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CMA CGM Forced to Withdraw Congestion Charges for Mombasa Port

dfid
Port of Mombasa (UK DFID)

Published Mar 10, 2021 1:30 PM by Njiraini Muchira

Shipping giant CMA CGM has been forced to withdraw an emergency port congestion surcharge in Kenya following protests by the government, manufacturers and importers.

In mid-February, the French company imposed extra charges for worldwide cargo bound to and from Kenya, which saw importers paying $150 per 20-foot container and $300 per 40-foot container. Exporters paid an additional $50 per 20-foot container and $100 per 40-foot container.

The company introduced the surcharge due to unprecedented congestion at the port of Mombasa - a situation that has resulted in delays for cargo discharge and ignited a crisis for shipping lines due to time lost.

“This means that importers, who include manufacturers, will have to compensate the shipping line for the time lost in the delivery of goods at the port due to inefficiencies that neither the importer nor the shipping line has control over,” said Phyllis Wakiaga, Kenya Association of Manufacturers CEO.

However, protests by the government, manufacturers and importers on the basis that measures are being undertaken to address the congestion problem and that the surcharge are raising the cost of doing business and that of goods has forced CMA CGM to withdraw the extra charges.

“Considering recent commendable operational efforts made at the port since then, CMA CGM wishes to announce the suspension of the charge until further notice,” said the company in a letter dated March 3 addressed to customers seen by The Maritime Executive.

The company added that while it will continue working hand in hand with port stakeholders to ensure long-term stability of operations, it will closely monitor port productivity and efficiency and reserve the right to reinstate the surcharge should the situation deteriorate again in order to recover any operating costs generated by poor performance at the port.

Kenya Ports Authority (KPA) has admitted the port of Mombasa is experiencing peak moments with recorded full container berth occupancy, something that has resulted in congestion due to slow clearance and evacuation of cargo.

While the authority is implementing measures including the introduction of double stack railing to improve cargo off take by the standard gauge railway (SGR) freight service, the situation at the port that is East Africa’s main gateway has not improved.

“The Mombasa port is experiencing congestion which has increased the berthing time. We therefore request traders and the entire community that whoever is planning on shipping in goods to plan effectively considering the delays,” said Ayebare Keneth, Uganda Cargo Consolidators Association chairman.

Since the last quarter of 2020, cargo owners and manufacturers who depend on the port of Mombasa have incurred huge losses as a result of increasing storage fees and demurrages arising from delays in the clearance of cargo.

The delays have spilled over to the discharge of cargo and loading of containers on wagons for railage to Nairobi and regional countries including Uganda, Rwanda, Burundi and South Sudan. The number of vessels that have called at the port of Mombasa for the two months of this year stood at 252 compared to 248 vessels in a similar period last year.

This has resulted in the facility handling over 115,000 twenty-foot equivalent units (TEUs) in the month of February alone compared to 108,000 TEUs handled the same month in 2020.

For non-containerized cargo, the port handled over one million tonnes against 800,000 tonnes handled in 2020, representing an increase of 20 percent.