to get to the market and now it takes 43 days to hit the same market, then you will require controlled environment containers in which those fruits can stay fresh which is expensive to hire,” he explained adding that the containers which used to cost them $1,800 were now being hired at $4,800.
Such costs make the traders uncompetitive particularly when compared with those from Brazil who are able to deliver their products on time and at a much lesser costs.
While he acknowledged that a permanent solution to the issue would involve ensuring political stability in Somalia which would take a long time to achieve, he suggested that the government should consider providing escorts for their cargo to ensure that they reach their intended markets without any delays.
Mr Langat spoke during a press conference where the Council expressed concerns over the new motor insurance underwriting guidelines which they said if implemented would see insurance premiums go up by between 60 to 100 percent. This would translate into additional costs for cargo owners, it complained.
“The new guidelines will make the cost of insurance unbearingly high for road transporters. They will therefore have no option but to pass on these increases to consumers of their services through higher freight services,” he warned.
He further feared that unscrupulous transporters might result to using fake insurance certificates which will spell doom for the economy and therefore called on the Insurance Regulatory Authority to engage the stakeholders on the issue.