Shipping & Logistics

Weak shilling hits airport logistic firms as imports fall

A Kenya Airways cargo plane. PHOTO | FILE
A Kenya Airways cargo plane. PHOTO | FILE 

The weakening shilling has chopped off millions of shillings from the earnings of airport-based logistics firms as rising prices significantly cut import volumes.

The volume of items ordered by air has dropped by a third in the first seven months of the year compared to the same period last year, provisional data prepared by the Kenya Airports Authority (KAA) shows.

Imports through the airports dropped by 18.4 million tonnes by July to stand at 39.5 million tonnes compared to last year’s 57.9 million tonnes recorded the same period.

“The weakening shilling has seen the volume of imports drop while exports —which have been made dearer — recorded a growth in the past seven months,” said Siginon Aviation divisional manager Jared Oswago.

The shilling has been on a losing streak this year, hitting a four-year low of 107 units against the dollar early this month. By yesterday, was trading at 105 units against the US dollar, making imports less attractive than at the start of the year.

The logistic firms rely on the import handling fees to grow their revenue with a kilogramme of imported cargo fetching Sh18 ($0.18) as opposed to the exports charged at a rate of $0.12 for the same quantities. The import cargo also attracts an allowance of $0.18 for handling of dangerous goods and a further $0.18 on prior release of goods.

An import cargo owner is also charged an extra fee if their goods overstay in the warehouses.

“On imports, we allow our customers to store their goods for two days from the date of arrival, any extra day attracts a charge,” said Mr Oswago.

On the export side, the weak shilling has coincided with the high season for Kenya’s roses in Europe to drive up volumes, players said.

The rising demand for flowers, vegetables and fruits in Europe, they said, has raised the number of international cargo flights with aircraft such as Saudia and Turkish increasing the frequency of their vessels.

Astral Aviation chief executive Sanjeev Gadhia said the volume of imports, especially on horticulture, have gone up while the imports have been a bit slow because of the falling shilling.

“The share of perishable goods have picked up, raising the volume of the exports while we have witnessed imports slowing down,” said Mr Gadhia whose company operates both in Africa and European market.

The move has seen the import shares of the four largest logistic firms drop since January, with the volume of exports going up. The KAA figures show that Kenya Airways Cargo was the only carrier that managed to register growth in import volumes in the first quarter of the year.

Compared to the first quarter of last year, KQ had its import volumes increased by 2.1 million tonnes to 8.8 million tonnes in the first three months of 2015 compared to 6.7 million tonnes last year.

The Swisssport, which is a multinational firm, was greatly hit with their imports in the first quarter of the year declining to 2.4 million tonnes from 12.5 million tonnes last year at the same time according to the figure provided by KAA.

The import volumes handled by the Trans Global fell from 3.8 million tonnes recorded in the first quarter of last year to 3.5 million tonnes in the first three months of 2015 while Siginon also registered low volumes between January and March with their share of imports dropping from 2.4 million tonnes last year to 1.7 million tonnes.

Mr Oswago pointed out that the cheaper oil has led to lower freight cost which impacted positively on the exports.