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Freight Market Update: June 7, 2021

June 14, 2021

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

Freight Rates:

Shippers Pay Premium Prices for Containers As Shortage Bites

Shippers have been forced to pay a premium for containers as the world witnesses a shortage, which has seen freight charges skyrocket.

The cost of shipping goods to Kenya has risen steadily since last December to hit a historic high of more than $6,000 in April with a knock-on effect being the increase in the cost of goods locally.

The cost of shipping a 40-foot container from China rose to $5,092 from $3,055 in December before settling at $6,000 in April, according to a traders lobby.

The covid-19 pandemic, which has been rampant in Europe and America, contributed to the shortage as shipping containers are not returning to China due to a drastic reduction in imports.

"Importers have had to wait longer or pay a premium to get the containers, a cost that has to be passed over to consumers," said James Kariuki, chairperson of the Kenya-China Trade Association

Potential Revenue luring Kenyan entrepreneurs to opportunities on New trade route.

In Mid-may 2021 it was announced by Joseph Kibwana, chairman of Kenya Ports Authority, that goods from Mombasa port headed to Ethiopia will use the revamped Standard Gauge Railway to Nairobi and then subsequently be ferried via the Nanyuki line to the Kenya-Ethiopia border.

According to an article published by the Kenya Association of Manufacturers (KAM), there are great investment opportunities for business people along the route.

Kenya’s exports to Ethiopia were worth over 6.83 Billion Kenya Shillings in 2019.

Some investors are eyeing the hospitality industry as the northern region of Kenya is now easily accessible.

Freight Traffic:

Uganda Government’s Delay to Secure Key Access Road Affects Completion of 30b Shs Logistics Hub

Gulu logistics hub, a trade facilitation infrastructure, is being established in Northern Uganda to boost domestic and regional trade. However, the launch of this hub has come to a grinding halt because the government has not yet secured the adjacent 2.4 km access road, which the hub heavily relies upon.

The conclusion of the first phase of construction is expected to be completed in September 2021. Without the $3.3million (about Shs 12 Billion) access road, which is just next to the 24 acres of land, the project timeline is set to be interrupted until the strategically placed stretch of land is secured by the Ministry of Works and handed to the contractors.

The European Union and the United Kingdom’s foreign and commonwealth development office through Trademark East Africa have already provided their $8.5 million contributions toward the construction of the logistics hub.

Once completed, the hub hopes to ease trade between Uganda and South Sudan as well as the Democratic Republic of Congo. Two of the country’s biggest export destinations.

Should the project delay because of failure to secure the access road, this will create a big blow to the construction of the hub; the road deal would also come with the establishment of power lines and a proper drainage system.

Rwanda embarks on Study that will guide infrastructure Development of Ports owned in Djibouti.

According to the official in charge of trade and infrastructure investments, Doreen Ntawabesa. Rwanda is currently procuring a process to undergo an intensive feasibility study for all ports outside Rwanda.

Once the report is concluded, a process will commence tendering the development of the three ports Rwanda owns outside its borders.

According to the CEO of Private Sector Federation, Steven Ruzibiza, “each port has its own business opportunities dependent on the return on investment. Each will be assessed, and the fitting businesses will be allowed to jet in once assessments are over.”

The land titles of these locations experienced some delays in securing, which in turn led to the delay of operations.

Kenya’s Maritime Single Window System goes live.

In a move to comply with the international maritime Organization rules, Kenya has started using the Maritime Single Window System, which shipping lines and agents operating within Kenya will be mandated to use.

Maritime single window system, simply put is a facility that allows those involved in trade and transportation to lodge standardized information and documents with a single-entry point.

The system will be used to electronically prepare vessels for pre-arrival and pre-departure declarations to the government agencies at the port of Mombasa.

This will ease the process of vessel clearing, as shipping agents can share information with numerous state agencies almost immediately.

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