The Transporter Issue 26 by Uplifted Studios

A PUBLICATION OF THE KENYA TRANSPORTERS ASSOCIATION

ISSUE 026 | VOL. 1

Self-regulatory charter on overloading yields gains, according to a Logistics Performance Index Survey REGULATION

Truckersâ&#x20AC;&#x2122; Charter improves axle limit The Transporter compliance

Delays along the Northern Corridor reduce the number of kilometres each truck travels annually to 60,000 INFRASTRUCTURE

DRC joins SGR project, boosts Mombasa Port

Logistics experts troubled by increased theft of cargo from Mombasa port and goods on transit

LOGISTICS

Alarm as highway cargo pilferage escalates ISSUE 26 VOL. 1

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Transporter

The

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TRUCKERS HARD

COVER STORY

ISSUE 026

VOLUME 1

GET US ONLINE www.kta.co.ke

CONTENTS

EDITORIAL

TRADE

REGULATION

00| Word from the Chairman Message from the Vice- Chairman 02| Updates 04| KTA News

TRUCKERS’ CHARTER

BRIEFS

46| Relief for importers as Northern Corridor transport cost drops 48| Kenya TradeNet now running smoothly despite hitches

INTEGRATION

improves axle limit compliance

REGIONAL

18| Rwanda to sign OSBP bill

ROADS

26| Project underway to ease Mombasa – Nairobi highway traffic congestion Two Sh71bn roads to be built in North Rift

34| Dongo Kundu bypass to improve turnaround for trucks, transporters say 36| DRC joins SGR project, boosts Mombasa port 38| Kenya – South Sudan road to boost trade 40| Alarm as highway cargo pilferage escalates

PORTS

Driverless trucks usher in

NEW ERA FOR HAULIERS

REGULARS

INFRASTRUCTURE

LOGISTICS

TECHNOLOGY

50| New import rules are nontariff barriers maritime experts warn 51| Comesa seeks to eliminate trade barriers

42| How to seal revenue leakage at Mombasa Port 44| KPA increases capacity as cargo volumes at Mombasa port grows

48| Truck World 49| Global 50| Truck & Trailer

Transporter

The

A publication of the Kenya Transporters Association Limited

BOARD OF DIRECTORS Kiprop Bundotich - Chairman Ahmed Shimbwa - Vice Chairman Nora Mugavana - Secretary Naeem Pasta - Treasurer Newton Wang’oo - Member Michael Adede - Member Vimal Ranpura - Member Abdi Awale - Member Mohammed Bagha - Member LAYOUT, DESIGN & EDITORIAL CONSULTANTS Efman Communications info@efmancommunications.com

Word from the Chairman

take this opportunity to wish our members and Kenyans a happy and prosperous New Year. Towards the end of 2015, we held our successful 10th Annual General Meeting in which members expressed a strong desire for progress. We have now set on a path to reinvigorate and retool the Association in order to progressively deliver on our founding ideals. As the new Board of Directors steers the Association to new heights, our members should expect a redefinition of the discourse on transport related matters. It’s noteworthy that progress in the sector is now being defined within the realm of regional integration and an efficient transport system has been identified as a key pillar in the process. Under the Northern Corridor Integration Projects (NCIP), member states have made commitments to implementation of a number of projects in which transporters will be called upon to participate. The Association seeks to actively engage all stakeholders in ensuring these commitments are achieved and sustained. On behalf of the Board of Directors, I want to assure our members that we shall remain alive to their concerns and address them with tenacity and resolve. Most importantly, it is the unity of purpose that will ensure we achieve and maintain a growth trajectory. Thank you and God bless you.

Bundotich Kiprop Chairman - KTA

All inquiries: Tel: +254 707 815 878 Fax: +254 41 231 20 15 Mobile: +254 786 366 538,

734 619 494 Email: thetransporter@kta.co.ke The Transporter is published quaterly

by the Kenya Transporters Association Limited (KTA Ltd). The views expressed are those of the authors and do not represent the official view of the Kenya Transporters Association Limited (KTA Ltd). Neither KTA Ltd nor Efman Communications, or any other person acting on their behalf, may be held responsible for the use to which information contained in this publication may be put, or any errors, which, despite careful preparation and checking, may appear. Individual advertisers are solely responsible for the content of advertising material which they submit to us, including ensuring that it complies with relevant legislation. We accept no responsibility for the content of advertising material, including, without limitation, any error, omission or inaccuracy therein.

ISSUE 26 VOL. 1

Message from the Vice Chairman

ver the last year, KTA has championed a number of initiatives aimed at complementing stakeholders’ efforts towards improving the business environment. For instance, we successfully advocated for zerorating of VAT on transit transport services to bring down the costs. In order to enhance productivity and safety in transport operations, we have set up and fully registered one of a kind heavy commercial driver training institute fully kitted with truck simulators. In order to give impetus to training our drivers, KTA is seeking strategic partnerships. We have put forth a proposal to the National Transport and Safety Authority that this facility be mainstreamed into our national training programs. The Authority has responded positively. We have also enhanced our members’ sensitization and sharpened information dissemination through our e-portal and social media platforms. As we begin the New Year, it’s clear that a lot remains to be done to ensure seamless movement of trucks and cargo. We will continue to fully and constructively engage the relevant stakeholders in ensuring mitigation of these bottlenecks. Lastly, I take this opportunity to thank our members for participating in our very successful 10th Annual General Meeting and to wish the new Board of Directors success in steering the Association to new heights.

Ahmed Shimbwa Vice Chairman - KTA

The Transporter

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Updates KTA BRIEFS QUOTED From the TOP indicators, there is overloading on our roads, despite laws being in place.

NCTTCA, which has been monitoring performance of the Northern corridor, including compliance at weighbridges through the Transport Observatory Project (TOP). Kenya Transporters Association Limited

Catch up with whatâ&#x20AC;&#x2122;s been happening within the transport and logistics industry around the Eastern Africa region

KTA BOARD OF DIRECTORS

@KTALtd1 COVER PHOTO

Infrastructure Principal Secretary John Musonik with other officials when he inspected construction of Kipevu road.

Bundotich Kiprop Chairman

Ahmed Shimbwa Vice Chairman

Nora Mugavana Secretary

Naeem Pasta Treasurer

Newton Wangâ&#x20AC;&#x2122;oo Member

Mohamed Bagha Member

Other: Michael Adede Member

HAVE YOUR SAY

If you have any comments about The Transporter Magazine, then please send them to: thetransporter@kta.co.ke or The Transporter Magazine, Abdel Nasser Road, Opp. Fayaz Bakery, Bondeni. P.O Box 88502-80100 Mombasa.

ISSUE 26 VOL. 1

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KTA News KTA directors meet ROADS AUTHORITY OFFICIALS

Eng. Jared Makori (Regional Manager, KENHA), meets with KTA directors when they paid him a courtesy call at the authority’s regional offices at Shimanzi.

TA Directors recently paid a courtesy call to the Kenya National Highways Authority (KeNHA) Coast Regional Manager Eng. Jared Makori at his Mombasa offices. The meeting focused on the planned road infrastructure upgrade in Mombasa and on the Northern Corridor. “We waste a lot of time in traffic jams before and after picking cargo and this is not only hurting Port productivity but our productivity as well,’’ contends a transporter in Mombasa. Port Stakeholder have recommended that immediate expansion works be undertaken within Port precincts especially on KIbarani, Changamwe, Port Reitz, Jomvu and Miritini sections. “We are concerned by the delays currently experienced on our highways. The incessant traffic snarl ups are a threat to business at the Port of Mombasa,’’ stated the KTA Vice Chairman, Mr. Ahmed Shimbwa. The truckers’ Association estimates losses in millions of shillings from truck downtime. Trucks reportedly take four to six hours to navigate a 10 kilometer stretch.

KeNHA is a signatory to the Port Charter which assigns specific timebound deliverables to Government Agencies and Private Sector player. “The Authority is fully committed to fast track expansion of key roads leading to and from the Port in order to provide seamless flow of traffic and cargo,’’ said Eng. Makori. The government plans to expand the following road sections: Airport Road (Changamwe junction – Magongo Road - Airport; Bomu Hospital Road – Refinery Road and Mainland – Jomvu Road); Southern By-Pass (Kipevu – Miritini – Bonje with a link to Portreitz and an interchange at Bonje); Northern ByPass (Bonje – Kadzengo – Malindi Road); Mombasa – Mariakani (Mombasa – Kwa Jomvu – Mariakani). The truckers Association envisages disruptions in traffic flow during the road works and has asked the roads Authority to put in place contingency measures to mitigate traffic snarls during the road works. KeNHA and KTA also agreed to regular consultations to resolve emerging concerns.

KTA meets NTSA, attends NPSC forum The KTA Team paid a courtesy call to the National Transport and Safety Authority Chairman, Mr Lee Kinyanjui as the new Board seeks to build sustainable partnerships with stakeholders in the transport sector. The meeting is one among the many earmarked to create good working relations with industry players and support KTA strategic advocacy objectives. The meeting focused on road safety, motor vehicle inspection, self-regulation in heavy commercial transport, regulatory framework and constitution of the county transport and safety committees. NTSA has proposed a raft of regulations for Commercial Vehicle Service. The Authority also seeks to implement instant fines for minor traffic offence. At the same time, the Association participated in a stakeholders’ forum convened by the National Police Service Commission (NPSC) to sensitize stakeholders on police vetting. NPSC seeks to vet the traffic department of the National Police Service. The department has been bedeviled with allegations of corruption and failure to enforce traffic laws. KTA has asked the commission to look into highway Patrol structure, streamline handling of minor traffic offenses, and regulate roadside Police Checks and use of speed guns among others. The Association also plans to meet the Inspector General of Police to address the increasing incidences of insecurity targeting trucks in the Northern Corridor.

CONNECT

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thetransporter@kta.co.ke

ISSUE 26 VOL. 1

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KTA News

From left to right, Samuel Helu, manager infrastructure, TMEA, Wellington Kiverenge, KTA acting CEO, David Stanton, Director General, TMEA, Dr. Chris Kiptoo, Kenya Country Director, TMEA, Abdi Awale, Director, KTA, Kiprop Bundotich, Chairman, KTA and James Ng’ang’a, Director of Infrastructure, TMEA.

