Press Center | Freight Shipping Logistics News
Oct 30, 2009
General
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The cost of bringing grain through the port of Mombasa can be slashed if the number of players is reduced, a parliamentary team was told on Friday.
The cost of bringing grain through the port of Mombasa can be slashed if the number of players is reduced, a parliamentary team was told on Friday.
The committee on Finance, Planning and Trade was touring the port to find out if the number of bulk grain handlers contributed to the high cost of flour.
“We want to find out how handling costs can be cut to benefit Kenyans,” committee chairman Chris Okemo said.
Grain Bulk Handlers Limited charges US$16 (Sh1,200) a tonne, which users say is too high compared to ports like Durban and Cairo that charge about US$4 (Sh300).
GBHL officials told committee members that private players handled about 30 per cent of the grains in the conventional way.
They said if all the grains were handled at the port through the bulk terminal, the unit cost and handling charges would be slashed.
Despite the cost of handling grains through the conventional method being lower at US$10 a tonne compared to GBHL’s US$12.50, importers eventually pay more because of delivery delays.
“The cost of freight is determined by the speed at which cargo is offloaded as vessel hire charges are calculated on a daily basis,” GBHL managing director Jaffer Mujtaba said.
GBHL can handle 14,500 tonnes daily compared to 3,500 tonnes that can be handled conventionally. This means a vessel offloading cargo in the conventional way can take four times the period it takes if the bulk terminal were used.
The GBHL officials said the facility was underutilised as it handled 1.2 million tonnes annually when it has a capacity to handle three million tonnes.
“In normal circumstances, the terminal handles 700,000 tonnes of wheat imported by millers, 200,000 tonnes for the World Food Programme and 350,000 tonnes for the Great Lakes Region annually,” said Mr Mujtaba.
GBHL had the sole right to operate the terminal for eight years to recover the cost of its investment but following the expiry of this agreement in February last year, several players have shown interest in running another facility.
Mr Mujtaba told the committee that millers were in the forefront in pushing for a second terminal to control the distribution of grains in the country.
“They have created artificial delays to justify high cost of flour and push for a second grain terminal,” Mr Mutjaba said.
The committee on Finance, Planning and Trade was touring the port to find out if the number of bulk grain handlers contributed to the high cost of flour.
“We want to find out how handling costs can be cut to benefit Kenyans,” committee chairman Chris Okemo said.
Grain Bulk Handlers Limited charges US$16 (Sh1,200) a tonne, which users say is too high compared to ports like Durban and Cairo that charge about US$4 (Sh300).
GBHL officials told committee members that private players handled about 30 per cent of the grains in the conventional way.
They said if all the grains were handled at the port through the bulk terminal, the unit cost and handling charges would be slashed.
Despite the cost of handling grains through the conventional method being lower at US$10 a tonne compared to GBHL’s US$12.50, importers eventually pay more because of delivery delays.
“The cost of freight is determined by the speed at which cargo is offloaded as vessel hire charges are calculated on a daily basis,” GBHL managing director Jaffer Mujtaba said.
GBHL can handle 14,500 tonnes daily compared to 3,500 tonnes that can be handled conventionally. This means a vessel offloading cargo in the conventional way can take four times the period it takes if the bulk terminal were used.
The GBHL officials said the facility was underutilised as it handled 1.2 million tonnes annually when it has a capacity to handle three million tonnes.
“In normal circumstances, the terminal handles 700,000 tonnes of wheat imported by millers, 200,000 tonnes for the World Food Programme and 350,000 tonnes for the Great Lakes Region annually,” said Mr Mujtaba.
GBHL had the sole right to operate the terminal for eight years to recover the cost of its investment but following the expiry of this agreement in February last year, several players have shown interest in running another facility.
Mr Mujtaba told the committee that millers were in the forefront in pushing for a second terminal to control the distribution of grains in the country.
“They have created artificial delays to justify high cost of flour and push for a second grain terminal,” Mr Mutjaba said.
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