Press Center | Freight Shipping Logistics News
May 1, 2010
General
caxias
The government is putting in place rules that will for the first time regulate commercial maritime service providers.
The government is putting in place rules that will for the first time regulate commercial maritime service providers.
The group, who take advantage of a weak regulatory framework, is blamed for the high cost of transport due to unjustifiable charges levied on shippers.
Kenya Maritime Authority (KMA) and stakeholders in the industry last year formed a task force that has now developed draft regulations.
One of the sectors the rules seek to control is the shipping lines and agents who are blamed for unfair business practices and imposing more than 20 charges, some unique to the port of Mombasa.
Existing laws governing ship agents and shipping lines do not go beyond issuance of licences.
The new regulations, KMA said last week when the stakeholders met to discuss the draft, will establish the scope of business for shipping lines and clearly highlight the regulatory duties of the authority.
Section 16 A of the Merchant Shipping Act 2009 (MSA), which came into force in September last year, bars shipping lines from directly or indirectly providing other maritime industry services such as clearing and forwarding agents, terminal operators, container freight stations and quay side services.
“Currently, our industry is overburdened by trading arms of the same company with regard to shipping logistics and related services,” the permanent secretary in the ministry of Transport Dr Cyrus Njiru said.
He said this has resulted in unfair trade practices and a loss of over $50 million (Sh3.8 billion) for shippers and consumers.
Shipping lines protested this provision even before MSA became law.
“This clause will exclude our group and a number of other large international companies from being able to make bids or invest in Kenya within a broad definition of ship logistics and related services,” a letter written to high ranking government officials by Maersk Group chief executive Nils Anderson said.
Mr Anderson said the company had planned to carry out an investment worth Sh6.75 billion ($90 million) to upgrade facilities at the port related particularly to container handling.
Not clear
Maritime commercial experts say that it is not clear who between the shipping agents and shipping lines is responsible for the charges on shippers.
The disputed fees have made the Northern Corridor one of the most expensive in the region. The cost of transport, according to the KMA director general Nancy Karigithu, stands at between 42- 50 per cent of the Cost of Insurance and Freight (CIF).
Charges that importers say should be scrapped or reviewed include the delivery order fee of $60-$65 charged to issue a letter of release for shipped goods in exchange of the bill of lading. This charge is unique to users of Mombasa port, a report generated last year by a committee on maritime stakeholders said.
There is also a bill of lading fee of $50-$60. The shipping agents charge a fee of $25 for handing over original documents to other cargo interveners such as clearing agents.
All empty containers that are returned to the shipping lines are charged a cleaning fee of $10-$20. “Whereas cleaning of a container should only arise when the goods carried were potentially dirty, all the shipping lines operating in Mombasa collect an advance cleaning fee,” said the report.
Shipping lines charge a terminal handling charge of $70-$90. Kenya Ports Authority (KPA) also charges a similar fee for the same container, subjecting shippers to double fee for the same service. This charge is also unique to Mombasa port.
The other disputed charge is the container deposit of $500 for 20-foot containers and $1,000 for 40-foot containers. Those in transit are charged $1,000 for a 20-foot and up to $5,000 for a 40-foot container.
Although this is part of a carrier’s attempt to ensure return of a container, it has been used to provide shipping lines with an avenue for proliferation of charges which are easily deducted from the deposit whose reimbursement takes inordinately long periods, the report noted.
Last year, the Kenya Ships Agents Association chief executive officer Captain Fredrick Wahutu said that charges in Mombasa are also common in other ports in the world.
“Shipping lines operate in an extremely competitive and volatile environment and as freight rates have tended to decline over the years, they had to institute charges to recover direct costs incurred locally that are not covered under freight revenues,” he told an industry meeting.
The group, who take advantage of a weak regulatory framework, is blamed for the high cost of transport due to unjustifiable charges levied on shippers.
Kenya Maritime Authority (KMA) and stakeholders in the industry last year formed a task force that has now developed draft regulations.
One of the sectors the rules seek to control is the shipping lines and agents who are blamed for unfair business practices and imposing more than 20 charges, some unique to the port of Mombasa.
Existing laws governing ship agents and shipping lines do not go beyond issuance of licences.
The new regulations, KMA said last week when the stakeholders met to discuss the draft, will establish the scope of business for shipping lines and clearly highlight the regulatory duties of the authority.
Section 16 A of the Merchant Shipping Act 2009 (MSA), which came into force in September last year, bars shipping lines from directly or indirectly providing other maritime industry services such as clearing and forwarding agents, terminal operators, container freight stations and quay side services.
“Currently, our industry is overburdened by trading arms of the same company with regard to shipping logistics and related services,” the permanent secretary in the ministry of Transport Dr Cyrus Njiru said.
He said this has resulted in unfair trade practices and a loss of over $50 million (Sh3.8 billion) for shippers and consumers.
Shipping lines protested this provision even before MSA became law.
“This clause will exclude our group and a number of other large international companies from being able to make bids or invest in Kenya within a broad definition of ship logistics and related services,” a letter written to high ranking government officials by Maersk Group chief executive Nils Anderson said.
Mr Anderson said the company had planned to carry out an investment worth Sh6.75 billion ($90 million) to upgrade facilities at the port related particularly to container handling.
Not clear
Maritime commercial experts say that it is not clear who between the shipping agents and shipping lines is responsible for the charges on shippers.
The disputed fees have made the Northern Corridor one of the most expensive in the region. The cost of transport, according to the KMA director general Nancy Karigithu, stands at between 42- 50 per cent of the Cost of Insurance and Freight (CIF).
Charges that importers say should be scrapped or reviewed include the delivery order fee of $60-$65 charged to issue a letter of release for shipped goods in exchange of the bill of lading. This charge is unique to users of Mombasa port, a report generated last year by a committee on maritime stakeholders said.
There is also a bill of lading fee of $50-$60. The shipping agents charge a fee of $25 for handing over original documents to other cargo interveners such as clearing agents.
All empty containers that are returned to the shipping lines are charged a cleaning fee of $10-$20. “Whereas cleaning of a container should only arise when the goods carried were potentially dirty, all the shipping lines operating in Mombasa collect an advance cleaning fee,” said the report.
Shipping lines charge a terminal handling charge of $70-$90. Kenya Ports Authority (KPA) also charges a similar fee for the same container, subjecting shippers to double fee for the same service. This charge is also unique to Mombasa port.
The other disputed charge is the container deposit of $500 for 20-foot containers and $1,000 for 40-foot containers. Those in transit are charged $1,000 for a 20-foot and up to $5,000 for a 40-foot container.
Although this is part of a carrier’s attempt to ensure return of a container, it has been used to provide shipping lines with an avenue for proliferation of charges which are easily deducted from the deposit whose reimbursement takes inordinately long periods, the report noted.
Last year, the Kenya Ships Agents Association chief executive officer Captain Fredrick Wahutu said that charges in Mombasa are also common in other ports in the world.
“Shipping lines operate in an extremely competitive and volatile environment and as freight rates have tended to decline over the years, they had to institute charges to recover direct costs incurred locally that are not covered under freight revenues,” he told an industry meeting.
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