KTA holds its 10th AGM

enya Transporters Association Limited held its 10th Annual General Meeting on 3rd October, 2015. The AGM, which was co-sponsored by Kenya Commercial Bank and Total Kenya, brings together directors of KTA member companies to review the Association’s financial statements and to elect new office bearers to the Board of Directors. KTA is the umbrella body of road freight transporters in Kenya and has been in existences for over four decades. The meeting which was held at the Best Western Plus, Creekside Hotel in Mombasa was graced by the Chief Officer, Transport and Infrastructure Mombasa County Eng. Alfred Keno. Speaking at the function, Mr Keno informed members of the plans to upgrade roads in Mombasa in order to address the traffic demands. “We intend to upgrade critical traffic choke points to have six lanes to mitigate congestion,” he said. He also pointed out that there had been delays in commencing road upgrade works and that the pending matters were being addressed to pave way for the works. In his farewell speech, read on his behalf by the Board Secretary, the outgoing Chairman, Mr. Paul Maiyo expressed gratitude for the support accorded him during his tenure. He projected a positive outlook for the sector while noting myriad challenges still persisted. “The last

ISSUE 26 VOL. 1

two years have been marked by considerable shifts in trade and logistics with considerable focus on development. Transporters ought to balance commercial interest with promotion of regional trade, creation of positive shifts in economic growth and support for development prospects of the nation,’’ he said. The outgoing chairman noted that the unprecedented growth in road freight transport has had some undesirable outcomes. “We are witnessing an escalation in road accidents, increase in the number of operators who are inexperienced and lack of relevant managerial skills, cutthroat competition, and ineffective operating standards and reduced service quality,’’ he noted. At the AGM, nine members were elected to the Association’s Board, chaired by Mr. Kiprop Bundotich. The new Board members will steer the Association over the next one year. Speaking on behalf of the new Board, Mr Bundotich thanked members for conducting peaceful elections and urged the new Board to forge a united front in championing interests of KTA members. “KTA had cemented its place in the industry and support from all members is paramount in achieving the strategic advocacy objectives,’’ he said. The AGM sponsors expressed their solidarity with the Association and urged on the need for long term mutually beneficial partnerships.

Transporters ought to balance commercial interest with promotion of regional trade, creation of positive shifts in economic growth and support for development prospects of the nation. Paul Maiyo, former KTA chairman.

KTA has cemented its place in the industry and support from all members is paramount in achieving the strategic advocacy objectives.’’ Kiprop Bundotich, new KTA chairman.

The Transporter

ISSUE 26 VOL. 1

Briefs NEW ROAD

Technical Support Officer (Simulator trainer) demonstrates to visiting TMEA delegation how a simulator works.

TRADEMARK EAST AFRICA pays KTA a courtesy call

Trademark East Africa delegation, led by the Director General David Stanton, paid a courtesy call to KTA in October. The TMEA delegation met with KTA Directors to, among other things, discuss the strategic partnership between the two institutions. KTA is seeking support from TMEA through a grant partnership to implement a number of interventions aimed at improving the quality and efficiency of road freight transport services in Kenya. These interventions include; development and operationalization of uniform operational standards by transport operators in accordance with global best practices; enhancement of skills, knowledge and competence levels of transport operators to respond to the dynamic market and influencing policy and regulatory direction through research and evidence-based advocacy positions. TMEA is implementing a number of infrastructure and systems upgrades at the Port of Mombasa and Border Points. “Our partnership could not have come at a better time. We should now progressively upgrade the capacity of operators to take advantage of increased business opportunities and stable environment arising from the Port expansion and streamlined port and border processes,’’ stated the KTA Chairman, Mr. Kiprop Bundotich. “We want to focus on enhancing competencies of fleet managers and

ISSUE 26 VOL. 1

truck drivers to make them more responsive to industry needs,’’ he continued. The truckers Association has set up a state-of-the art heavy commercial driver training facility complete with truck simulators. The partnership will support full operationalization of the facility to offer training to over 7000 truck drivers in the next three years. In the same period, a total of 300 transport/fleet managers are also targeted for training in Fleet Management and Safety, occupational health and safety and strategic and productivity management. According to the Training Needs Assessment (TNA) Study for Road Transport Operators in East Africa in 2012, only 36.7 percent of transport operators surveyed had ever received any professional training relating to their work. The glaring deficit in operational skill levels, knowledge and competence has contributed to the high operational and administrative costs constituting over 60% of the trucking charge for every 500 Kilometres covered. “We are keen to support KTA under our three pillars for growing prosperity. This partnership fits very well within our improved business competitiveness pillar,’’ said David Stanton. “We must ensure that ultimately our efforts lead to a significant reduction in transport costs and cost of goods and I am pleased that this partnership seeks to make that impact.’’ He stated.

Uganda seeks shs270 billion for KapchorwaSuam road Kenya and Uganda plan to build another corridor to boost trade between the two East African countries. The proposed road on the Ugandan side will start in Kapchorwa Town through to Bukwo and Suam before joining the Endebess - Kitale - Eldoret bypass roads project in Kenya. The Suam bridge forms the boundary of Kenya and Uganda in Bukwo District. Uganda National Roads Authority and the Kenya National Highways Authority are seeking funds from the African Development Bank (AfDB) for the project. The Ugandan section of the road will cost $80m (Shs270b) with funding expected to come from the Government of Uganda and African Development Bank (AfDB). The Ugandan section, according to UNRA, will be about 73 kilometres and will be upgraded from the current gravel to tarmac, which will be a relief to various farmers around the Sebei Sub-region. “It is a very sensitive and vital corridor linking the productive sub-regions of Bugisu, Karamoja and Sebei. It is also another eastern gateway to the neighbouring country of Kenya,” says Eng Joseph Otim, the director road maintenance at UNRA. “The 35 kilometre of the road on the Kenyan side, and 73 kilometre stretch on Ugandan side is in a poor state which renders it impassable during rainy seasons. AfDB has promised to redesign the road,” Trans Nzoia county governor Patrick Khaemba, told the Business Daily in Kenya. Mr Khaemba said that residents at the Kenyan border are spending a lot of money in Uganda and if the AfDB approves the funding to tarmac the Kitale- Suam highway, economic activities would be spurred. The Transporter

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ISSUE 26 VOL. 1

in bits...

Disputes raise cost of road constructions

Sh800m road construction project set to boost inter-county trade The county administration has launched a Sh800 million project to tarmac roads in a bid to expand the transport network. The road will cover 15km through Uriri subcounty into Ndhiwa sub-county in Homa Bay County, and is expected to improve trade between the two counties and along Lake Victoria. At the same time, Migori Governor Zachary Obado has requested the national government to fast-track the reimbursement of funds meant for the construction of roads which are still under the central government. “As we open up new roads and build those under county governments, it is also my appeal to the national government to surrender money for construction of roads under it. Construction of some of its roads have stalled,” he said. Recently, Mr Obado unveiled the construction of bridges across River Migori in an effort to boost trade between Kenya and Tanzania. “It is only about three years since the advent of devolution and the steps my administration has taken to move the county forward are evident to all because they have been done in the open,” he said. Obado said it was important for county governments to improve road infrastructure to boost trade and ease movement.

At least eight out of 10 government road projects are delayed by lawsuits, further flaring up costs of construction. The Kenya National Highways Authority Chairman Erastus Mwongera said the watchdog is concerned with claims that quite often end up in court. Mr Mwongera said that the suits have stalled some road projects by over five years while draining the authority’s resources. “Some project in western Kenya which could have been completed by now is the latest case. We terminated the contract we had with the consultant, he went to court, and the cost is now inflated because even the little that was done has gone to waste,” said Mr Mwongera.

Motorists to drive at 50kph from Naivasha to Nairobi Motorists will now have to drive at 50 kilometres per hour in Karai area in Kinungi on the Nairobi-Nakuru Highway to curb road carnage. This is after the new directive issued by the National Transport Safety Authority (NTSA) in conjunction with the Kenya National Highways Authority (KENHA) as they started erecting the 50km/h speed limit sign-posts to curb speeding. NTSA flagged Kinungi as one of the five centers on Nairobi-Nakuru Highway that have recorded a high number of pedestrian deaths and the speed limit takes effect immediately. According to NTSA Director General Francis Meja, the other areas that have been declared black-spots on the said highway include Ihindu, Kinungi, Karai, Kayole and Mithuri, all in Naivasha. The directive follows an official visit by senior NTSA and KENHA officials to the affected areas following an outcry by residents over the killer highway

NTSA raises concerns over road deaths rise The National Transport and Safety Authority has raised concerns over the rise in road deaths compared to 2014. It attributed the increase to human error, speeding, dangerous overtaking, drink driving and the use of undesignated areas to drop passengers. The number of deaths increased by five per cent from 2,886 last year to 3,037. A total of 1,338 pedestrians, 658 passengers and 434 boda boda operators died. Addressing the press in Naivasha, NTSA deputy director Margaret Kabochi said boda boda operators require civic education to reduce accidents. “The number of fatalities compared to last year has risen and the majority of these accidents were avoidable,” she said.

