VCS eases freight burdens by replacing container deposits with guarantees, boosting trade and efficiency.
For years, shipping lines have imposed hefty container deposits on clearing agents and shippers, creating significant financial strain. These deposits, required to secure containers for limited usage periods, are seen as one of the most significant non-tariff barriers to regional trade.
For instance, a clearing agent handling 20 containers may need to pay a deposit of $100,000 (Sh13 million). The deposit remains tied up for 45-60 days—time needed to move cargo, especially to regions like South Sudan, and process refunds—draining operating cash flow and discouraging small firms from expanding their businesses.
A new initiative by Swiss-based Viaservice Container Solution (VCS), introduced in Kenya mid-year, offers a much-needed alternative. Instead of requiring cash deposits, VCS provides guarantees to shipping lines or agents on behalf of registered customs agents, freight forwarders, and shippers.
Robel Nuguse, Director at Ronash Limited, which handles South Sudan-bound cargo, described the solution as transformative, alleviating a significant financial bottleneck in the freight industry.
Container deposits, while protecting shipping lines’ interests, have long stifled the growth of small businesses. Kenya Ship Agents Association CEO Elijah Mbaru explains that shipping lines request deposits as collateral to mitigate the financial risks of containers not being returned. With regional trade imbalances—imports far outpacing exports at a ratio of 80:20—the risk of unreturned containers remains high.
"Containers are meant to keep moving, generating revenue for shipping lines," Mbaru noted. "A delay at the port represents a financial loss, as that container could have been used elsewhere. Though container deposits are necessary, they’ve placed significant pressure on businesses."
VCS aims to address these challenges. The service ensures shipping lines face lower risks of unreturned containers while offering customs agents and clearing firms a cost-effective alternative. Since its 2020 launch in Tanzania, VCS has significantly improved cargo clearance through the Dar es Salaam port, helping customers avoid the burden of raising large cash deposits.
Tanzania’s success demonstrates the system’s potential. By serving 65% of the clearing agencies—over 600 companies—VCS has improved operational efficiency for shipping lines, allowing them to focus on value-added services while reducing financial risks.
Now operational in Kenya, VCS has already onboarded four shipping lines, with three more expected to join soon. According to John Mathenge, Regional Managing Director of Viaservice Limited, the adoption of VCS promises long-term benefits, including quicker equipment movement and reduced risk for shipping lines.
As Kenya embraces VCS, the freight sector looks forward to streamlined operations and improved trade competitiveness, borrowing lessons from Tanzania’s successful implementation.