Politics and policy
KPA plans to share cargo fees with container depots
The Kenya Ports Authority (KPA) is reviewing its tariff structure to allow sharing of cargo handling fees with container freight station owners in a move aimed at expediting cargo clearance.
KPA general manager in charge of operations Khamis Twalib said the model whereby Container Freight Stations (CFS) earn revenue only from storage charges works against faster movement of consignments.
“There has been a tendency by operators to delay transfer of containers so that they generate revenue from storage charges, thereby penalising the importer. In the new structure, the sharing agreement will encourage them to move more cargo,” Mr Twalib said.
He said that the incentive would be offered to CFS operators who move more containers.
Mr Twalib declined to disclose details of the new tariff, only saying that it was due for approval by the board next week.
CFS managers have in the past been accused of deliberately delaying containers to earn revenue from storage charges under the service level agreement signed between them and KPA.
Transporters charge Sh12,000 to move a container from Mombasa port to a CFS, while importers pay storage charges.
CFSs were allowed to operate from 2007 when the port, which had an installed capacity of 250,000 twenty-foot equivalent units (TEUS) containers, was congested.
The port now handles over 700,000 such containers. The Kenya Shippers Council has been lobbying to have its members clear cargo directly because of exorbitant charges by CFSs.
“We have a case where an importer was asked to pay $12,000 (Sh1 million) as storage charges before the goods were released,” said KSC chief executive officer Gilbert Lang’at.
Mr Lang’at said that goods do not have to be transferred to freight stations in cases where importers’ documents are with port officials by the time the containers arrive.
Mr Meshack Kipturgo, the chairman of the CFSs Association of Kenya, said that KPA’s gesture was welcome since it would streamline operations.
“CFSs are supposed to be extensions of the port, but the current tariff does not recognise this. Sharing handling fees with KPA will encourage competition in evacuation of cargo from the port,” he said.
Mr Kipturgo welcomed the recent announcement by the Commissioner of Customs Services, Ms Beatrice Memo, that CFSs would be allowed to handle transit cargo.
He said that the move would help to decongest the port. Kenya Revenue Authority (KRA) does not allow CFSs to handle transit cargo due to concerns over dumping into the local market. However, the depots handle transit vehicles.
But CFS operators have faulted the rule, saying that it is easier to divert a car into the local market than a container with a customs seal.
Early this month, Ms Memo wrote to officials of one CFS allowing them to handle transit containers.
However, she instructed them to segregate an area meant for such cargo and execute a separate customs bond of Sh100 million for transit goods.
“All containers for transit goods destined to your CFS must be transported by trucks fitted with an electronic cargo tracking system (and) a monthly report of all transit containers cleared must be submitted to the commissioner’s office,” Ms Memo said.
Mr Kipturgo said that transit container traffic, which accounts for 40 per cent of imports, was mostly to blame for congestion at the port.
He urged KRA to licence more CFSs to handle transit cargo, adding that the move would ease congestion.