12 8 10

ISSUE 26 VOL. VOL.11

Kenya to introduce crude oil into the market by this year Kenya plans to sell crude oil in nine months’ time despite expert advice that the earliest the Turkana oilfields can be commercially exploited is 2020 reads TheEastAfrican. A Kenyan State House-based team has been given until January 2016 to work on the logistics of the evacuation that would see crude moved by trucks from Lokichar to Kitale, from where it would be taken to Mombasa in specialised rail wagons for storage. Delivering on the oil promise by September 2016 is said to be one of the immediate tasks assigned new Energy Cabinet Secretary Charles Keter. Tullow Oil Plc, jointly with Africa Oil Corporation has discovered 600 million barrels of oil in northwest Kenya, which the government wants moved by road and loaded on rail wagons owned by Rift Valley Railways for transportation to Kenya Petroleum Refineries (KPRL) storage tanks in Mombasa. From there, the waxy crude will move by an existing pipeline which still needs to be reconfigured, so that it can be pump directly to the jetty at the Kipevu Oil Terminal. The journey from Lokichar to the export market, most likely China, India and Malaysia, which have the advanced refineries to recover high quantities of white oil products from waxy crude, would be under specially heated conditions. Ministries are now looking at how to refurbish 200 kilometres of road from Lokichar to Kitale in western Kenya to accommodate tankers. The Transporter

The Transporter

ISSUE 26 VOL. 1

Customs

KRA to replace faulty

SIMBA SYSTEM in Sh1 billion upgrade

Simba is ageing and has operational issues which makes it unreliable. KRA wants to replace it and we are partnering with them in that. Frank Matsaert

ISSUE 26 VOL. 1

he Kenya Revenue Authority will install a new customs software early next year to replace the faulty Simba

system. Trademark East Africa (TMEA) CEO Frank Matsaert said the new system will be put up in the first quarter of 2016. KRA has been working with TMEA to upgrade the current system at a cost of Sh1 billion. The news comes just one week after President Uhuru Kenyatta announced the ratification of the World Trade Organisation Trade Facilitation Agreement (TFA) that requires countries to upgrade their customs systems. “Simba is ageing and has operational issues which makes it unreliable. KRA wants to replace it and we are partnering with them in that. “I believe Kenya is moving the right

direction and will get new demands to do more as a result of TFA that we would like to help address,” Mr Matsaert said in Nairobi. He spoke during the signing of a fiveyear memorandum of understanding with the World Customs Organisation (WCO). WCO has pledged to increase technical assistance in speeding up movement of goods, incorporating agencies into the ICT network including KRA and customers and security features. TFA was passed at the ninth ministerial conference in Bali, Indonesia seeking to streamline the passage of goods across borders by cutting red tape and bureaucracy and establishing common approaches while clearing goods through customs. Kenya became the 57th WTO member to sign the pact which will come into force once 108 members ratify it. The Transporter

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Environment

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AFRICA’S TRANSPORT BLUEPRINT could spell doom for flora and fauna, study says

Road and rail corridors threaten to wreck pristine wilderness as they open up land for mining with little guarantee of agricultural benefits, scientists warn

any new road and rail ‘‘development corridors’’ planned to crisscross Africa in the name of economic development could destroy the continent’s equatorial forests and savannahs, lead to many people invading protected areas and have only limited chances of increasing agricultural production, say scientists in a new study. If built, the 33 giant transport routes, some of which will be 3,000km-long, will open up the African interior to farming and trade and are likely to attract large-scale immigration, including legal and illegal miners, commercial agricultural interests, and people seeking newly accessible farming or grazing areas, according to the report, published in the journal Current Biology. The danger, say scientists, is that illegal logging could devastate some of the last great forest areas,

ISSUE 26 VOL. 1

and hundreds of thousands of square kilometres of sparsely populated but biologically rich areas in east and southern Africa would be damaged irreparably. They say: “Africa is changing faster than any continent has ever changed in human history. A key priority in the coming decades will be increasing agricultural production and efficiency to improve food security and alleviate poverty for Africa’s rapidly growing population while harnessing the unprecedented scale of foreign investments focusing on land and natural-resource exploitation.” The proposals range from building, or upgrading, major roads and railways across the Congo basin and east-west links in southern Africa. One route is planned to link Dakar in Senegal to Port Harcourt in the Niger delta. Another would eventually link Kenya with Chad. If all the corridors identified by the authors are built, they would total 53,000km in length. Most involve

roads, rail, powerlines and pipelines and each would probably lead to development at least 50km-wide along their length. “Africa needs better roads and railways which, if well located, can do a lot of good but if badly sited can open a pandora’s box of problems, as has occurred in the Amazon where illegal logging and poaching of wild animals has devastated pristine areas,” says Professor William Laurance, an ecologist at James Cook University, Cairns, Australia, and the study’s lead author. Laurance said Africa’s development corridors would strongly affect future patterns of mining, land occupation and agriculture. “Our analysis suggests that, as currently planned, a number of the development corridors would yield only limited agricultural benefits while severely degrading African ecosystems and wildlife. Concerted efforts are needed to reduce and mitigate these impacts.” Contd. in Pg. 16 The Transporter

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Environment THE TRANSPORT CORRIDORS

KRA to replace SIMBA SYSTEM

Major road and rail routes: current and planned

Contd. from Pg. 12

Active Planned Being Upgraded Dakar

Port Harcourt

Mombasa

Tropical and sub-tropical forest

AFRICA’S TRANSPORT BLUEPRINT

could spell doom for flora and fauna, study says

Africa needs better roads and railways which, if well located, can do a lot of good but if badly sited can open a pandora’s box of problems, as has occurred in the Amazon where illegal logging and poaching of wild animals has devastated pristine areas. Prof. William Laurance

Contd. from Pg. 14 Six of the corridors are said to be well planned with large benefits and only limited environmental costs, another six risk damaging critical environments, especially rainforests in the Congo basin and west Africa and biologically rich equatorial savannah regions, according to the study. But the author argues that the 20 or so marginal corridors should be evaluated in much greater detail. “If they do progress, it should only happen under the most stringent conditions. “For Africa, the dangers of the development corridors are profound. Even if well executed, we estimate that the current avalanche of corridors would slice through over 400 protected areas and could easily degrade another 2,000. “Beyond this, the corridors will encourage human migration into many sparsely populated areas with high environmental values. The wild card is the hundreds of billions of dollars of foreign investments pouring into Africa each year for mining. Even if a corridor is likely to yield only modest benefits for food production it may be very difficult for governments and decision-makers to say no to big mining investors.”

PUBLISHED RULES ONLINE Kenya has already published all customs rules and procedures online as demanded by the agreement and once it comes to force, the country will have to consult with stakeholders when amending laws on moving goods. “Kenya has done a lot in terms of a single customs window and we now have to move to discussions on making information available for users around procedures and tariffs through automation because the private sector need to know what to expect,” WCO secretary-general Kunio Mikurinya said. The pact also requires Kenya to provide an electronic means of clearing goods before they arrive in the country and allow goods, especially air cargo, past customs as fast as possible, even before the final determination of customs duties and taxes. Parties had also agreed that small products with minimum value should be let across without duties although the limit is not yet set. Implementation of the TFA has the potential to increase global merchandise exports by up to Sh102 trillion ($1 trillion) annually benefitting mostly developing countries, according to the WTO’s World Trade Report 2015 released in October. Kenya is already part of a process to implement the pact through the Northern Corridor Initiative alongside Burundi, DRC, Rwanda and Uganda, having agreed to streamline customs control, documentation procedures and transit. Recently, Ethiopia formerly applied to join the corridor that links landlocked countries of Uganda Rwanda and Burundi with Kenya’s port of Mombasa after being an observer for six years.

SOURCE: THE GUARDIAN

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The Transporter

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Regional Rwanda to sign OSBP BILL Once fully operational, One Stop Border Posts will improve truck turn around and facilitate inter-regional and international transport and road transit.

he Council of Ministers in the East Africa Community (EAC) in November 2015 introduced the One Stop Border Post Bill, 2013 to Rwanda for final Assent to give it a full legal force. The countries that have already functioning OSBPs are using bilateral agreements between them to carry out the operations. Already, the Republics of Burundi, Kenya, Tanzania and Uganda have assented to the Bill. Already where the facilities are running bilaterally, there is facilitation of free movement of persons and enhancement of trade between the Partner States, an East Africa Legislative Assemble (EALA) report adopted by the House states. In this regard, regional legislators have called for remaining works of OSBPs to be fast-tracked to allow its implementation for further integration. The recommendations are contained in a report of the Communication Trade and Investments (CTI) on the OSBPs in EAC Partner States debated and passed by the House. The report was presented to the Rwanda House by Hon. Nancy Abisai on behalf of the Committees Chair, Hon. Mukasa Mbidde. EALA Members undertook an On-Spot Assessment on the One Stop Border Posts in EAC Partner States in the months of April and September 2015. Phase one of the assessment covered OSBPs at Mutukula (Uganda/Tanzania), Mirama Hill/Kagitumba (Uganda/Rwanda) and Rusumo (Rwanda/Tanzania) on 8th to 11th April 2015. The second phase covered Lungalunga/HoroHoro (Kenya/Tanzania), Taveta/Holili

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(Kenya/Tanzania) and Namanga (Tanzania/Kenya) from 30th September to 3rd October 2015. The objective of the Onâ&#x20AC;&#x201C;Spot assessment was to find out the status of implementation of the OSBP initiative project and its effect on the movement of people and the EAC business environment. It also set to interact with stakeholders and identify opportunities and challenges affecting the implementation of effective OSBPs and to come up with relevant recommendations, EAC secretariat said. Stakeholders who participated in the On-Spot Assessments included revenue authorities, immigration, bureau of standards, police, clearing and forwarding agents and traders. Others were transporters, local authorities and development partners as well as officials from the EAC Secretariat. One Stop Border Posts lessen time spent in clearing goods at borders and facilitate interregional and international transport and road transit. This is because when exiting one country and entering another, OSBPs combine two stops into one, thus reducing transit time. During the meetings, Members were informed that construction of an OSBP was delayed at the Mutukula (Tanzania side) due to late handover of the site, power outages and floods among others. Mutukula on the Uganda side also had delays occasioned by re-designing challenges, delays in relocation of police posts occupying the area and delay in release of funds among others. The OSBP on Mirama Hills, which was financed by TradeMark

East Africa to the tune of US $ 7.8 million was however completed in time as was the facility at Kagitumba, Rwanda/Uganda border. Construction at Rusumo border was expected to be concluded in December 2015. In Namanga, the report indicates that construction on the Tanzania side has been completed even though not formally handed over due to a number of outstanding issues. On the Kenya side, a number of challenges continue to hamper the completion including erratic power supply, lack of drive through scanners for goods carrying vehicles and funding shortages. According to Namanga Kenya Revenue Officer Station Manager Mr. Dishon Njuguna, the project was 80 per cent complete. The completion was delayed after the contractor declined to receive his payments minus the penalties after a breach of contract. He was supposed to have completed the construction of the facility by December, 2013, but the contract terms were reviewed to June, 2015, attracting penalties. Generally on all borders, there is limited knowledge on borders with regards to OSBPs, lack of operating manuals and inadequate water supply. In its findings, the report underscores training and sensitisation programs and the need for teamwork. The Secretary-General of the EAC, Amb. Dr Richard Sezibera reiterated that the EAC OSBP Bill and the Vehicle Load Bill were currently in Rwanda on the last stop and that the process of assent was on.

