Cargo costs to drop at Kenyan port

May 31, 2010

, NAIROBI, Kenya, May 31- Cargo owners can in the next few months expect to pay reduced costs for their freight imported through the port of Mombasa.

This follows a decision by the Kenya Maritime Authority (KMA) to rationalise shipping costs which will tame clearing and forwarding agents who charge ‘predatory’ rates for cargo handling.

“You cannot say they (costs) are illegal because there is no law that says you shouldn’t charge; but some of them may arise from inefficiencies in the system because even if somebody’s cargo is delayed, the owners still have to pay within the law for demurrage, for delays irrespective of whether they are responsible,” said KMA Director General Nancy Karigithu.

Agents now will be required to file their cost structures with the Authority and justify them and in turn those charges will be published to ensure transparency and accountability in the sector.

A recent study revealed that importers are subjected to 27 service charges most of which are self-imposed and unjustified. A trader for example has to part with about Sh1,540 ($20) for clearing the container and $15-$20 for demurrage.

They also have to pay $30 for ‘lift-on, lift off’ which is a fee charged for lifting a container from the ship and loading it into a lorry and $100 for the Container Service Charge which shipping carriers imposed to cushion themselves against a Value Added Tax that had just been introduced.

This has seen the sector’s logistic costs go up by 40 percent above the Cost of Insurance and Freight which has translated into a loss of billions of shillings to the economy and high costs of goods for end consumers.

Although Mrs Karigithu said the shipping lines have taken advantage of the loopholes that have been created by the lack of proper structures in the sector, she said lack of awareness and fear among the traders have propagated the imposition of such rates.

“These charges have been driven by fear that if I don’t clear my cargo today, come tomorrow KPA (Kenya Ports Authority) will slap me with charges, Customs has its own charges so the quicker I take out my cargo whether the charges are unfair or not, the better for me,” she said.

She said they are organising a series of meetings with stakeholders as they seek to implement the Merchant Shipping Act 2009 despite resistance from the agents.

Mrs Karigithu she said a taskforce formed to come up with regulations to implement the Act was also working on heavy sanctions to be meted out on rogue service providers who insist on administering unfair fees and to deter others from doing so.

KMA is also pushing for self regulation and wants the shipping lines and agents to join associations which will be recognised by the Authority. The regulator has vowed to clean up the sector and make it a more efficient and competitive means of moving cargo.

This, Mrs Karigithu said, would help open up the many opportunities that abound in the marine sector.

“Kenyans are not aware that we are sitting on a gold mine as a costal state. We want them to know that they need to stop looking inland and release the capital that is required to invest in our coastal waters,” she said.

The shortage of qualified people in the industry will soon be eased following the admission of Kenya into the International Maritime Organisation’s ‘White List.’ This not only allows the sector to train seafearers and issue certificates that are recognised globally which in turn will provide an opportunity for Kenyans to explore careers in the sector while business people can invest in it.

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