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Freight Market Update: June 14, 2021

June 14, 2021

A Sendy Freight Weekly Round-Up to keep you informed on all things freight and logistics in the region.

Freight Rate:

Why High Container Rates are Likely to Persist

There has been an explosive rise in container rates across major global trade routes. Consequently, shipping costs have increased tremendously, creating an additional economic burden for a  world struggling to recover from the pandemic.

According to Jan Hoffman, Chief of Trade Logistics Branch at UNCTAD, the situation is likely to persist.

The Covid-19 pandemic has resulted in many trade restrictions along the global supply chain. A slow down has been experienced in major ports resulting in additional inefficiencies in intermodal connections. Containers are spending 20% longer in each system for each shipment. According to Hoffman, as long as the pandemic is not contained, he believes that the situation will get even worse, driving freight rates ever higher.

EAC Trade Ministers Push for Uniform Charges to boost cargo movement.

In a bid to facilitate the smooth movement of goods and people within the region, The East African Community council of ministers of trade has urged member states to harmonize the charges, validity, and mutual recognition of Covid-19 certificates.

The EAC regional sectoral council on trade, industry, finance and investment (SCTIFI) noted that the non-recognition of covid-19 certificates by partner states, the different charges for covid testing, and varying validity certificates are affecting the movement of goods within the region.

EAC member states launched digital covid-19 certificates last August to assist in the fast clearance of goods at border points. Lack of harmonization of these certificates and procedures has slowed down and possible gains and benefits that would have come from its implementation.

Freight Traffic:

Refurbished Kisumu Port to remain dormant without Uganda's Support.

The Kisumu port is part of the East African Community (EAC) infrastructure development scheme, with the potential to generate $60 billion worth of trade annually, but currently only bringing in about 10 per cent of this to the three big EAC economies.

As such, Kenya is pushing for its regional partners, especially Uganda, to help them with this project by speeding up the implementation process to facilitate quicker transportation of goods, particularly fuel to the great lake's region and South Sudan.

Kampala's delay in completing the construction of an oil jetty on its side has stalled Kenya's efforts and has seen Nairobi opt for tankers to ferry petroleum products across the lake.

World Logistics Passport (WLP) welcomes ten new countries.

The World Logistics Passport (WLP), a global, private sector-led initiative designed to smooth the flow of international trade and unlock market access, has welcomed ten new countries at its inaugural Global Summit.

The summit, which took place virtually, hosted a diverse mix of CEOs, government ministers and representatives of leading international trade bodies to further international cooperation, offering business in the right conditions.

The WLP has broadened its reach in Africa and Latin America. Countries like Kenya, South Africa, Ethiopia, Botswana, Zimbabwe, Mozambique, Burkina Faso, Guinea, Paraguay and Ecuador are all new entrants to the program.

Traders will now have access to east-west trade routes whilst also capitalizing on key trading centers across Southern and Eastern Africa.

Covid-19 Update:

Need for EAC to embrace tech to curb revenue slump.

When the covid-19 pandemic hit its peak, many governments the world over suffered due to the collection of revenue. For example, the Bank of Tanzania (BoT) recorded a low in revenue collection; the monthly economic review stated that income tax in the country was down to 1.41 trillion from 1.63 trillion in its first quarter of 2021 alone.

Non-tax revenue also recorded a drop from 911.8 billion to 691.4 billion; the country also received considerably less money from donors than recorded in recent years.

This could perhaps be explained by the fact that donors had their own pressing obligations due to the covid-19 pandemic as well. A similar situation has been faced in Uganda as well.

Uganda has since advanced its adoption of the digital revenue stamp; the Tanzanian government has also announced plans to adopt electronic tax stamps (ETS).

Rwanda, on the other hand, was on track with meeting its tax obligations for the financial year 2020/21; this was largely due to the government's covid-19 measures as well as the private sector's commitment to see their tax obligations through even whilst battling the outcomes of the pandemic. However, the country will be looking into the technology as means for revenue and tax collection.

UAE bars entry to travellers from Uganda, Zambia and DRC.

The Central and Eastern African regions have seen a surge in coronavirus cases over the past week. As such is the case, the United Arab Emirates has taken strict measures to ban national and overseas airlines and transit passengers from the region.

The new travel regulations went into effect Friday, June 11 at 11:59 pm. Uganda's President Yoweri Kaguta Museveni introduced new lockdown measures to tackle a wave of covid-19 ravaging the youth in the country.

He announced the closure of schools and universities for 42 days and suspended public gatherings and prayers in mosques and churches.

On June 4, the country recorded 1,259 cases, the highest in a single day, with officials reporting long lines at hospitals. President Museveni said the wave mostly affected people aged between 20 and 39 and increased transmission rates among children aged 10 to 19.

Last week, the Democratic Republic of Congo said it was facing the third wave of coronavirus infections, with its epicentre in the capital, Kinshasa, one of Africa's most populous cities.

The UAE decision was announced by the National Emergency Crisis and Disaster Management Authority and the General Civil Aviation Authority on Wednesday.

The directive includes travellers who were in the three countries in the 14 days before coming to the UAE.

UAE citizens and first-degree relatives, diplomatic missions approved between the Emirates and the three countries, including administrators working in the embassies of the UAE and the affected countries, are exempt from the ban.

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