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Cargo agents on war path with shipping companies

SHIPPING & LOGISTICS
By Patrick Beja | August 5th 2021

The cargo ship, Alianco, offloads containers at Lamu Port. [Omondi Onyango, Standard]

Cargo agents have placed all the blame for port delays at the feet of shipping companies.

Through their umbrella body, Kenya International Freight and Warehousing Association (Kifwa), the agents said most shipping lines are making a killing from the delays.

According to Kifwa, processing of local shipping charges is usually done outside the country by the shipping lines. The latter takes time processing these charges, while cargo agents are stuck with their goods in containers.

Normally, agents hire containers from shipping lines and part with huge deposits. The longer goods are locked in containers, the higher the amount agents will pay the shipping lines.

The containers, commonly in sizes of 20-foot and 40-foot, provide great protection to the goods because once sealed, they insulate goods from bad weather, temperature variations, theft, fires and impact while being handled.

Kifwa National Chairman Roy Mwanthi complained of reluctance and delays in refunding container deposits once agents return them empty.

He explained that shipping lines prefer refunding container deposits in Kenya shillings, while forcing cargo agents to pay the deposits in US dollars, therefore making gains from exchange rate variations.

Mwanthi revealed that Kifwa’s engagements with various shipping lines have borne no fruit.

“As much as we are engaging with our partners, we urge all clearing agents to advise clients accordingly on preferred lines that facilitate faster release process and have demonstrated willingness to facilitate trade,” said Mwanthi.

“Agents are meanwhile advised to avoid lines known to frustrate faster clearance of cargo as a way of reducing the cost of doing business at the port of Mombasa.”

Shipping lines on the other hand have countered the allegations, claiming that they have made efforts to ensure trade-related issues at the port are resolved within the shortest time possible.

Under the aegis of Kenya Ships Agents Association (KSAA), the firms said they have worked closely with Kenya Maritime Authority (KMA), the maritime industry regulator, to ensure matters raised by cargo agents are resolved promptly.

KSAA chief executive Juma Tellah explained that it takes only 48 hours for shipping lines to generate charges and payment confirmations, dismissing delayed claims by agents. 

He further averred that refunds for container deposits are made within seven days after submissions are made. Conversely, delays are only experienced when cargo agents change shipping lines.

“There were recent isolated incidents spurred by change of shipping lines and refunds were delayed because they had to be processed outside the country,” Mr Tellah explained.

“These challenges were reported to us and KMA and were resolved.”

Cargo agents singled out South Sudan as one of the transit countries that has become a huge cost problem.

This is because given the politically volatile situation in that country, many containers are either damaged or lost, hence shippers charge high deposit rates.

Former Kifwa Mombasa Branch Chairman Peter Otieno noted that deposits for either a 20-foot or 40-foot container on transit to South Sudan stands at $4500 (Sh488,250).

A 20-foot container destined to the Democratic Republic of Congo (DRC) attracts $2000 (Sh217,000) deposit while a 40-foot container will attract $4000 (Sh434,000).

A 20-foot container going to Uganda or Rwanda is charged $1000 (Sh108,500) while the 40-foot box attracts $2000 (Sh217,000) deposit.

“Rates for container deposits for South Sudan are the highest because of the high risks involved. Many containers are lost in that destination,” explained Mr Otieno.

Container deposits for domestic cargo are pegged at $500 (Sh54,250) for a 20-foot container and $1000 (Sh108,500) for a 40-foot container.

For the revolving deposits, a clearing and forwarding agent may be asked by the shipping line to part with $6000 (Sh651,000) for containers that do not exceed 20 feet.

“Shipping lines are careful not to release containers to clearing agents without checking the revolving deposit,” said Otieno.

“They control the number of containers they release at a time based on the deposit.”

He continued: “It also depends on the amount of trust with the client and the risk assessment on the destination of the containers.”

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