Pay dispute sparks cargo delays at Mombasa port
Cargo trucks queue at the main entrance of KPA Gate 24 on June 16, 2022. Importers using the Mombasa port are experiencing delays in cargo delivery and collection following a payment dispute between KPA, Kenya Railways Corporation and shipping lines.
Importers using the Mombasa port are experiencing delays in cargo delivery and collection following a payment dispute between the Kenya Ports Authority (KPA), Kenya Railways Corporation (KRC) and shipping lines.
The Nation has learnt that several containers are stuck at different port facilities in Mombasa and Nairobi after KPA, which is owed billions of shillings by KRC and shipping lines, suspended collection of cargo until all debts are cleared.
In correspondences seen by the Nation, KPA has been writing to shipping lines, which use the standard gauge railway (SGR) to ferry cargo to Nairobi and Mombasa, to clear their arrears in vain, forcing them to take action.
“This is a follow-up notice which we sent two months ago. We bring to your attention that your account has unpaid debts and is operating way above your bank guarantee. A cursory look into your account reveals that there are invoices aged over 30 days.
The authority’s credit policy 2021 stipulates that invoices should settle within six days from the date of invoicing,” a letter to shipping lines by KPA’s credit control department reads. KPA has asked shipping line to liaise with KRC to clear the arrears before the end of June, which also marks the end of the government’s financial year.
Delivery of cargo affected
On Thursday, the Kenya Transporters Association (KTA) said its members have been affected by the suspension of services.
“What is happening ... is affecting delivery of cargo since importers pay upfront for any services rendered by KPA, SGR and shipping lines,” said KTA chairman Newton Wang’oo. KTA also accused the government of forcing them to use SGR despite increasing inefficiencies, leading to higher transport costs.
The dispute comes just weeks after Industrial and Commercial Development Corporation chairman John Ngumi’s two-year term ended last month, sparking a management crisis.
Mr Ngumi’s term ended on May 31 with very little to show as traders continue to experience inefficiencies and staff in the four agencies complain of bureaucracy challenges.
Mr Ngumi has defended his tenure, saying, a lost has been since the Kenya Transport and Logistics Network (KTLN) was formed.
KTLN was formed in September 2020 to coordinate operations at KPA, KRC and Kenya Pipeline Company (KPC).
It was meant to reduce penalties paid to port facilities and curb detention charges paid to shipping lines, delays in railage to the inland container depot in Nairobi, delays in off-loading and return of empties and unstable automated systems by agencies.
Increased competition
A recent study revealed increased competition from the central corridor in cargo throughput to DRC, Rwanda and Burundi.
The report indicated that 80 per cent of imports through Mombasa are handled as “through bill of lading” due to unpredictable operational environments resulting in an additional cost of between Sh10,000 and Sh15,000 per container.
