TRANSHIPMENT A KEY GROWTH STRATEGY FOR MOMBASA – LAMU PORTS IN AFRICA REGION

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Transhipment is the act of off-loading a container from one ship (generally at a hub port) and loading it onto another ship to be further carried to the final port of discharge. It is an aspect of economies of scale where by a larger ship brings cargo which is dismantled into smaller units for onward shipping by smaller ships to other ports in the region.

                            “It’s more of a wholesale port”

The main economic reason for a transhipment port to be sustainable is that there should be a properly defined stable market to justify a direct service with a defined prediction level of frequency. This enables ship planning and scheduling. – The given market should be able to assure enough cargo volume.

Kenya Ports Authority in collaboration with the government need to market the Mombasa to neighboring countries, Shipping Lines and ports of this new opportunity if need be concessions should be prompted- this is a new business frontier.

Road-map

Kenya’s islands of Lamu are undergoing a transformation due to (LAPSSET) project Lamu Port and the South Sudan-Ethiopia transport Corridor projects. Lamu has some of the deepest natural harbors in the world making it a natural preference of mega transshipment cargo vessels.

Upon completion of the projects, Lamu will boast of 32 deep sea berths which are currently still in the initial phase. The aim of undertaking the project is to connect the East African coast from Lamu port, with the West African coast at Douala port.

The project is about 25% complete with the contractor expecting to hand over the first berth next year and the third and final one in 2020.

The Lamu Port and Lamu-Southern Sudan-Ethiopia Transport Corridor is part of a $25 billion infrastructure project—linking Kenya with Ethiopia, Uganda and South Sudan; it part of China’s belt Rail and Road initiative, which aims at reviving ancient land & sea trade routes that link Asia with the rest of the world.

ALSO READ: Kenya government abolishes vessel transshipment bonds at Mombasa port

Port statistics indicate that the first quarter of  2017 transhipment cargo volumes increased by( 87 per cent) from 10,262 TEUs last year to hit 19,225 (TEUs) the same period this year with vessels form  ports of Dar es Salaam, Pemba, Mogadishu and Mauritius calling into Mombasa port. Others include Islands of Madagascar, Comores, and Mozambique being a untapped market.

This growth in transhipment traffic can also be attributed to inter-agency committee marketing efforts. The agency constituted last year is chaired by the KPA, comprises Kenya Revenue Authority, Kenya Ships Agents Association and Kenya International Freight and Warehousing Association.

With  the 550,000 TEU’s annual capacity Container Terminal I in operation and commissioning of construction of Kshs 24 billion Japanese (JICA)  funded Container Terminal II;  Mombasa port stands the best chances on being a key hub- these are infrastructural developments that takes years to operationalise. This magnitude of investment is not palatable to most regional economies apart from Tanzania. Once the entire project is completed it will make the Port of Mombasa the largest port in the region with about 2.5 million TEU capacity annually. The new container Terminal will create an additional 900 meters quay length to the current 840 meters.

Presently KPA has a capacity of 1.6 million containers which means that congestion of containers which the port experienced prior to expansion project will be a solved matter. Another boost to this will be operationalisation of Nairobi Inland Container Depot (ICD) which will at optimal carter for 40 percent of incoming cargo. This will indeed reduce port congestion by the same margin.

The standard gauge railway (SGR) train is also expected to further ease the congestion at the port when it begins to haul cargo later this year. Officials say the recent dredging has also made it possible for larger ships which cannot dock anywhere else in the region to use the Kenyan port.

Key Africa Transhipment Routes

The growth in transhipment traffic can also be attributed to spirited marketing by an inter-agency committee on transhipment that was constituted last year. The team is chaired by the KPA, comprises Kenya Revenue Authority, Kenya Ships Agents Association and Kenya International Freight and Warehousing Association.

Some of the changes the committee has spearheaded include removal of the transhipment bond and permit which has simplified the cargo transfer process. KRA initially collected bond at the rate of Sh100,000 per vessel — before it was revised to Sh1,000 per container following months of intense lobbying among shipping agents — is meant to ensure that such goods are not diverted into the local market duty-free. Clearing and Forwarding Agents charges a fee of not less than Sh 10,000 per container

Shipping line agents can also now access transhipment entries, enabling shipping lines to sub-contract the services to a clearing and forwarding agent to process transhipment entries on their behalf.

The port has also set aside areas in the port for stacking transhipment containers, which has eliminated physical identification of containers and adoption of online releases for transhipment cargo.

Some examples of such countries would be:

  • Ethiopia which uses the port of Djibouti in Djibouti as their gateway port.
  • Uganda which uses the port of Mombasa in Kenya as their gateway port.
  • Moldova which uses the port of Constanta in Romania as their gateway port.