Cargo tariffs set to rise as agents set minimum fees
A ship offloads cargo at the Mombasa port. Africa has a bright future in international trade given its vast resources and abundant labour. FILE PHOTO | NMG
The Kenya International Freight and Warehousing Association (Kifwa), a lobby for cargo handlers, has set minimum service fees in a shift aimed at curbing price undercutting and boosting earnings.
The lobby said the new minimum fees take effect on December 1, 2023, and will offer a cushion against inflation—a feat that will see cargo exporters and importers pay more than the current service charges.
Minimum pricing is a form of control commonly used to give producers or service providers a higher income. They, however, lead to higher prices for product or service consumers.
“We have not had minimum charges set for all our services we offer and this has brought in exploitation as some traders misused clearing agents and charged them as low as Sh3,000 to clear their cargo worth millions of shillings but this will end starting December 1 this year,” said Kifwa national chairman Roy Mwanthi.
In the new rates, the cost of obtaining Import Declaration Form, which used to cost about Sh2,000, traders will now have to part with a minimum of Sh5,000 on either 20 or 40-foot containers for goods handled on air, sea, or land.
To clear a 20-foot container, it will now cost a minimum of Sh15,000 for 20 feet and Sh25,000 for a 40-foot container or 1.5 percent of the total cost, insurance, and freight (CIF).
For export, clearing and forwarding agents will begin charging $100 (Sh14,987.99) for 20-feet and $150 (Sh22,481.99) for 40-feet for local dealers whereas transit will cost $100(Sh14,987.99) and $200(Sh 29,975.39) as transfer charges for 20 and 40 feet containers respectively.
To import a vehicle of up to 2000 cc, the trader will have to part with Sh15,000 for the unit to be cleared whereas that of above 2000 to 3000 cc, it will cost Sh20,000.
For vehicles above 3001cc, buses, trucks, lorries, and other special vehicles, it will cost Sh30,000 for each unit to be cleared.
The association has also set minimum charges for other services including transhipment, and bond extension charges among others.
In their justification to set the charges, which involve cargo classification and cargo declaration, the association said there have been unfair business practices currently being witnessed where serious and meaningless price undercutting is the order of the day.
“Influx of quacks in the industry who act as middlemen in the industry with the sole aim of making money without incurring costs like office rent, licences, etc hence paying peanuts to agents while taking lion’s share. Some importers are taking advantage by pushing for price cuts under the pretence that another agent is offering cheaper rates,” said Leonard Njiru, Mombasa branch Kifwa chairman.
This is the first time clearing and forwarding companies have introduced minimum charges in both land, sea, and air freight charges which means traders will have to comply with rules as opposed to bargaining for the cheapest firm to offer their services.
In the new rules, traders will no longer have to negotiate on the services offered by agents as there are minimum fees set for any service to import goods including motor vehicles.
