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Tanzania: Costs of Switching to Dar Port
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East African Business Week (Kampala)
ANALYSIS
28 January 2008
Posted to the web 28 January 2008
Joyce Mirembe
Kampala
After four weeks of unrest in Kenya, Ugandan importers and exporters are increasingly turning to Dar es Salaam port as an alternative to Mombasa port; but how much more will it cost one to transport raw materials, finished merchandise or containers of coffee from Dar es Salaam to Kampala?
Well for starters, the distance to Dar es Salaam is much longer than the one to Mombasa. Logistically, it is much more expensive as part of the journey is across Lake Victoria between Mwanza in northern Tanzania and Port Bell near Kampala.
Mr. Charles Kareba, the managing director Kargo International Limited, a clearing and forwarding firm in Kampala told East African Business Week recently that transporting a 20ft container from Mombasa to Kampala today costs US$ 2,300; it costs $3,000 in excess to transport the same container from Dar es Salaam through Mutukula to Kampala.
Whereas Dar es Salaam has come in as an alternative port, there are shortcomings at the port itself. That is why costs of handling keep fluctuating depending on the volume of cargo at the Dar es Salaam port.
Communication between Kampala and Dar es Salaam, according to Kareba is also relatively constrained as opposed to communication between Kampala and Mombasa.
For goods to move through Dar es Salaam across Lake Victoria, compared to Mutukula in southwestern Uganda, there are few wagon ferries to transport goods. Today about 20% of Uganda-bound cargo goes through Dar es Salaam.
This means that Mombasa has been taking the larger balance.
Since its inception, the Dar-es-Salaam port has lacked capacity to handle expanded volumes of cargo, a situation that has increasingly led users of the services to opt for Mombasa as cargo overstayed at Dar es Salaam.
"The demand for containers was much higher than the supply and the cargo would over stay there," he explains. "We [Uganda] should be able to keep both routes running because we are land-locked," Kareba explains.
Last week, the Uganda Manufacturers Association (UMA) recommended that government negotiate with the Tanzanian government to provide an alternative route to the Mombasa seaport through Dar-es-salaam port.
An assessment of the Kenya political crisis on exports by the Uganda Export Promotion Board (UEPB) a week ago indicated that exporters are stuck with goods that are bound for different markets because of failure to transport them through Kenya to Mombasa.
Elgon Leather Co. (U) Ltd said it had 15 containers destined for Pakistan at the shippers' premises while those that made it to Mombasa are stuck because of sporadic working hours with no insurance cover. The Uganda Tea Development Agency Ltd said teas totaling 666 tones worth US$1.7 million had been stuck at the factory, in transit and at the shipper's yard.
BIDCO Uganda, which has a daily turnover of $0.5 million worth of soap and cooking oil at its Jinja plant has lost $1 million in terms of export sales and $4 million in domestic sales.
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The coffee sector said it was suffering from shortages of empty shipping line containers for loading coffee, shortage of trucks for transportation to Mombasa. Mr. Robert Byarugaba, the head of logistics, Kyagalanyi Coffee Ltd said shipments out of Mombasa remain stuck and that the situation was likely to continue into February and March.
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