The entry of the Standard Gauge Railway (SGR) line in the logistics chain early this year when it started hauling cargo trains is leading to re-alignment of the other industry players.
Container Freight Stations (CFSs), which have been handling over 90 percent of the domestic containers passing through the Mombasa port have been hit hard due to the huge volumes of the container being transported and cleared at Internal Container Depot (ICD).
CFS operators have proposed to work closely with Kenya Railway Corporation (KRC), Kenya Ports Authority (KPA) and Kenya Revenue Authority (KRA) to improve efficiency at ICD.
They propose to continue carrying out their normal duties of verification and release of cargo. This, they say, will ease the pressure on customs clearance at ICD Embakasi.
“It is expected that there will naturally be a buildup of pressure on the operations at the facility as the volume of cargo grows,” the proposal, being reviewed by the three government agencies reads in part.
The second intervention is for CFSs to deliver containers directly to SGR loading area from their yards.
“This will ease pressure on KPA who are currently running multiple activities of normal port operations including tracing and transferring containers to the SGR designated loading areas,” the proposal said.
And finally, the CFS operators have proposed to offer a service package to the customers that will included last mile delivery and return of empties to Mombasa empty depot as required by the shipping lines.
CFS will undertake to market SGR freight services to their customers. This will come along with specific targets per CFS operators, they suggest, which must be achieved daily.
“KRC will gain from the CFS knowledge of the market, with 250 marketers, and have an assured controlled source of cargo for the SGR freight service,” the proposal reads.
CFSs, which were handling all the domestic cargo before the SGR started operations have undergone a significant revolution, making them attractive to the importers due to their flexibility in storage charges.
All imported cargo is supposed to be cleared and discharged in four days. According to KPA tariff, it is supposed to attract demurrage charges thereafter. However, once cleared in the CFS, which were initially supposed to earn their profit by charging overstayed cargo, special arrangement between importers and operators allow the cargo to stay at the yard for a longer period on an agreed arrangement.
The CFSs were initially set to handle cargo at a time that most of the traders could not clear within the stipulated free storage period and they were supposed to generate their profits by levying storage charges. However, the improved efficiency at the port of Mombasa forced CFS operators to remodel their business to remain afloat.
Mr. James Rarieya, the general manager of the Mombasa Container Terminal (MCT) and the chairman of Container Freight Station Operators (CFSA), in an earlier interview, said operators of the stations today are focusing on the business needs of the clients to grow their businesses.
“With the improved efficiency of clearing the cargo, huge infrastructural investments at the port of Mombasa, CFS operators have developed innovative and flexible measures that have seen their increased use by domestic importers,” says Rarieya.
Large importers are seeing use of CFSs more attractive as opposed to the port due to extended free storage period under negotiated terms. For instance, an importer with just a few trucks does not have the urgency of hiring more trucks to evacuate the containers within the free storage period, which according to KPA is 4 days.
“They can instead have personalized engagement with CFS operators that allows them to evacuate all the containers using own trucks based on agreed terms.” Rarieya said.
There are now 16 CFS facilities serving Mombasa port including 10 appointed by the KPA and even one operated by a Ugandan company initially handling Uganda-bound cargo but later changed to compete with the others in the local market under the EAC Single Territory Initiative.
The CFS’s have taken weight off Mombasa port. Cleared as inbound containers, they are discharged from vessels and taken quickly by truck or tractor to the designated CFSs. Each container can then be cleared for on-carriage to final destination or, in the case of LCL containers, stripped into a warehouse for customer collection or groupage.
Each CFS is a self-contained facility with government agencies on site including Customs, police, the standards authority and sanitary inspectors.
As well as handling containers, freight stations can be used for all types of unitised cargo including machinery and vehicle imports. The stations have increased Mombasa port stacking capacity which stands at 18,000 Twenty Foot Equivalent Units (TEUS) while the combined CFS stacking capacity is 27,340 TEUS enabling Mombasa to handle an annual throughput of 2.7 million TEUS with the current infrastructure.
The stations have also increased seaport productivity at the water front through direct delivery as the CFSs can marshal an excess of 1000 truck trailers units at a go to move containers directly from the ships without landing them at the port quay.
Cases of pilferages have reduced as CFSs are well secured and have invested in advanced security measures to ensure the safety of cargo. They have created 5,000 direct jobs in private sector and 200 in the public sector (customs, KEBS, port health, police).