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Regulation TRUCKERS’ CHARTER improves axle limit compliance

With the Exception of Busia, all the other weighbridges observed a compliance level above 90 percent since February 2015.

he self-regulatory charter on overloading has yielded significant gains according to the Logistics Performance Index Survey released recently by the Shippers Council of Eastern Africa (SCEA). The survey shows improved compliance at all the weighbridges, a success the report attributes to the charter 14 agencies involved in cargo transport signed in September 2014. After a month of signing the charter, Mariakani recorded a compliance level of 82.5 percent with Athi River recording 89.7 percent. In June last year, the two weighbridges recorded a compliance rate of 93.2 and 95.6 percent respectively. Except Busia, the report noted, all the other weighbridges observed a compliance level above 90 percent since February 2015. It is only Busia that still operates fully under static weighing machines. “All weighbridges have showed mixed results in their compliance level since the charter was signed. It is expected that all trucks should achieve 100 percent compliance with few exceptional cases,” said the survey report that was released in November 2015. Another key innovation that has improved compliance is the installation of High Speed Weighing in Motion (HSWIM) bridges. The innovation came when the Kenya National Highways Authority (KeNHA) contracted SGS to upgrade and manage the network of weighbridges throughout Kenya to enhance road safety, facilitate trade by decongesting weighbridge stations and improve data generation and collection. SGS installed HSWIM systems, which removed human discretion

ISSUE 26 VOL. 1

from weighbridge operations. With underground sensors imbedded in the road, HSWIM automatically detects trucks that weigh more than the legal limit, selecting them for static weighing. Stakeholders developed the charter in response to the challenge of dealing with issues affecting overloading through co-operation rather than legislation. The charter that was signed by 14 agencies involved in transport outlined key performance indicators and responsibilities of each organisation in controlling the vice. According to Kenya Transports Association (KTA), when a truck is overloaded, the cargo owner benefits by paying less for a load that would have been carried by two trucks. KTA said that despite efforts to sensitize truckers and efforts by government agencies, some transporters continue to overload. According to the survey carried out by the Northern Corridor Transit Transport Coordination Authority (NCTTCA), a truck which is not overloaded saves 29 hours of uninterrupted flow at weighbridges. The authority said vehicles that comply with the weight limits are overhauled between 400,000 to 500,000 kilometres compared to the overloaded vehicles that are overhauled at about 300,000 and sometimes as low as 10,000 kilometres. In recognition of the challenges facing the transport sector in regard to overloading, players developed a self-regulatory mechanism they hoped would deal with the problem. They argued that the challenges would be addressed more effectively through cooperation rather than legislation and punitive punishment which

have been there over the years yet the vice continued to thrive. The initiative followed the EAC load control Bill which was passed in May 2013 and which harmonized the gross vehicle weight (GVW) limits to 56 tons across the region. Measurement is based on axle load with maximum for single axle at 10 tons and a maximum of seven axles per truck. Initially, Kenya had a maximum allowable weight of 48 tonnes, Tanzania 56 while Uganda, Rwanda and Burundi allowed a maximum of 53 tonnes. The various measurements were a source of conflict and confusion among the northern corridor states. Governments within the EAC have committed to adopting a unified approach to issues of common interest in the transport sector, of which overload control is critical. The law makes provisions for the control of vehicle loads, and establishes a framework for the protection of the regional road network. It overrides the individual member state laws and the member states were expected to realign their respective laws to act within a period of one year. “From the TOP indicators, there is overloading on our roads, despite laws being in place,” said NCTTCA that has been monitoring performance of the Northern corridor, including compliance at weighbridges through the Transport Observatory Project (TOP). The Authority coordinated the signing of the charter through its Executive Secretary Donat Bagulay. “The Self-Regulatory Charter is anchored on the East African Community Vehicle Load Control Bill 2012, which provides a framework to be applied in the EAC,” Mr Baluga added. The Transporter

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Cover Story

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The Transporter

Traffic snarl ups hit

TRUCKERS HARD With an average of 2,500 trucks leaving Mombasa each day, the losses directly resulting from the traffic jams translates to $240 000 per day or $2,880,000 annually in costs to truckers and shippers – KTA

onstraints at the Port of Mombasa, delays along the Northern Corridor transport route and operational inefficiencies have reduced the number of kilometres each truck travels annually to between 60,000 - 90,000, casting doubt on achievement of the 120,000 envisaged at the signing of the Mombasa Port Community Charter. Constant traffic snarl ups at Taru, just about 35 kilometres from Mombasa town especially over the over the past four months, have compounded the situation, sending driving transport costs to an estimated 30 per cent of the value of traded goods. The traffic jam is caused by a diversion where the road is being constructed between Samburu and Taru. Data compiled by the Kenya Transporters Association (KTA) indicate that operational (both direct and indirect) costs and administrative costs for trucking companies constitute over 80 per cent of the trucking charge with direct costs constituting nearly 60 per cent of the total cost. Inadequate cargo off-take and delivery infrastructure within Port precincts and along key transport routes has resulted into perennial traffic snarls ups with the resultant delays in cargo delivery and evacuation as well as empty

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containers repatriation, says KTA. “Currently, trucks take four to eight hours to navigate a 10 kilometer stretch between the Port’s main gates and the dual carriageway at Miritini and over 24 hours to deliver empty containers. These delays in cargo off-take constitutes between 15 – 30 per cent of the expected journey time from Mombasa to Nairobi,” KTA says in a report prepared by programmes officer Mr Stephen Ogolla. According to the report, with an average of 2,500 trucks leaving Mombasa each day, the losses directly resulting from the traffic jams translates to $240 000 (Sh25.2 million) per day or $2,880,000 (Sh302.4 million) annually in costs to truckers and shippers. “Poor or inadequate infrastructure directly contributes to increase in

Ksh25.2 Million Lost daily to truckers as a direct result of traffic jams in Mombasa

ISSUE 26 VOL. 1

Cover Story

driver time on the road thus higher labor costs; increased driver fatigue resulting into increase in road accidents and reduced trip miles per truck over a period of time thus larger fleet needed for the same amount of work and higher vehicle repair and operating costs,” Mr Ogolla says, adding that the costs are passed down to the end user in increased prices of finished goods. According to Mr Malusha Majani, managing director at Shaluma Enterprises Limited, the major traffic jam is caused by heavy commercial vehicles that he says should be banned from operating during the day.

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“We supply ballast at the Mombasa port for construction of the second container terminal and when we used to operate during the day we could only do 220 tonnes but after starting operations after 8pm we are able to deliver over 1,000 tonnes. If all trucks operate at night we could help address this problem,” he said. KTA acting executive officer Mr Wellington Kiverenge said there was need to expand the roads in and out of Mombasa. “The roads that we currently have cannot handle the increased cargo at the port, the solution to this is the road network. Once this is sorted out,

it will solve the entire problem,” he said. He said KTA and their truckers were open to any suggestions that would ease the movement of trucks, which will help them save time. Mr Kiverenge added that having an alternative route through Jomvu would help reduce the jam if trucks would be allowed to use the road. He however said another cause of congestion is the narrow exit road through Bomu Hospital area. “The road along that stretch is very narrow and is not able to accommodate more than one truck at a time, this affects all the The Transporter

way Miritini and Refinery roads,” he noted. The numerous Container Freight Stations (CFSs) in the area have also complicated traffic flow since trucks turning to enter into the facilities block other road users. There have been calls from a section of port stakeholders who say the CFSs, which were established in 2007, should be located at least 40 kilometres from the port and not within a radius of 10 kilometres as is the case. There might also be a reprieve in the offing after the government announced plans to expand Mombasa-Mariakani Road to The Transporter

dual carriage way at a cost of Sh22 billion in what officials of the Kenya National Highway Authority (KeNHA)said was aimed at speeding cargo movement from the Mombasa port and ease traffic flow. KeNHA said the project will be undertaken into two phases starting with construction of MombasaJomvu 11.4 kilometer road at a tune of Sh10 billion. The agency’s corporate affairs manager Charles Njogu said the first phase of the project will be implemented through “conservatory loan’ from the African Development Bank (ADB). “We are playing our part to remove nontariff barriers along the Northern Corridor in line with the government plan to bolster efficiency in the movement of cargo along the 8,800km corridor from the Port of Mombasa up to the Democratic Republic of Congo,” added Mr Njogu. Mr Njogu said actual construction work for the first phase will begin early 2016 and already KeNHA has advertised for the procurement process with a view of getting the right bidder to undertake the project. The first phase of the dual carriage way road project will start at the junction of Kenyatta Avenue and Digo road within the Central Business District areas in Mombasa town. It will stretch along Jomo Kenyatta Avenue through Makupa causeway, Changamwe, Mikindani, Miritini, Mazeras, Mariakani before terminating just past Mariakani weighbridge.

Lasting solution in sight?

new proposed six lane highway project, connecting the port city of Mombasa to the outskirts of the greater Mombasa metropolitan area in Mariakani – some 40 kilometres enroute the main highway to Nairobi – will cost 22 billion Kenya Shillings. This new section will cover about 12 kilometers, which are among the most congested and jamprone in the entire country. It has been a cause for constant complaints by motorists which in the past have been stuck for more than 10 hours without moving an inch. This being the only main exit route from the coast to the national parks and game reserves inland, like the Sagalla Hills, the Taita Hills Game Reserve, Tsavo East, Tsavo West and Amboseli, traffic jams impact severely on safari itineraries for tourists, and the new road, when complete in approximately in three years’ time, will bring substantial relief through shorter transit times. The project is reportedly being financed by the African Development Bank, internally generated funding through various levies, with other development partners providing loan and grant funding.

