Sunday, October 13, 2013

Container Freight Forwarding and Warehouse Bodies Accuse Port of Monopoly

Appointment of Jack of All Trades Group Outrages Local Shipping Companies
Shipping News Feature

KENYA – SOUTH SUDAN – According to local press, the Kenya Ports Authority (KPA) has appointed Panda Clearing and Forwarding, part of the Panda Petroleum & Supplies group of companies, as the sole body allowed to process all cargo destined for South Sudan from the Port of Mombasa. This move has drawn predictable criticism from industry bodies, the Kenya International Freight & Warehouse Association (KIFWA) and the Container Freight Station Association (CFSA), which are demanding that the KPA reverse its decision, as it creates a monopoly on the route.

Panda appears to be a ‘Jack of All Trades’ group, recently formed in South Sudan, which supplies fuel and lubricants whilst running insurance, freight forwarding, logistics and road haulage subsidiaries in Kenya and Tanzania and with an emphasis on operations in its home country. Now KPA Operations General Manager Capt. Twalib Khamis has reportedly notified all the shipping and clearing agents of the Authority’s intentions to implement this scheme at the end of September. In his notice, he reportedly stated that as of October 15, all cargo bound for South Sudan should be manifested for clearance at the Compact Freight Station which partners Panda.

In response to the notice from Khamis, both KIFWA and CFSA have claimed that the directive encourages monopolistic practices that clearly are prohibited, with KIFWA Chairman Boaz Makomere adding the ruling should only apply to shipments belonging to the South Sudanese government, not for cargo that belongs to private traders or individuals. Makomere is reported in local publications as going on to say:

“The port of Mombasa is a public utility and therefore the awarding of any contracts or accession to any agreements must be done transparently and with the participation of the public and key stakeholders. It is very clear that the purported appointment of the sole clearing agent and container freight station is not only discriminatory but also illegal. Failure to [withdraw the directive] will force the association to seek redress as shall be deemed appropriate.”

Chief Executive Officer of CFSA Daniel Nzeki went one step further by threatening KPA with legal action if the notice had not been withdrawn to all CFS, shipping lines and clearing agents by October 8. Nzeki continued:

"All our CFS members must be allowed to participate in the South Sudan market without any discrimination from its government and any importer who wishes preferential treatment due to logistics challenges is free to negotiate directly with our members."

This is yet another contentious argument in the long running battle between the Ports Association and local freight groups. In March the CFSA won a Court battle to stop the KPA disqualifying ten local container freight stations from receiving freight passing through Mombasa after KPA accusations that charges levied on goods were illegal. The operators indicated that they had spent huge amounts to establish their businesses and expected to receive commensurate returns. This latest move appears to be an attempt to achieve the same ends by different means.

Last month Kenyan Transport and Infrastructure Cabinet Secretary Michael Kamau, speaking at an IMF conference in Nairobi, announced that the government wished to see the closure of all the container freight stations after receiving ‘numerous’ complaints from the Presidents of Rwanda and Uganda, in an attempt to ‘improve cargo handling at the Mombasa port and reduce costs on imported goods’, somewhat ironic as that was the very reason given at the time for the establishment of the terminals concerned.

Photo: Ships line up at Mombasa Port