DOCUMENTATION AND ROLE OF CARGO INTERVENERS IN PORT
OPERATIONS By P.J. Shah
• There are various types of goods that pass
through the Port of Mombasa i.e. local
imports, local exports, transit imports, transit
exports and transshipment. Each type of
cargo is covered by different types of shipping
documents and undergoes different clearance
processes.
• Similarly there are not only different types of vessels which bring
cargoes to Mombasa i.e. conventional vessels, container vessels or
ro/ro vessels which are handled by 14 shipping lines operating in
Mombasa but also different sizes and types of containers in use e.g.
20FT or 40FT Standard, Reefer, Flat Rack, Open Top, High Cube,
Platform etc.
•
• There are also different types of trucks in use for transportation of
containers from the Port of Mombasa to their final destination such
as single trucks, pulling Truck & Trailer, Semi-Trailer with sides or flat
bed and covered body trucks.
• Shipping lines offering containerized cargo service have regular
sailings to Mombasa with frequencies of weekly or fortnightly or
monthly calls whereas shipping lines offering conventional cargo
service have either spot calls or inducement calls.
• Hence for the purpose of today’s workshop I
will confine myself to clearance of
containerized local and transit imports as they
not only constitute the bulk of the traffic
passing through the Port of Mombasa but also
face numerous challenges in clearance.
• Clearing goods through the various interveners
involved in the process i.e. Kenya Ports Authority
(KPA), Kenya Revenue Authority (KRA), Kenya
Bureau of Standards (KEBS), Kenya Plant Health
Inspectorate Services (KEPHIS), Port Health
Authority (PHA), Dairy Board of Kenya (DBK),
National Biosafety Authority (NBA), AntiCounterfeit Agency (ACA) and Port Police and
forwarding them to their final destination is not
only a very complex but also lengthy and
cumbersome exercise as will be seen from the
flow charts which look like a Spider’s Web and
which are annexed herewith as Appendix I and II
• From these Flow Charts the delegates will
observe that there are altogether 33 and 35
steps involved in the clearance process on local
and transit containers respectively.
• In order to make the delegates understand
these processes reflected in the Flow Charts
and save their time I have prepared a separate
write-up on each of the steps involved in the
clearance process which is annexed herewith
as Appendix III & IV.
• The shipping documents required for clearance of
the two types of cargoes are as listed under item
numbers (1) of Appendix III & IV.
• Besides forwarding the relevant shipping
documents the Importer must also remit
adequate funds in advance to enable his Clearing
Agent to pay the necessary Import Taxes if it is
local cargo and other third party charges such as
shipping line charges, port charges, transport
charges etc. on a shipment of his.
• The clearance process starts with the Importer. He
has to ensure that he forwards a complete set of
shipping documents listed under item numbers (1)
of Appendix III & IV for a shipment to his Clearing
Agent atleast 7 days prior to the expected date of
arrival of the carrying vessel in Mombasa to
enable the latter to clear and remove the
containers from the Port and return the empty
containers to the shipping line’s nominated depot
in Mombasa within the following free periods
given by the Kenya Ports Authority, Kenya Revenue
Authority and shipping line concerned
respectively:
• Kenya Ports Authority:
•
Local imports
-4 days from the day after the
date of last sling
•
Transit imports
-9 days from the day after the
date of last sling
•
N.B.: The date of last sling means the date on which a vessel
completes discharges of her cargo in the Port.
•
•
•
Kenya Revenue Authority
Customs Entry
-14 days from the date of the
Shipping Lines:
Local imports
-9 to 14 days from the date of
discharge of a container in the Port depending on the shipping line
involved.
• Transit imports
-21 to 45 days from the date
of discharge of a container in the Port depending on the destination
and shipping line
involved.
• Similarly under Section 34 of The East African
Community Customs Management Act 2004 an
Importer is required to enter goods to a Customs entry
within 21 days after the commencement of discharge
of cargoes from the carrying vessel.
• Under Section 42 of the same Act such overstayed
goods are deemed to be deposited in the Customs
Warehouse and if they are not lawfully removed from
the Port or Customs Warehouse within 30 days after
date of deposit Kenya Revenue Authority give a notice
to the Importer by publication in the Kenya Gazette to
remove them from the Port or Customs Warehouse
within 30 days from the date of notice, failing which
the goods are deemed to be abandoned to Kenya
Customs for sale by Public Auction at Customs
Warehouse, Kilindini
• With so many interveners involved coupled
with lengthy and cumbersome clearance
procedures it becomes a real challenge for a
Clearing Agent to clear and remove a local
container from the Port within the free period
allowed by KPA.
