Kenya is racing to retain the dominance of the Mombasa port as the premier port of call in the region, in the face of the rising status of its Dar es Salaam counterpart.
Capt William Ruto, the managing director at Kenya Ports Authority (KPA), talked to the Business Daily on challenges and opportunities in the face of growing competition in the region.
The Mombasa port has for decades been the major gateway and exit point for cargo into the eastern and central African region. However, the status of the Dar es Salaam port has been rising, how big of a threat is this?
We still dominate the region. Rather than competition, we see the Port of Dar es Salaam complementing us.
For a start, 35 percent of the transhipment cargo handled at the Mombasa port is for Tanzania. We have witnessed a surge in the number of ships calling at the port.
Since the start of this year, we have processed 1,818,641 TEUs (twenty-foot equivalent units) excluding this month’s figures. This (1,818,641 TEUs) is higher than the 1,623,080 TEUs for last year and 1,449, 863 TEUs for 2022. All these point to our dominance.
Shippers choose efficiency over most other things and that is why the majority of cargo meant for Rwanda and copper exports from Zambia are handled at the Mombasa port, despite the two countries being closer to Tanzania than Kenya. Additionally, we are counting on the ports of Kisumu and Lamu to further boost the Mombasa port and pull in more countries to use our state-of-the-art facilities.
What measures are there to protect the dominance of the Mombasa port in the region?
We are building capacity ahead of demand and also modernising facilities through the acquisition of new equipment like ship-to-shore gantry cranes that we are getting from China next month. These new cranes will be able to lift two containers, unlike the existing ones that can only lift one container.
Shimoni port, with a capacity of 24,000 metric tonnes, will be ready in the next six months. This port is key to positioning us as the leader in the region’s fishing industry.
Between January and June next year, we will buy 10 rubber-treated gantry cranes, 20 terminal tractors, 20 trailers and one rail-mounted gantry crane. All these will cost more than Sh5 billion.
What are some of the challenges facing the Mombasa port?
Any regional port has many dynamics and all must be addressed. The expansion of the port calls for huge capital outlay. We have to balance between what to give the investor (government) from our profits and what to plough back into upgrading the port.
There is also the issue of downtime from the systems of the Kenya Revenue Authority and manual declaration of maritime health, which in other ports is done online.
Last year, KPA announced plans to review the tariffs for the use of the port. When do we expect the new tariffs to be in place?
We were to undertake public participation for the new tariffs this month but we shelved it to January 2025. We will have the new tariffs by March.
The last time this (tariff review) was in 2012. There was an attempt to implement new tariffs between 2018 and 2020. We, however, dropped the idea because of the economic fallout of the Covid-19 pandemic.
How is KPA going to mitigate the potentially negative impact of high tariffs?
The expectation is that we will increase most of the fees. However, we will introduce incentives, just like many other successful ports are doing.
For example, some countries charge a fee to visitors who arrive on passenger ships and this is because they (visitors) use amenities at the ports which cost money to set up.
But we will not charge this fee and we are instead looking at the bigger picture of how much a visitor will spend in the country.
How has KPA mitigated the presidential directive that revoked an earlier decision that compelled all importers to use the SGR to move their cargo from the port of Mombasa?
The directive that was issued by the President to revert port service to Mombasa allowed importers to choose whether to use standard gauge railway (SGR).
As a result of this directive, we have seen a drop of about 15 percent in containerised cargo being railed. To counter this impact, Kenya Railways and KPA initiated a strategy to improve our SGR efficiency and we are able to rail cargo to the Internal Container Depots (ICDs) ex-hook (meaning direct from the ship to the wagons) and within 10 hours the cargo is delivered at the ICDs.
There have been plans to privatise the Mombasa port. Will we see a private investor take over the facilities anytime soon?
We have been flip-flopping on this matter of concessions for our ports. Since 2017 there have been attempts to do it but the plan has been dropped due to a change in government policy.
For now, there are no plans to move the concession way and we are waiting for directives from the government. We want maximum returns from our ports but again we must ensure we use the best approach. The plan to do concessions for the port was under litigation but the courts cleared it for the government to proceed.
The port of Lamu was billed as a game-changer in the transhipment of regional cargo. Do you still hold this view?
We operationalised the Lamu port in 2022 with some teething problems in terms of lack of cargo handling equipment. Initially, it was expected that we would employ the concession model.
However, the government dropped this idea and this forced us back to the drawing board to raise money. We got a loan from Stanbic Bank that helped us to buy equipment worth $53 million (Sh6.8 billion).
What are the biggest challenges facing the Lamu port?
We have two major problems facing the port. One is the issue of the axle load which greatly varies between Kenya and Ethiopia.
In Kenya, the axle load is between 28 to 30 metric tonnes while in Ethiopia it is 40 to 50 tonnes. This problem was evident when the port handled fertiliser cargo for Ethiopia, where we used Kenyan lorries to truck the cargo to Moyale from where it was taken up by Ethiopian lorries.
There is also the problem of the Lamu-Garissa-Isiolo road but we are aware that contractors are expecting this road early next year.
Addressing these two issues will help us unlock the potential of the Lamu port by opening up to Ethiopia and South Sudan.
