Kenya Shipping News

Kenya Shipping News

  • September 19, 2015
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#source: Kenya Daily Nation

The striking off by a Japan-based association of the firm contracted to offer quality inspection of used motor vehicles destined for Kenya has put the Kenya Bureau of Standards on the spot.

Quality Inspection Services Japan was delisted by the Japan Harbour Transportation Association on claims of poor inspection of radioactive substances in used vehicles for export.

An industry stakeholder told Sunday Nation that Japan Habour has very clear guidelines on monitor vehicle test procedures at the port, mainly to protect Japanese workers.

It is this failure to comply to these guidelines that caused the delisting of the inspection services firm.

The pre-shipment firm’s managing director, Mr Kiyoaki Hatano, wrote to Kenya Bureau managing director Charles Ongwae on September 14 claimed that they would continue to inspect pre-shipment motor vehicles for radiation level compliance.

“The services discontinued are only those specifically appointed by Japan Habour. The decision does not affect our roadworthiness inspection for Kenya and other countries such as Tanzania because our radiation inspection was just limited to those vehicles/machinery for their controlled harbour areas,” Mr Hatano said.

The question now is why Kenya Bureau would retain the services of a firm that its own peers have expressed lack of confidence in.

The tender was for pre-shipment inspection, which therefore means that all motor vehicles it handles must be inspected at the port before shipment. Every party that qualifies for this assignment was required to demonstrate their ability to do the same.

Anything short of that, industry sources said, exposes the exporter to additional costs or loss of full amount invested per vehicle since the exporter will be required to take up the cost of returning the unroadworthy vehicles, should it be established at the port of arrival that the car is unfit.

This is done to protect the Kenyan public — from the port worker to the end user.

But Mr Ongwae said they will stick with Quality Inspection Services Japan was because Japan Habour is not a Japanese government agency.

“Motor vehicles from Japan will be inspected for radiation before they come to Kenya. Japan Harbour Transportation Association will not handle any vehicle that has not been inspected by their approved inspectors. This means no vehicle will leave Japan without inspection,” Mr Ongwae said.

But one question that lingers is the due diligence that Kebs carried out on the firm before awarding it the contract in January. The three-year contract was awarded amid acrimony in the industry, and the matter had to be decided by the Public Procurement Administration Review Board. Kebs had shortlisted seven firms, namely Japan Export Vehicle Inspection Centre Ltd (Jevic), East African Automobile Services Ltd, Bureau Veritas, Wilnar International Company, Japan Auto Appraisal Institute, and Auto Terminal Japan.

Some of the rival bidders had challenged the award to Inspection Services on competence and capacity. They also claimed that due diligence that normally should be conducted before opening of bidders’ financial proposal, was conducted after the firm received a letter of award.

East African Automobile Services and Jevic also claimed that the tender document did not specify the number of contractors that were to be engaged by Kebs.

The firms argued that in the past, Kebs would specify the number of companies to be contracted. From 2012 to 2015, the tender was awarded to three contractors, namely Jevic, Quality Inspection Services and Auto-Terminal Japan to inspect vehicles from Japan, United Kingdom, Dubai, Singapore and South Africa.

The aggrieved bidders had stated in their appeals that even after being prompted during the tender submission window period to clarify on the number of contractors Kebs intended to engage from 2015, the standards bureau failed to give clear direction.

The firms appealed to the procurement board asking it to annul the award to Quality Inspection Services.

The firm was said to have submitted fewer copies of the bid proposal than the mandatory three.

Jevic also wanted the board to nullify the tender arguing that Kebs failed to provide them with minutes of the technical proposal opening meeting on November 24.

Furthermore, there were allegations of conflict of interest by Quality Inspection Services, which is claimed to be the motor vehicle inspection arm of Jans Trading Company Ltd, one of the largest Japanese exporter of used vehicles to Kenya.

The request for proposal expressly barred bidders from having business in conflict with inspection, namely exportation, and clearing and forwarding.

In the contract, Quality Inspection Services had agreed to pay Kebs $41 (Sh4,346) in administration fees for every vehicle inspected. Since Kenya on average imports 7,000 used cars a month, this translates to $287,000 (Sh30,422,000) a month due to Kebs in administration fees.