• Whilst the free period on transit containers is
adequate for the purpose of documentation, it
again poses a challenge in its off-take from the
Port
• Failure to clear and remove containers from
the Port and return the empty containers to a
shipping line within the free periods stated
above result in the Importer having to incur
various demurrage charges enumerated
below:
• Port Authorities:
20FT Container
Container
• Re-Marshalling charge US$ 110.00
Storage Charge:
• Local containers:
– First 3 days
per container per day
– Next 8 days
“
“
– Next 9 days
“
“
– Thereafter
“
“
40FT
US$ 165.
US$ 30.00
US$ 60.00
US$ 35.00
US$ 70.00
US$ 40.00
US$ 80.00
US$ 45.00
US$ 90.00
• Transit containers:
– First 2 days
US$ 30.00
US$ 60.00
– Next 7 days
US$ 35.00
US$ 70.00
– Next 6 days
US$ 40.00
US$ 80.00
_ Thereafter
US$ 45.00
US$ 90.00
• Shipping Lines:
Container demurrage charge:
First 7 daysUS$ 4.00 to US$ 10.00
AUS$ 8.00 to
US$ 20.00
“
“
Next 7 days
US$ 10.00 to US$ 20.00
US$
20.00 to US$ 40.00 “
“
Thereafter US$ 14.00 to US$ 30.00
US$ 28.00 to
US$ 60.00
“
“
• Customs Authorities:
• Customs Warehouse Rent @ US$0.30 per
Metric Ton per working day from 15th or 22nd
day
onwards, as the case may be, until
the date the cargo is removed from the Port.
• Experience shows that Importers are not only not conversant with
the Importation rules and weight restrictions but are also ignorant
of their rights and obligations.
•
For instance Importers ask their Shippers to load more cargo in a
container than is allowed under the axle load restrictions existing in
Kenya and the neighboring countries or load some personal items
like a Television set or Refrigerator in the container without
declaring them on the shipping documents or leave it to their
Shippers to choose a shipping line for shipment of their goods from
the Port of loading to the Port of discharge instead of doing it
themselves or asking the Shippers to obtain freight rates, terms of
carriage and destination charges from different shipping lines for
comparative purposes.
•
As a result of this ignorance Importers have to either suffer
indefinite delays in receipt of their goods or end up paying
additional destination charges to the shipping line in Mombasa or
penalties to KRA or additional transport costs to a local transporter.
There have also been instances where
• an Importer has paid a part amount in advance
to his Shipper with the balance to follow before
the carrying vessel arrives in Mombasa and then
fails to raise the balance amount in time, and
• an Importer is in possession of all the requisite
shipping documents for a shipment but has no
monies to pay for the destination charges when
the shipment arrives in Mombasa;
• an Importer has lost his monies and goods
through improper sale contracts with the Seller
or appointment of inefficient or unscrupulous
Clearing Agent or Transporter.
• In all these instances an Importer invariably
fails to clear his shipment in time and thereby
incurring heavy demurrage charges or ending
up paying abandoning his shipment to Kenya
Customs for sale by Public Auction.
• Another common problem that has been
experienced over the years and that is mainly
with transit cargoes is that an Importer sends
copies of shipping documents for the same
shipment to more than one clearing agent in
Mombasa, thereby not only creating a
confusion as to who is the right clearing agent
to handle his shipment but also ending up in
either incurring additional costs or losing his
shipment altogether.
• Experience also shows that there is invariably a delay in
receipt of shipping documents, especially from Importers in
the neighboring countries as these documents are
transmitted from the Seller’s bank to the latter’s
correspondent bank and from the latter to the Importer’s
bank. After securing release of the shipping documents
from his bank the Importer then sends them to his clearing
agent.
• This movement of shipping documents from one bank to
another bank takes time. There is also the tendency on the
part of an Importer to not only delay securing release of
the shipping documents from his bank but also remittance
of funds in advance to his clearing agent for payment of
import taxes or third party charges until a day or two
before the expected time of arrival of the carrying vessel or
at time after a vessel has arrived in Mombasa in order to
save on finance costs.
• It is therefore very essential that Importers both in
Kenya and neighboring countries are sensitized on their
rights and obligations including use of correct
“INCOTERMS” for shipment of their goods.
“INCOTERMS” stand for “International Commercial
Terms”.
