Northern Corridor transport rates drop

The Northern Corridor has registered a general decline in transport costs while the Central Corridor shows a steady but marginal increase in the past five years. According to the 2015 East Africa Logistics Performance Survey, the cost of transport from the port of Dar es Salaam to the landlocked countries of East Africa is twice higher than that from the port of Mombasa to the neighbouring EAC countries.

“The average transport cost from Mombasa to Kampala came down from $3,400 in 2011 to $2,500 in 2015, while the rates from Dar-es-Salaam to Kampala have increased from $2,507 in 2011 to $4,500 in 2015,” says the report. Gilbert Langat, chief executive officer at the Kenya Shippers Council, noted that the 2008 post-election violence in Kenya saw many shippers and cargo traders shift to the port of Dar es Salaam due to the losses they incurred during this period. This lasted till 2012, when Kenya was going through election campaigns again.

“Many shippers and cargo traders were not sure of the outcome of the Kenyan elections during 2012 period and preferred to ship their goods through the Dar port. So the Dar port saw an increase in cargo clearance, and transport on the Central Corridor also improved,” said Mr Langat. “But after the 2013 elections, with President Uhuru Kenyatta and his counterparts Paul Kagame of Rwanda and Yoweri Museveni of Uganda focused on improving business at the port of Mombasa and the Northern Corridor, the cost of cargo clearance dropped.”

The focus by the three presidents, he said, has seen the cargo clearance time drop from eight days to four days currently. “For the Dar es Salaam port and Central Corridor to continue making profits after losing business to Mombasa again, they had to increase its rates for both clearance and transport,” noted Mr Langat. “To improve logistics ranking, the country’s leadership has to partner with the other EAC states on appropriate infrastructure investments, regulatory framework, logistics financing and harmonisation of regional transportation laws,” he added.

The Dar port, the report says, has an average dwell time of nine days compared with Mombasa with five days dwell time. The global cargo dwell time benchmark is three days. The high dwell time is attributed to multiple agencies involved in clearing cargo at the port. The transit cargo times from Mombasa to Malaba have come down to 200 hours against a target of 120 hours. Dar has higher shore handling charges than Mombasa for transit export while Mombasa has higher import volumes.

The survey, conducted annually, analyses the performance of trade logistics in the East African Community member states with respect to the indicators of time, cost and complexity (CTC) against those of the world’s leading trade hubs. This year’s survey ascertains the improvement in the three areas that were identified to be of major concern in the 2014 report: Efficiency of goods clearance; system availability and reliability; and the quality and availability of infrastructure. The survey tracked specific quantitative and qualitative indicators of logistics performance in terms of cost, time and complexity of executing trade transactions.

Freight forwarding companies, shippers and transporters formed 90 per cent of the sample population during the survey, while 10 per cent consisted of various logistics firms involved in the movement of goods and services around the East African region. Overall, Rwanda performed better than the other economies and ranked at position one in 2015, with a score of 3.66 compared with 3.52 in 2014.

Burundi is fifth with a score of 2.25 against 2.78 in 2014 with the political situation there contributing to the dismal perception of its performance. Kenya stands at position three with a score of 3.07 in 2015 against 2.82 in 2014. Tanzania slipped from position three in 2014 to position four in 2015, with scores of 2.77 and 2.89 respectively.

Source: The East African