New container guarantee deal expected to boost trade at Mombasa port

The newly acquired ship-to-shore gantry cranes being offloaded at the Port of Lamu. [File, Standard] The Kenya Ships Agents Association (KSAA) and Viaservice Kenya said the partnership will eliminate trade barriers and enhance operational efficiency in the region. It will also promote digital innovation and trade financing in Kenya and across East Africa region. The two parties said the deal was a big relief for small-scale traders in Kenya who can now import without being charged more than US$500 (sh64,230) per container as a Container Guarantee (CG) after shippers and clearing and forwarding agents agreed to adopt innovative means of guaranteeing importers to facilitate trade. ALSO READ: Port of Mombasa caught in tariff wars crossfire With the new development, small-scale traders can now compete with developed entrepreneurs, as they can now clear several containers on time without depositing cash as security to return containers and save millions of shillings paid as demurrage. Billions of shillings every year lie idle as more than two million containers through the port of Mombasa have to be paid a minimum of $500 (64,230) as a container guarantee. Shipping lines routinely demand cash deposits before the cargo leaves the port as a guarantee for the return of the empty container. The deposit is $500 (64,230) and $1,000 (Sh128,461) for a 20-foot and 40-foot container, respectively, for cargo destined for Kenya. Those in transit are charged between $1,000 (Sh128,461) and $5,000 (Sh642,305) for a 20-foot and 40-foot container, respectively. Already, four shipping lines, among them the second-largest company CMA CGM and MSC/Ocean Freight, shipping agents, and more than 25 per cent of clearing and forwarding companies have signed a Memorandum of Understanding (MOU) with Viaservice Kenya, which will save billions of shillings deposited in every container as security before they are released. KSAA and Viaservice/Trans signed an MOU at the Mission to Seafarers Centre in Mombasa County. The parties stated that the partnership represented a shared commitment aimed at enhancing trade efficiency by replacing container cash deposits with Viaservice's digital guarantee solution, enabling importers and shipping agents to reduce financial restraint, accelerate cargo clearance, and improve cash flow, while promoting transparency, cost-effectiveness, and faster container turnaround. They noted that the solution also strengthened container safety and provided greater security assurance across the supply chain. KSAA chairman Mr Rodger Dainty said the partnership will boost efficiency at the port of Mombasa by improving container turnaround. "This collaboration with Viaservice is a significant step forward for Kenya and the entire East African shipping and logistics sector. It represents a commitment to enhancing efficiency, reliability, container safety, customer satisfaction, and security assurance across the supply chain, benefiting all stakeholders involved," he said. Viatrans' head of global trade facilitation, Mr Morgan Lepinoy, stated, "As part of the Viatrans Group, our mission is to simplify and facilitate global trade, strategic partnerships, and innovation. Partnering with KSAA allows us to deploy proven digital and trade finance solutions that address trade barriers, streamline logistics, lower costs, and unlock growth for businesses across the region." KSAA chief executive officer Mr Elijah Mbaru said the new container guarantee scheme is a milestone, as it will ensure a speedy turnaround time for containers at the port and ensure a fluid supply chain. "Ship turnaround at the port is dependent on the containers. There is a need for the Kenya Revenue Authority and Kenya Ports Authority to be on board this journey," Mbaru urged. After a rollout in Tanzania in the past three years, the Viaservice company moved to Kenya about two years ago to extend the programme, with live operations expected to kick off within two months. CG is expected to help provide a sustainable solution to the perennial container deposit non-tariff barrier, therefore lowering the overall cost of doing business, thus enhancing trade competitiveness. Five shipping lines in Tanzania have joined the facility, according to Mr John Mathenge, the managing director of Viaservice in Tanzania. The shipping lines that have joined the facility include MSC Tanzania, Messina, Inchcape Tanzania (Hapag Lloyd), WOSAC, One Network Express (ONE), and WEC Lines. READ: Kenya Ship Agents Association Over 50 per cent of the licensed clearing and forwarding companies in Tanzania have signed for the guarantee service, according to Mathenge. CG means that Viaservice provides a guarantee to the shipping line or agent for registered customs agents, freight forwarders, and shippers, allowing the shipping line or agent to skip the container cash deposit. The East Africa container deposit is estimated to be about USD 1.5 billion (Sh 193.5 billion) and over USD 7 billion (Sh 903 billion) in Africa. Estimated demurrage paid in the region is USD 3 million (Sh 387 million) per year. According to the parties, this is tied money which could be used to expand business and is also a cost that adds to the costs of importation and resultant consumer price. They noted that the most affected are the landlocked countries served by the ports, which face a myriad of challenges and which cause delays in the return of the empties. They noted that Small and Medium Enterprises (SMEs) may not be able to place the deposit and, at the same time, pay for freight and port charges, and the deposits are equally affected.

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