KPA to invite fresh bids for transit cargo services

MV Boston offloading cargo at the Port of Lamu, March 2023. [Robert Menza, Standard]

The Kenya Ports Authority will re-tender for the provision of end-to-end logistics services for cargo destined for transit markets amid a storm from freight forwarders who have opposed the decision.

KPA said that an earlier tender for last-mile transportation services was non-responsive, but will be progressed in line with the public procurement guidelines.

The ports acting manager of corporate communication, Mr Jones Buchere, said transit markets form a critical business segment for KPA, representing 32 per cent of the total traffic through the port of Mombasa as of 2023.

Insisting that KPA had not shelved the plan due to opposition from clearing and forwarding agents, Mr Buchere said Mombasa faces competition from neighbouring ports and transport corridors, hence the plan.

He cited some markets where he said Mombasa was geographically disadvantaged for the need to employ innovative approaches.

"Re-tendering will be embarked upon after incorporating views from key stakeholders, a process that is currently ongoing through various consultations," he said.

He said KPA strives to remain the market leader and is constantly developing strategies to competitively position the Mombasa port, curb cargo diversion and promote business growth.

"Several initiatives have been adopted such as tariff-based incentives, increase of free-storage period and end-to-end logistics solutions to offer a one-stop service," said Mr Buchere on efforts to improve services for transit markets.

Last week, the Kenya International Freight and Warehousing Association (Kifwa) national chairman, Mr Roy Mwanthi, claimed all freight agents had rejected KPA's plan to handle end-to-end logistics for cargo destined for the landlocked countries.

He said his members had opposed the deal during a Tuesday port stakeholders meeting at the port, saying it would impact negatively on their businesses.

"Stakeholders have rejected the plan because it poses direct competition between KPA and freight forwarders, its customers," Mr Mwanthi argued.

In the plan, KPA wants to ferry cargo for transit from the port to Naivasha and offer logistical support, but clearing and forwarding agents say this will push them out of business.

The transit market for the port includes Uganda, South Sudan, the Democratic Republic of Congo, Burundi and Rwanda.

Statistics from KPA show that Mombasa port handled 11,395,478 tonnes of cargo for the transit market last year.

Uganda had the lion's share with 7,115,085 tonnes, or 62.4 per cent of the landlocked countries' market.

South Sudan came second with 1,901,758 tonnes followed by DRC with 1,510,979 tonnes.

Other transit markets are Rwanda, Burundi and parts of Tanzania.

The landlocked countries using the port have since put pressure on KPA to make it easier to do business at the facility or they move to the neighbouring port of Dar es Salaam.

The KPA deal has already been communicated to the transit market as part of the incentives to attract business and ward off competition from neighbouring ports.

Kifwa has written to KPA Chairman Benjamin Tayari, saying that its planned venture into the logistics business will negatively affect their business at the port and ultimately lead to closure.

In the letter, Mr Mwanthi claimed KPA's plan to take transit cargo to Naivasha was against President Ruto's directive when he took power to return port operations to Mombasa.

"KPA's mandate is to develop, manage, operate and regulate ports and not to venture into end-to-end logistics business, unless the KPA Act is amended. We have objected to and rejected this plan because KPA wants to give work to a few clearing agents and create a monopoly. It also wants to return port operations to Naivasha against the presidential directive. We cannot accept that," Mr Mwanthi said.

In response, Mr Tayari explained that KPA intended to provide end-to-end logistics to shorten the distance from Mombasa port for the transit countries and boost business in the Northern Corridor region.

"We are going to complement each other... We want to support our customers in the transit market. We will see how best to implement the plan meant to be a win-win... It is an opportunity for everyone; nobody will be forced out of business," he assured.

He said KPA would engage the logistics industry and resolve any issue in the best interest of port business.

But Mwanthi claimed that a foreign shipping firm was angling for the end-to-end logistics business through a few clearing and forwarding agents to implement the KPA plan.