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ISSUE 26 VOL. 1

Roads Two Sh71bn roads to be built in North Rift

Project underway to ease

MOMBASA-NAIROBI

highway traffic congestion Traffic snarl ups along the Mombasa Nairobi highway are expected to ease following drastic measures to address gridlocks like those experienced during the recent rains. Speaking during an inspection tour of the Maji ya chumvi – Bachuma Gate road project, KeNHA special projects Manager Engineer Kefa Seda said that the recent gridlock will not be experienced again due to the mitigation measures taken. “Previously the deviation that was there was 7km long 8.5m wide but right now as we speak it has been reduced to 2 km to ease traffic congestion, we also have traffic being monitored every 45 minutes so we expect all to be well going forward,” said Engineer Seda. The Bachuma Gate - Maji ya chumvi road classified as A109 is 53.4 km long and covers Taita Taveta and Kwale counties of the coast region. The road project starts at the entrance of Tsavo National park and ends at Maji ya Chumvi Bridge. The project is a section of the Nairobi - Mombasa highway and runs through rapidly expanding centers which include Mackinon road, Meli kubwa, Taru and Samburu forming part of the Northern

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corridor, an international trunk road. he construction of the Maji ya chumvi Bachuma gate which has been recently delayed due to El Nino rains is expected to be completed in 24 months at a cost of Sh5 bilion. The scope of works include construction of a main carriageway, realignment of minor roads at junctions, provision of vehicular access and access culverts for road side properties. Other works include the construction of a new road over Rail Bridge, drainage structures, construction of six lorry parks at Samburu, Mackinon, Taru, provision of bus bays and road markings. It is anticipated that improving the road will enhance domestic and regional trade and create job opportunities. It is also expected that reliable regional connectivity will accelerate regional integration. Engineer Seda said that the Authority was adamant that works along the road project will be completed within the contract period. “We are expecting construction works to be completed in November 2016”, Engineer Seda said.

The national government has promised to speed up work on two roads, together costing Sh71 billion, in the North Rift. The two roads are a 97km section of the Kitale-Lodwar road between LokicharNadapal and the 43km Southern Bypass in Eldoret. Turkana Governor Josphat Nanok said the Kitale-Lodwar road will be built for Sh63 billion. He said the county has agreed with the national government to accelerate work. The road has been in bad condition for many years and will be tarmacked. It will be financed mostly by the World Bank. The government secured credit of $500 million (Sh50 billion) from the bank in July last year to build the section between Lokichar-Nadapal. The government is ready to construct the Sh6 billion Southern Bypass in Eldoret by March, he said. A contractor will move to the site, following completion of a survey and compensation of families to be displaced. The African Development Bank will finance the project, which Uasin Gishu Governor Jackson Mandago says will ease movement of goods and people in East Africa. However, survey work is yet to start on a 25km dual carriageway linking the town to Eldoret International Airport. It will cost Sh8 billion. The Transporter

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Technology Driverless trucks usher in

NEW ERA FOR HAULIERS Truck makers, logistics firms salivating at potential gains to be had by introducing automation into road-going freight transport.

he driverless vehicle debate revolves primarily around autonomous cars, piloted by top tech companies such as Google and Tesla. But what about driverless trucks? Truck makers and logistics companies are salivating at the potential gains to be had by introducing automation into roadgoing freight transport. “Maybe it’s not as eye-catching as a person reading his newspaper behind the wheel of a passenger car,” says Niklas Gustafsson, chief sustainability officer at Volvo Group, the Swedish truck maker. “But in the trucks business... the reason for automation is maybe not so much for the driver. It’s more about trucks in platoons saving a lot of fuel.” Fuel consumption represents about a third of the running costs for road hauliers. Driverless heavy duty trucks offer the potential for “platooning”, whereby trucks travel in convoy at very close distances behind one another. That could mean a saving of as much as 20 per cent on fuel costs thanks to aerodynamics, says Gustafsson. Driverless trucks have so far been successfully employed in specific areas — for example around mines

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or in container ports. Road-going trucks are already benefiting from semi-autonomous safety features. For example, all new trucks sold in Europe since November must by law be fitted with autonomous emergency braking. Other features, such as MAN’s lane guard system, keep drivers within their lanes and warn truckers if they are veering off course. Several truck makers, including Volvo, MAN and Scania, offer advanced intelligent gearboxes that use GPS to spot when a hill is approaching and help drivers know when to accelerate and when to coast to limit fuel consumption. Further moves are being made towards full automation. Daimler of Germany this year revealed the first self-driving truck to be licensed for commercial use. Trials of platooning are also set to take place in the Netherlands early next year. The rewards go beyond fuel consumption. Autonomous commercial vehicles would, for instance, be better at maintaining the concentration that can fail human truckers on long-haul and routine journeys, while avoiding fatigue. “The system never gets tired,” Wolfgang Bernhard told the Financial Times this year speaking at the launch of its Freightliner truck.

“It never gets distracted. It’s always at 100 per cent.” Some say it would be possible to designate lanes on long highways to autonomous vehicles — effectively moving road transport into the realms of computerassisted transport employed in the air and on the rails. “If there were dedicated lanes on the roads, this automated technology would be introduced even faster,” says Gustafsson. But, as with driverless cars, regulation needs to be resolved before autonomous trucks head on to the highway. Platooning, for instance, is technically possible using radarbased adaptive cruise control — a technology that effectively tracks the car in front. But in countries such as Germany, legislation says that trucks have to keep a safe distance of 50m from the lorry in front — and that is too great a gap to achieve aerodynamic gains. The regulation issue is more acute for trucks, analysts say, since they tend to drive long distances across national borders and between jurisdictions. As such, Frost & Sullivan, the consultancy, believes that while autonomous highway driving in passenger cars is due to become mainstream by 2020, driverless trucks will not be introduced for platooning until closer to 2022. Truck makers also say hauliers will be reluctant to truly embrace autonomous commercial vehicles until the trucker is able to fully disengage from driving in transit and perform tasks, such as processing cargo. “[Until then], this is no business case for any customer,” says Manuel Hiermeyer at Volkswagen Truck & Bus, the holding company for MAN and Scania. “When the driver is still behind the wheel, he is not able to take on other duties. “Only in the next step, where a driver is not required during a defined use — such as the highway — then there is a business case.” But that in turn raises the question as to whether truckers will want to carry out functions other than driving. “Personally, I do not see that they want to do logistics with an iPad,” says Hiermeyer. The Transporter

ADVERTORIAL FEATURE

Handling of the steel at the Panal Freighters Ltd. yard, Mombasa.

Unexpected happening that offered

PANAL FREIGHTERS LTD a position in global logistics

Mr. Ahmed Mwinyi Shimbwa, a logistic industry enthusiast and the firm’s managing director says that the newly unveiled five years strategic plan will firmly plug the company in the global logistics economy.

n event that took place at the port of Mombasa in 2003 was the turning point for the Panal Freighters Ltd, one of the leading logistic providers in the region. In that year, the firm had existed for almost a decade. Although it had been registered in 1994 as a trading, commission agent and transport company, it had only specialized in clearing and forwarding business until that eventful year. In 2003, the port of Mombasa faced a serious congestion problem. Since its establishment and with its main focus being on clearing and forwarding business, Panal had to seek partnership from the existing transporters to help the company evacuate its growing clients’ cargo from the port. This arrangement had worked well without any major hiccup until 2003. This year, the transporters the company had used were seriously overwhelmed by the volumes of the cargo that they needed to evacuate from the port due to the unfolding situation. Without a fleet of

trucks of its own, Panal Freighters could only bet on the mercy of fate to deliver its clients consignment. “We were stuck with a consignment of a certain German based pharmaceutical firm. It is then that our client challenged us to invest in our own trucks, a challenge that we took very positively,” Mr. Shimbwa, one of the founding directors, who started the logistic company with a lean staff of two - a secretary and an office assistant and whose passion on blue economy had been inherited largely from his father and grandfather’s seafaring careers, said. The clearing and forwarding business the company had operated had already grown significantly by the time he was considering venturing in a new transport business, a success he attributes to the goodwill the company enjoyed from the business community especially those from Mombasa, according to Mr. Shimbwa, who was in this year’s Mashujaa Day awarded a certificate of recognition by the Ministry of Sports, Culture and Arts.

“Although getting KRA licenses then was a huge challenge, with the aggressiveness and enthusiasm we ventured in logistics, it did not take us long to get the ball rolling by getting all documentations right. It is a career I had all along yearned for,” he added. Having been challenged by the pharmaceutical company to start a transport wing, the company saw a new opportunity and seized it. The two companies had enjoyed a cordial relationship for a substantive period of time. Based on this, they signed a two years contract, a move that made Panal Freighters Ltd dream of venturing in transport get a new lease of life. Armed with the contract documents that guaranteed the company a sustainable business opportunity, the company found it easy to convince local banks to offer a loan facility to purchase a fleet of its own trucks. “In 2003, we bought the first four trucks from Britcom UK firm. This was a major breakthrough that has been the turning point of the success and growth

ADVERTORIAL FEATURE

The growth we have witnessed is attributed to the goodwill we enjoy from our customers owing to the professionalism we employ. Mr. Ahmed Mwinyi Shimbwa

Mr. Ahmed Mwinyi Shimbwa - Director, Panal Freighters Ltd. we have enjoyed to date,”Mr. Shimbwa said. In the year that followed, the company bought four more trucks and in 2005, it doubled its fleet to 16 trucks. Today, the company enjoys a fleet of over 150 trucks, specializing in haulage of all types of cargo. How the transport line would influence the growth of the company in the over one and half decade that followed is something that the directors, according to Mr. Shimbwa, could not have comprehended when they took that bold step towards the unchartered territory. Transport, he said, is a significant component in the logistic chain. With such a huge fleet it enjoys today, the company that today imports its own spare parts, tyres and other consumables has been able to meet its internal needs and also to offload excess to the external markets, leading to expansion in other areas.

