Mombasa port rethinks strategy as Dar eyes bigger market share

The Mombasa port has been compelled to change tack as competition from Dar es Salaam counterpart gets stiffer.

The two ports have in the past two months introduced a number of products and promotional tariffs as they seek to have an edge in maintaining existing traders while attracting new businesses.

Recently The Tanzania Ports Authority (TPA) waived 100 per cent port storage charges, targeting Rwandan and Democratic Republic of Congo (DRC) cargo. This was meant to counter the Kenya Ports Authority (KPA), which had earlier extended the container free periods for transit traffic at the Mombasa port.

The Kenya Maritime Authority on July 1 extended the container free periods for transit traffic at the Port of Mombasa and along the Northern Corridor for as long as the Covid-19 pandemic challenges persist.

Rwanda business community says they will always pick the port that provides convenience and lower costs.

"If the offers are coming and they are favouring us, we shall use the corridor that is cost-effective," said Stephen Ruzibiza, Rwanda Private Sector Federation (PSF) chief executive.

Joseph Akumuntu, a Rwandan importer, told Shipping & Logistics that much as the cargo were allowed to leave the ports without levying fees, the bottlenecks associated with ongoing Covid-19 testing still hinder movement and clearance of cargo.

Shipper Council of East Africa (SCEA) chief executive Gilbert Lagat said Tanzania port in recent weeks has been giving promotional tariffs which will in future attract more business.

According to the East Africa Logistics Survey, the average cost of transporting a 40-foot container from Mombasa to Nairobi dropped to $1,000 last year from a high of $ 1,300 in 2011, while that from Mombasa to Kampala came down to $2,500 from $3,400 in the same period.

This is, however, lower compared to the Central Corridor mainly served by the Port of Dar es Salaam, where rates recorded a marginal increase. This places Mombasa as the cheapest entry point for goods into the region.

SCEA data shows the transport cost from Dar es Salaam to Kampala has increased from $2,507 in 2011 to $4,500 last year, making Northern Corridor the better choice for Uganda.

The Tanzania Ports Authority (TPA) waived storage charges for all containers earmarked for auctioning as a result of accrued storage charges blamed on Covid-19 pandemic.

TPA in its circular waived 100 percent of the storage charges for over 2,000 containers that arrived between December and May this year, and which are stuck at the Dar es Salaam port. The move is meant to consolidate Tanzania’s business ties with Rwanda.

TPA director-general Deusdedit Kakoko said waiving the charges will ensure Rwanda continues doing business with Dar es Salaam port.

"In connection to your letter (Private Sector Federation Rwanda), TPA supports your application because of stiff competition for Rwandan cargo and our competitor Northern Corridor," read a section of the circular dated July 15.

Mr Kakoko said they decided to waive the charges to build good relationship with its customers, adding that by capturing the Rwandan market, it means extending port services to DRC as Kigali is a transit route to and from DRC.

The ports of Mombasa and Dar es Salaam had announced intentions to auction all cargo which had overstayed in their facilities, majority of which arrived between January and May when effects of the coronavirus pandemic took their toll on logistics.

Importers say that while they had received respective governments' extension of free demurrage days from 14 days to 55 days, and nine days to 90 days for Tanzania and Kenya respectively, nothing has been done to honour this promise.

Dar es Salaam port hosts a bigger number of overstayed cargo with over 2,200 containers while Mombasa and Nairobi Inland Container depot have about 100 containers.

Dar es Salaam move leaves Port of Mombasa at a disadvantage as it struggles to retain Rwanda and DRC market.

KPA has not waived storage charges to any country even as the volumes of Rwanda and DRC cargo through the facility continue to shift to the Central Corridor.

Tanzania seems to have begun reaping the benefits of the $345 million World Bank grant to the new Dar es Salaam Maritime Gateway Project (DSMGP) which has significantly improved its port business.

Cargo on transit to Tanzania from the Kenyan port dropped by 9.4 percent from 151,000 tonnes in 2018 to 141,000 tonnes in the past seven months, with tonnage expected to drop much further in the near future.

Recent data by KPA indicate the investment at the Port of Dar es Salaam, which involved the physical infrastructure improvement and the institutional strengthening capacity through the grants, has attracted Burundi which is shifting its business from Mombasa port.

Records indicate a significant fall of business between Kenya and Burundi with paltry 1,000 tonnes reported to have been imported through the Port of Mombasa in the first seven months last year compared to a total 21,000 tonnes during the same period in 2018.

However, Kenya's close diplomatic ties with Uganda and South Sudan and the Northern Corridor infrastructural development has significantly improved business with the two countries.

Also, heavy investment on infrastructure along Northern Corridor coupled with low compliance at weighbridges, time taken at the data processing centres and cargo dwell time at the port, has greatly attracted a number of countries willing to import through Port of Mombasa.

Transit goods to Uganda remained the highest with more than 4.666 million tonnes in 2019 while goods destined to DRC jumped by 19.3 percent from 269,000 tonnes in 2018 to 321,000 tonnes last year.

More than 141,000 tonnes of cargo were transported to Rwanda in 2019 compared to 121,000 tonnes through Mombasa port in 2018, while transit cargo to South Sudan jumped from 409,000 tonnes in 2018 to 451,000 tonnes in 2019.