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First mooted as a way to decongest the port, Container Freight Stations or CFSs, are now proving to be more of a problem than a solution.
First mooted as a way to decongest the port, Container Freight Stations or CFSs, are now proving to be more of a problem than a solution.

Port users have for example raised concerns that the freight stations are doing more cargo clearance than the port.

The increased business going to the CFSs is exposing importers to danger because there is no legal framework regulating their operations.

And in some cases, the containers are by-passing port procedure and moving straight to the freight stations.

Started in October 2007 when the port experienced serious congestion, with shipping lines threatening to slap the punitive Vessel Delay Surcharge (VDS) on Kenya Ports Authority (KPA), CFSs have evolved into custom bonded facilities.

They have also become very lucrative. According to insiders, a CFS can move business worth over Sh500 million a month and with minimal recurrent expenditure after initial investment.

There are also claims that some KPA and Kenya Revenue Authority top officials have ownership interests in CFSs and extend favours to selected facilities, thus promoting unfair competition.

Ms Fatma Yusuf who is in charge of communications at KRA in Mombasa says currently there are 14 licensed CFSs, all of which have offices for use by customs officers.

But according to a KPA officer who declined to be named, “only two of them – Consolbase and Mombasa Container Terminal – have the authority to receive cargo directly from ships, with the others being only storage facilities where only cleared cargo and empty containers can be stored, he said.

Owing to this confusion, importers have sounded alarm bells over the operations of CFSs, complaining that the facilities are doing business in such an ad hoc manner that unscrupulous businessmen are using them for their shady deals.

CFSs are licensed by KRA, but there is no government agency charged with the responsibility of regulating their operations to protect the interests of the public and ensure that importers are not exploited.

An inter-ministerial committee, formed last year, is seeking to regulate their operations.

The Kenya International Freight & Warehousing Association (Kifwa) has already threatened to take legal action against shippers who offload their cargo to nominated CFSs without prior consultation with cargo owners as has been the case in the recent past.

“The role of the CFSs has been reversed and cargo from the vessels is being nominated for the preferred CFSs upon discharge although the bill of lading declares the discharge port as Kilindini,” Peter Mambembe, association vice chairman said in an interview.

He accuses a shipping line for unprocedurally amending the final place of delivery of goods by nominating CFSs whose agents don’t have contractual arrangements to handle their cargo.

“Our client’s goods are normally destined for Kilindini Port as place of final delivery and it is contrary to the provisions of the law as stipulated in the East African Community Customs Management Act (EACCMA) to amend the manifest to read otherwise without following the laid down procedures,” Mr Mambembe says in a letter he wrote to the shipping line.

The agents say according to section 187 and 188 of the EACCMA, and in exercise of their role as agents of cargo owners, they are supposed to be consulted before cargo is moved to a CFS.

Agents also claim that CFSs are charging storage fees after 21 days when customs warehouse rent (CWR) becomes due.

Officers from CFSs have remained tight-lipped over the accusations, referring the matter to KRA.

However, the many shortcomings notwithstanding, CFSs have significantly assisted the port in addressing the problems of congestion and as a result traffic of containerised cargo has grown tremendously.

CFSs had by October last year handled over 55,000 Twenty Foot Equivalent Units (TEUs), according to KPA operations manager, Joseph Atonga.

But despite these benefits, industry players say a legal framework should be drawn without further delay.