EAC’s logistics sector gains momentum

//By Bernard Omondi

2016 Survey shows strategic gains made in logistics sector within the last few months, and cites areas to be improved for efficient cargo transportation

By Benard Omondi

Gains have been made in the East African logistics sector, according to the 2016 East Africa Logistics Survey released early October by the Shippers Council of Eastern Africa.

The survey reported that road freight costs from Mombasa to Kampala decreased to USD 2,237 in 2016 from 3400 in 2011; and from USD 8000 to 4,993 from Mombasa to Bujumbura in the same period.

The decline in costs was due to improvements made in road infrastructure, reduction made in the number of police checks and enhancement of weighbridge efficiencies through automation. The Survey further notes that the average cost of transporting a 20 ft. container by sea was USD 1,810 and USD 2710 for a 40 feet container from the United Kingdom to Mombasa by sea.

On the other hand, it cost USD 2,070 and USD 3090 for the 20 feet and 40 feet containers respectively from United Kingdom to Dar es Salaam.

According to the findings, the Jomo Kenyatta International Airport (JKIA) maintained the lowest air freight import rates from India, China and the United Kingdom at USD 710,639 and 584, followed by Dar es Salaam, Entebbe, Kigali and Bunjumbura respectively.

Nairobi had the lowest dwell time for exports at an average of 28 hours compared to regional peers, while the airport in Bunjumbura has the lowest dwell time at an average 65 hours for exports and 67 hours for imports. The second most efficient hub after Nairobi is Kigali at 44 hours for export and 47 hours for imports.

Speaking during the launch of the survey, Dr Chris kiptoo, Kenya’s Permanent Secretary in the State Department of Trade lauded the report findings, saying achieving a smooth logistics service not only reduces the cost of imports but is vital to producers, a factor he said enables them participate in global production circles and eventually move into new business opportunities.

“Improving logistics includes several dimensions such as enhancing logistics capabilities, the development or rehabilitation of the physical infrastructure, and the streamlining of trade related procedures,” the PS said.

In rail transport, the survey indicated that charges on the Mombasa to Kampala line has steadily declined over the past three years from USD 2400 in 2014 to 700 in 2016 as a result of steep competition from road freight.

The survey rated Kenyan airport’s infrastructure much higher than all other airports in the region, scoring 4.2 out of 5 whereas Burundi and Uganda airport infrastructure scored the least at 2.7, while Tanzania and Rwanda scored 2.8 and 2.9 respectively.

With regards to efficiency of key logistics processes, Rwanda scored the highest with a score of 3.9 out of 5 according to the respondent’s perception. Kenya was second with a score of 2.7; Uganda scored 2.6 while Burundi and Tanzania scored 2.4 out of 5.

According to the survey, it takes an average of 33 days to move freight by sea from port of Mombasa and 35 days from Dar es Salaam port to Felixstowe in the United Kingdom. But less time from Dar es Salaam to Genoa in Italy as compared to Mombasa.

On the other hand, the mean time it takes to move freight from Mombasa to Mumbai in India is 20 days compared to Dar es Salaam which takes 28 days.

However, for road freight, the survey revealed truck turnaround times between Mombasa and Nairobi in 2016 was 26.4 hours. Mombasa to Kampala was 10.7 days while Mombasa to Kigali was 12.5 days.

“The trend shows that there has been a 40 per cent decrease in truck turnaround time between 2014 and 2016,” the survey notes.

“Truck turnaround times for Dar es Salaam to the key corridor destinations in Kigali, Bunjumbura and Kampala have remained steady with a marginal decrease of 1.8 per cent on the Dar es Salaam- Kampala route.

The trends for all the three routes are very similar because a bulk of the transport journey is in Tanzania with very short sections of the route in the neighboring country.”

On his part, Dr Kiptoo lauded the Shippers Council for releasing the reports, saying its findings help improve the logistics sector and support trade across the region.

“It is such studies that help us in government to know where to emphasize our efforts. As a ministry, we welcome consultative dialogue to improve the trade environment in East Africa,” he said.

In 2014, the survey ranked Kenya’s logistics sector among the last two most inefficient in the region. The country performed poorly on timely delivery of shipments, the competence and quality of logistics services, the percentage of shipments physically inspected, the transparency in conducting customs valuation and on conflict management in trade disputes.

Fast forward to 2016 and gains are eminent. In terms of border clearance operations, Kenya ranked second out of respondent’s perception, scoring 2.7 after Rwanda’s 3.9 of the 5 respondents. In rating adoption of using paperless system, Rwanda topped again with a perception index score of 3.5, followed by Kenya at 3, Uganda with 2.7, Burundi 2.1 and Tanzania with a score of 2 of the 5 respondents.

Kenya, however, performed poorly in rating trader competence, scoring the lowest at only 2.0 compared to its other regional peers. The country also ranked last in transparency of customs rating, scoring 2.1 compared to Uganda’s 3.3, Rwanda’s 3.1, Burundi’s 2.7 and Tanzania’s 2.4 respectively.

The partner states are now fast tracking reforms on border clearance with introduction of one stop border posts to facilitate speedy clearance of cargo.

Gilbert Langat, CEO of the Shippers Council of Eastern Africa, said there’s need to adopt reforms in the sector to have efficient logistics services.

“Following trade liberalization and the elimination of tariffs under the WTO negotiations, the quality of logistics, customs documentation and cost of production have a major bearing on a firm’s decision about which country to locate to, which suppliers to buy from and which consumer markets to enter.

“However, high trade facilitation costs and, more particularly low level logistics services are a barrier to trade and foreign direct investment, and therefore to economic trade,” he said.