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New law to hurt shipping lines |
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Saturday, 13 March 2010 |
A new maritime law passed by the Kenyan government last year that is now being operationalised will bar shipping lines from investing in other cargo handling logistics in the country.
The Kenya Maritime Authority (KMA), the statutory body that regulates
the industry, last week received final views from public on what shape
the new regulation on commercial maritime services should take.
A
provision in the Merchant Shipping Act 2009 (MSA), which was introduced
during the third reading of the bill in parliament has drawn a lot of
controversy and efforts to operationalise the MSA has been opposed by
shipping lines and their agents since the it came in force in October
last year due to the prohibitive clause.
According to section 15(a)
of the Act, no owner of a ship or person providing the services of a
shipping line shall either directly or indirectly, provide in the
maritime industry services of crewing agencies, clearing and forwarding,
port facility operators, shipping agents, terminal operators, container
freight stations, quay side service providers, general ship
contractors, haulage, ship breakers, ship chandlers, cargo
consolidators, ship repairers, maritime training or such other services
as the minister of transport may appoint.
Those who argued in the
support of this provision said that an ocean carrier who operates other
segments of the transport logistics chains have far superior advantage
over other competitors.
“They not only have the first hand access to
information on potential customers but they also employ predatory
activities that drastically reduces and shut out the competition
altogether,” A working group formed last year under the auspices of KMA
to develop consensus on the new regulations said. However, Shipping
lines were not represented in the working group.
Details have since
emerged that the shipping lines tried to block the enactment of the new
law with section 15 (a) and wrote to the Kenyan government to lobby
against the law being assented to by the president.
In one of the
letters, Maersk Group chief executive Nils Andersen said the clause,
which was introduced during the third reading of the Bill would hurt
foreign investors in the industry.
“This clause will exclude our
group and a number of other large international companies from being
able to make bids or invest in Kenya within a broad definition of ship
logistics and related services,” the letter said adding that the
provision would undermine a number of investments already made by the
shipping lines.
Mearsk commands the biggest cargo volume through the
port of Mombasa and has invested heavily on the cargo handling
operations. KPA has already dedicated berths 13 and 14 to Maersk who in
turn agreed to invest in the cargo handling equipment at the port.
Out
of the 22 shipping lines calling at Mombasa port, 13 are for
containerised cargo and Maersk commands between 30-40 per cent of the
market share.
Based on statistics released by the KPA last year,
Maersk commanded 32.1 per cent of the total container traffic handled at
the port of Mombasa.
Other companies with a significant portion are
Mediterranean Shipping Company (MSC) and Pacific International Lines
(PLI) at 19.4 and 12.8 per cent respectively according to the last year
figures.
Nils Andersen visited Mombasa port in 2008 with a business
team to explore expansion of the company’s operations at the Kilindini
port. The Danish company has subsidiaries in more than 130 countries
worldwide.
“ KPA has received a lot of support from Maersk and the
company has invested heavily in cargo handling equipments that we use to
offload vessels that call at the port inclusive those of rivals,” port
managing director who was suspended last week Mr James Mulewa said.
He
said that Maersk will assist it in the handling of cargo at the port
and would add more equipment to help KPA since it has allocated the
company two dedicated berths. But according to the new law, Andersen
letter to the Kenyan authorities said that it would scuttle the Maersk
plan to invest US $ 90 it had planned to invest at the port.
KMA
gave public two weeks to give their views to a task force that was set
up to develop regulations on commercial maritime services that were
suspended last year. The views sort from the public will acquaint the
task force on the issues to be addressed.
“The key output is to
establish the current status of operations that directly impacts on the
flow of the cargo with a view of identifying key performance indicators
and establishing structures for sustenance of agreed service levels,” an
advert placed in local media said in part.
Importers using Mombasa
pay logistic costs for as much as 42 per cent of the cost of insurance
and freight and almost 58 per cent of the free on board value of goods,
according to a report by the working group.
Michael Kihara, Arranged
for Hellenic Shipping News Worldwide
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