A study commissioned by the Kenya Private Sector Alliance (KEPSA) in partnership with Shippers Council of East Africa (SCEA) has identified a number of factors that are conspiring to make use of Naivasha ICD unfavorable to transit countries using Mombasa port.
The multiagency study was initiated to independently assess the situation of Naivasha Inland Container Depot (ICD) and how different Departments and Agencies can make the facility ideal for clearance of cargo. This was occasioned by an outcry by the Private Sector on issues related to operational efficiency and cost-effectiveness of the facility.
The facility, with 45,000 square metres has a capacity of handling 2 million tonnes of goods per year and has 2 trains dedicated to ferry cargo from Mombasa port.
The study sought to appreciate possible benefits to transit partner member countries and exporters; compare the total freight costs for the rail freight from Mombasa to Naivasha and the EAC Partner States with road freight costs- considering the entire shipping logistics, last-mile and other related costs.
It has now emerged that despite the infrastructural developments and economic advantages presented by the facility, some operational and efficiency concerns need to be addressed to make the facility more efficient.
“There were cases of lack of access cards and the process of application. Customers using the facility are required to travel to Mombasa for application, which is time-consuming and increases the cost of doing business,” Northern Corridor Transit and Transport Coordination Authority (NCTTCA) said a tweeted statement.
The report, currently in final validation stages, proposes that Kenya Ports Authority (KPA) and Kenya Railway consider implementation of First in First out (FIFO) framework to ensure timely delivery of cargo to Naivasha ICD from Mombasa.
Regarding incentives, KPA is implementing a 30 days free period for cargo clearance at the Naivasha ICD. Shipping lines, on the other hand, give up to 28 days. Further, Kenya Revenue Authority (KRA) charges customs warehouse rent for any cargo that delays beyond the 21 days as provided by the East African Community Customs Management Act (EACCMA ACT, 2012).
“The variance, the report says, creates inconsistency on incentives making it almost impractical for cargo owners to benefit,” the report says.
To enhance the operational efficiency of the facility, the report recommends full installation of support infrastructure and systems.
Specifically, the report calls for addition of control gates for smooth movement for trucks; fast-tracking system configuration as well as weighbridge activation; construction of verification area to support processing of local cargo; completion of re-marshalling yard to the required standards; construction of a medical facility and establishment of COVID-19 isolation facility; and infrastructure to handle perishable goods.
Further, the report wants KPA to develop and implement Standard Operating Procedures (SOPs) for the smooth running of the facility and other ICDs in the country.
To enhance visibility, the report adds that a joint marketing team involving the private sector be constituted. In future, the report opines that the facility is commercialised and run by the private sector on completion when Public-Private Partnership (PPP) processes have been initiated and completed.
The report concludes that there is a need to boost collaboration and coordination of Naivasha ICD public and private stakeholders for addressing operational challenges.
The role of Naivasha as a tool to address congestion and the port came into sharp focus from stakeholders last year. According to Gilbert Langat, Chief Executive of SCEA, 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.
Last year, Richard Hough, the Chief Executive Officer of African Logistics Properties (ALP), said that if supportive infrastructure was in place and the country could guarantee market sustainability, the firm 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 for us,” Hough noted.
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.”
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 make Rwanda invest in warehousing since they as well need the Northern Corridor in addition to Dar corridor.
