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Freight Market Update: May 03, 2021

May 25, 2021

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

Freight Rates:

Kenya Ports Authority Further Extends Free Storage Period

The authority announced a further extension of the free storage period at the Mombasa Port and ICDs, which had expired on March 9. Transit export containers will enjoy 20 days free storage period, up from 15 days. Transit Import containers will now enjoy 14 days of free storage at the port and at ICD Embakasi. Domestic import and export containers will now have 5 days and 15 days of free storage respectively.

High Freight Charges Signal an Imminent Increase in Cost of Goods

The Shippers Council of Eastern Africa (SCEA) noted that international freight charges have gone up by between 20–25 percent, signaling an imminent rise in the cost of goods in the country. According to SCEA, the East Africa region is currently experiencing a shortage of vessels and containers which has contributed to the jump in the cost of shipment.

Why container freight rates have surged

Shipping rates have hit an all-time high showing a surge in container spot freight rates that were initially triggered by the pandemic and further strengthened by the Ever Green mega-ship that blocked traffic in the Suez Canal for almost a week in March. Jan Hoffman (Head of UNCTAD’s Trade and Logistics Branch) was quoted saying “The Evergreen incident reminded the world just how much we rely on shipping”, “About 80% of the goods we consume are carried by ships and we tend to forget this”

Public Notice: Verification of containers targeted by Kenya Revenue Authority.

Beginning April 27, containers at the port of Mombasa that are subjected to verification by the Kenya Revenue Authority will not be charged verification fees if they are found to be compliant. Containers found to be non-compliant or misdeclared shall be charged the full verification fees of USD 80 and USD 120 for 20ft and 40ft containers respectively.

Freight Traffic:

Test Operations of the New Lamu Port Starts

Test operations of the new Lamu port will commence on May 20 ahead of the June 15 commissioning. Lamu Port general manager Abdullahi Samatar said testing of the equipment will begin before the first vessel from Maersk makes a maiden call to the facility.  The Lamu port, which is a key part of Lamu Port South Sudan-Ethiopia Transport Corridor, has three berths completed at $48 million.

Kenya Railways to Refurbish 31 Locomotives

Kenya Railways is refurbishing 31 locomotives to expand capacity to move passengers and cargo along the 465km Longonot - Malaba Metre Gauge Railway (MGR) section and the 216.7km Nakuru-Kisumu MGR line which are currently under rehabilitation. The rehabilitation of Longonot – Malaba MGR section and Nakuru-Kisumu MGR branch line that are 25.1% and 60% complete respectively, is viewed as critical to expanding trade across the East African region and is estimated to significantly reduce transport and logistics costs.

Kenya awards Lamu Port road project to China Communications

Kenya celebrated a win by awarding a Lamu port road project to China Communications Corporation Company, the Kenya National Highway Authority signed a deal with the Chinese company worth a whopping $166 million deal that would see a 257km stretch between a soon to be operational Lamu Port and the town of Garissa, a 113km section between Hindi and Kiunga and 83km between Ijara and Hulugho both of which are close to Lamu.

The estimated time of completion for the projects is 36 months, this project reinstates CCCC’s position in Kenya after recently losing control over the control of the Mombasa-Nairobi gauge railway. Other components of the deal include the construction of resort cities in Lamu, fiber optic links, and an oil refinery.

COVID-19 Update:

Kenya Eases COVID-19 Restrictions

Kenyan President Uhuru Kenyatta on May 1 lifted a ban on movement in and out of the capital Nairobi and other four counties deemed COVID-19 hotspots amid declining infections. Schools will reopen as per the schedule on May 10 while restaurants and eateries in the disease-infested zones will resume normal operations subject to adherence to COVID-19 containment measures.

Uganda Confirms Indian Variant

Uganda has now registered 5 COVID-19 variants, including the Indian COVID-19 variant B.1.617. Dr. Jane Ruth Aceng, the Minister of Health, said there is a need to scale up surveillance, contact tracing, and testing at the district level so as to detect cases early and urged the public to follow the COVID-19 containment standard operating procedures.

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