Container Freight Stations (CFSs) and clearing agents are pushing the Kenya Ports Authority (KPA) to issue a public notice to shipping lines so that the importers can endorse where they want their cargo to be cleared from.
Mr. Daniel Nzeki, Container Freight Station Association (CFSA) chief executive officer said that importers are required to write letters to Kenya Ports Authority (KPA) for endorsement as government agencies involved in clearing cargo puts in place guidelines to implement the presidential order.
These physical interactions, according to Nzeki, may expose importers to graft by some port employees. Kenya Ports Authority managing director John Mwangemi said that they have already started implementing the presidential directive.
In a roundtable meeting with the stakeholders, the newly elected governor Abdulswamad Sheriff Nassir said; “We are pleased to find that there has been progressing but there needs to be a concerted effort by the KPA to limit excess bureaucracy and red tape that is hampering businesspeople from working.”
According to Nzeki, KPA should issue another notice to revoke an earlier one done in June 2018 that stopped importers from nominating cargo to CFSs of their choice. It partly read.
“This is to notify all shipping lines that containers destined to Mombasa for local clearance shall not be allowed to be nominated by clients or endorsement of Bill of Lading to any CFS”.
It further added; “The nominations shall be done by the KPA based on vessel rotation, volumes, and individual CFS capacity, therefore you are required to inform your clients in your various ports of loading accordingly”.
Shipping lines have been using the Through Bill of Lading (TBL) that identifies Athi River as the final destination of all Nairobi- bound cargo.
The Kenya International Freight and Warehousing Association (KIFWA) national chairperson Roy Mwanthi told the Star on Monday that, “KPA is still playing games.”
“KPA must come out publicly and announce through a notice that the earlier directive has been vacated in compliance with the presidential directive,” said Mwanthi.
He said most shipping lines and importers are not aware that cargo can be cleared from Mombasa because KPA is yet to issue a notice on the same. The presidential directive has also not been gazetted.
Fred Seka, the President of the Federation of East African Freight Forwarders Associations (FEAFFA), said that the logistics sector welcomes the move by the government to allow the business community to commercially determine their preferred mode of transport from the port of Mombasa.
FEAFFA and other logistics stakeholders had raised concerns with the initial directive, especially on mandatory transportation of cargo using the SGR.
Although they had stabilized the logistics industry, the development of CFSs in the manner they did in Mombasa was largely unforeseen. The original idea, in 2007, was for the stations to earn profits by charging demurrages for cargo that was not cleared within the free storage period, which then stood at 7 days. Therefore, they were to serve as an extension of the port with a mandatory requirement for them to apply the KPA tariff.
The congestion was so serious that an estimated 60% of the cargo volume through the Port of Mombasa could not be cleared within the free storage period.
CFSs became lucrative and they proliferated very fast in a span of a few years, the number had grown to over 10 CFSs. The extra capacity they created gave KPA a breathing space to develop more infrastructural projects-new container terminal, extension and deepening of berths, and dredging of the channel to allow huge vessels.
This, in turn, increased efficiency at the port, and with the CFS business becoming more competitive, KPA gave importers leeway to nominate cargo to the stations of their choice.
The huge infrastructural development at the port and the acquisition of modern equipment by CFS operators meant that the demurrage model could not sustain their businesses. CFSs investment profile was estimated at over Ksh20 billion in 2017.
With no room for tariff adjustment, CFSs had to innovate to remain afloat. They then introduced tailor-made arrangements with their customers, largely serving as distributive points as well as storage areas for the already cargo cleared by the Kenya Revenue Authority (KRA) through the offices they hosted.
Some CFSs allowed cargo to stay in their yards for up to 60 days. The CFSs became so popular among the importers that those with good marketing skills had over 80%of the cargo nominated to stations by importers themselves as opposed to the KPA.
The writer is an editorial consultant and can be reached via githua.kihara@gmail.com
