Kenya’s maritime trade connectivity has worsened to a five-year low, a newly published global scorecard showed, pointing to the logistical challenges experienced at the port of Mombasa.
A liner shipping connectivity index (LSCI) for 2019 by the United Nations Trade and Development Agency (UNCTAD) ranked Kenya at 16.98 points — breaking a streak of back-to-back improvements since 2013.
“A country’s position in the global container shipping network — its connectivity — is an important determinant of its trade costs and competitiveness,” UNCTAD’s chief of trade logistics, Jan Hoffmann said.
Kenya’s 2019 performance marks a sharp decline from the previous year’s 21.08 points which was the country’s best ever score since the LSCI was launched in 2006.
Notably, rival Tanzania posted an improvement in the 2019 LSCI to realise 15.94 points — its highest ever. The port of Mombasa has been losing market share to neighbouring Dar es Salaam port due to congestion.
Mombasa has recently been in spotlight for delayed clearance of cargo which increases storage charges and hurts businesses.
Mombasa, a gateway to East and Central Africa, processes imports and exports for Kenya and several other countries including Uganda, Rwanda, the Democratic Republic of Congo, South Sudan and Burundi.
Traders complained that the slow clearance at the port had led to the reduction in the number of containers ferried through the Standard Gauge Railway from the port of Mombasa to the Inland Container Depot (ICD) in Nairobi.
An estimated 1,000 containers arrive at the Mombasa port daily, according to industry data.
Long distance transporters also complained of having to wait for lengthy hours or even days before they could be handed cargo for delivery.
Further, the transporters grumbled about increasing cost of doing business due to delay by the Kenya Revenue Authority (KRA) to provide cargo tracking seals, which are mandatory as part of strategy to help curb dumping and theft of goods.
The taxman has made it mandatory for all transporters to acquire special regional seal from it in addition to the Electronic Cargo Tracking System ECTS tags provided by authorised private firms.
The Electronic Cargo Tracking System (ECTS) comprises satellites, a monitoring centre and special electronic seals fitted on cargo containers and trucks, which give the precise location of goods in real time.
The system triggers an alarm whenever there is diversion from the designated route, an unusually long stopover or when someone attempts to open a container.
Cargo verification has also been a challenge at the port of Mombasa due to multiple layers of State agencies involved in the process.
The East African Community (EAC) Affairs and Regional Development ministry in March proposed that most agencies should be kicked out of customs units at major ports and border points to ease delays in cargo verification and clearance, saving investors tens of millions of shillings in demurrage costs.
“Our experience trading across the borders for goods coming in and out of the country has been extremely painful. This is because of … 27 agencies operating at the port today all wanting to do checks and inspect things,” EAC Affairs and Regional Development Secretary Adan Mohamed told reporters in Nairobi.
He said that only four “critical” certification agencies should be retained at the port of Mombasa, Nairobi’s ICD as well as major airports and border points such as Busia and Malaba.
Data by the Kenya Ports Authority (KPA) shows that the volume of cargo handled by Mombasa Port grew 6.3 percent to 29.8 million tonnes in the eleven months ending May this year compared to the previous period.
Container traffic increased by 13.1 percent to 1.27 million Twenty feet equivalent units (TEUS) over the eleven-month period while cargo destined for other countries was up 10 percent.
UNCTAD said China retained its lead as the country best connected to others by sea in 2019. The country’s LSCI has increased by 51 percent since 2006.
Five of the top 10 best connected economies in 2019 are in Asia, with Singapore, Korea, Hong Kong (China), and Malaysia rounding out the top-five list, each with a score of more than 100, according to the index’s metrics.
At the other end of the table, small islands developing states (SIDS) have hardly seen any improvement, meaning trade in shipped goods remains problematic in those countries, with knock-on economic effects.
“We observe a ‘connectivity divide’ — a growing difference — between the best and worst connected countries,” Mr Hoffmann said.
The LSCI covers 178 countries and shows maritime connectivity trends from 2006 to 2019. It is calculated from data on the world’s container ship deployment and released annually.
This year UNCTAD has expanded the time series in collaboration with MDS Transmodal to cover more countries, including several SIDS.
The 2019 index also includes a new component covering countries that can be reached without the need for transshipment.
“Counting on a direct regular shipping connection has empirically been shown to help reduce trade costs and increase trade volumes,” Mr Hoffmann said.
Research shows that the absence of a direct connection is associated with a 42 percent lower value of bilateral exports.
The other five components of the index remain unchanged — the number of companies that provide shipping services, the number of services, the number of ships that call per month, the total deployed container-carrying capacity, and the size of the largest vessel.
Credit: Source link