ONE-STOP SHOP

Mr. Shimbwa credits transport to the success of the other business lines the company has opened. Panal Freighters Ltd is today a one-stop shop when it comes to transportation and freight. The company has grown to become one of the household names in East and Central Africa offering freight forwarding services to its clientele nationally, regionally and internationally. Today, it provides Onland, Air, Rail, Ocean and Bulk cargo logistics. It also provides yard and warehousing space and project cargo shipments to clients such as Ramco Group , Kapa Oil Refineries, Abyssinia Group , World Food Programme ,Picfare Group of companies, RT East Africa, Elgon Kenya Ltd, Bhachu Industries and Multilines Group of companies. Indeed, the company holds ISO 9001:2008 quality accreditation through QAS International for the management, handling, logistics and shipping of project cargo worldwide since 1994. It has also ventured in other industries such as housing, hotel and it is in the process of starting a steel production unit. “The growth we have witnessed is attributed to the goodwill we

enjoy from our customers owing to the professionalism we employ. The government has also been very responsive and has developed a supportive business environment. And above all, Kenya and regional economies are growing at impressive rates,” Mr.Shimbwa, who speaks passionately about logistics industry said. Stakeholders of Northern Corridor, which stretches from Mombasa to Democratic Republic of Congo, have undertaken serious efforts to reduce nontariff barriers, a move that has increased business in the recent years. Mombasa port has also initiated several infrastructural projects that include expansion of the berths, dredging of the channel and the ongoing construction of the second container terminal- expected to increase the container terminal capacity by 1.2 million Teus- reinforcing the facility status as a regional hub.

INTERNATIONAL AFFILIATION

World players are also willing to deal with local players, Mr.Shimbwa noted. The evidence of the increased activities is demonstrated by the expansion Panal Freighters Ltd has undertaken. The company has opened offices in all major towns along the Northern Corridor in Kenya and liason offices in Kampala, Kigali, Bujumbura, DRC and Juba, serving South Sudan, the second biggest transit market for cargo passing through Mombasa port. “We have been very keen to create international networks. There is a lot of acceptance by the global players, which has been critical for the growth of the local industry,” Mr. Shimbwa explains. And indeed the company has put great efforts to put itself in the global map. Internationally, it is affiliated to the International Federation of Freight Forwarders Associations (FIATA), a nongovernmental organization, representing an industry covering approximately 40,000 forwarding and logistics firms, also known as the “Architects of Transport”, with a staff of between 8 - 10 million people in 150 countries. Panal Freighters Ltd is also a member of the World Wide Partnership Cargo

Link Network (WWPC) and International Air Transport Association (IATA) another global trade association for the airline industry. It has a membership of 260 airlines comprising 83% of total air traffic in the world. Too, the company is targeting to partner from 2016 with the World Cargo Alliance (WCA) the world’s largest and most powerful network of independent freight forwarders, with over 5,936 member offices in 187 countries around the world. Locally and regionally, the company is affiliated to the national associations that include Kenya Transport Association (KTA), Kenya Association of Manufacturers (KAM), Shippers Council of East Africa (SCEA) and Kenya International Freight and Forwarding Association (KIFWA. Others include Federation of East Africa Freight Forwarders Association (FEAFFA) and Kenya National Chamber of Commerce and Industry (KNCCI). “Affiliation to the global bodies has been a strong pillar for networking with global players and we have been able to provide logistic solutions to a global audience as a result,” Mr. Shimbwa said. Owing to the value the firm attaches to creation of international networks and better services, Panal Freighters Ltd has launched a five year strategic plan, which the directors fondly call vision 2020. The strategic plan has identified ambitious targets for its all the departments with the view of increasing more value and customer satisfaction. “The emerging market dynamics where we are working with international players demands high standards and this is why we are strategic to up our game,” Mr. Shimbwa said, adding that the strategic plan was informed by a comprehensive survey that was done on the customers overall needs. Mr. Shimbwa says that the awards the company has won in the past is a testimony of the high level of professionalism employed by the employees. The company has broken the record by scooping four consecutive awards for concerted efforts in facilitating transportation logisticstransport category, an annual award given by the Kenya Ports Authority

(KPA), 12th International Transport Award New Millennium Awarded in Madrid Spain, Best Trade Stand in Msa International Show. It has also received awards from the safety sensitive oil marketers- VIVO Energy and Total. One of the key pillars of this innumerable success is a dedicated and motivated workforce. There is a lot of emphasize on training and Panal Freighter Ltd personnel are constantly trained by the Federation of Kenya Employers (FKE), National Industrial Training Authority (NITA)- a government agency, SCEA,KIFWA, KTA’s heavy commercial training institute, KNCCI and international exposure through various travels, the MD said. The 21st century depends on the human resources to face the challenges of industrialization and globalization of business. Scaling up human capital effectiveness and efficiency, staff growth and career development, through staff motivation and provision of a safe and conducive working environment are key to our human resources management. “ Right from the point of selection and recruitment we zero in on talent and professionalism. We enjoy a diverse workforce and are an equal opportunity employer.” Shimbwa said. The company also puts great emphasise on the service to its customers and provides insurance covers customized to meet its clients’ needs; ‘by insuring their goods and merchandise against physical loss, destruction or damage whilst in transit, when loading or unloading and at any other time when in our custody, giving them the peace of mind and ensuring them a smooth life.’ As the emerging economic trends demand today, Panal Freighters Ltd has invested immense resources on Information Communication and Technology in order to remain competitive. This is for our own internal operations between the Mombasa based headquarter, branches in the country and liason offices in landlocked countries we are serving. “This has enable us to have a real time data flow to all our satellite offices which are interconnected translating to a seamless communication,” Mr Shimbwa said, adding that the company’s movement of the trucks is monitored by a fleet management system that has been put in place that apart from offering security, emergencies are responded to promptly. “Last but not least, Panal Freighters Ltd recognizes the need for constant engagement with our customers and we embraced all social media platforms where we are able to promptly respond to queries raised by our customers or any other players.

Mombasa and Dar es Salaam port to clear the goods at the port of entry, relieving the players the burden of physically escorting goods to prevent diversion and enhancing revenue collection. “Although the players were a bit hesitant when the programme was conceived as one would expect, the gains are very significant,” Mr. Shimbwa said, adding that it is today taking only 3 days to move a container from the port of Mombasa to Kampala a feat that previously could take up to 18 days. Mr. Kenneth Bagamuhunda, Director of Customs at the EAC secretariat, in a recent interview said that almost all the goods being traded in the East Africa are being processed through the system leading to significant revenue collection, with fuel imports in Uganda recording an increase of 20-30 percent. The gains so far made should be consolidated, according to Mr. Shimbwa, by executing some reforms. For instance, there is a persuasive need to harmonize the tariffs in the region to avoid revenue leakage. The monitoring of the transit cargo should also be reinforced. Trucks hauling the goods are installed with Electronic Cargo Tracking Systems (ECTS). “To reinforce this further, there is need to introduce rapid response teams so that they can promptly respond to alerts. An audit of the cargo by revenue authorities from the shipping lines to the end user would also eliminate any malpractice,” he added. More vigilance on sensitive cargo such as sugar is important. Unscrupulous traders can easily exploit the limited capacity by enforcing authorities to scrutinize and sneak into the region such cargo. “A trader can declare a consignment of 200 containers as rice but in actual sense it is only 20 containers that will contain this while the rest container carries sugar.” Added he; “Clever and comprehensive audit would easily be able to identify any discrepancies.” The Kenya Bureau of Standards has appointed inspectors spread in the countries Kenya source imports

that are supposed to carry pre- export verification. However, there role is only limited to checking standards and Mr.Shimbwa contends that with minimal resources, the same inspectors can also carry other task such as identifying quantity and value of the imports for correct tax computation and other requirements. “The Single Window System risk assessment module should also be made active to help profile and detect fraudulent transactions,” he added. The construction of the Standard Gauge Railway (SGR) has attracted divided opinion from various players on how it will impact on the road transport sector. However, according to Mr. Shimbwa, the rail world over haul only a small percentage of the total volumes and Kenya should not be exceptional. “The regional economies are growing at very impressive rates. We are looking for efficiency, which the new line is seeking. With road transport being the back bone of the regional economies, we expect the increased efficiency to have ripple down effect on our businesses,” he said.

OVERLOADING

On overloading, Mr. Shimbwa says that there is over 80 percent compliance to axle load limits. The axle load compliance charter that has been developed by stakeholders involved in road transport was signed last year and has reduced corruption, the biggest culprit of overloading. “The best practice comes with self regulation. KTA where I sit as a director is initiating a process to partner with National Transport Safety Authority and other agencies to compel transporters to be members of an association and KTA has already developed a code of conduct,” Mr.Shimbwa said. Mr. Wellington Kiverenge, the acting Chief Executive Officer of the Kenya Transporters Association (KTA) said that one of the biggest challenges the association had faced in its campaign on overloading was lack of a coordinated approach to fight the vice.

SINGLE CUSTOM TERRITORY

Mr. Shimbwa’s interest on the logistics industry is evident from the passionate and eloquence he speaks on the topic. One of his areas of great interest is the Single Custom Territory (SCT), which he thinks should have been conceptualized and implemented many years ago. This system allows the importers from the landlocked countries using both

Operations at the Panal Freighters Ltd. office, Mombasa.

