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Freight Market Update: May 17, 2021

May 27, 2021

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

Freight Rates:

PwC Lauds KRA on Lifting Restriction On Warehousing Of Goods

Commissioner of Customs and Border control at Kenya Revenue Authority has lifted restrictions on warehousing of goods in customs bonded warehouses that was imposed by the customs office in May of 2020.

This change of policy by the Government comes as a relief for businesses that utilize customs bonded warehouses to store goods, defer payment, and are involved in regional trade.

Whilst the decision to lift the restrictions is a positive one, the initial announcement in 2020 took the business community by surprise and had investors questioning whether to use Kenya as a means to continue serving their customers across the region and as a result, this has cost Kenya and the region at large many business opportunities. There is a need for consistency in tax law and for policymakers to ensure that tax laws are not changed too frequently to ensure the impact on businesses is not so adverse.

Freight Traffic:

Global Shipping Line Hapag-lloyd Enters the East African Market

German International shipping and container transportation company has entered the East African market, with weekly sailings between China, South-East Asia, Kenya, and Tanzania. This move will open up East Africa’s access points to Hapag-lloyd's global market.

Hapag-Lloyd has enjoyed operations in Sub-Saharan Africa for about 13 years now and has seen steady and significant growth in transported volumes of goods to and from Africa since then.

As well as the ports serving the Kenyan and Tanzanian ports Hapag-Lloyd will service landlocked East African countries such as Uganda, Rwanda, Burundi, and South Sudan with regular inland connections to and from Mombasa. And as part of its growth strategy, the company hopes to develop inland connections to Somalia, Southern Ethiopia, and Northern Tanzania.

Kenya & DRC Strengthen Ties

Kenya and the Democratic Republic of Congo have long enjoyed a cordial and mutually respectful relationship, this has always been strengthened by their equal love for Rhumba as well as both sharing Kiswahili as a national language.

Kenya has in the past facilitated peace deals amongst the people of the DRC, the two nations have also seen the establishment of diplomatic missions in both countries as a sign of intent for long-term cooperation.

In April 2021, President Uhuru Kenyatta paid the DRC a three-day state visit, the visit was aimed at enhancing the two countries’ relationship in trade and security.

Now that the DRC is enjoying peace within its borders, citizens were encouraged to make investments in both countries. With insurance, aviation, hospitality, mining, and construction identified as areas for investment.

To support this vision, an agreement was signed between Kenya Airways and Congo Airways which will cover areas of the countries’ mutual interest, aircraft maintenance, training of airline personnel as well as sharing excess capacity between the two airlines when it occurs.

Matters of freight were tied to this agreement, where the DRC intends to reposition Mombasa port and make it the DRC’s main Exim gateway. This is where the country’s cargo will be handled facilitating jobs and other benefits for the two countries.

Covid-19 Update:

Dar Es Salaam Reaps Big on Cargo at Mombasa’s Expense

A report titled ‘The impact of Covid-19 on Transport and Logistics in East Africa’ compiled by The Shippers Council of East Africa (Federation of East African Freight Forwarders Association and African Economic research consortium) stated that the Port of Dar Es Salaam benefited greatly from the minimal covid-19 containment measures in Tanzania.

Tanzania recorded a higher throughput at the height of the pandemic, statistics show Dar es Salaam port saw 4,939 metric Tonnes more cargo between March 2020 and March 2021 in comparison to the 4% decline in cargo throughput at the Mombasa port.

While road freight rates increased between Mombasa port and the region, this saw a shift of business to the Dar es Salaam port.

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