Press Center | Freight Shipping Logistics News

The process of establishing a legal framework to compel maritime service providers to give quality service and reduce the cost of doing business through the port of Mombasa, has started.
The process of establishing a legal framework to compel maritime service providers to give quality service and reduce the cost of doing business through the port of Mombasa, has started.

This follows last month’s gazettement of new regulations by the ministry of Transport to put into effect the Merchant Shipping Act 2009.

The new regulations, The Merchant Shipping (Maritime Service Providers) Regulations 2011, requires all service providers — shipping lines, ship agents, clearing agents, container freight station, empty container depot, port service providers and cargo consolidators to sign service level agreements with consumers of their services.

The Kenya Maritime Authority, the industry regulator, recently organised the first workshop with industry stakeholders that set the pace for the creation of the agreements, which market analysts say will increase the competitiveness of the port.

The second workshop was be held last Sunday, October 30, to determine when the service level agreement will come into force, said KMA director general Nancy Karigithu.

To enhance the quality of service, the new regulations require the service providers to make written agreements with parties defining the level of service and performance.

“A service level agreement may contain an undertaking on the minimum facilities and equipment necessary for delivery of maritime services in line with the service providers operations,” the regulations read in part.

Until 2009, the maritime industry operated through an Act of Parliament enacted in 1967, despite the transformation witnessed in the industry in recent years.

The Merchant Shipping Act 2009 repealed the 1967 law, with the first set of regulations to make the new Act operational being gazetted last month.

It is believed that the loopholes that have turned the port of Mombasa into one of the most expensive in the region could be sealed soon following the gazettement of the service providers’ regulations, which for over a year and a half the shippers had pushed for.

It is estimated that importers and consumers spend over $50 million (Sh3.8 billion) annually due to unfair practices by service providers, the permanent secretary in the Transport ministry, Dr Cyrus Njiru, said last year.

Market analysts cite Mombasa as an expensive port, with logistics accounting for 42 per cent of the cost of insurance and freight (CIF) due to various unjustifiable charges.

The new regulations give the KMA powers to interrogate the various tariffs levied by the service providers. Firms will not be allowed to review the tariffs without notifying the authority.

This means the service providers may be required to present the structure of their costs and justify them.

The chairman of Kenya International Freight and Warehousing Association, Mr Hezron Awiti, said cargo owners have been absorbing high storage charges due to delays created by cargo interveners.

On the spot light

KPA has been on the spotlight since July this year over delays, mainly due to a labour shortage attributed to a standoff between the authority and the Dock Workers Union on the role of the private sector, especially on conventional cargo, which requires huge human labour.

“If the new regulations were in place, shippers would not pay the high costs associated with such delays,” said Mr Awiti.

To avoid delays, the conventional cargo vessels have over the years engaged private groups to complement loaders from KPA and those on contract.

But the union wants the port to increase the number of permanent dock workers and engage more contracted loaders to meet the shortfall.

Dock Workers Union secretary general Simon Sang said KPA moved 223 workers to the headquarters where they are working on contract as support staff.