Dispute between Kenya Ports Authority (KPA) and shippers over ferrying Mombasa bound cargo by Standard Gauge Railway (SGR) to Nairobi for clearance before returning it to the Coast is subjecting traders to huge losses.
The move, which is building up congestion at the port, has seen delays and higher costs for traders who have to foot the charges of ferrying back the consignment to Mombasa.
Traders reckon that it makes no economic sense to ferry cargo to Nairobi for clearance and returning it as importers have to pay up to Sh110,000 for a 20-foot container to be transported by SGR from Mombasa to Nairobi and back.
Ideally, the cargo is supposed to be discharged to the Container Freight Stations (CFSs) after clearance by KPA, for onward transportation to the last point.
KPA is blaming the CFS operators for sidestepping a government directive that all importers with upcountry Kenya Revenue Authority (KRA) PINs and addresses can only clear their imports in Nairobi hence the standoff.
In the past three weeks, thousands of containers have been detained at Mombasa port due to a dispute with importers over whether they (cargo) should be hauled to Nairobi or not, subjecting shippers to huge losses due to high demurrage charges.
“We agreed that all Nairobi bound cargo be hauled by SGR and the Mombasa based cargo be cleared in Mombasa and released to CFSs but this is not happening,” said CFSs chairperson Daniel Nzieki.
“Central to the dispute is an assertion by the KPA that all importers whose KRA PINs were registered upcountry, must clear their cargo in Nairobi,” he added.
Mr Nzieki said there has been total confusion at the port despite importers nominating their preferred CFSs where they should pick their cargo.
However, traders argue that even though some of them registered their PINs in Nairobi, they have since relocated their businesses to Mombasa, making no sense to be forced to clear their containers at the capital city.
“Most of the firms operating in Mombasa were registered a long time ago and their company registration address reads Nairobi yet their physical location is in Mombasa. This is what KPA is using to hold the cargo,” said Kenya International Freight and Warehousing Association chairperson Roy Mwanthi.
The Mombasa cargo accounts for about 10 percent of freight imported daily which is estimated to have accumulated to over 6,000 containers since the beginning of the stalemate.
Cargo including Out of Gauge containers (big containers), Reefers and containers carrying dangerous cargo which cannot be transported by SGR, are stuck at the port.
A steady climb in shipping rates witnessed since March 2020 showed signs of easing this October for the first time in over a year. The freight cost on the busy Shanghai-Los Angeles trade route for a 40-foot container sank by almost $1,000 last week to $11,173, representing a decline of eight percent, which analysts say is the steepest fall since March 2020.
The cost of transporting cargo has dropped to levels last seen in 2009 as transporters continue to grapple with low volumes of freight at the port of Mombasa. The decline in cargo has been attributed to the high cost of shipping, occasioned by a shortage of containers globally, which has seen traders cut down on imports.
The containerised cargo dwell time at the port of Mombasa improved in quarter two of this year but remained below the December 2022 set target, according to Northern Corridor Transport Observatory quarterly report.An analysis by the agency shows that it took cargo an average of three days to be evacuated from the Port of Mombasa in the quarter ending June 2021.