NEW LAW WILL SCUTTLE CARTELS AT MOMBASA PORT
By Githua Kihara and Gitonga Marete Posted Monday, June 8 2009

Kenya Shippers Council chief executive officer Gilbert Langat said issues such as shipping lines investing in cargo handling logistics that increase freight cost will soon be a thing of the past.

The Kenya Maritime Authority (KMA) has already sent a memorandum to various government ministries saying that while international ocean freight cost was four per cent of total cost elsewhere, the overall local transportation costs still average 20-40 per cent of Cost Insurance and Freight.

“This cost can directly be attributed to the unfair monopolies that currently characterise the sector,” KMA says in its report.

According to Mr Langat, the new law gives hope to a sector that has over time become a theatre of extortion of Kenyan and regional importers using the Mombasa port.

When ocean carriers operate other segments of the transport chain, Mr Langat argues, they have an advantage over other local operators.

“They have first hand information on the cargo and can employ unorthodox practices that lock out competition,” Mr Langat said, adding that if properly regulated, shipping lines can be helpful since they have resources that local investors may lack.

“Traders have over time raised serious concerns of being left at the mercy of cartels of the international maritime transport service operators who even dictate what Container Freight Station will receive cargo and in this way frustrate local operators,” says the KMA report.

The bone of contention is a provision in the new law that seeks to limit their operations in the cargo handling process.

According to section 15(a) of the Act, no owner of a ship or person providing the services of a shipping line shall either directly or indirectly, provide in the maritime industry services of crewing agencies, clearing and forwarding agents, port facility operators, shipping agents, terminal operators, container freight stations, quay side service providers, general ship contractors, haulage, ship breakers, ship chandlers, cargo consolidators, ship repairers, maritime training or such other services as the minister may appoint.

Details have now emerged of how shipping lines wrote to high ranking government officials to lobby against the law being assented to by the president.

In one of the letters, Maersk Group chief executive Nils Anderson said that a clause introduced during the third reading of the Bill would hurt foreign investors in the industry.