NHIF strike at port hits trade in East Africa

A workers’ strike paralysed the clearance of cargo at the Mombasa port for the second day running yesterday, disrupting the supply of goods to Uganda, Rwanda, South Sudan, Burundi and the Democratic Republic of Congo.

The effects of the strike called to protest new NHIF rates are likely to be felt in the rest of East Africa because no goods can be cleared for import or export.

On Wednesday, a Ugandan representative at the port said importers and exporters from his country would stop paying storage charges after two days because they were not responsible for the delays in clearing cargo.

Yesterday, Kenya Ports Authority Managing Director Gichiri Ndua said the authority had lost over Sh100 million in handling fees in the 36 hours that unionisable employees had boycotted work. This estimate does not include the cost shipping companies incur to run their vessels.

Fifteen ships had berthed at the port waiting to be loaded or to unload their cargo while seven others were waiting to berth. With the daily cost of running one vessel ranging at between Sh5 million and Sh10 million, depending on its size, the losses from the strike are massive. The Mombasa port also serves landlocked countries in the region.

“It’s rather unfortunate that the strike started with our workers and yet even members of the mother union had not started the boycott. As you can see, we decided to deploy our management staff to do the work and we hope to resume fully by tomorrow,” Mr Ndua said yesterday.

Port users were on Tuesday and yesterday told to stay away, with clerks and truck drivers saying they had spent the two days trying to have their trucks loaded to no avail.

Mr Hamisi Lalo, a driver, said he loaded his truck with rails he was to transport to the China Road and Bridge Construction camp site but was stopped at the gate.

“This is unfair because my boss is waiting for me and I am stuck here because of the strike. We have incurred huge losses because I was supposed to come back for another load,” he told journalists at the container terminal.

Although workers at the management level had been deployed at the terminal, there was little sign of activity in most of the berths and Mr Ndua said if the workers continue to stay away, the port’s management would hire replacement workers.

“We are telling our employees that KPA has not had an engagement with them in which we have differed and, therefore, there is no justification for them to withhold labour,” Mr Ndua said.

However, Dock Workers Union Secretary-General Simon Sang said workers were not consulted when the new NHIF rates were introduced. The first deductions were reflected in the June salaries.

“Our strike is legal because it kicked off after the expiry of the seven-day notice. What we are stressing is that the rates cannot be based on the gross salary and they must stop the deductions with immediate effect,” he said.

At the Likoni channel, where about 160 workers are also on strike, the Kenya Ferry Service Company’s unionised members kept off their work stations.

Led by their shop stewards, members sat in different groups on the island and on the mainland Likoni channel crossing points discussing the strike.

“We will not go back until the government meets our demand of stopping the deductions and refunding our already deducted money,” said one shop steward, who requested for anonymity.

Management staff took up the marshalling of commuters and traffic on both sides of the crossing for the second day.

Meanwhile, learning activities in Mombasa Country could be paralysed from today after the Kilindini branch of the Kenya National Union of Teachers (Knut) announced that its members would start boycotting class to push for the reduction of the health insurance rates.

Branch Executive Secretary Dan Oloo said teachers would stay away from work until the new NHIF rates are reduced.

“One cannot wake up one day and decide to deduct your salary without consulting you. No going to class until our demand is met,” he said. He also demanded that the deductions be based on basic, not gross, pay.

Mr Oloo said Knut had resolved to join other unions in the strike to oppose the rates.

“How can you use the same style to deduct from those earning less than Sh35,000 and those earning over Sh100,000 a month?” he asked.

On Tuesday Trade Union Congress Chairman Tom Odege, Secretary-General Wilson Sossion and Deputy Secretary Charles Mukhwaya said the deductions must be suspended and the money already deducted refunded before unions could return to the negotiating table.

Reported by Gitonga Marete, Mwakera Mwajefa and Brian Ocharo.

Search for second port operator nears endBy GITONGA MARETE, gmarete@ke.nationmedia.comPosted  Thursday, June 25  2015 at  21:24The process of picking the firm to operate Mombasa port’s second container terminal moves to the final stage on Friday when the technical bids for 12 prequalified foreign companies are expected to be opened.

