Clearing agents are up in arms over escalating cost of handling empty containers, which are passed on to importers and ultimately to consumers in the form of high price of goods.
They say the cost of transporting empty containers back to Mombasa is rising as the government pushes for more cargo to be transported on the Standard Gauge Railway (SGR).
To ferry the empty containers back to Mombasa by road, according to the industry players, transporters are spending up to Sh45,000 in just one trip with delayed delivery of the “boxes” attracting demurrage charges after free period days. Currently, Kenya Railways transports 600 containers per day to the upgraded Inland Container Depot in Nairobi and only rail back 150 to Mombasa.
Importers are supposed to return containers to designated yards in Mombasa within 14 days for domestic cargo and up to 45 days for transit goods, failure to which they start accruing storage charges or what is technically known as demurrage.
Demurrage charges start from $10 (Sh1,000) for one 20-foot container per day after expiry of the free period, and rise daily.
While 40-foot container attracts demurrage of $20 (Sh2,000) per day, these charges can rise to more than $100 (Sh10,000) per container per day. This usually depends on the number of days the importer stays with the container and the shipping line.
Kenya International Freight and Warehousing Association (Kifwa) Chairman, William Ojonyo said cumulatively, the industry is losing at least Sh3 million per day on detention and storage fees. “There is no way targets are going to be met if the containers continue to clog at the port,” he said recently, accusing Kenya Ports Authority (KPA) and Kenya Revenue Authority (KRA) of the delays.
Speaking at a stakeholders’ meeting in Nairobi, Ojonyo said that the process of collecting cargo at the Embakasi Inland Container Depot (ICD) is being slowed by the large number of trucks converging at the facility.
On average, 500 trucks come to the ICD everyday, not only to collect the nominated cargo, but also to evacuate arriving cargo. But of importance for the clearing agents and the reason they are calling on the government to urgently revise a recent policy on free storage period for containers at the ICD, is the escalating demurrage costs.
On May 1, this year, KPA slashed free storage period from 11 days in four days, resulting to protests from clearing agents. Under the new tariff, an imported container through the SGR will pay Sh2,000 and Sh30,000 for a 20-foot container and 40-foot container respectively in storage fee should importers fail to collect their cargo after the free storage period.
However, importers are charged Sh1,500 and Sh2,200 for a 20-foot and 40-foot container respectively for storage after the four-day period is over until the container is removed from the depot.
The agents further argue that many containers brought to the ICD by SGR leave by road further breaching the timelines of shipping lines. “This is a breach of an international protocol,” Chris Bichage , a Kifwa member, said.
KPA and KRA argue that transporting containers by the SGR from Mombasa is cheaper since it costs between Sh15,000 and Sh19,000 for a 40-foot container.
Kenya Ports Authority is pushing for the use of ICD as an extension of the port, where cargo on merchant haulage should start counting free days when it lands at the ICD. But clearing agents want the free days period to start when containers are offloaded at the port.
According to John Mutinda, a logistics officer with Goldwell Forwarders Ltd with this scenario, the logistics of handling empty containers — especially for those not imported on the bill of lading (TBL) — presents challenges to transport back to the lines without demurrage charges.
KPA issued a notice on May 3 asking clearing agents and importers to support the SGR freight service by counting for free days when cargo lands at the ICD in Nairobi.
“To make the SGR freight services more attractive to cargo owners, shipping lines are further directed to support non-TBL containers railed to the ICD by commencing the free storage period of containers upon landing at the ICD and not Mombasa Port,” the notice said. But Ojonyo said when containers are transported by SGR, agents cannot tell when they will leave Nairobi or arrive in Mombasa.