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Freight Market Update: June 28, 2021

June 29, 2021

Freight Rates:

Shippers seek Redress from the Regional court over SGR use.

Kenya Ports Authority announced recently that all cargo from Mombasa Port would be hauled off to Nairobi and Naivasha by the Standard Gauge Railway exclusively, a decision that has been firmly contested by importers and led to subsequent court battles with Kenya Ports Authority advocating for its stay.

In a twist of events, Ugandan shippers have now joined Kenyans in seeking redress from regional courts to allow them to choose their preferred mode of transport for cargo from Mombasa Port.

Speaking to a local Publication Mr Hussein Kiddedde, Chairman Uganda Freight and Forwarders Association, stated, “We should align with our Kenyan counterparts to go in the regional courts of law to contest because we have a right to use the available choices of transport and not be forced,”.

A five-judge bench is expected to pass its ruling on the matter on September 30.

Uganda Covid-19 second lockdown troubles Kenyan firms and truckers.

Last Friday, the President of Uganda announced a 42-day lockdown following a surge in Covid-19 numbers, restricting cross-district movement, including public transport, private vehicles, and boda boda.

He also revised curfew hours to start from 7 pm to 5.30 am.

While cargo and essential services are exempted, Kenyans are concerned that it will cause border delays and goods delivery.

“Cargo movement will be slow because of the measures,” Ombok said, adding that the number of trucks plying the Northern Corridor, mainly Mombasa-Kampala, has reduced by almost a half.

The pandemic has led to a massive rise in transport costs along the Northern Corridor by 48 percent, mainly on measures to contain the virus by regional states.

Freight rates from Mombasa to Kampala rose from $2,200 in the pre-pandemic period to $2,500 per container (both 20 and 40 feet), which extended into the first half.

Freight Traffic:

Dar Es Salaam Port Authorities Ban Storage of Imported Explosives.

The largest port in Tanzania has issued a notice to all its users warning against the storage of dangerous goods. These consist of explosives, flammable solids, and gases, substances liable to spontaneous combustion and substances that emit flammable gases when they come into contact with water.

A statement from the port Director partly read “All Cargo which the International Maritime Dangerous Goods have classified will not be stored at the port and will be treated under the direct delivery procedure” This is in an effort to protect the safety of the people, port infrastructure and property as well as the environment.

Somaliland and DP World Opens a New Terminal at Berbera Port & Plans expansion of the Second phase.

DP World, a leading logistics solutions company, has joined forces with Somaliland and officially opened a new terminal at Berbera Port following completion of its first phase and has made plans to work together towards expanding the port.

It was opened by His Excellency Muse Bihi Abdi, President of Somaliland, and Sultan Ahmed bin Sulayem, Group Chairman and CEO of DP World. The development is happening to turn the port into a major trade hub for the Horn of Africa region. The new terminal can handle the largest of vessels in operation and has seen a capacity increase to 500,000 Twenty-foot equivalent Units (TEUs) up from 150,000 previously. DP World has committed to investing $442 Million to see the project to its completion.

Kenya to market Lamu Port in Ethiopia.

The port of Djibouti mainly serves Ethiopia; this has been a significant motivator in Kenya marketing the newly opened Lamu port to the nation.

Kenyan firms like Safaricom and KenGen already have a foot in the Ethiopian market.

The industrial and commercial development cooperation, Kenya export promotion and branding agency and Kenya Investment Authority are current campaign champions to market the port to Ethiopia. Kenya is targeting traders, shipping companies with offices in Ethiopia, importers, exporters, clearing and forwarding agencies, as well as government institutions.

The deal would, in turn enhance bilateral relations and enhance cross-border trade for the two nations.

Ship Building to Propel Kenya into Maritime Hub.

Kenya recently launched and started operations of the Kenya Shipyard Limited, which is set to steer the nation into a shipbuilding hub and a leading maritime hub in Africa.

The agency will be instrumental in developing local ship manufacturing, which will be critical to achieving the blue economy agenda. However, the primary and most vital tasks will be construction, repair, and maintenance. Kenya targets traders, shipping companies with offices in Ethiopia, importers, exporters, clearing and forwarding agencies, government institution maintenance of shipping vessels.

The global market for ship construction is valued at an estimated $120 Billion, and Kenya is working towards having a seat at the table; this move will also see the nation rely less and less on foreign-built vessels.

COVID-19 Update:

New plan to mitigate Covid -19 impact on East African Logistics.

In an effort to alleviate the effects of the covid-19 pandemic on business and regional trade, shippers and freight forwarders have come together to develop a regional stimulus-response.

Following an industry study at the Nairobi and Naivasha inland container depots, the border towns of Namanga and Malaba, and Rusumu in Rwanda, several policy proposals were arrived at.

The study conducted between March 2020 and March this year established that over 75 per cent of transport and logistics businesses in the East African community were negatively impacted by the Covid-19 pandemic. Among other gaps identified, the lack of harmonised testing and Covid-19 certificate among EAC partner states and risk management planning and implementation strategies.

Other policy proposals include enhancing IT infrastructure and automation and prioritising vaccination in the transport and logistics sector.

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