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Shipping & Logistics

Importers lose Sh20.7 million to container delays at Nairobi ICD

Containers in storage at the Inland Container Depot
Containers in storage at the Inland Container Depot (ICD) after being transported from Mombasa via the Standard Gauge Railway (SGR) on July 31, 2018. FILE PHOTO | NMG 

Clearing companies and importers have lost Sh18.7 million in container retention charges to shipping lines because of delays at the Embakasi inland container depot (ICD) in Nairobi, Kenya International Freight and Warehousing Association (Kifwa) has said.

The association, through its chairman William Ojonyo, said Tuesday that a further Sh2 million has been lost on demurrage to Kenya Ports Authority (KPA) with every importer recording about Sh300,000 loss on the same.

The stakeholders blamed the Kenya Revenue Authority (KRA) and KPA for delayed cargo clearance which has affected their businesses. Mr Ojonyo said he had written to the KRA severally but the taxman had declined to address the issue.

“KRA is now making it difficulty by targeting cargo and demanding 100 per cent verification. There is also a value dispute which is becoming rampant and causing delays,” he said.

Mr Ojonyo said that since the cargo is no longer taken to container freight stations (CFS), it is impossible to clear it out of the ICD within the four-day grace period. He said that 98 per cent of cargo at the ICD incurs demurrage charges.

“This is caused by delay on the part of KRA which targets cargo haphazardly with consignments targeted by different departments namely, Tariff and Valuation, Investigation and Enforcement, and ISO.

“All the departments insist on physical inspection, thus enhancing corruption and inducement. KPA is unable to cope with demand for verification of container loads at the ICD Nairobi, it takes more than 10 days to clear containers,” he said.

Mr Ojonyo said that the fact that CFSs are no longer nominated by importers makes it impossible to clear cargo fast, attracting higher costs.

“CFSs have now basically been removed from the trade, meaning the importer has no negotiations with the CFS where he would negotiate for between 21 and 30 days and this has exposed KRA’s inefficiency in clearing cargo thus making it more expensive for the importer,” he said.

He said that government agencies were waging war on the contraband and illicit goods trade with no regard to shippers.

“The most affected cargoes are sugar, edible oil and rice,” he said.

Mr Ojonyo said that it was impossible to clear groupage containers over the four-day grace period. “If you have for example 50 containers it is impossible to get 50 trucks to ferry containers out within four days because the process is clogged. As we speak, there are about 7,000TEUS at the ICD yet its capacity is only 3,000,” he said.

Mr Ojonyo said that although the trains ferry more cargo than trucks, it is not cleared as fast.

“The importer is now left to suffer at the hands of government agencies and the worst part is that they, especially KRA, are not ready for open engagement on the matter,” he said.

He said that KPA was overwhelmed by large cargo volumes at the ICD. “KPA did not expect such volume of cargo and it has no expertise to manage it,” he claimed.

KPA stopped pre-nomination of cargo to CFSs on July 1. Initially, shipping agents and importers chose between ferrying their containers by rail to the ICD in Embakasi, trucking it by road to Nairobi, or taking it to CFSs in Mombasa.

At the CFSs they had the option of negotiating rates. Today it is the KPA’s duty to determine where to store containers.

“As shipping agents we had agreements with particular CFSs which offered us a certain standard of service at a specific rate, some would offer 30 days of free storage.

“But now we have no choice and must clear our cargo from the CFS within four days,” said John Orwa, Service Delivery Manager at Multiple Solutions Limited, Mombasa.

Local import containers are given a four-day grace period and those on transit nine days. Containers staying at KPA’s nominated CFSs in excess of the grace period attract storage charges. From day five to seven charges per day are 20ft containers $25 and 40ft $50; eight to 15 days: 20ft-$30 and 40ft-$60; 16 to 24 days: 20ft-$40 and 40ft-$80 while over 24 days 20ft- $45 and 40ft-$90.

Additionally, recommended shore handling rates are 20ft container of imported cargo for domestic use $90 per day, while a 40ft container attracts $135. A 20ft cargo container meant for transit costs $80 and a 40ft $120.

There are about 25 CFSs at Mombasa port used for receipt and dispatch of cargo as well as loading and offloading.

One can hold a minimum of 500 containers. About 2,000 containers leave the port by truck daily. Shipping agents and importers were forced to alert their customers of the changes at the port and arising charges. It is not the first time that the authority has issued such a directive. In November 2015, in a notice to the public, KPA issued a similar notice which was set to take effect on December 1 but the plan was put on hold due to opposition from stakeholders who claimed that it would lead to added charges which would be passed on to consumers.

“The cost of an imported good is determined by how much the importer spends on getting it to the market including charges at the various CFSs.

“Therefore, if the charges are high then the product will be sold at a price that will ensure the importer meets costs and realises a profit,” said Stephen Kanyingi, the marketing agent at Emirates Shipping East Africa Limited based in Mombasa.

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