CFSs - Catalysts for socio - economic development

By EUGENE OMILO

Container Freight Stations (CFS) play a critical role in trade and in the development of the national economy despite the negative publicity arising out of the general lack of knowledge on the role of CFSs and the lack of a clear framework by the government on the licensing and operations of the facilities.

By providing additional cargo storage and diverse clearance facilities to port users, the facilities are one stop centers, making logistics and supply chain dynamics easier and impacting positively on overall costs of doing business for the benefit of the economy.

CFS’s in general have given the port of Mombasa additional cargo holding capacity which would otherwise not have been available if the KPA had continued to handle these goods within the port area.

The maritime regulator, Kenya Maritime Authority, also concedes that the absence of structures to sustain efficiency and quality of maritime transport services is a challenge, the role of CFSs cannot be undermined.

“Without CFSs, the congestion at the port of Mombasa could have been impossible to manage in view of the limited infrastructure at the moment,” says KMA Director General Mrs. Nancy Karigithu.

Mombasa Container Terminal General Manager Mr. James Rarieya who is also a member of the CFS Association’s executive committee observes that it has been virtually impossible to extend the stacking capacity further within the present port limits due to the natural barriers that surround the container terminal.

“CFS’s have therefore provided the much needed relief to the port of Mombasa by providing this critical capacity,” says Mr. Rarieya.

He continues that this factor alone has contributed to the port being able to handle 770,000 twenty feet equivalent units (TEUs) in 2011, well beyond the actual port container handling capacity at 250,000 TEUs.

This capacity has over the years been increased to 500,000 through investment by the Kenya Ports Authority (KPA) in equipment with high handling capacity and paving of areas previously designated for stacking general cargo to a level that can hold containerized cargo.

Though critical to regional trade, the CFS’s have continued to face various challenges with major amongst them being what operators refer to as ‘negative cargo transfer policy issues.

The policy does not allow transit containers to reach the CFSs.

According to Mr. Wilfred Oluga who is the vice chairman of the CFS Association and Managing Director of Awanad Enterprises, there is significant increase in container through put at the port of Mombasa which shows that there will be a massive congestion problem if KPA and KRA  maintains the status quo in the handling of transit cargo.

Paradoxically, he says, there is idle space at the CFSs most of which are underutilized, registering container occupancy at very low levels, some as low as 20% utilization.

“There is relative stability and growth in the greater East and Central Africa region which is largely served by the port of Mombasa. Countries like South Sudan are fast becoming important players in the import business further straining KPA’s capacity to handle transit containers,” he explains, to show why KRA should consider releasing transit cargo to the CFSs.

      The trend has been as follows in the recent past:

2005                       2006                       2007                       2008                       2009

436,671                 479,355                 585,367                 615,733                 618,816

Further, operators say dwell time of transit containers is longer under the current arrangement which also contributes to the pile up.

Though KRA’s has cited the fear of cargo diversion as the main reason why transit cargo cannot be released to CFSs, Mr. Oluga says operators are willing to put up additional bond to address the concerns.

“Considering  all these concerns, one can see why it makes a lot of sense to allow transit containers to be handled at the CFSs which currently operate below 50% space utilization,” argues Mr. Oluga.

But even with increased bonds, Kenya Maritime Authority Director General Mrs. Nancy Karigithu thinks otherwise.

She says  with the current lack of clarity on treatment of delays arising from the various parties involved in cargo clearance and transfers and the attendant penalties that are passed on to importers, this may generate more outcry if CFSs were to handle transit traffic.

“ The ideal situation would be to transfer such cargo to a KPA facility away from the port such as the Inland Container Depots in Embakasi, Kisumu or Eldoret or any other  facility outside the port but which is fully under KPA control,” she suggests.

On the other hand, Mrs. Karigithu pegs the underutilization of CFSs to the fact the CFSs have grown in number while volume of cargo has not changed much.

“Cargo is nominated by KPA to CFSs, and the volumes handled by a CFS depend on the performance of a shipping line such that if a shipping line is doing very well, the CFS will be able to handle greater volumes,” she explains.

Ends…