29 April 2013

Kenya Transport Crisis Affecting Local Businesses

The northern corridor route that is the lifeline of five hinterland states is reaching crisis point as transporters prepare to step on the brakes in their job.

Kenyan transporters met Kenya's deputy president William Ruto over the congestion at Mombasa port as well as the restrictions on weights carried by cargo trucks.

The Kenya Transporters Association (KTA) say a crisis has arisen in the transport industry over axle load limit imposed by the Kenyan government - a factor that will also affect the hinterland states.

"This is threatening to paralyse movement of cargo from the port of Mombasa to the northern corridor destinations of Uganda, Rwanda, Burundi, Democratic Republic of Congo (DRC) and South Sudan," read a memorandum from the KTA.

The transporters cite the long queues of trucks, sometimes extending into tens of kilometres, unable to move past weighbridges.

Overloaded trucks attract court fines ranging from Ksh31,000 to Ksh400,000 (sh12m) per truck-a figure they consider substantial, "and a compelling reason for transporters to withhold services," reads the communiqué.

The business community in Kampala is already feeling the heat. One of the leading industrial outfits in Uganda - Mukwano Industries said they used to hold three to four weeks of raw material in Kampala while the rest was in transit or on the high sea.

"I am down to just about four or five days with some materials completely stocked out. My own exports of tea, soya cake, simsim are also affected and our warehouses in Tororo and Lira are full."

"This affects business cash flow. I wonder how the fuel companies are doing, If they have stock or they will take advantage and create hoardingwhile hiking prices," Alykhan Karmali, Mukwano Industries managing director.

During the recent swearing in of the Kenyan president Uhuru Kenyatta, Museveni reportedly brought up the matter with his Kenyan counterpart although the outcome of their discussion is not mentioned.

Alykhan says they have been complaining about this matter since November 2012.

The East Africa Vehicle OverloadControl Bill proposes a uniform ceiling of 56 tonnes permissible weight against Kenya's 48 tonnes. Notably, countries in East Africa apply varying axle weight limits and given the cut-throat competition for business in the region, Kenyan transporters feel disadvantaged.

They are calling for the adoption of a uniform load limit.

All these developments come on the heels of an aggressive campaign by the Dar-es-Salaam central corridor managers to position the route as a better alternative for that the hinterland states.

An advert by the central corridor says its the most effective logistics network with roadblocks reduced by 70% in the last three years while export procedures take 18 days and cost $1,040 while its closest competitor takes 26 days and costs $2,255.

Heavy commercial transporters in the region particularly in Kenya, are finding the cost of doing business unbearably high.

The cost of transportation constitutes over 30% of the cost of goods in the market in East Africa - the net effect is a high cost of living.

Much of the solution, analysts say, could have been found in developing a reliable railway and water transport system.

The trucking industry represents over 90% of the cargo transport market but inconsistent and arbitrary policy applications by EAC states continues to undermine a smooth flow of operation.

Almost every month, there is an outcry either about the poor port facilities or some arbitrary decision that disrupts smooth flow of cargo from Kenya mostly.

"Lack of qualitative regulation - with glaring deficiencies in policies and legislations - is the most serious threat to the sector. Cargo transport operations along the Northern Corridor, "which connects the Port of Mombasa to markets in Kenya and other landlocked countries in East Africa, South Sudan and the Democratic Republic of Congo, have incessantly been affected by numerous infrastructural, procedural and administrative issues," read the memorandum.

Road transport, the most preferred mode of transporting cargo along the corridor, is estimated to be over 50% more expensive than comparative corridors in Europe, Asia and the Americas.

This disparity is largely attributed to lengthy border processes compounded by poor facilities, lengthy and un-integrated cargo clearance procedures and poor traffic flow, numerous and poorly calibrated weighbridges, innumerable police check points, un-harmonised vehicle load control requirements and failure to implement effective transit regimes.

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