New rules at port of Mombasa to cut business expenses
A new charter for service providers at the Mombasa port has raised expectations that the cost of doing business at the gateway will be substantially reduced, leading to lower prices for consumer goods, Business Daily Africa reports.
The regulations the Ministry of Transport gazetted are a win for shippers who have over the past two years pushed for the ethical benchmarks.
The Merchant Shipping (Maritime Service Providers) Regulations 2011 require shipping lines, ships agents, clearing agents, container freight stations, empty container depot, port service providers and cargo consolidators to form associations.
The Kenya Maritime Authority (KMA) would only license members of the associations and approve all charges the service providers propose.
The new regulations also require the service providers to make written agreements with their clients to define the level of service and performance.
“A service level agreement may contain an undertaking as to the minimum facilities and equipment necessary for the delivery of maritime services in line with the service providers operations,” they state in part.
Transport PS Cyrus Njiru said last year that delays arising from unfair practices by service providers in cargo clearance were cost importers and consumers $50 million (Sh3.8 billion). (Read: Port operations slow down as dock union protests over loaders)
Market analysts cite Mombasa as an expensive port, with logistic costs accounting for 42 per cent of the cost of insurance and freight.
While the Kenya Shippers Council said the regulations would reduce the costs in the industry, the Kenya Ships Agents Association said the code of conduct had constrained the operations, especially for shipping lines.
Importers have been pushing for a review of levies by shipping lines, which are barred from engaging in other cargo handling businesses under the Merchant Shipping Act.
Some of the charges shippers wanted reviewed include the delivery order fee of between $60 (Sh5,758) and $65 (Sh6,237) charged to issue a letter of release for shipped goods in exchange of the bill of lading. There is also a bill of lading fee of between $50 (Sh4,798) and $60.
The shipping agents charge a fee of $25 (Sh2,399) for handing over original documents to other cargo intermediaries such as clearing agents.
All empty containers that are returned to the shipping lines are charged a cleaning fee of between $10 (Sh960) and $20 (Sh1,919). Shipping lines charge a terminal handling charge of between $70 (Sh6,717) and $90 (Sh8,636).
Kenya Ports Authority (KPA) also charges a similar fee for the same container, subjecting shippers to double payment for the same service. The charge is unique to Mombasa port.
The other disputed charge is the container deposit of $500 (Sh47,980) for 20-foot containers and $1,000 (Sh95,960) for 40-foot containers.
Those in transit are charged $1,000 for a 20-foot and up to $5,000 (Sh479,800) for a 40-foot container.
The regulations put the KPA on the spot over the deteriorating provision of service with delays for ships in getting a berth and recent dispute with dock workers, which has compromised the output of the facility.
Container freight stations, which were started as extension of the port in 2009 to ease congestion and forestall imposition of a vessel delay surcharge will now have to defend their tariffs with Kenya Maritime Authority.
They have previously been accused of subjecting imported cargo to artificial delays to justify higher storage charges despite them being required to apply a tariff similar to KPA’s.
The regulations the Ministry of Transport gazetted are a win for shippers who have over the past two years pushed for the ethical benchmarks.
The Merchant Shipping (Maritime Service Providers) Regulations 2011 require shipping lines, ships agents, clearing agents, container freight stations, empty container depot, port service providers and cargo consolidators to form associations.
The Kenya Maritime Authority (KMA) would only license members of the associations and approve all charges the service providers propose.
The new regulations also require the service providers to make written agreements with their clients to define the level of service and performance.
“A service level agreement may contain an undertaking as to the minimum facilities and equipment necessary for the delivery of maritime services in line with the service providers operations,” they state in part.
Transport PS Cyrus Njiru said last year that delays arising from unfair practices by service providers in cargo clearance were cost importers and consumers $50 million (Sh3.8 billion). (Read: Port operations slow down as dock union protests over loaders)
Market analysts cite Mombasa as an expensive port, with logistic costs accounting for 42 per cent of the cost of insurance and freight.
While the Kenya Shippers Council said the regulations would reduce the costs in the industry, the Kenya Ships Agents Association said the code of conduct had constrained the operations, especially for shipping lines.
Importers have been pushing for a review of levies by shipping lines, which are barred from engaging in other cargo handling businesses under the Merchant Shipping Act.
Some of the charges shippers wanted reviewed include the delivery order fee of between $60 (Sh5,758) and $65 (Sh6,237) charged to issue a letter of release for shipped goods in exchange of the bill of lading. There is also a bill of lading fee of between $50 (Sh4,798) and $60.
The shipping agents charge a fee of $25 (Sh2,399) for handing over original documents to other cargo intermediaries such as clearing agents.
All empty containers that are returned to the shipping lines are charged a cleaning fee of between $10 (Sh960) and $20 (Sh1,919). Shipping lines charge a terminal handling charge of between $70 (Sh6,717) and $90 (Sh8,636).
Kenya Ports Authority (KPA) also charges a similar fee for the same container, subjecting shippers to double payment for the same service. The charge is unique to Mombasa port.
The other disputed charge is the container deposit of $500 (Sh47,980) for 20-foot containers and $1,000 (Sh95,960) for 40-foot containers.
Those in transit are charged $1,000 for a 20-foot and up to $5,000 (Sh479,800) for a 40-foot container.
The regulations put the KPA on the spot over the deteriorating provision of service with delays for ships in getting a berth and recent dispute with dock workers, which has compromised the output of the facility.
Container freight stations, which were started as extension of the port in 2009 to ease congestion and forestall imposition of a vessel delay surcharge will now have to defend their tariffs with Kenya Maritime Authority.
They have previously been accused of subjecting imported cargo to artificial delays to justify higher storage charges despite them being required to apply a tariff similar to KPA’s.