Press Center | Freight Shipping Logistics News

An initiative launched by Kenya Revenue Authority to expedite clearance of goods at Mombasa port has failed to take off as customs agents fret over the scrutiny that comes with being granted special concessions. Under the scheme, agents who pass scrutiny are certified as Authorised Economic Operators (AEO), a status that gives them special treatment when clearing cargo, reducing the costs and time spent on the process.

So far, only 35 logistics firms have won the privilege which is granted to importers, clearing agents, and transporters on the basis of proven compliance with the taxman’s regulations.

A customs official, who declined to be named because he is not authorised to speak, said the thorough scrutiny involved had made clearing agents reluctant to apply for the AEO status.

“Most clearing agents have not come forward because of the vetting process which includes scrutiny of past operations and payment of various taxes to KRA,” he said.

There are 700 clearing and forwarding companies registered with KRA.

The Kenya Shippers Council (KSC) recently recommended scaling  up the AEO programme to address the high cost of doing business in the industry. AEO-compliant firms, for instance, do not have to strip their containers for customs verification. Stripping a 20ft container costs Sh6,000.

With KRA subjecting about 55 per cent of containers to verification, importers  pay over Sh1.6 billion annually for the exercise, a Kenya Shippers Council policy paper on Container Freight Stations says.

Although CFSs incur this cost, the billing is passed on to cargo owners and consumers because state agencies that demand the process do not re-imburse the expense.

The Authorised Economic Operators programme is open to all players whose applications are successful. The initiative ran on a pilot basis for a year in 2008 before it was launched.

The KSC report says unilateral actions by trade facilitation agencies were behind acute delays in clearing cargo.

“Usually, they do not conduct joint verifications resulting in containers being stripped several times. Some agencies still insist on physical inspections even after KRA invested in electronic scanners,” said the report.

The report identifies system failures on Kenya Ports Authority and KRA automated systems as another cause for delays, before the cargo is moved to CFSs whose operators estimate the combined downtime to four hours daily.