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Logistics firms eye profits in Lamu

SHIPPING & LOGISTICS
By Benard Sanga | August 12th 2021
Containers being loaded into MV Spirit of Dubai at the Port of Lamu. [Kelvin Karani, Standard]

In 2009, Parliament passed into law the Merchant Shipping Act which opened doors for local logistics companies.

Prior to the Act, the logistics business was dominated by a few foreign companies which offered all shipping and logistics supply chain services, crudely elbowing out local firms.  

The law now restricted the foreign firms to only shipping services; they were forced to leave services such as clearing and forwarding, transport among others to Kenyan firms.

That is when people like Silvester Kututa and his company were able to reap big from the logistics sector.

Mr Kututa who owns Express Shipping and Logistics (ESL) Ltd ventured into the logistics sector 20 years ago.

ESL which controls 10 per cent of cargo volume in Mombasa offers, logistics, customs clearance, ships brokerage and consultancy.

It has offices in Mombasa, Nairobi, Tanzania and Uganda and has now opened an office in Lamu. 

“I actually ventured in Lamu three years ago to lay a foundation for business long before the port became operational,” said Kututa.

Lamu Shipping Limited (LSL) has also deployed its vessels to transport cargo from Zanzibar to Lamu. Last month, LSL vessel MV AMU1 dropped 62 full loaded containers at Lamu.

LSL CEO Twalib Khamis said Lamu will grow faster than Mombasa.

“This seaport is growing faster than anticipated because of its strategic position, deeper berths and convenient connectivity to Ethiopia, South Sudan, Uganda and Kenya’s hinterland,” he said.

Shipping experts say the acquisition of modern Ships to Shore Gantry cranes will unlock the trans-shipment business at the Lamu Port.

Kenya Ports Authority (KPA) acting Managing Director John Mwangemi said equipment at Lamu Port will be purchased at a cost of Sh4 billion.

“We want Lamu Port to rival Dubai,” said Mr Mwangemi in an interview in Lamu.

Among the equipment which will be installed include three Ship to Shore Gantry (SSG), eight Rubber Trye Gantry, five Harbour Mobile Gantry and 18 Tract tractors.

Conversely, Kututa opined that the Mobile Harbour Cranes already stationed at the port cannot attract anticipated trans-shipment business.

“A port needs SSG to effectively operate a modern terminal. They deployed mobile cranes to help but we must get SSG to be able to attract trans-shipment business,” he said.

Lamu anticipates trans-shipment cargo for Tanzania, Mombasa, Somalia, Indian Oceans Islands of Comoros, Madagascar, Seychelles and South Africa.

Once roads and other infrastructure are complete, the port will handle huge construction materials headed to South Sudan and South of Ethiopia.

“The future is very bright if the corridor is extended beyond South Sudan and Ethiopia,” said Kututa hinting at the planned Lamu- Douala–Lagos–Cotonou–Abidjan Corridor.

Kenya also hopes to ride on the Africa Continental Free Trade Area (AfCFTA) agreement launched early this year to secure business for Lamu Port.

Establishment of value addition centres for agricultural commodities among them tea and coffee, key exports for Kenya, will also create business.

Kennedy Ombaso, a flower exporter, said Special Economic Zones also provide an opportunity for investors to re-exportation cargo without paying additional taxes.

Currently, avocado exporters in Kenya face stiff competition from exporters in Peru and South Africa due to transshipping at the Salalah Port in Oman.

Ships ferrying tea exports from Mombasa Port also drop off the commodity at the port of Salalah before it is ferried to Europe.

According to Gilbert Langat, Shippers Council of East Africa (SCEA) CEO, these commodities should be exported through Lamu.

Kenya has been dependent on Mombasa Port and the Mombasa–Kisumu-Busia highway and the railway called the Northern Corridor. 

The Lamu-Isiolo-Juba highway – a 1,800km trunk road – is expected to open up many parts of Kenya.

The Lamu Port-South Sudan-Ethiopia-Transport Corridor (Lapsset) has nine growth areas: Lamu growth area, Garissa-Bura growth area, Wajir growth area, Moyale growth area, Lokichogio growth area, Turkana growth area, Isiolo-Meru Archers Post growth area and the Mwingi growth area.

Each of the growth areas has an identified set of economic activities and investment opportunities. 

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