Mombasa port is expected to handle more transshipment business this year going by the performance of the first two months of 2017. Transshipment cargo volumes increased by 87 per cent over last year’s levels to reach 19,225 twenty-foot equivalent units (TEUs).
Dar es Salaam, Pemba, Mogadishu and Mauritius are Kenya’s main transshipment market. “We are geared towards booming business in transshipment segment following growing interest by shippers due to improved services,” said Kenya Ports Authority managing director Catherine Mturi-Wairi.
The increased infrastructural development and cargo handling capacity is driving KPA move to make transshipment business the next frontier of business growth. A joint task force by the KPA and Kenya Revenue Authority (KRA) was initiated in 2015 to lead reform campaign geared towards removing all the bottlenecks that make shipping lines shy away from using the strategically located Mombasa port.
In an earlier interview, Captain William Ruto, the KPA’s Chief Pilot told Freight Logistics that the task force has already created a working template after collecting views from all the stakeholders involved in this trade and has recommended major transformation that once fully implemented, shipping lines will find it attractive to use Mombasa for transshipment.
The joint task force visited three points each in Europe, Asia and Africa, close to Mombasa in size, and which have recorded significant growth in transshipment, to gather guiding lessons for Mombasa port initiative. The selected ports were Tangier in Morroco, Colombo in Sri Lanka and Malta port in Malta.
According to Captain Ruto, one of the major factors of the success for these ports is the manner in which they have simplified the processing of the transshipment cargo, a vital lesson that Kenya, which has been associated with lengthy process, has now embraced. Transshipment process in Malta takes less than 24 hours to approve, Colombo and Tangier takes less than 12 hours, whereas at the port of Mombasa, it takes 8-10 days.
“The shipping business is a complex affair that rides on predictable trends,” Captain Ruto said.
In all the ports visited, transshipment businesses have been simplified to allow faster clearance and approvals using Electronic Data Interchange (EDI). This compares poorly with Mombasa port, where entries and processes are partly manual. The shipping lines in the three ports are only required to lodge manifest to customs for approval but in Kenya, there are 9 steps involved, which causes further delays and the ship earmarked for delivering cargo may depart without loading the containers.
Delaying a ship is very costly and the daily average additional vessel operating costs incurred by shipping lines can range between U$ 20,000 – U$ 35,000 depending on vessel size, a demonstration of how crucial it is for the lines to save time in the shipping industry, according to Juma Tellah the Kenya Ship Agents Association (KSAA).
Also, the ports visited have modern risk management systems that allow them to make advance risk profiling
“We have made good gains in enhancing our ICT platforms to accommodate business-friendly processes having collected views from all the stakeholders involved transshipment business,” Captain Ruto said.
Due to the simplified processes of handling the transshipment cargo, the three ports have recorded impressive growth of this business line. Colombo handled a total throughput of 4.3 million Twenty-Foot Equivalent Units (TEUS) in 2013 with 2.5 million going as transshipment cargo. In the year that followed, the port’s total throughput increased to 4.9 million TEUS and transshipment volumes even grew more to stand at 3.7 million TEUS.
Malta recorded total throughput of 2.75 million TEUs in 2013 and transshipment volumes were 2.48 million TEUS. In 2014, it handled a total throughput of 2.9 million TEUs and transshipment cargo took 2.6 million TEUS. Tangier recorded a total throughput of 3.2 TEUS in 2014 with 3.0 constituting transshipment cargo.
This compares poorly with the Mombasa port. In 2013, the port handled 894,000 TEUs with transshipment cargo recording 16,269 TEUs. In 2014, the port handled 1,012,002 TEUs. During last year, the transshipment volume registered an impressive growth reaching 60,854, which Mr Tellah attributes to KPA and his association’s marketing efforts.
Two of the critical issues that have been addressed as per the task force recommendations are the issues of transshipment bond and use of forwarders in lodging ship manifest, two features that were unique to Mombasa port, and which shipping lines highly contested.
Transshipment business passing through the Mombasa is governed by the East African Community Customs Management Act (EMCCMA) and Regulations. Since it is a requirement for all transshipment cargo to be entered in Appropriate Transshipment Entry, the shipping line or agent have been engaging the services of a forwarder at an extra fee.