How Kenya is shipping out billions yearly in imported cargo levies

A ship arrives at the port of Mombasa. FILE PHOTO | NMG Kenya is losing about Sh100 billion yearly in freight charges for imported cargo, which is paid to foreign shipping lines docking at the Port of Mombasa.

Last year, the port made a cargo record of 1.3 million containers leading to a freight payment of Sh78 billion. Each of the standard containers is paid a minimum freight rate of $500 (Sh50,000).

Also every year, the port receives about 130,000 units of second-hand vehicles which attract freight charges of Sh10.4 billion, all of which is repatriated back to foreign countries where the shipping lines ferrying them are registered.

The reason Kenyan is not getting a share of this huge amount of cash is simple; the country does not have a national shipping carrier that would enable it to benefit from the charges levied on imported cargo.

Experts say such a local carrier will be to shipping what Kenya Airways (KQ) is to the aviation industry.

To address this situation, cargo importers and other players are calling on the Kenyan government to introduce the Cabotage law to save them from paying billions to foreign firms.

‘Cabotage laws apply to merchant ships in most countries that have a coastline, to protect the domestic shipping industry from foreign competition, preserve domestically-owned shipping infrastructure for national security purposes, and ensure safety in congested territorial waters.

The Kenya International Freight and Warehousing Association (Kifwa, Car Importers Association of Kenya (CIAK) and independent maritime and shipping sector players say Kenya lags behind in applying the laws that the developed nations enacted years ago.

Speaking to Shipping and Logistics, Kifwa national chairman Roy Mwanthi said a national shipping carrier will be instrumental in reducing the cost of goods.

“There is need for Kenya to have its own national shipping carrier. It is prudent because we are advocating for shipper freight rates which will end up reducing the cost of imported goods and it will in time reduce the cost of doing business,” said Mr Mwanthi.

“If the government can operate a shipping carrier the same way they operate Kenya Airways (KQ), then that would be good.”He said a national shipping line will get support from Kenyan importers because it will ease their trade and reduce freight rates.“It (national shipping line) should be a parastatal run independently so that it can marshal all cargo coming to Kenya. It must have several vessels to fulfil the demand of […]

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