Mombasa port has recorded a significant drop in the cargo volumes due to Covid 19 pandemic that has seen some shipping lines shun off the facility. The cargo handled at the Port of Mombasa in the month of February 2020 declined to 2.7 million tons from 3.2 million tonnes in January 2020, according to Shippers Council of East Africa (SCEA) Chief Executive Officer (CEO) Gilbert Langat. The hardest hit is the liquid cargo, which recorded a decline of 12 percent.
The compounding effect of COVID-19 led to stagnation of cargo handled at 2.7 million tonnes in March 2020, lower than 3.0 million tonnes handled in March 2019. There were cancellations of vessel schedules with trade routes from China- COSCO and Evergreen shipping lines.
However, the drop in the containerized cargo recorded a significant drop of about 2.5 percent on imports and an increase of 2.2 for exports by the end of May this year according to Thierry Bidau, Thierry Bidau, CMA-CGM Kenya East African Cluster General manager.
This was due to the huge volume of the cargo that was still being held in major transshipment ports when the Covid 19 crisis hit the country. However, the transit volumes are likely to be affected due to delays at the border points as shippers seek to wait and see.
The delay has affected transport costs with some transporters like Rongai Workshop and Transport Ltd shunning transit cargo altogether.
“Delays at the border posts are upsetting systems transporters have put in place making it hard to plan operations,” Mr Mike Davis, Chief Executive Officer at Rongai said, adding that the last mile transport from Nairobi ICD has also been a challenge with delays of up to 24 hours due to protocol being used on Covid 19
With China having opened its economy a month ago, according to Bidau, and India’s plans in top gear to open its economy as well, the domestic imports are likely to record good performance.
The drop in the cargo has also affected the neighbouring Dar es Salaam port, which has recently been experiencing delays in vessel arrival and berthing. Andrew Vincent, Head of Projects and Corridor Solutions at Bollore Logistics told the virtual meeting that this has put Dar port at a poor situation considering an advantage enjoyed for Rwanda and Burundi cargo due to its short distance to the two countries compared to Mombasa port.
“Shippers shied off from bringing more imports, especially from China. Exports were also curtailed due to restrictions in Europe, USA and other export markets as a measure to contain the pandemic that was spreading globally,” said Langat.
The pandemic has led the global economy to a new conundrum. Global growth is projected by the International Monetary Fund (IMF) to fall to -3 per cent this year, making it the worst recession since the great depression and much worse than during the 2008-09 financial crisis.
The latest World Bank Kenya Economic Update (KEU) predicts growth of 1.5 percent in 2020 in the baseline scenario, with a potential downside scenario of a contraction to 1.0 percent, if COVID-19 related disruptions in economic activity last longer.
The role of Naivasha as a tool to address congestion and the port came into sharp focus during the meeting. There is a need to create supportive infrastructure to enable the facility to handle more transit cargo.
As it stands today, according to Langat, it was more costly to use the facility since it was not clear on whether to use Through Bill of Lading (TBL), where the cargo drop points are, last mile transport and railing back empty containers.
In the latest move to attract shippers to use the Inland Container Depot (ICD) from Mombasa to Naivasha, Kenya Railways reduced freight charges from $600 to $480 for a 20-foot container and from $850 to $680 for a 40-foot container. The Corporation reiterated that the railway line offers a service that is premised on safety, efficiency and reliability.
Good roads, housing to accommodate ICD users and other supportive infrastructure such as warehouses are needed to allow logistic players use the facility for transit cargo.
Importers, according to Langat, would order raw materials for use for 3 months but following disruption of Covid 19, the need to order material for up to six months is increasingly becoming necessary, which calls for more storage space.
According to Richard Hough, the Chief Executive Officer of ALP, if supportive infrastructure and the country can guarantee the market sustainability, ALP would consider investing in modern warehousing in the region.
“We would absolutely take the demand. But since warehousing is an intensive capital venture, the issue of sustainability is critical,” Hough noted, adding that the company has now introduced short term lease measures to meet the demand brought about by Covid 19 pandemic.
Added he; “We need to understand the rules that will make the venture successful. We are looking at the sustainability of the relations between Kenya and its neighbours. It is an area we would look forward to investing in.” Hough said.
ALP recently announced plans to construct a one-million square feet storage facility in Nairobi. In 2018 ALP completed another within the Tatu Industrial Park, Ruiru, about 22km north of Westlands or 3 km from the Northern and Eastern bypass junctions.
Joshua Rugema, Chief Executive Officer (CEO) of the East Africa Exchange Commodities, a Rwandan based firm that runs a commodity e-trade platform, also said that supportive infrastructure in Naivasha would would see Rwanda invest in warehousing since they as well need the Northern Corridor in addition to Dar corridor.
ALP Projects:
ALP WEST
ALP West is strategically located being at Tilisi development which is 2 minutes away from Nairobi/Nakuru highway. The expansion of the six lane highway will ease transportation and make an excellent distribution network within Nairobi CBD and neighbouring countries like Uganda. ALP West logistics park measures 50 acres and will be constructed in phases. Phase one, the courtyard, will comprise of smaller units from 500sqm. The decision to start with 500sqm is to allow small scale distributors to reduce their cost of storage and improve their supply chain and operations efficiency. Phase two will comprise of grade A warehouses similar to ALP North completed facility in Ruiru. Other solutions we aim to provide at ALP West is the built to spec for businesses with specific needs/requirements.
ALP NORTH
ALP acquired 22.4 acres of industrial zoned land at Tatu Industrial Park situated 22km north from Westlands and the Nairobi CBD. The site is 3 km from the Northern and Eastern bypass junctions and 5 km from the Thika highway. ALP will be delivering up to 47,000 sqm of modern grade A international standard warehouse space at this location, the first modern distribution centre in Kenya. ALP North is designed as a multi-tenant facility with space available from 2,000sqm upwards.
ALP commenced warehouse construction in April 2017 and will deliver the first two warehouses of 28,000sqm by September 2018. The third warehouse of 19,600sqm will be delivered in April 2019. ALP North consists of three class-A distribution centres. The first two units comprise 13,634sqm each and one units of 19,661sqm. All units are designed as multi-tenant facilities.