Infrastructure

DONGO KUNDU BYPASS to improve turnaround for trucks, transporters say

onstruction of the Kipevu-Miritini road has taken shape, and is expected to improve evacuation of cargo from Mombasa port with transporters saying it will help improve turnaround for trucks. The road is part of the long awaited Dongo Kundu bypass whose plans were mooted over 30 years ago. The Kipevu road will have special features incorporated into the designs, in a move intended to enhance security at the Moi International airport. The one-kilometre stretch passing along the airport border will be covered with a canopy and CCTV cameras installed to ensure all activities are captured and relayed to a control centre, according to the Kenya National

ISSUE 26 VOL. 1

Highways Authority (KeNHA). “There will also be a tunnel originating from near the airport running under the road to access the sea and will be used in case of emergency for security purposes only. These features have been introduced in new designs to guarantee security at the airport,” said Kungu Ndung’u, engineer in charge of the project. The new features come as the country grapples with security concerns raised due to terror threat Kenya faces as a result of its fight against terrorism with Kenya Defense Forces in Somalia. The road, which runs nearly along the shoreline, is scheduled to be completed in 36 months at a cost of Sh11 billion and is part of the larger Dongo Kundu bypass whose cost is expected to exceed the initial estimate of Sh28 billion

due to the enhanced features. The authority was negotiating with the contractor – China Civil Engineering Construction Cooperation – to see how the project would be fast-tracked and completed in 24 months, KeNHA chairman Erastus Mwongera said. “This is the first phase of the project and the road will improve transport of goods along the northern corridor from Mombasa port which continues to experience congestion due to slow movement of cargo,” noted Mr Mwongera. According to KeNHA, tendering for the 8.9 kilometre second phase of the project which begins from Mwache to Kibundani had started. The Dongo Kundu road, also referred to as the Southern bypass, is seen as the solution Contd. in Pg. 39 The Transporter

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Infrastructure

DRC joins SGR project,

BOOSTS MOMBASA PORT In 2014, DRC cargo handled through Mombasa port stood at 407,727 tonnes against 511,714 tonnes in 2013, a decrease of 20.3 per cent. This compares poorly with the 1.3 million tonnes handled by the neighbouring and competing Dar port in the same period.

emocratic Republic of Congo (DRC) officially joined the regional joint infrastructural projects during the latest East Africa’s Heads of State Summit held in Nairobi in October last year, which is seen as a major boost for Mombasa port future transit business. It joined the four East African countries, Rwanda Uganda, South Sudan and Kenya, which use the Northern Corridor. On October16, the Northern Corridor Transit and Transport Coordination Authority (NCTTCA) facilitated the first bilateral ministerial meeting between Uganda and DRC on the development of the Standard Gauge Railway (SGR). Kenya has already commenced construction of the line between Mombasa and Nairobi, which is said to be over 60 percent complete, with commissioning expected in 2017. Mombasa port is a major gateway to seven landlocked countries in

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East and Central Africa including DRC, but the port has not been able to attract impressive volumes of cargo destined to the central African country with huge mineral deposits. In 2014, DRC cargo handled through Mombasa port stood at 407,727 tonnes against 511,714 tonnes in 2013, a decrease of 20.3 per cent. “The drop was mainly attributed to the import segment of the traffic which decreased by 107,907 tonnes or 22 per cent,” said KPA managing director Gichiri Ndua in a statement. This compares poorly with Dar es Salaam port cargo volumes for DRC. The volume has increased up to 1.3 million tons in 2014 from only 200,000 tonnes in 2004. The Nairobi meeting was attended by a delegation from DRC led by Hon. Justin Kalumba MwanaNgongo, Minister for Transport and Ways of Communication, a delegation from Uganda led by

Eng. John Byabagambi, Minister for Works and Transport as well as a team from the Northern Corridor Transit and Transport Coordination Authority (NCTTCA) led by the Executive Secretary, Donat M. Bagula. The objective of the bilateral ministerial meeting was for the two Ministers to further discuss the development of SGR and, specifically, to agree on the points of the SGR connectivity between the two countries. Furthermore, the meeting aimed to encourage DRC to join the Northern Corridor Integration Projects (NCIP) initiative. “We commend the tenacity of the NCTTCA Executive Secretary in engaging both sides for the realization of the technical bilateral meetings and this first ministerial bilateral meeting on the development of the SGR”, said Mr Byabagambi.

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Infrastructure

BAGAMOYO MEGA PORT: Is it viable?

“Based on the pace of economic development, the country will never attract ships of over 6,000 Twenty Foot Equivalent Units (Teus) in the coming 25 years and should instead expand Dar port..” – Tanzania Shipping Agents Association.

anzania started construction of the controversial port at Bagamoyo late last year (2015) amid a raging debate on its viability. The opinion is divided on whether the existing inland infrastructure, the location of the port and the growing economies Dar es Salaam port serves will provide sustainable business. The mega project, located only 75 kilometres from Dar es Salaam, will be over 20 times of the existing Dar port. The project being funded by China Merchants Holdings International and Oman’s State Government Reserve Fund at a cost of US $ 11 billion will have capacity to handle 20 million containers annually. Former president Jakaya Kikwete, who comes from Bagamoyo, attended a groundbreaking ceremony and said the construction of phase I of the project would take two years. “The construction of the Bagamoyo port and a special

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economic zone is aimed at realising the government’s goal of bringing about an industrial revolution in Tanzania,” he said. The first phase of the port, being built on an 800 hectares land, will realize a quay, the container yards, the cargo terminal and all the dredging works. Government officials said the port would be able to handle mega-ships - with a container vessel size of 8,000 Teus after the first phase is completed. The whole project including roads, railways and the economic zone is expected to take 10 years to build. Tanzania is East Africa’s secondbiggest economy after Kenya, and cargo volumes at the existing Dar es Salaam port are expected to rise as much as 25 percent in 2015 to reach 18 million tonnes. The World Bank said last year that inefficiencies at Dar es Salaam cost Tanzania and its neighbours up to $2.6 billion a year. The project would dwarf Kenya’s port at Mombasa, east Africa’s trade gateway about 300 km (180 miles) to the north, and aims to capitalize

on growth in a region seeking to exploit new oil and gas finds. Jianhua Hu, executive vicepresident of China Merchants Holdings, said implementation of the project marked “the most significant event” in Tanzania-China relations over the past four decades. However, those who are opposed to the construction of the port ask if Bagamoyo is the right location for a port, given its closeness to Dar and far from gas deposits off Tanzania’s southern coast. Even as they see the project as Kikwete’s home legacy, critics say the growth of Tanzania economy does not justify construction of a port of that magnitude. “We are warning the government that with the pace of the economic development, the country will never attract ships of over 6,000 Twenty Foot Equivalent Units (Teus) in the coming 25 years,” Tanzania Shipping Agents Association (Tasaa) chairman Peter Kirigini said mid last year.

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Infrastructure

KENYA-SOUTH SUDAN road to boost trade

Most of the South Sudan bound cargo generated at the port of Mombasa is transported through Uganda and the two point border crossing affects truck turnaround.

onstruction of a crucial road linking Kenya and South Sudan which industry players say will significantly transform trade between the two nations was started in November last year. The road begins from Lesseru and transverses through Kitale, Marich Pass, Lodwar, and Lokichogio ending at Nadapal border between Kenya and South Sudan. The government secured credit of $500 million (Sh50 billion) from the World Bank in July 2015 for the construction of the section between Lokichar-Nadapal. Once completed, trade between the two countries will increase significantly. The volume of goods traded between and Kenya has increased since South Sudan became an

ISSUE 26 VOL. 1

independent state. Today, it is the second largest transit market of cargo imported through Mombasa port after Uganda, which commands over 70 percent of total transit volumes. Last year, a total of 556,000 tons against 540,000 tons registered in a similar period in 2014 were handled by the port. Imports from Kenya make 25 per cent of South Sudan’s total inflows. The delay to construct the road, which is critical for the enhancement of trade between the country and her landlocked northern neighbour, has limited the potential of enhancing business between the two countries. The portion from Loichangamatak to Lokichar will be financed by the government as it continues sourcing for additional funding. “We at the moment do not

have financing from Lesseru to Loichangamatak, however, we express optimism that the development partners such as the German Development Bank (KfW) will support the construction of this section of the road,” Kenya National Highways Authority (KeNHA) director general Peter Mundinia told press. “This road is critical as it has been identified as an important catalyst for integration of South Sudan into the Kenyan economy,” Mr Mundinia added. Most of the South Sudan bound cargo generated at the port of Mombasa is transported through Uganda since Kitale-Juba road in its current state is impassible with high cases of insecurity. Ideally, it would be easy to use the Kitale route which would reduce the border crossing to one and also The Transporter

DONGO KUNDU BYPASS to improve turnaround for trucks, transporters say Contd. from Pg. 32

cut the distance to Juba by about 400 kilometres. Crossing the two border points causes serious delays, affecting overall truck turnaround. Uganda constructed a road connecting Kampala, Gulu in the North of Uganda and Juba. This has made Uganda a huge trading partner with Southern Sudan especially on vegetables and other food stuffs from Uganda. Also, Kenyans intending to travel to Juba have to pass through Kampala to get to South Sudan. Kenya’s main transport artery has traditionally been the Northern Corridor highway running from Mombasa through Nairobi to the border with Uganda at Tororo. “The road will provide a direct road access to the port of Mombasa for South Sudan’s export/imports without transiting into another country and its improvement will promote and facilitate regional economic integration between the two countries,” the KeNHA boss said. An inter-ministerial secretariat that is spearheading second transport corridor, LAPPSET, estimates that the entry of Southern Sudan into the regional economies would see unrestricted demand of cargo rising upwards of 32 million tons per annum. South Sudan relies on Port Sudan in the Northern Sudan and based on the history of the two countries, South Sudan would welcome an alternative, which ideally is Kenya. Lamu port would however provide the best bet since the distance between Juba and Port Sudan is

about 4,000 Kilometres while that between Juba and Lamu is only 1,500 Kms. Also the two countries are set to benefit from being connected to a high-speed fiber optic cable within the next two years which will greatly enhance communication as well as inter-border trade. The governments of both countries have initiated the fiber optic cable system as part of a wider initiative known as the Eastern Africa Regional Transport, Trade and Development Facilitation Project, in which construction of the road has been undertaken. Shared Services Director at the ICT Authority Robert Mugo recently said: “As you are all aware, roads and information superhighways are two of the most effective means of realising accelerated development of any modern economy. Today we are witnessing the implementation of both at the same time in this region.” The ICT Authority is implementing the Kenyan-side of the project through a World Bank fund estimated at a cost of $24.62 million, while the Sudan side is estimated to cost $14.2 million. The full cost of the road construction from Eldoret to Sudan border is an estimated $1.2 million and is set for completion in early 2019. Connecting these countries using traditional and digital infrastructure has the potential to facilitate growth in both physical and digital assets across the two countries and beyond.

