Why Mombasa is still East Africa’s main port of call

The strategic importance of Mombasa as the gateway to East Africa means the port and its operations are rarely out of the news.

The business community in Kenya and the wider region follow all developments with great interest, looking hopefully for signs that long-promised improvements will become a reality.

Among the most significant recent developments at the port city was the opening earlier this year of a new Container Freight Station by APM Terminals – a unique facility with a dedicated rail link and a one-stop-shop operation for speedy cargo processing.

The Business Daily spoke to APM Terminals Regional Manager, Jesper Boll, on the business of freight management in Africa and the rationale behind investment in the new facility.

Efficient freight management service has traditionally required an equally efficient railway transport. Kenya’s and by extension East Africa’s railway system is by no means in the best shape. One would ask what drives your investment in a terminal in Mombasa?

It is an amazing fact that currently only three per cent – I repeat three per cent – of all cargo in East Africa moves by rail. Mombasa is the busiest container terminal in East Africa that handled 899,000 TEU (twenty-foot equivalent unit, the standard container definition) throughput last year.

This has resulted in heavy road congestion that has become a serious obstacle to traffic flows in and out of Mombasa. But we believe the railway is the transport of the future. Our new facility, for instance, has two 600-metre railway lines which can accommodate four trains simultaneously.

Each train movement takes the place of approximately 40 truck movements, thereby easing the overburdened road network and offering a more eco-friendly solution.

Huge traffic jams are experienced every day at the Makupa Causeway, the Changamwe roundabout and sometimes all the way to Nairobi. Our location on the Nairobi-Mombasa highway helps to ease the traffic congestion and also reduces the time spent by importers picking up cargo from the port.

Your facility can be interpreted as a vote of confidence in Mombasa. How do you feel about reports that the port will face stiff competition in the future from Lamu and the recently announced Bagamoyo project in Tanzania?

I think the key phrase in your question is “in the future”. The fact that ambitious projects such as Lamu and Bagamoyo are on the drawing board is a recognition of the importance of East Africa as a region. It will obviously be some time before these two are a working reality.

In the meantime I think we should recognise the tremendous strides that Kenya Ports Authority has made to remove bottlenecks and introduce efficiencies. These enabled the port to handle an increase of 17 per cent in container traffic last year to the total of 899,000 TEU, I mentioned earlier.

I expect that over the next few years it will break through the one million TEU, which will be quite a landmark. Mombasa consistently outperforms other ports in the region, such as Dar es Salaam and Beira, although it trails Durban, Salalah in Oman, and Port Said.

But how long do you think can Mombasa hang on to that advantage given the speed with which these projects may be executed?

Remember that Mombasa itself is on the move with very exciting projects meant to keep its leadership position. There is the Berth 19 project that is being built at the existing facility, and Terminal 2 – which will dramatically increase the port’s capacity.

Berth 19, I understand, will have a capacity of 200,000 TEU per year and Terminal 2 a capacity of 1.2 million TEU. When these are completed, obviously Mombasa will be equipped to handle a capacity of 2.6 million TEU by 2016.

That is good enough for improvements at the port but doesn’t the challenge remain in moving the cargo to its final destination in the East African hinterland?

The World Bank says it takes, on average, 38 days to import and 32 days to export goods across borders in sub-Saharan Africa, whereas the number of days required is significantly lower in other regions.

Take a very practical example; it will cost a Ugandan importer 2,000 dollars to move a container from Shanghai to Mombasa today but 4,500 dollars to move that same container from Mombasa to Kampala, assuming no penalties, demurrage or storage.

It is fair to say there is room for improvement on the inland transportation side as well as the port side. The Kenya government has set aside some Sh22 billion in the budget to build a standard gauge railway that will upon completion nearly double the current train speeds.

What should one expect from a modern container terminal such as the one APM Terminal has built in Mombasa?

Ours is a genuine one-stop-shop, with all the necessary offices and facilities on-site to allow importers to process all documentation swiftly and efficiently.

We have the offices of the various state departments — Kenya Revenue Authority, Kenya Bureau of Standards, Kenya Plant Health Inspectorate Services and also banking facilities with an on-site branch of Equity Bank.

The aim is to substantially reduce turnaround time for imported and transit cargoes and also reduce demurrage costs for importers in Kenya and Uganda.

You are responsible for APM Terminals Sub-Saharan region, what your regional strategy?

We feel that we have a natural role to play in these economies and that is why we have invested heavily in growing our presence in the region.

The opening of APM Terminal Mombasa is part of our strategy to collaborate with local partners—in this case a joint venture with Kenyan company, Great Lakes Ports Ltd - to upgrade port and transport infrastructure in order to increase the competitiveness of local transportation services.

There are great business and growth opportunities in East Africa and this is not new territory for APM Terminals. Logistics Container Centre Mombasa (LCCM), part of APM Terminals Inland Services, has been in operation since 1997.