Kenya Ports Authority’s plan to venture into last-mile cargo delivery has irked clearing firms and transporters in the country, who now fear of being thrown out of business.
In the latest developments at KPA, management is keen to partner with global shipping lines and a section of local and regional firms to offer end-to-end logistics services targeting the transit market.
This means KPA wants to be involved in both cargo handling at the Port of Mombasa and earn from clearing the goods and transportation.
“KPA will provide end-to-end logistics services for transit market customers from Port of Mombasa to the destination, a move that will improve efficiency and reduce cost of doing business,” managing director William Ruto said.
Already, KPA has engaged Chinese international container transportation and shipping company –COSCO shipping lines, a subsidiary of COSCO Shipping Holdings, whose general manager for global investment, Frances Tan, visited the port of Mombasa this week.
KPA has invited firms to be prequalified to offer end-to-end services, with Uganda which accounts for up to 83.2 per cent of transit volumes through the Port of Mombasa being a major target.
Others are South Sudan which takes up 9.9 per cent and DR Congo, Tanzania and Rwanda, which account for 7.2 per cent, 3.2 per cent and 2.4 per cent, respectively.
The Kenya International Freight and Warehousing Association (Kifwa) however says the move is a threat to local firms as it will favour multinationals with financial muscles, with shipping lines expected to seal off the business from the point of loading at international ports.
Speaking during an interview with the Star, Kifwa national chairman Roy Mwanthi said KPA was overstepping its mandate, as it will now be competing for business with clearing agents and transporters.
“We are opposed to this and we urge KPA to stick to their mandate which is to operate, maintain, manage and develop ports withing the country. KPA has no business engaging in provision of logistics services,” Mwanthi said,“ They cannot start competing with their stakeholder.”
Kenya Transporters Association is expected to hold a board meeting on the same before the week ends.
“We shall issue our position. There is a board meeting this week,” CEO Mercy Ireri told the Star yesterday.
The move by KPA is linked to an earlier attempt by global shipping lines to tap into the local clearing and forwarding and last-mile cargo delivery business, which led to a major strike by clearing agents in May 2022.
According to the Shippers Council of Eastern Africa (SCEA), the vertical integration model will see shipping lines handle freight, local warehousing, clearing and forwarding and last mile cargo delivery.
This is a strategy that allows a company to streamline its operations by taking direct ownership of various stages of its production process rather than relying on external contractors or suppliers.
“This will see shipping lines control the entire supply chain. Some players might find themselves playing third fiddle, they will have nothing to do,” SCEA had told the Star.
While clearing agents are raising genuine fears and concerns, the move by shipping lines will improve efficiency, SCEA noted.
Kifwa, which has written to the President protesting the move by KPA, has warned of a major strike if its concerns are not addressed, a move that could paralize operations inside and outside the port.
According to Kifwa, more than 1,200 Kenyan based clearing and forwarding firms could close if international shipping lines and KPA venture into last mile business.
This puts slightly over 10,000 jobs on the line where on average, a clearing firm employees at least 10 people according to Kifwa.
The latest development comes about nine years after efforts to block foreign-owned shipping lines from expanding their offering beyond cargo haulage was overturned by the court.
A ruling by the High Court in Mombasa in January 2015 had then rendered section 16(1) of the Merchant Shipping Act, 2009 ineffective, denying Kenya Maritime Authority and Kenya Ports Authority powers to block shipping lines from engaging in other businesses.
According to the section, no owner of a ship or person providing the service of a shipping line was to either directly or indirectly, provide in the maritime industry the service of crewing agencies, pilotage, clearing and forwarding agent, port facility operators, shipping agent, terminal operator and container freight station.
Foreign-owned shipping lines control 92 per cent of Kenya’s international trade.
Meanwhile, there have been several acquisitions by international shipping lines of logistics firms operating in Kenya, as they seek to cement their position in the local market.
An example is the move by the leading global shipping line Mediterranean Shipping Company (MSC) to acquire Bolloré Africa's logistics business unit in 2022, for $6.4 billion (about Sh741.4 billion at the today's exchange rate).
A big player in Kenya and East Africa’s logistics space, the company has a presence in 42 ports.