Kenya's horticultural exports to key markets of UK and the Netherlands could triple as it goes big on sea freight logistics in partnership with the two countries.
The country has signed a deal with both markets to develop a cool-logistics corridor for Kenya’s produces.
The deals will facilitate private investment in cool-logistics infrastructure to support the transportation of fresh produce by sea.
This will involve aspects of logistics such as port facilities, transportation networks and regulatory frameworks.
Transport Cabinet Secretary Kipchumba Murkomen, said the cool-logistics corridor aim to set new standards for transporting fresh produce and in turn boost bilateral trade and grow Kenya's agricultural sector.
“A well-functioning sea freight logistics system for perishables could double or even triple Kenya's horticultural exports, and that could create up to three million jobs in the horticultural and agro-logistics industries,” the CS said, during the signing of the deal with Dutch Ambassador in Kenya, Maarten Brouwer.
Nearly half of Kenya's fresh produce exports, mainly flowers go to the Netherlands, with avocado exports also increasing substantially in recent years.
The value of exports to the Netherlands was Sh69.7 billion in 2022, Kenya Economic Survey 2023 indicates, up from Sh61.6 billion.
Those to the UK however dropped to Sh44.5 billion from Sh49.4 billion the previous year.
The deal comes at a time when Kenya and the EU are moving towards the ratification of an Economic Partnership Agreement, approved by the European Parliament early this month.
The EU is Kenya’s second-largest trading partner, and one of the most important export markets, after Africa.
Under the deal, Kenya will enjoy duty-free, quota-free EU market access for all exports, as well as partial and gradual opening of the Kenyan market to imports from the EU.
Total trade between the EU and Kenya reached Sh525.9 billion in 2022, according to official data, with EU’s imports from Kenya amount to about Sh191.2 billion, mainly vegetables, fruits, and flowers.
EU’s exports amount to Sh321.9 billion and are mainly in mineral and chemical products and machinery.
Kenya also has a post-Brexit preferential trade deal with the UK, which has suspended the eight per cent duty fee on fresh cut flowers, effective April 11 to June 2026.
This means flowers transiting through auctions in the Netherlands will now not incur duty.
Kenya plans to move 50 per cent of horticultural exports from air to sea freight, in an ambitious seven-year plan that is aimed at cutting costs and reducing carbon footprint.
This is part of a five-year Sh3.8 billion programme backed by TradeMark Africa dubbed “the Business Environment and Export Enhancement Programme (BEEEP).
The Netherlands with support from Denmark and the European Union (EU) is leading the initiative in the programme, aimed at driving the country’s shift to green and sustainable transportation of horticultural exports.
Fresh Produce Consortium of Kenya projects the move will cut freight costs by between 40-50 per cent, compared to what exporters are spending on air.
Airfreight rates range between $4.50 (Sh 591.75) and $6 (Sh789) per kilo, depending on the various operators at the Jomo Kenyatta International Airport (JKIA).
This means sea freight could cost about $4 (Sh526) per kilo of cargo.
“Sea freight will also enable us move more volumes and meet the expectations of the consumers in Europe who have become more sensitive on carbon emissions,” FPC Kenya chief executive Okisegere Ojepat told the Star.
He, however, said, more needs to be done to ensure seamless shipments without compromising the quality of goods.
Two shipping lines– French container transportation and shipping company CMA CGM Group and Danish shipping and logistics company, Maersk, are the current movers with more expected to join the trade.
Maersk has since affirmed its commitment to meet market expectations.
"Spoilage rates for ocean shipments on our vessels, for example, are around two-three 2-3 per cent which is similar to air freight. So, having the sea as a more cost-effective means to get flowers to market makes Kenya more competitive as a flower-growing hub,” Maersk notes.
It takes between 28 and 35 days to reach markets in Europe, which accounts for about 70 per cent of Kenya’s cut flower exports.
The shift is expected to enhance the competitiveness and raise the share of exports of Kenyan avocados, mangoes, and vegetables to Europe and other international markets.