It will take about a month for the winner to be announced after the technical bids are opened, Kenya Ports Authority (KPA) general manager for corporate affairs Justus Nyarandi said on Thursday.

“We will carry out the evaluation after Thursday’s exercise and only open the financial bids for the firms that will have passed the technical stage,” he said in a telephone interview.

Mr Nyarandi added that the assessment of the technical bids would be combined with the financial evaluations, with the technical bids weighted at 80 per cent and 20 per cent for financial evaluations.

Combining the two means that a firm may lose out even after garnering the highest score in the financial bid, if its score on the technical aspect is lower.

“This is to avoid a situation where it is perceived we are only considering the financial aspect to pick the winner. You might find a firm that wins technically has a slightly lower quote but is picked because we want to attract the best in terms of operations,” said Mr Nyarandi.

The operator will pay KPA a standing annual fee of Sh1.7 billion ($18.4 million) plus a commission based on volumes of cargo, which forms part of the determining factors on which firm wins the tender.

Since the foreign firm will own 51 per cent shares, the manner of sharing the remaining 49 per cent between the government and local investors will also form the basis on which the firms compete.

The tender for the operation of the terminal was floated last year and 12 international port operators shortlisted in February. Eight among them are ranked as world’s top terminal operators.

They include Hutchison Ports Investments based in Hong Kong, DP World (Dubai) and PSA International from Singapore. Others are China Merchants Holdings and SSA Port Terminal, all listed in the top 10 world terminal operators.

The new terminal is being funded by the Japanese government and the loan for the first phase, which came with a condition that it will be operated privately, was signed in 2007. It will be ready for operation in March next year.

Early this month, the Treasury introduced a new clause in the tender documents requiring the winner to cede 15 per cent shares to the government, sparking speculation that underhand deals were hatched in a bid to benefit well placed individuals by giving them free shares.

According to sources close to the Public Private Partnership Unit at the Treasury, an initial plan where the concessionaire was required to seek a joint venture with a local company was rejected because it would have opened the gates for brokers to benefit from the deal.

“There was a feeling that since the port is a national asset, the new terminal would be left entirely in the hands of the private sector,” said the source who sought anonymity.

“Brokers would also have had a field day negotiating big deals at the expense of the government-funded project. Also, without representation at the board level, even KPA would have been in the dark in regard to operations and the amount of money coming in,” the source added.

Asked about the 15 per cent share rule on who would sign the deal on behalf of the government, Mr Nyarandi said bidders give an undertaking that they will give the government the shares upon winning. “The Treasury will only sign with the winner.”

Lamu, Kwale, Kilifi, Mombasa in talks to secure coastline

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Four counties at the Coast are in talks to form a joint team to manage public safety and search and rescue missions along the coastline.

Kwale, Mombasa, Kilifi and Lamu intend to form a coast guard whose main responsibility will be to secure beaches, a leading attraction for foreign tourists visiting Kenya and Kenyans visiting the Coast.

The Mombasa County executive secretary for Tourism Development, Mr Joab Tumbo said the security team would also undertake and coordinate beach and other clean-up operations.

Mr Tumbo, who also chairs the coastal counties tourism executives’ forum, said the team would also be expected to regulate beach operators and address the “beach boy” menace, which has been both a nuisance and a security threat to tourists.

“The formation of the coast guard and setting up of coast guard stations will ensure smooth operations at the beaches and help us realise sustainability of coastal tourism besides improving livelihoods,” said Mr Tumbo.

Speaking to the Kenya News Agency in his office on Monday, Mr Tumbo said the coast guard will be patrolling the coastlines from Kiunga in Lamu to Vanga in Kwale, while giving safety lessons and information to both domestic and foreign tourists.

The team will also monitor beaches and marine reserves to ensure there is sufficient security, besides creating a proper environment for tourists to enjoy their stay.

They will also be charged with the responsibility of reducing the number of water-related accidents and instill a safety culture among all vacationers and the public, especially during festive seasons when large numbers of visitors flock to the Coast.

“We need to deal with the issue of beach boys,” said Mr Tumbo, who accused them of invading the privacy of visitors.

