Uproar at port as shipping line levies delay charges on cargo

Cargo Vessel Mv Linea Messina one of the largest in the World offloads its cargo at Berth Number one at the Port of Mombasa in Mombasa County on Tuesday, December 3, 2019. [Maarufu Mohamed, Standard]

Congestion at the port of Mombasa is threatening to turn into a logistics nightmare after a shipping line slapped traders with a punitive surcharge for delays.

CMA CGM announced on February 19 that it had introduced a Port Congestion Surcharge (PCS) on cargo bound to and from Kenya until further notice.

The France-based shipping company introduced the fee to recover money it had lost due to the congestion at the Port of Mombasa, saying that the jam would only get worse.

The charge is imposed when vessels experience delays at a port, with analysts putting the payment at between $20,000 (Sh2.2 million) and $45,000 (Sh4.9 million), depending on the on the size of the ship.

The surcharge, which will be applied to all cargo, became effective this month with traders paying $150 (Sh16,350) for a 20-foot container and $300 (Sh32,700) for a 40-foot container.

This means that an importer bringing in 10 forty-foot containers will pay an additional Sh327,000, which will then be reflected in the cost of finished products consumed locally.

“That is a substantial amount of input that makes it more expensive to bring in goods,” said Shippers Council of Eastern Africa Chief Executive Gilbert Langat.

He said they have since written a protest letter to CMA, adding that they are hopeful the surcharge will be rescinded.

Although CMA CGM is only one shipping line with a fifth of the total market share, Mr Langat said there are fears that other shippers such as Maersk might follow suit.

Maersk, with a market share of over 50 per cent, ships most of Kenya’s tea and coffee exports, the country’s main source of hard currency.

Langat questioned why CMA made the decision, noting that it was always expected that there would be some kind of a pileup at the port owing to the challenges occasioned by the coronavirus pandemic.

He said the Kenya Maritime Authority did not act speedily to prevent the move.

“The regulator is supposed to tell the shipping line that you cannot do this because this is a maritime economy,” said Langat, adding that they have not heard from the authority.

“So we are taking up this issue as the private sector.”

The Kenya Ports Authority (KPA) in a statement noted that while there has been increased activity at the port, delays have gone down with cargo dwell time reducing from an average of 5.6 days in December 2020 to 4.6 days in January 2021.

“The Port of Mombasa is currently experiencing peak moments with recorded full container berth occupancy with minimum vessel delays,” said the statement.

“This has also witnessed steady growth in import volumes for both general and containerised cargo following the cessation of Covid-19 restrictions and lockdowns from the major import countries that had also resulted to most of the world’s top-performing ports experiencing congestion.”

KPA’s projection for cargo they will handle in February 2021 is expected to surpass that of the same month in the last two years.

“We are projecting to handle over 115,000 TEUs (twenty-foot equivalents) against 108,000 TEUs handled in 2020,” said KPA acting Managing Director Rashid Salim.

For non-containerised cargo the port is projecting to handle over one million tonnes against 800,000 tonnes handled last year, representing an increase of 20 per cent.

Mr Salim attributed the improved performance to measures currently being undertaken by KPA, working alongside shipping lines and other port stakeholders to streamline operations.

Each time a ship calls at a port and is waiting to berth, because they are within a country’s territorial waters, they pay for that waiting.

The shipping line cannot increase the freight charges because traders have already paid for it.

As a result, shipping companies will implement the surcharge on any other cargo that comes to the same port.

“For this particular advisory, the delays happened when we have up to 13 waiters moving down from end of November, December and January,” said Langat.

“They are actually trying to recover money for the period of time, mainly December and January.”

Moreover, in addition to the new markets that Kenyan importers started accessing following the closure of the Asian markets, the latter also re-opened resulting into increased cargo at the Mombasa port.

Kenya gets most of its raw materials from China, India and other Asian countries.