Kenya Ports Authority (KPA) is set to lose billions of shillings as it moves to implement a short-term strategy to decongest the port of Mombasa.
Last week, KPA announced a waiver of storage charges for containers lying at the port for more than 100 days as of January 25, 2012, which will be effective up to the first day of March 2012.
Data from KPA shows that there are 466 export containers, 737 domestic import containers and 294 transit import containers that have been at the port for between 100 and 1,000 days.
Kenya Ports Authority (KPA) is set to lose billions of shillings as it moves to implement a short-term strategy to decongest the port of Mombasa.
Last week, KPA announced a waiver of storage charges for containers lying at the port for more than 100 days as of January 25, 2012, which will be effective up to the first day of March 2012.
Data from KPA shows that there are 466 export containers, 737 domestic import containers and 294 transit import containers that have been at the port for between 100 and 1,000 days.
"The waiver will result in billions in losses to KPA. Going by a daily charge of Sh2,800 per container, such a container owes the port roughly Sh280,000 in 100 days, and there are hundreds of such containers lying at the port," said Gerald Kagumo, chairman of Federation of East Africa Freight Forwarders Association.
Previously, KPA permitted a free storage period of seven days for domestic import containers and 15 days for transit import containers after which the cargo would attract daily charges on the number of days spent at the port beyond the free storage period.
In a new tariff schedule signed by former KPA managing director James Mulewa which became effective on October 1, 2009, the free storage period was reduced to five and 11 consecutive days for domestic import and transit import cargo containers respectively.
The changes did little to decongest the area because there are service providers who are paid according to how long the cargo remains in the port.
"Underlying this is the fact that CFSs (container freight stations) are paid based on length of stay of cargo in their possession. This incentivises delays. Importers are concerned that despite the minister's undertaking, there has been no shift in payment for CFSs that do not encourage delays in release of cargo," said a statement by CEO of the Kenya Association of Manufacturers Betty Maina and her counterpart at the Kenya Shippers Council Gilbert Langat.
Currently, it takes cargo as long as 10 days or more to move from the port to the CFS for clearance.
There are about 15 licensed CFSs owned by private investors who make their money from charging importers for collecting and storing cargo on their behalf as the law does not allow individual importers to collect their containers directly from the port.
Delays at the port of Mombasa have a ripple effect on consumers as they cause artificial shortages of supplies which have resulted in skyrocketing prices of commodities.
This is in addition to a tendency by importers to pass on extra charges incurred during the clearance process to consumers further raising the cost of imported goods.
The current waiver is the product of a meeting between the ministry of Transport and a number of government agencies in search of measures to improve efficiency at the port.
Those represented included KPA, Kenya Revenue Authority, Kenya Maritime Authority, Kenya Bureau of Standards, Kenya Plant Health Inspectorate Services, Kenya Urban Roads Authority and security agencies.
The meeting resulted in the creation of the Rapid Results Initiative (RRI); a three- month strategy to streamline port operations under whose provisions the waiver falls. A number of similar measures carried out in the past, including the famous order by the then acting Finance minister John Michuki for a 24-hour port and the destruction of hundreds of unclaimed vehicles, failed to solve the problem.
Other measures to be adopted under the RRI include the provision of an additional 100 to 200 wagons, three trains to operate daily during this period for quick evacuation and a fully operational and enhanced all-weather verification shed by the lapse of the RRI period that is expected to put to an end to the frequent interruption of the cargo clearance process by the rains.
The initiative also compels owners of CFSs to evacuate all containers assigned to their yards within 48 hours or risk losing their licences.
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