Bernard Sanga
6 July 2009
Nairobi — Business at Mombasa's multibillion shilling container freight stations is headed for tough times.
This is due to the near static container through-put at the port, coupled with the ongoing modernisation and expansion process.
Lethargic growth of the port's business, following a slow economic climate in East Africa and the global financial crisis, has enabled the port to handle all the inflow without the help of CFS.
"There is a lot of pressure on the Kenya Ports Authority (KPA) to stop sending cargo to CFSs as the port's operations have improved tremendously, hence no congestion. But we signed a memorandum with these facilities and we cannot elbow them out now.
"However, if efficiency at the port is sustained, we will have to start clearing all cargo at the port," said KPA's public relation officer, Sylvan Mghanga.
He added that although port business is unpredictable and could experience an unprecedented inflow of cargo, some CFSs might soon have to close shop due to lack of business.
Private Container Freight Stations were introduced in 2000 to ease congestion. They are licensed by the Customs Services Department under Section 14 of the East African Community Customs Management Act, 2004.
Their number has increased since then, currently standing at 13, while others are under construction. Investors flock to these facilities on the assumption that cargo volumes will continue to increase and that the port will be unable to cope.
However, the port is on an expansion and modernisation programme that, if completed, will see it handling such volumes without involving CFSs.
The ongoing expansion programmes include the construction of a second container terminal and the planned second port of Lamu.
The new terminal will handle 1.2 million twenty-foot equivalent units (TEUs) and will occupy a 100-hectare plot at Kipevu, next to the current terminal, whose handling capacity is 250,000 TEUs annually.
The total capacity of the two terminals will exceed the current through-put, which stands at 615,733 TEUS, going by last year's port records.
Other measures to improve efficiency include automation of the port and introduction of a 24/7 operational schedule, interfacing of SIMBA and KWATOS, and improvement of security.
Such improvements have seen cargo deliveries rise to an average 600 units a day. This is still below the port's target of 1000 units daily. The benefits accrued include reduced turnaround times for vessels calling at the port and improved deliveries.
"Competition in the CFS business is becoming very tough. All too often, new CFSs are licensed. We welcome fair competition as it could bring down the cost of shipping in the region," says Mitchell Cotts CFS managing director Daniel Tanui.
He said that investors had thought that the ongoing rehabilitation of logistic systems would put more pressure on the capacity of the port of Mombasa, hence the dash for CFSs.
Once rehabilitated, the logistic systems will link the port of Mombasa with Southern Sudan, Northern Tanzania and Eastern Zaire.
"The biggest headache would start after KPA completes its expansion programmes, as there would be no excess cargo for CFSs to handle.
That could explain why some CFSs are lobbying for monopoly of handling cargo destined for certain countries," said Mr Tanui.
Great Lakes CFS, which has a facility at Uwanja wa Ndege area on the Mombasa Nairobi highway, has been keen on monopoly rights on all Uganda-bound cargo. Rwanda's Private Sector Federation (PSF) is also keen on a facility that would handle all cargo to the country.
Kenya Freight and Warehousing Association national vice-chairman Peter Mambembe says CFSs should start sourcing for their markets, rather than depending on the port.
He said that due to stiff competition, a number of them were exploiting loopholes in the Act and hence going against the spirit of their formation.
"KPA has abdicated its role to the Shipping Lines, who are changing the manifests without the authority of importers and exporters and nominating cargo illegally to private container freight stations in total disregard of the law," said Mr Mambembe.
He added, "The bill of lading is a document of title and any alteration must be done with the express instructions of the owners of the goods, through a document known as a "corrector" to change the manifest."
Meanwhile, customs agents say that the idea of having CFS to decongest the port has been abused as KRA has issued licences to dry ports inside the very terminal they are supposed to decongest.
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