In 2014 and 2015, Express Shipping & Logistics (ESL) Ltd was the highest Kenya Ports Authority (KPA) revenue contributor in the clearing and forwarding category.
In 2019, the firm was appointed by the Kenya Revenue Authority (KRA) among those to pilot the Integrated Customs Management System (ICMS), a transformative platform that will revolutionalize the country’s cargo clearance, which the taxman has since rolled out.
Compliance and close working relationships with key Government Partner Agencies (GPA) has been one of the hallmarks ESL has used for growth over the years. ESL was among the first clearing firms to join the Authorized Economic Operators (AEO) program.
The firm now looks forward to releasing AEO consignments within 24 hours of shipment arrival as opposed to longer hours it has been taking with the Simba system after KRA fully rolled out motor vehicle and bulk cargo clearance through iCMS at the Mombasa port.
ESL Forwarders Ltd was accredited the AEO status on 26th June 2013 while ESL’s shipping arm got its listing on 25th February 2020.
This was no mean feat since until recently, the uptake of the program has been sluggish. KRA recently told the Freight Logistics magazine that the program has listed 155 importers and exporters, the largest constituent since the program started in 2006.
In the list, there are only 83 freight forwarders although Kenya has over 1300 of them registered by Kenya International Freight and Warehousing Association (KIFWA). ESL is the only ship agent listed in the program, which also has only seven transporters.
By enrolling in the AEO program, there is a high level of trust between KRA and AEO Customs agents and accredited shippers. This, according to Silvester Kututa, the Founder and Chief Executive Officer (CEO) of ESL enhances faster clearance of the goods- green channel priority clearance that emphasizes voluntary compliance.
“Goods are cleared on the green channel because of transparency and the trust of AEO Agents and AEO shippers. Verification process is minimized to AEO requirements, thus saving shippers and agents’ time,” Kututa said.
Although there are numerous benefits that accrue to those listed in the AEO program, lack of sufficient sensitization of the benefits and high level of compliance has hampered the program uptake.
Another challenge is the fact that the AEO has not been embraced by other cargo interveners such as Kenya Bureau of Standards (KEBS), Port Health and so on, which causes delays in the event they intervene in a consignment, Kututa said. This needs to change, as we move into an even more stringent competitive environment in the Africa Continental Free Trade Area, where country logistics competitiveness will be absolutely a must.
The AEO program was conceived by the Commissioners of Customs of the East African (EAC) countries of Burundi, Kenya, Rwanda, Tanzania and Uganda after the adoption of the World Customs Organization (WCO) SAFE Framework of Standards by the WCO Council in 2005.
The Commissioners’ decision was in line with the EAC Protocol that requires the EAC region to set up a Customs Union as one of the building blocks for regional integration.
The decision was also prompted by the consideration that since the AEO program is about trade facilitation and the security of the supply chain, traders and Customs stood to gain more if the whole supply chain within the region is covered under one program.
There are both the national and regional AEOs. The EAC Regional AEO program covers and is applicable in all the Partner States. The regional AEO program operates under a common set of criteria, instruments, authorization process, benefits and monitoring system in all the Partner States.
ESL, according to Kututa will start the process of acquiring the regional AEO this year. ESL put its footprints in Tanzania in 2012 and in 2017, growing demand by manufacturers and shippers saw ESL Uganda Ltd being incorporated to leverage the firm’s expertise in logistics for its customers in Uganda and the Great Lakes region of Rwanda, Burundi, Eastern DRC and South Sudan.
iCMS has put in place a modern system that will require high compliance levels hence compel the shipping community to comply or be driven out of business, according to Kututa.
“Technology age is with us and we will continue to leverage on this to create efficiencies in shipping and logistics. To some extent, the logistics industry is lagging in automation, and we want to take lead in this area too. One needs only to look at what is happening elsewhere, technology will drive future supply chains. We shall be heavily involved in digitization of our supply chain processes this year” he said.
The AEO program tackles risk challenges by shifting the perspective, so that instead of focusing on the goods themselves, Customs focuses on the traders. The AEO program is designed to facilitate and enhance the experience of the compliant trader when undergoing Customs clearance processes.
KRA is also preparing to roll out iCMS on goods under Single Customs territory regime as well as petroleum.