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 todays

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), Anti-Counterfeit 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 Spiders 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 lines
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 -14 days from the date of the

Customs Entry

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:
40FT Container
Re-Marshalling charge
165.
Storage Charge:
Local containers:
First 3 days US$
container per day
Next 8 days US$
Next 9 days US$
Thereafter US$

20FT Container
US$ 110.00

US$

30.00 US$ 60.00

35.00 US$ 70.00
40.00 US$ 80.00
45.00 US$ 90.00

per

 Transit containers:
First 2 days
60.00
Next 7 days
70.00
Next 6 days
80.00

_ Thereafter
90.00

US$ 30.00

US$

US$ 35.00

US$

US$ 40.00

US$

US$ 45.00 US$

 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 Sellers bank to the
latters correspondent bank and from the latter to the
Importers 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
ships 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
20th November 2012