Dwindling cargo forces reduction in Mombasa port tariffs

The effects of the global economic downturn and disruptions caused by piracy off the coast of Somalia and the Gulf of Aden have finally hit operations at the Port of Mombasa, forcing its managers to review tariff charges to avoid loss of business to rival ports.

For several months maritime operators have been forced to use longer routes to avoid an upsurge of piracy attacks in the Horn of Africa, thus pushing up the cost of maritime trade as the cost of insurance climbed nearly twenty fold.

Their woes were compounded by the effects of the global financial downturn that saw most ship owners ground their vessels, thus tightening the tonnage supply and increasing the cost of freight.

“In keeping pace with developments and to address rising costs in maritime trade, Kenya Ports Authority wishes to announce minor tariff adjustments,” managing director James Mulewa said.

The new tariffs set to take effect on October 1, payment for scanning, verification, inspection and associated stripping or stuffing currently pegged at $75(Sh5,850) and $110 (Sh8,580)for 20 foot and 40 foot containers respectively, will be removed.

The licence fee for private mooring, buoys and jetties would also be reduced from $500(Sh39,000) to $200(Sh15,600) per annum while the free period storage will now be fiveand 11 consecutive days for domestic and transit containerised traffic respectively.

“Shore handling rates will attract additional $3(Sh234)and $5(Sh390) for 20 foot and 40 foot containers respectively. Other shore handling rates will be prorated,” KPA said.

While May and June is usually the peak season, raging global economic recession has dwarfed the volumes handled during this important season for port operations. Importers welcomed tariff adjustments by KPA but warned of imminent increase in the cost of all imported commodities.

Mr Gilbert Lang’at the chief executive of the Kenya Shippers Council (KSC) said additional costs on shore handling and reduction of free period from seven to five days may significantly increase while the removal of scanning verification and associated charges will bring down the cost of clearing cargo.

“The overall effect is definitely an increase. The effect may not be seen in the short term as there is significant reduction of cargo handled due to economic melt down,” he said but questioned the rationale of reducing the free storage period.

“If the port and the customs department have done due diligence to ensure that there is no delay, cargo owners will be happy to pick their cargo in 24 hours,” he told Business Daily.

Freight forwarders however, questioned KPA’s intention to raise handling charges by between $3-$5 (about Sh240-Sh400) for 20 foot and 40 foot containers respectively.

“The increase in charges are unjustified. The port’s yard is almost empty. We are prepared to challenge any attempt by KPA to raise its own revenues,” said Gerald Kagumo, national chairman of the Kenya Institute for Freight Forwarders and Warehousing Association (Kifwa).

In recent months, KPA, jointly with the tax collector have nominated untaxed cargo to private warehouses known as Container Freight Stations (CFSs).The CFSs concept was started in 2003 to remove overstayed containers and create space at the KPA yard.

CFSs concept has become a central feature of shipping — handling charges on cargo that had stayed for more than 21 days.