Clearing and forwarding agents are threatening to paralyse ports and border operations unless the Kenya Ports Authority stops it plans to venture into transport logistics.
This comes ahead of a port stakeholders meeting next Tuesday, where KPA is set to meet the clearing agents, transporters, customs officials, shipping lines among other port stakeholders, to deliberate on a way forward.
Clearing agents and transporters are opposed to plans by KPA to offer end-to-end logistics services, which will see foreign companies including global shipping lines, tap into the last mile logistics business.
According to KPA, it is targeting cargoes meant for the transit markets, hugely served by local and regional transporters; a move that industry players say will push out homegrown businesses out of the trade.
KPA is keen to see goods delivered to the doorstep of a client straight from the Port of Mombasa either through a bill of lading or merchant haulage, at an extra fee, giving shipping lines an upper hand over local firms.
Already, it has engaged Chinese international container transportation and shipping company –COSCO shipping lines, a subsidiary of COSCO Shipping Holdings.
“We want to give them an option where importers can bypass brokers and ensure timely delivery and returns which means lower freight costs and avoiding demurrage costs. We are just facilitating,” KPA managing director Willliam Ruto told the Star.
However, port stakeholders have opposed the move, which is also seen to have a potential negative impact on the Standard Gauge Railway freight services.
It is likely to affect over 100 contracts that are in place for last-mile cargo delivery with major transporters in the country, from Inland Container Deports of Nairobi and Naivasha.
According to the Kenya International Freight and Warehousing Association (Kifwa), 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 to the last mile.
The association wants freight services beyond port facilities be left to Kenya Railways (SGR) and private sector players, insisting KPA should stick to its mandate of port operations.
“We are going to stage a major strike and paralyse all cargo handling activities if KPA moves out of its mandate,” national chairman Roy Mwanthi said.
Kifwa is the umbrella body of more than 1,200 clearing and forwarding companies in Kenya and an affiliate of the Federation of East African Freight Forwarders Associations (FEAFFA).
The Kenya Transporters Association (KTA) whose members are huge cargo movers in the country and the East African Community is also concerned over the move, but yet to make a conclusive decision as it awaits next week’s meeting.
“There is a planned meeting with KPA next week to discuss the same. Nothing has been arrived at yet,” KTA chief executive Mercy Ireri told the Star yesterday.
A move to venture into logistics business, Kifwa says, would “kill” small businesses in the country.
In a letter to the KPA chairman Benjamin Tayari, received on January 15, Kifwa has called on the authority to instead work with shipping lines, customs agents, freight forwarders, transporters and private cargo handling facilities, with each port stakeholder playing their role.
“We expect KPA as a public entity to support and align with the government’s Bottom-Up Economic Transformation Agenda that is focused on supporting local MSMEs and indigenous businesses to thrive so as to create jobs for the youths and build household incomes,” the letter copied to the Competition Authority of Kenya, Transport CS, his trade counterpart, and the Chief of Staff, reads in part.
The Shippers Council of Eastern Africa (SCEA) has however supported the “vertical integration model”.
“The end-to-end solutions being mooted is welcome and will most probably be achieved through partnerships and cooperation with discussions with Kenya Railways on service delivery and pricing structure,” head, policy and advocacy, Agayo Ogambi told the Star.
Sources within the transport ministry have however indicated the move is carefully being analysed, as it possess a potential threat to the SGR and local jobs.