Tea traders risk losing millions of shillings in a logistics crisis arising from the shipping lines’ rejection of their consignments in the wake of a persistent slowdown in the loading of vessels at the Mombasa port over the past two weeks.
The stalemate, which has so far affected 151 export containers carrying tea valued at $9.4 million (Sh940 million), is the latest in a chain of operational inefficiencies that are affecting business at the port.
East African Tea Traders Association (Eatta) said major shipping lines, such as Maersk that tea traders use to move exports destined for Pakistan, have rejected the bookings citing inefficiencies in the loading export cargo.
Pakistan is the top buyer of Kenyan tea. Eatta says the delays are the result of heavy congestion at the port that has seen import cargo fill up container stacking areas to capacity leaving no room for the stacking of export containers in readiness for loading on the vessels.
“The major shipping lines have curtailed tea export bookings by more than 50 per cent and this is coming at a time when the Mombasa Tea Auction is selling very high volumes of tea,” said Edward Mudibo, the Eatta managing director.
The Business Daily could not reach the port’s managing director, Catherine Mturi-Wairi, as she did not respond to phone calls nor reply text messages.
Eatta, which manages the auction, warned that failure to ship the tea promptly could lead to a major crisis as the tea buyers will run out of working capital to purchase more of the commodity leading to a crash in prices in the wake of low demand.
The price of tea at the auction has already touched a three-year low in recent weeks having dropped to Sh247 per kilo on Tuesday.
“These delays might also lead to the real possibility of the auction being suspended with serious ramifications on the farmers, investors and the Kenyan economy,” he added.
Mr Mudibo urged the authorities to address the matter with speed arguing that the delays will discourage transport ships from docking at the Port of Mombasa.
Logistics firms and millers have over the years raised concerns over operational inefficiencies at KPA, which they say costs them millions of shillings in losses.
For instance, delays in discharging wheat at the port last year saw importers slapped with demurrage charges of $15,000 (150,000) per day for a single ship for nearly one month.
KPA blamed the interruptions on heavy rains.
The monopoly of Grain Bulk Handlers at the facility has also raised concerns among stakeholders who say it encourages laxity that comes with high inefficiency costs.
Public Works principal secretary Paul Maringa said last year it is not in the interest of government to have a monopoly in place and that it would like to see another player at the port.