A committee of experts that was mandated by regional maritime bodies to look into the cost of shipping in East Africa has recommended the scrapping of six levies and the lowering of five charged on imports at the port of Mombasa.
The six levies to be scrapped are: The terminal handling charges ($90- $135), delivery order fee ($60-$65), container handling charges ($25), equipment management fee ($50), handing over fee ($25 per document) and the 10 per cent administration fee charged at $40 minimum.
Chaired by Kenya Maritime Authority commercial manager John Omingo, the committee report says there are 25 charges levied on importers using the port of Mombasa, most of which do not exist in other ports.
Importers using the port of Mombasa have complained that logistics costs from the port to client account for as much as 42 per cent of the cost of insurance and freight and almost 58 per cent of the free on board value of goods.
The port of Dar es Salaam scrapped terminal handling charges some years back, while in Mombasa, shipping lines charge shippers $90 and $135 for the 20ft and 40ft containers respectively.
The same amount is charged by the Kenya Ports Authority, which means that shippers pay double for the same service.
The charges recommended for reduction are the container cleaning charges currently charged at $10-$25, depending on the shipping line, the amendment to the bill of lading fee currently charged at $30-$50, container demurrage charges and the manifest correction fee of $30.
When adopted, the proposals in the report, will in the next few months bring down the cost of shipping in East Africa.
Shipping lines have requested a month’s time to look into the implications of the recommended changes on their business.
“We know that the maritime authority has been empowered by the new Merchant Shipping Act to look into these costs and of course the quality of service, but we requested them to give us a month so that we can look at the proposals, but the cost will definitely come down,” said Capt Fredrick Wahutu of the Kenya Shipping Agents Association.
The new Merchant Shipping Act accords the KMA immense powers including the power to deregister shipping agents or any other player who does not conduct fair trade, and fears among the shipping lines are that it may evoke such powers to implement those recommended cost changes without input from industry players.
Capt Wahutu, however, says that the KMA’s desire to reduce port charges were good but noted that shipping lines and any other affected players should be given time to look at the effects on their business.
“The KMA has powers, but this is business and that is why we have been approaching the issue through consultations and by the end of the month we should have reached a compromise position,” said Capt Wahutu.
The report also recommends that maritime service providers will, from the time of enactment of the recommendations, be required to issue 90 days’ notice to the maritime regulatory authority on intentions to increase or introduce new levies.
“Notwithstanding the freedom to earn a reasonable return on investments, every service provider when intending to introduce new or reverse tariffs, charges or other conditions affecting the trade shall serve a three months’ notice to relevant regulations authorities, transit governments and shippers councils in order to allow consultations, negotiations or representations by the consumers of the service.
“Provision should be made in the shipping regulations to punish any service provider/person who contravenes the notice,” said the report.
The Kenya Maritime Authority has already pledged its support for the recommended regulations, saying it will implement them once shipping lines have made their own recommendations.
“Shipping lines are currently charging what they want and we want to regulate these charges but we opted for consultation. Let importers be assured that the director general has vowed that some of these costs would have to go now that we have powers through the Merchant Shipping Bill,” said A KMA official.
The KMA has been stamping its authority as a maritime regulator on Kenyan shipping after it also introduced a section in the new Act that bars shipping lines from operating as a one- stop center.
Section 16 Part 1, which shipping lines have opposed, stipulates that shipping lines will not be allowed to operate other shipping logistics business in the country.
The committees of experts comprised representatives from the Kenya Maritime Authority, the Surface and Maritime Transport regulatory Authority (of Tanzania), the Kenya Ports Authority and the Tanzania Ports Authority.
Others were from the Kenya and Tanzania Ships Agents Associations, Kenya/Tanzania Shippers Council, Kenya /Tanzania Transport Associations, Freight Forwarders Association and representatives from Uganda, DR Congo and Rwanda.
The report is expected to affect freighting costs in Kenya, Tanzania, Uganda, DR Congo, Rwanda, Burundi, Zambia and Malawi.