• There are 13 commonly used “INCOTERMS” such as
CIF, FOB etc. which are recognized by Customs and
Courts around the world as the standard set of rules
for global commerce. ‘INCOMTERMS” are not only
rules of trade logistics that describe the responsibility
of the buyers and sellers in delivery of physical goods
but are in essence definitions and guidelines for sales
contracts.
• Whenever crisis arise in the Port of Mombasa, which is also
a legally gazetted Customs Area, the business community
starts pointing fingers at the management of KPA without
analyzing how the crisis has come about. If a crisis has come
about due to non-availability of berths or offloading/loading
equipment or lack of labor or storage space then it is KPA
who is responsible for the same but if it has come about due
to delay in documentation or evacuation of cargo then it is
either the Importer or KRA and other Government Agencies
(OGAs) who are responsible for the same.
• For the information of delegates KPA acts as stevedore to
the shipping line by providing berthing space,
loading/offloading equipment and labour and as a custodian
of cargo to Importers by providing storage facility and
security.
• Although the entrance channel to the harbor was recently
widened and container terminal berth lengths were increased
by KPA this still does not allow the latter to accommodate
container vessels with a carrying capacity of more than 6000
containers.
• Hence the Port of Mombasa still continues to be a feeder
port i.e. containers destined for Mombasa are discharged
from panamax or post panamx vessels with carrying
capacities of between 6000 to 10000 TEUs at ports like
Salalah, Jeddah, Jebel Ali, Kofakan, Colombo, Durban, Port
Klang or Singapore and then transshipped from there to
Mombasa in smaller feeder vessels not exceeding 300 Metres
in length and carrying capacity of 6000 TEUs.
• On an average it takes between 6 to 8 weeks for a container
to arrive in Mombasa after it has left the first Port of loading.
• Whilst the roles of KRA and other Government Agencies
(OGAs) are to protect government revenue and prevent
importation of substandard or fake or banned goods and
diversion of transit goods into the country unfortunately
this is not done with a balancing act of protecting
government revenue and at the same time facilitating
unhindered flow of goods due to rigid and duplicated
rules and lengthy procedures. Under the EACCM Act
2004 KRA is also mandated to regulate the clearing and
forwarding industry by vetting and licensing Clearing
Agents and Transit Transporters on an yearly basis.
• There are over 1000 licensed Clearing Agents ranging
from one or two man shows (Briefcase Agents) to
International companies operating in Kenya handling
both Seafreight & Airfreight.
• The introduction of Simba System by KRA way back in
2005 has brought about some benefits to the
Importers but the business community has yet to
achieve the full benefit of the system as some of the
remaining modules e.g. Paybox, Targeting, Importer
profiling, automatic on-line bond cancellation etc. have
yet to be introduced by KRA who are still insisting on
presentation of hard copies of shipping documents.
• Unfortunately human intervention is also there. It is
hoped that when the Single Window System comes
into operation sometimes next year the clearance
process will become faster, smoother and flawless as it
will not only be a paperless one but also one without
any human intervention.
• Similarly although 24/7 operations were
introduced in the Port of Mombasa more than
3 years ago, the business community has yet to
achieve full benefit of it as some of the parties
to the agreement are still not working round
the clock e.g. shipping lines, banks etc.
Furthermore
KRA
are
not
doing
verifications/scanning of cargo at night, thus
defeating the purpose of working round the
clock.
• In order to cope with the increased volume of
business passing through the Port of Mombasa
against a backdrop of limited facilities KPA started
nominating some private Container Freight
Stations (CFSs) about 5 years ago to handle local
containers on their behalf but here again
Importers have yet to benefit in terms of savings
in costs and clearance time. On the contrary
there have been numerous complains about
delays in transfer of containers from the Port to
CFSs nominated by KPA and incurrence of
unnecessary additional charges.
• In conclusion;
• the Authorities need to review their business processes
by eliminating rigid and outdated rules and non-tariff
barriers and embrace modern technology such as
forensic audit in order to prevent leakage of revenue
but at the same time be able to provide an efficient
and customer friendly environment. For example KPA
is not allowed to berth a vessel until a ship’s manifest is
approved by KRA. At times this leads to delay in
berthing of vessels and in turn delays in clearance of
urgently needed cargo not to mention delay in
collection of revenue by KRA.
• the Importer needs to:
• properly plan importation of his shipments;
• understand his rights and obligations in maritime
trade & transportation;
• get familiar with import and weight restrictions;
• appoint an efficient and reliable Clearing Agent;
• ensure submission of shipping documents and
funds in time to his Clearing Agent; and
• appoint an efficient and reliable Transporter.
Thank you all.
By P.J. Shah
Mombasa
th
20 November 2012