“Our pristine and white sandy beaches are hard to resist, with tourists both domestic and foreign, hence the need to keep them safe and friendly,” he said.

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#source: Kenya Daily Nation

Kilindini continues to be the East and Central Africa region’s choice port with transhipment cargo handled at the facility growing by 320.7 per cent in 2014.

Transhipment grew to record 731,912 tonnes in 2014 against 173,971 tonnes in 2013.

Kenya Ports Authority Managing Director Gichiri Ndua said the port continues to make tremendous improvements with the area it serves expanding to include South Sudan.

The traffic destined to transit countries amounted to 7.199 million tonnes in 2014 up from 6.709 million tonnes handled in 2013.

Uganda remained Kenya’s biggest transit market and continues to increase its usage of the port.

Mr Ndua said in 2014, Uganda cargo grew by 12.4 per cent with 5.522 million tonnes compared to 4.912 million tonnes in 2013.

Although exports remained lower than imports through the port, Mr Ndua said the former grew by 12.8 per cent in 2014.


“Kenya’s Mombasa port continued to make notable improvement with the total cargo throughput increasing by 11.5 per cent from 22.307 million tons in 2013 to 24.875 million tons in 2014,” he said. During the same period, container traffic grew by 13.2 per cent, rising from 894,000 Twenty Foot Equivalent (TEUs) in 2013 to 1,012,002 TEUs in 2014.

The MD said importers today take less time to receive cargo at their various destinations in the region. This time is expected to reduce further with the building of the standard gauge railway expected to start operations in 2017.

“Dwell time reduced to 3.9 days in 2014 from 4.9 days in 2013,” he said adding that the number and sizes of the vessels that called at the port also increased.

He said the crossing of the One Million TEUs milestone last year was a reflection of the strong growth achieved by the port and maritime industry in 2014.

President Uhuru Kenyatta graced the One Million TEUs ceremony with Ndua saying in the statement that 2014 was “an excellent year for the industry” and predicted that “2015 will be another record breaking year”.

He singled out the maritime community, shipping lines, clearing agents, transporters, oil companies, Container Freight Stations, port suppliers, security and government agencies for the improvements and promised more efficient services and better pro-business environment and skilled workforce.

“The imports that pass through the port of Mombasa are critical to Kenya’s economic growth and to the economic well-being of its neighbours.  These include petroleum products, wheat clinker, steel and coal imports that make up nearly 84 per cent of the total traffic in Mombasa,” he said.

However, the MD regretted that exports represented only 15 per cent of the total volumes of goods handled by the port.

Mr Ndua hailed the gradual reduction of trade barriers in recent years within the East African Community.


He said improved infrastructure increased the competitive advantage of domestic industries adding that the operational effectiveness of the port of Mombasa has a direct influence on the competitiveness of Kenya business and the wide cost of goods within the EAC.

Mr Ndua said that the six coast counties of Taita Taveta, Kwale, Mombasa, Kilifi, Lamu and Tana River with a population of approximately 3,325,307 had great potential that should be harnessed.

If investment in irrigation agriculture, modernizing and expanding all existing infrastructure, innovation and technology will make the region more competitive, he said.

He said security, service delivery and environmental issues should be considered for economic development.

“Considering the above fundamental areas that should be harnessed and developed, education is key to making the region grow and achieve its full potential and investments must therefore be made in improving education standards, exploring opportunities for scholarships and capacity building initiatives within and without the counties, including international exchanges,” he said.



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#source: Kenya Daily Nation

Updated: May 26th, 2015

A new report has cited high freight and storage costs as the main challenges facing traders in the East African Community.

An audit conducted by the Shippers Council of Eastern Africa (SCEA) on companies drawn from a cross-section of segments has revealed where the traders go wrong in logistics leading them to incur huge losses that could otherwise be easily avoided.

This, according to regional traders, is making their products compete unfavourably in the market.


According to the Pilot logistics survey report, most companies have not implemented a fully integrated logistics system. The firms mostly focus more on third-party agencies to run their transportation and warehousing necessities.

“The practice by most organisations  is procuring imported goods on cost and freight (DFR) terms thus risking paying uncompetitive rates on sea and airfreight services,” the report states.

