After government agencies were ordered out of the port and Nairobi Inland Container Depot (ICD) in June last year, a mechanism on how they would discharge their mandate was not immediately put into place.
It is now emerging that this lack of co-ordination by government agencies has resulted to the current intermittent delays at the ICD that have a high cost implication on imported goods, the cost of which is passed on to consumers.
Only the Kenya Ports Authority, Kenya Revenue Authority and Kenya Bureau of Standards were left to operate at the depot.
Although the yard is operating at a holding capacity of less than 50 percent most of the times in the recent past, cargo being cleared within the four–day free storage period has remained low, standing at 43 percent by February 12.
According to port weekly reports on the facility, the yard has a capacity of 15,000 Twenty Foot Equivalent Units (Teus) and by February 12, it had a total of total of 6,443 Teus, both 20 and 40-foot container units. In addition, 1,651 Teus that had stayed beyond 21 days were being held by the privately owned storage areas known as Peripheral Storage Facilities (PSF), leased by KPA.
KPA corporate communication officer Haji Masemo said going by the yard container population, the ICD is not supposed to experience congestion or cargo clearance delays if all players observe their Service Level Agreements.
“SGR is currently able to move eight to 10 trains every day and having addressed teething problems faced when we started operations, delays are not expected,” Mr Masemo said.
According to stakeholders, most of the challenges that faced SGR operations have since been addressed and there could be a need to review the arrangement where storage facilities are being leased.
“When we started operations with more cargo being pushed through SGR, we had to create innovative measures by leasing extra storage capacity. Whether we need them in future could be reviewed,” Mr Masemo said in a phone interview.
A 2017 study by Maritime Business and Economic Consultants on CFS operations with Gichiri Ndua, former KPA managing director, as lead researcher, observed that a container yard operating at utilisation levels below 70 percent of its capacity would normally run without experiencing any congestion.
“The actual capacity of the container slots is determined to be in the range of 70-80 percent of its theoretical capacity,” the report notes.
A clearing and forwarding agent who spoke to Shipping & Logistics on condition of anonymity questioned the rationale behind transferring cargo to private facilities where they incur huge storage charges, even with the ICD having capacity to store them.
“I think there is somebody who wants to reap from our helpless situation because they know we have no choice,” said the agent who operates from Nairobi.
He said there are costs associated with ferrying containers to the yards, which can go as high as Sh15,000 per unit, stretching the last mile cost further.
The facilities operate in the same model as CFSs in Mombasa where they retain the storage charges they levy.
Shippers Council of Eastern Africa (SCEA) executive officer Gilbert Langat said although there have been efforts in reducing delays at the facility, infrastructure around the ICD are still “wanting”.
“We don’t understand why roads around the ICD are still a problem because congestion is delaying turnaround time for trucks. There is also one entry and one exit which is the major cause of delay,” Mr Langat said.
There is need, he noted to harmonise the operations of the PSFs with those of the CFSs, with the view of carrying out some processes at both the facilities.
The CFSs are customs areas where KRA staff are also stationed and all clearing procedures are carried out.
At the same time, clearing and forwarding agents are also concerned about cargo dwell time which has gone up to an average of up to 10 days in some instances, according to William Ojonyo, former chairman of the Kenya International Freight and Warehousing Association (Kifwa).
During the week under review, the average dwell time stood at six days. This means that on average, it is impossible to clear cargo through the ICD within the free storage period.
Kifwa has on several occasions raised concern that there have been systematic challenges in the pre-arrival clearance, urging KRA to carry out random verification instead of subjecting a huge number of containers to 100 percent verification.
By the close of the week under review, 134 container units were awaiting verification at the ICD. The situation is made even worse when the other government interveners take part or there is a value dispute between the importer and taxman.
“Although there is need to appreciate the difficulty being experienced to clear cargo in four days, agencies that cause delays should be surcharged,” said Mr Ojonyo, who is also managing director Keynote Logistics Limited.
“The single window cargo clearing system has brought on board about 37 cargo interveners and it is easy to identify who causes these delays.”
These delays, he said, are not new, noting that before SGR started operations, importers and clearing agents used to negotiate for a 30-day free storage period with CFS operators in Mombasa to allow them time to deal with industry inefficiencies in clearance of the goods.
“At ICD and PSF, this option is not available,” he said.
When the CFSs were created in 2007, about 60 percent of cargo passing through the Port of Mombasa attracted storage charges. Since they were required to apply KPA tariff, they were supposed to generate profits from storage charges of overstayed cargo.
As they grew in number and competition became stiff, operators made arrangements with their customers, and served as distributive points and provided warehousing services to remain afloat.
Some CFSs allowed cargo to stay in their yards for up to 60 days.