East Africa: Kenya’s Strategy to Manage Cargo Logistics and Borders
Kenya has taken steps to revitalize its cargo business at its ports in response to competition from the port of Dar es Salaam, according to a report by The East African. The government has implemented a series of measures, including the establishment of the Government Clearing Agency (GCA) to handle government-owned cargo in the region. Additionally, port fees have been reduced and the storage duration for transit cargo has been extended. As part of these efforts, Kenya has eliminated destination charges, offering potential savings of up to U.S.$1,200 per 40-feet container for importers from the landlocked East African Community partners who use the Port of Mombasa. Salim Mvurya, the Cabinet Secretary for Mining, Blue Economy and Maritime, highlights that these initiatives aim to stimulate the economy and ensure the safe and confidential clearance of sensitive government cargo.
Data from the Kenya National Bureau of Statistics reveals that 52% of the cargo cleared at different border points belongs to government ministries, departments, and agencies. The government’s decision to centralize government-owned cargo has led to protests from the Kenya International Freight and Warehousing Association (Kifwa). Kifwa argues that the government should support business rather than directly engaging in it. Roy Mwanthi, Chairman of Kifwa, states that in 2022, 51% of the 33.9 million metric tonnes of cargo handled at the Port of Mombasa belonged to the government. The consolidation of government cargo poses challenges for delivering project materials to remote areas, as the government lacks the capacity to efficiently handle such large volumes of cargo. Kifwa was preparing to introduce new cargo handling rates and minimum service fees, but this setback has forced them to reconsider their plans.
In order to address competition from the Dar es Salaam port, Kenya has re-evaluated its trade agreements with South Sudan and the Democratic Republic of Congo. Consequently, the storage period for transit cargo bound for Juba and Kinshasa has nearly doubled. A recent report indicates that cargo destined for Juba and Kinshasa will now benefit from an extended free storage period of 45 days, up from the previous 20-25 days. The storage period for cargo headed to Uganda has been increased by two days, providing a 30-day free storage window. Goods intended for Burundi and Rwanda will now have a 35-day free storage period, up from the previous 30 days.
To mitigate the negative impact of unauthorized charges imposed by shipping lines at the Mombasa port, the Kenya Maritime Authority has taken action. These charges were discouraging users and causing a decline in cargo throughput. Despite a marginal increase in container traffic in 2022, the cargo handled at the port decreased by 1.9%. To address this issue, major shipping lines introduced various fees, such as equipment management fees, ex-border charges, late documentation per bill of lading fee, container cleaning fees, and import documentation fees. However, these fees were revoked by the Tanzania Shipping Agencies Corporation, which operates the Dar port. Geoffrey Kainuko, the Principal Secretary of the State Department of Shipping and Maritime Affairs, believes that the adjustments made by Kenya will help retain and attract clients.
These measures aim to improve the competitiveness of Kenya’s ports and ensure the efficient handling of cargo, benefiting both the economy and businesses involved in international trade.
