The cost of moving goods in Africa is 3.5 times more expensive compared to high-volume global trade routes because its ports have little economy of scale, according to logistics experts.Increasing operational costs due to underdeveloped rails, road networks and regulatory bottlenecks have also been cited as major contributors to slow traffic through Africa’s ports.
Speaking during the 26th Intermodal Africa Exhibition and Conference in Mombasa, participants said capacity constraints at the ports have limited accommodation of large ships in line with international shipping trends.Kenya Ship Agents Association chairman Silvester Kututa who is also the founder of Express Shipping and Logistics EA company said inefficiency which has resulted in increasing demurrage has been a major barrier to shipping lines making Mombasa their port of choice.“
Demurrage contributes to increasing cost of doing business and most traders would only import through the facility with seamless movement of physical cargo and paper trail that is why we have been pushing preclearance of cargo at Mombasa port which is now working,” said Mr Kututa.Kenya Cabinet Secretary National Treasury Ukur Yatani said Africa faces a number of hurdles that hamper the efficiency of its ports, infrastructure and trade in general which range from capacity constraints, underdeveloped skills, security, gender inequity and financial inadequacies.
Mr Yatani said Mombasa Port stakeholders are bound by a Port Community Charter that has Service Level Agreement which sets performance targets to be achieved by each agency.The implementation of the Charter is closely monitored by the government to ensure every agency plays its role in boosting the port and transport corridor’s performance.The CS said the cost of logistics in Africa is pushed up by the states of infrastructure.“
We cannot deny the fact that the cost of doing business in Africa is directly determined by the state of infrastructure. Undoubtedly, transport systems interconnectivity in the continent is still poor and the state of affairs cannot be improved if governments do not integrate their investment plans,” Mr Yatani said.“
This is why, as a result of this realization, countries are grouping into regional economic blocks to plan and execute infrastructural developments jointly.”Kenya Ports Authority (KPA) acting managing director John Mwangemi said to reverse the trend, East African countries are investing in the infrastructure to increase cargo throughput and efficiency.“
Kenya has in the last decade has increased investment in infrastructure to address these bottlenecks.”He noted the government has invested in roads and rail networks to serve the port in addition to developed inland container terminals or dry ports and container freight stations to decongest ports.Mr Yatani said Africa has come up with a plan to improve the state of infrastructure“