High transport costs in the East African region pose serious challenges in the region’s ability to effectively compete with the rest of the world in trade, the Kenyan shippers said on Tuesday.Kenya Shippers Council (KSC) CEO Gilbert Langat said the cost of transporting export goods is 60-70 percent higher than the U.S. and Europe, and 30 percent higher than Southern Sudan. “This state of affairs is expected to reduce economic growth by 1 percent annually, especially in the landlocked Burundi, Rwanda and Uganda, whose development depends on transit solutions in neighboring Kenya and Tanzania,” Langat said in Nairobi during the launch of the council’s Logistic Performance Index for East Africa. “The ports of Dar es Salaam and Mombasa have cumulatively experienced an annual average growth in cargo throughput of 8.8 percent occasioned by growth in regional trade. These ports have over the past decade experienced delays and congestion,” he said.Langat said a number of reforms are currently underway including 24/7 operations, construction of additional terminal facilities, automation of the container handling processes, improvement in documentation and cargo clearance, cargo verification and scanning among others. He said the Northern Corridor, which links the Port of Mombasa to landlocked Uganda, Rwanda and Burundi, with links to Northern Tanzania, the Democratic Republic of Congo, South Sudan, Ethiopia and Somalia accounts for annual cargo volumes in excess 10 million tons and combined transit and trans-shipment traffic of more than 2 million tons. Subsequently, the Central Transport Corridor, which connects the Port of Dar es Salaam with Burundi, Rwanda, Uganda and the DRC also accounts for the same cargo volumes as its Northern counterpart. “Trade along these corridors has a positive impact on the region and many initiatives have been undertaken to improve corridor efficiency,” he said. “However, performance is still hampered by high transport costs, inadequate physical infrastructure and national policies that are incompatible with the EAC goals of regional integration”.In order to address key transport and logistics challenges in the region, Langat said both businesses and policy makers need to fully understand the bottlenecks that exist on the transport and logistics chain in the region. This, he outlined, can only be done through a major analysis of the logistics processes and links in the East African transport system in the form of an annual logistics performance index.In the East African region, about 75 percent of the value of exports is due to transport costs, where for example it takes up to 71 days to import goods to Burundi from any of the other four East African member states where poor road infrastructure, unreliable railway transport, different axle load measurements and a myriad of unnecessary roadblocks all add up to the burden of transporters. This is the first such Index for the region which compares the EAC performance in the trade logistics indicators of time, cost and complexity with those of the world’s leading trade hubs. The LPI dataset can be used to identify key bottlenecks in EAC and help frame the needs and priorities in the trade facilitation and logistics reform. The indicators focus on time spent clearing goods at ports, on inland transport and while crossing borders; the cost of freight across all modes of transport, terminal handling costs at ports of entry; and the number of documents, agencies, signatures, physical and electronic inspections required per trade transaction. Additionally, the Index examines the perception of shippers about freight and clearance times, and infrastructure adequacy. “The Council and other business associations will use the indicators to interpret the performance of the logistics chain in East Africa and reveal to both policy makers and businesses the full extent of bottlenecks in the chain and propose appropriate redress measures,” Langat said.The Index, compiled following a study commissioned by KSC, revealed that while it takes 28 days to move a 40ft container from the port of Shanghai, China, to Mombasa at a cost of 600 dollars, it takes 41 days for the same container to reach Bujumbura from Mombasa at a cost of 8,000 dollars. This represents double the time at 13 times the cost. This does not include other costs of delays, corruption and in some cases, pilferage of cargo. These costs make EAC products very uncompetitive and require urgent action to bring them down. Xinhua