SCEA chief executive Mr Gilbert Langat said it is possible to cut freight costs by half if things are done in the right way.


“Lack of information on how to process cargo through the borders has seen middlemen take advantage of that and charge exorbitant prices to the company for processing the various documents — costs that could otherwise be avoided,” Mr Langat said.

“Storage is still very expensive for shippers in the region; it accounts for approximately Sh1.8 Billion in 2013/2014. If we reduce the cost by 20 per cent we would see significant changes in prices.”

Vivo Energy Kenya’s managing director, Mr Polycarp Igathe said the Kenya Revenue Authority’s delays in remitting the import duty also plays a role in the high costs of doing business in East Africa.

“Give back our drawbacks, there are certain importers who pay things that are not dutiable. To just get your duty drawbacks, should be an automatic system. And those are the big frustrations, they are increasing costs because what some people have tended to do is if I cannot get my drawback, I just charge it into the end consumer price,” said Mr Igathe.

Mr Langat, has also warned traders of the existence of people who would want to fight the new changes in cargo processing that are put in place to bring down costs and improve efficiency.

“There are people who are benefiting from inefficiencies in demurrage and storage, there are others who benefit from going round the system, and when we get everything done in a straightforward manner, of course some of these people will lose business,” he said.


Mr Langat therefore has urged regional shippers to equip themselves with all the necessary information that regards clearing of cargo at the ports to avoid paying extra for ‘services’ that are not necessary.

The report also recommends use of ICT where firms can use vehicle tracking systems and interactive websites where clients can download cargo status reports.

The study has also emphasized on the need for companies to audit their contracted transporters to establish their performance against the best practice of 9,000-12000 kilometers truck turnaround time per annum.

A World Bank report estimates that transport and logistics costs accounted for approximately 42 per cent of the total value of goods imported into the region.





Prices of imported used cars in Kenya ‘to soar’ as State moves to lower age limit
By Frankline Sunday
Updated Friday, April 10th 2015 at 00:00 GMT +3

NAIROBI: Second-hand vehicle importers in Kenya could soon be restricted from importing vehicles more than five years old as the government moves to improve on fuel efficiency and cut down carbon emissions.

This is one of the recommendations of a study by the United Nations Environment Programme (UNEP) and the University of Nairobi commissioned by the Energy Regulatory Commission (ERC).

The study looked at the prospect of promoting cleaner and more fuel-efficient vehicles in order to reduce localised air pollution, greenhouse gas emissions and national fuel bills.

“The vehicle population in the country has been increasing at between 10 and 12 per cent each year since 2003 and as of 2012 we had 2.02 million vehicles on our roads,” Energy and Petroleum Principal Secretary Joseph Njoroge said.

This growth rate, he stated, is far higher than the rate of development of the road network, with the bulk of this traffic concentrated in the cities.

“We are talking with the Kenya Revenue Authority (KRA) and the National Treasury to introduce incentives for purchasing fuel-efficient cars and lowering the age limit to five years,” stated Njoroge. “It may be too late to have this in place for the 2015/2016 budget but we are still engaging with them and the bigger picture is that there are economic gains to be made at the macro-level.”

See Also: Njiraini wants tax incentives to foreign investors scrapped
According to UNEP, Kenya’s bulk of carbon emissions originates from the transport sector with most of the adverse effects recorded in urban centres. “The transport fleet in Kenya is composed, up to 90 per cent, of second-hand imported vehicles and we have an opportunity to make these more fuel-efficient and cleaner because if they use less fuel they emit less,” said UNEP’s Head of Transport Unit Rob de Jong.

“We can do this by making small changes like giving incentives for buying cleaner cars and this will easily halve our emissions, which comes with major economic advantages,” he explained.

Lowering the age limit to five years would mean Kenyans would have to dig deeper into their pockets to import vehicles as newer units are more expensive than older units. The Government is, however, optimistic a review of the import duty to match this new age limit will maintain the country’s second-hand vehicle importation industry.

“We put an eight-year cap on importation of second hand cars and still had 10 to 12 per cent growth rate despite protests from importers and we believe if we cap it at five years we will not be curtailing growth in the vehicle industry,” said Njoroge.

#source: standardmedia.co.ke

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