Kenya has launched a comprehensive plan to revitalize its cargo business and maintain its competitive edge against the port of Dar es Salaam in Tanzania, according to a report by The East African. The government has implemented various measures to achieve this, including the establishment of the Government Clearing Agency (GCA) to handle regional government-owned cargo. Additionally, port fees have been reduced, and the storage duration for transit cargo has been extended.
One significant change introduced by Kenya is the elimination of destination charges for importers from the landlocked East African Community partners who use the Port of Mombasa. This move is projected to save importers up to U.S.$1,200 per 40-feet container. Salim Mvurya, the Cabinet Secretary for Mining, Blue Economy and Maritime, highlights that these initiatives aim to boost Kenya’s economy, enhance the efficiency of cargo clearance, and ensure the safe handling of sensitive government cargo.
While these decisions benefit the national economy, they will have implications for private clearing agencies that previously enjoyed profitable contracts. Over 52% of the cargo cleared at various border points belongs to government ministries, departments, and agencies, as per the Kenya National Bureau of Statistics.
The centralization of government-owned cargo has faced opposition from the Kenya International Freight and Warehousing Association (Kifwa), a private clearing agency. Kifwa argues that the government should focus on supporting business rather than directly engaging in it. Roy Mwanthi, Chairman of Kifwa, points out that in 2022, the government-owned cargo accounted for 51% of the 33.9 million metric tonnes handled at the Port of Mombasa. The consolidation of government cargo may create challenges in delivering project materials to remote areas, as the government lacks efficient handling capacity. This decision comes as a setback for Kifwa, which was preparing to introduce new cargo handling rates to combat inflation.
To counter competition from the Dar es Salaam port, Kenya has re-evaluated its trade agreements with South Sudan and the Democratic Republic of Congo. As a result, the free storage period for transit cargo bound for Juba and Kinshasa has nearly doubled.
A recent report reveals 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. Cargo bound for Uganda will have a 30-day free storage window, a two-day increase, while goods intended for Burundi and Rwanda will enjoy a 35-day free storage period, up from 30 days.
These adjustments are intended to counteract the negative impact of unauthorized charges imposed by shipping lines at the Mombasa port, which resulted in a decline in cargo throughput. In 2022, despite a minor increase in container traffic, the cargo handled at the port decreased by 1.9 percent. Tanzania Shipping Agencies Corporation, which operates the Dar port, revoked various fees introduced by major shipping lines, such as equipment management fees and import documentation fees.
Geoffrey Kainuko, the Principal Secretary of the State Department of Shipping and Maritime Affairs, believes that these strategic adjustments will enable Kenya to retain and attract clients, thus strengthening its position in the cargo business.
By implementing these measures, Kenya aims to fortify its cargo industry, secure its market share, and outpace its competition in East Africa.
