More dialogue among stakeholders will stabilize the Maritime industry
By Omilo Omilo
With the current scenario of cargo owners crying foul over rising insurance costs, KRA locking horns with truckers over a new system to safeguard transit goods from diversion, the big debate on port congestion and of late the winding up of some shipping lines the majority of which are reportedly running at loss, the increasing economic costs of piracy to the regional economies there is justifiable concern as to the health of the maritime industry.
This is despite the maritime sector being one of the recognized key sectors necessary to drive Kenya’s economy towards stability as stipulated in the Vision 2030.
Of course, major improvements have been witnessed in the maritime industry over the past few years, with the introduction of electronic documentation systems, increased investment by KPA and the adoption of the Merchant Shipping Act 2009 and the consequent establishment of the Kenya Maritime Authority to regulate, coordinate and oversee activities of the industry for socio economic benefits in line with national and international standards.
The Port boasts highly professional and experienced managers, an account that has seen operations improve greatly despite the challenges that continue to prevent the port from realizing its full potential.
In general, KPA is doing a good job as the overall trend has improved substantially, but a lot more has not been achieved as anticipated partly because of interference from external forces.
The port can be made more competitive should the management be given more freedom to make independent decisions and less political influence is exerted.
A close focus on how the various players integrate with other stakeholders and other relevant regulatory organs of government has, however, revealed that many critical issues have to be addressed if stability in economic growth is to be achieved.
Major concerns on the profitability of the Port of Mombasa in the years to come have been brought to the fore as the current instability gripping the shipping industry and challenges at East Africa’s major feeder port is threatening to drive away International Shipping Lines.
Evidently, the past year alone has seen four international shipping lines wind up business in the East African region, with a majority of those still in business running at a loss.
Despite the fundamental role that shipping lines play in trade facilitation, little is being seen to be done to protect their interests with regulation favouring cargo owners more to the inconvenience of ship agents whose lobbying is often viewed erroneously as a push to protect their own vested interests.
This has been a great concern as evidenced by the outcry of the Kenya Ships’ Agents Association (KSAA) which is mandated to promote the interests of shipping lines and their representatives operating at the port of Mombasa.
For starters, the Association’s membership is of such importance to both the Kenyan and regional economies that should one or more of its major members withdraw from the market it would create huge instability in the local freight market with vastly reduced shipping options for domestic cargo interests and the inevitable instability (rising cost) in freight rates. As an example, should Maersk Line withdraw from East Africa there would be an approximate loss of 50 per cent capacity to move cargo through the port of Mombasa with, obviously, very significant detrimental effects to the economy.
KSAA chairman Mr. James Knight who is also the director at GAC - Seaforth Shipping (K) Limited has been seen in the limelight expressing concern about this situation while calling on the Government to provide a level playing field for all stakeholders to actively promote freedom of entry into the market for both foreign and domestic investors.
Above all, the government needs to implement policies that promote long term stability in the maritime sector.
More focus needs to be placed on promoting constructive dialogue between stakeholders, where all are treated as of equal importance, with the aim of the various stakeholder groups being to self regulate in line with international practice.
The authorities should be looking outward, seeking examples of best practice globally and basing policy on these rather than what appears to be a trend towards following the lead of Tanzania and other regional regimes in formulating policies that have clearly not worked.
One would acknowledge the need for a regulatory body such as KMA to ensure that Kenya meets its obligations in terms of implementing international maritime conventions, promoting a domestic seafarer industry, addressing seafarer welfare issues, Port State Control etc., but at the same time question the role it has taken for itself in seeking to actively regulate commercial matters within the transport sector.
Kenya already has legislation covering monopolistic and unfair trade practices and these should be used where necessary rather than stringent commercial regulations that may well drive away investors and bring about a decline in competition.
In essence, there needs to be more dialogue and understanding amongst stakeholders and seeking much more their involvement in the formulation of regulations and policy with a view to creating long term stability within the maritime and transport industry.