to the perennial problem of congestion at the Likoni ferry, which is blamed for underdevelopment of the south coast. Over 300,000 people and 5,000 vehicles use the channel each day, which has overwhelmed the Kenya Ferry Services (KFS) with the five ferries breaking down frequently, resulting to delays. Other projects KeNHA is undertaking at the coast are the ongoing expansion of the Port Reitz, airport and MombasaMiritini roads into dual carriage, with designs of the northern bypass (Miritini-Mtwapa) almost complete, KeNHA said. The projects are funded by the Japanese government through the Japan International Cooperation Agency (JICA), Trade Mark East Africa (TMEA), World Bank and African Development Bank (AfDB). “For a long time, the roads in Mombasa have been faced with congestion but once this and other road projects are complete this will be a thing of the past. In three to four years you should expect a new-look coastal town,” said Mr Mwongera. Last year, the government received a loan facility of Sh25 billion from Japan International Cooperation Agency (JICA), in honour of an agreement signed in June 2012. The second section of the Dongo Kundu bypass will involve construction from Mwache to Dongo Kundu which includes building of long span bridges.

Logistics

Alarm as highway cargo

PILFERAGE ESCALATES Theft is targeting high value cargo and despite the ECTS gadgets, cases are done undetected, which industry players say signifies high level collusion.

So complex is the cartel that the perpetrators are able to offload part of the consignment from transit containers.

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heft of imported goods at the Mombasa port and along the Northern Corridor has reached an alarming proportion with industry players accusing a well-coordinated syndicate that they say is now affecting revenue collection and hurting Mombasa portâ&#x20AC;&#x2122;s competitiveness as a regional hub. A recent status report by transporters and clearing agents shows how pilferage has been taking place unabated. The report, which lists over 65 cases of attempted or actual theft truckers have reported, was presented to government officials when they met logistic stakeholders in Mombasa recently. The senior officials drawn from various government departments including three Cabinet Secretaries had convened to discuss with stakeholders

possible areas of revenue loss and ways to increase collection. So complex is the cartel that the perpetrators are able to offload part of the consignment from transit containers. Trucks ferrying transit containers are mandatorily required to install an Electronic Cargo Trucking System (ECTS) that monitors their movement in real time. The container is also secured with ECTS seals and any interference with it sends an alarm to Kenya Revenue Authority (KRA), the transporter and ECTS service providers. Ideally, a Rapid Response Team is supposed to be deployed immediately to prevent occurrence of a criminal or an illegal activity. Stakeholders are now puzzled how theft is taking place undetected with this system in place. Wellington Kiverenge, acting chief executive The Transporter

officer at Kenya Transporters Association (KTA), a lobby group representing truckers, said the level of sophistication the cartel is operating cannot be effectively executed without an elaborate network of collusion, an observation echoed by Shippers Council of East Africa CEO, Mr Gilbert Langat. This syndicate can only be successful through collusion among drivers, corrupt customs officers, unscrupulous traders, law enforcing authorities not keen to investigate and prosecute the culprits as well as an ineffective ECTS service. “These guys are able to open seals and remove part of the cargo, empty part of the consignment and replace seals and sometimes steal goods without tampering with the gadgets,” Mr Kiverenge said. Mr. Langat cites increasing cases of corruption in the country as a major contributing factor to rampant theft. He also said that the rapid response teams are supposed to have infrastructure and sufficient resources such as aircrafts to respond to emergencies promptly. “Pilferage can only be done when the content of a container is well known. And for this to happen, there must be some element of collusion by those handling it. Also, there are other logistical challenges such as finding a convenient location that the goods can be offloaded,” he said, a view that was also shared by KTA chairman Mr. Kiprop Bundotich. “They are targeting high value goods such as coffee and electronics. This is evidence that theft is being made possible through collusion,” Bundotich said, adding that the rapid response team should not be assigned an area stretching over 50 kilometres. The report lists a number of recent incidences of theft that have been reported to police. It gives all details including the progress. For instance, on 12th September this year, a container loaded with dry iron boxes destined to Nairobi was opened at unknown location and 338 pieces found missing when the client received the consignment at his premises. The custom’s seal number, the The Transporter

report says, was different from the original one. Although domestic cargo is not secured with custom seals, the one whose duty has not been fully paid is secured. On October 18this year, robbers attacked a transit truck destined to Kagali at Chimoi along the Eldoret- Webuye Road, an area the report cites as a hot spot. They cut the seal and tracking gadget and stole five hand sprayers. On July 3, a driver hauling plywood pieces disappeared and left the truck at Machakos. “This led to another driver being brought from Nairobi. Although the seal was intact, the container rivets were tampered with,” the report said. Further, on October 9 this year, unknown number of television sets was reported to have disappeared from another container destined to Rwanda. When the truck reached the destination, the ECTS gadget was intact and rivets sets were missing. On September 9, another consignment of 582 microwaves silver in colour was missing from a container load. The theft according to the report was only discovered when the truck reached the destination. While a full load container with 325 bags of wheat was stolen on April 8 this year, another full load container of coffee for export was stolen on its way to the port on October 20, according to the report. One Mombasa based transport company, the report notes, has received almost 40 seal tampering alerts in the recent past. Although the region has embraced a Single Customs Territory (SCT) requiring payment of taxes at the point of entry, there is no uniform tariff and taxes on isolated goods are levied at different rates in member countries. This, according to Bundotich is making it attractive for unscrupulous traders to import goods as destined for Uganda, pay duty to the Uganda government and exploit the weak monitoring system to dump the goods in local market. “In fact, this is denying the revenue authority a huge amount of revenue since various products such as sugar attracts significantly

varying levels of taxation in Kenya and Uganda,” Bundotich said. KRA blamed law enforcing agencies saying that they are the ones who are supposed to provide security on cargo once it leaves loading points. The National Police Service Commission which also attended the port stakeholder meeting in Mombasa confirmed receipt of the transporters’ damning report. Ms. Winifred Kitonga, the deputy director for communication at NPSC said the report will be discussed with the office of Inspector General of police, which is the operational arm of law enforcement. “The report was submitted to us and after studying it, we shall present it to the IG office for action,” she said. Transit cargo is monitored up to the border entry points. Once there, the ECTS is deactivated and the cargo handed over to the revenue authority of the receiving country. But unlike in Uganda where Uganda Revenue Authority (URA) fully manages the ECTS tracking process, Kenya has licensed a number of private companies that supply the gadgets at a fee of up to US $1,000 and another US$ 200 for the seal with fee being levied on the transporter and cargo owner. KRA controversially licensed the providers a few years ago and the matter ended up in court since KTA opposed the high cost of the gadgets arguing that they were supposed to get them for free since they only served the interests of the taxman. “In Uganda, they are offered by URA for free and the system has worked smoothly. By allowing competing private companies to play a key role in the system, the providers can easily be motivated to make each other look bad,” Langat said. In Uganda, the system sends an alarm if a driver stops for more than 10 minutes and a rapid response team can be deployed unlike in Kenya where cargo has been stolen as close as Mariakani. The introduction of ECTS was meant to do away with the physical escort of the cargo, which was tedious and did not effectively prevent dumping of the goods in the domestic market. ISSUE 26 VOL. 1

Ports How to seal revenue leakage at

MOMBASA PORT

he Kenya International Freight and Warehousing Association (KIFWA) has recommended a number of drastic measures agencies involved in cargo clearance at Mombasa port should adopt to check revenue leakage. In a letter sent to Treasury Cabinet Secretary Mr Henry Rotich, KIFWA says cases of dumping in the country have increased despite the fact that the East Africa region has adopted a Single Customs Territory (SCT) that allows payment of all duties at the point of entry. “Pursuant to your request, KIFWA has deliberated on the matter and reviewed potential areas of weakness that could

ISSUE 26 VOL. 1

lead to revenue loss for the Customs Service Department,” reads part of the letter dated November 4 2015 and signed by Chairman Mr Auni Bhaiji. The association was responding to a request by Treasury when three cabinet secretaries met industry stakeholders in Mombasa recently to check areas of revenue loss. Although the SCT was meant to reduce incidences of cargo diversion, the region has not harmonized other tariffs. For instance, Kenya charges significantly different import duties on commodities such as sugar compared to what Uganda Revenue Authority levies. “This has the potential of making unscrupulous traders import goods purportedly for Uganda

and divert the same cargo in the local market,” Kiprop Bundotich, the Kenya Transporters Association (KTA) chairman said in a recent interview. This is reinforced by lack of a water tight strategy of Electronic Cargo Trucking System, which has seen the increased pilferage of transit containers. ECTS service providers, law enforcement agencies and Kenya Revenue Authority (KRA) are blamed for lack of competent Rapid Response Teams to handle ECTS alerts. The system sends a signal in real time in event somebody interferes with the seal. To prevent this, KIFWA recommends a tax policy where the EAC agrees on a standard taxation tariff for goods coming

The Transporter

Although Single Customs Territory (SCT) was meant to reduce incidences of cargo diversion, the region has not harmonized other tariffs.

into the region. This will improve compliance levels as there will be fewer incentives to divert cargo whose duty level is the same across all borders. “At operational level, they should introduce stringent ECTS arming operations supported by the use of a dedicated sealing and arming area within the Container Freight Station /Port facility exit points. These include Optical Character Recognition (OCR) technology to capture the seal and truck details and container and truck weights,” KIFWA said. This information would be shared with the weighbridge management where data collected is sent to a central location and alarms on any arising discrepancies automatically generated and sent to key operators via email or SMS. Another radical proposal is to have uniform goods quality standards in the EAC region to forge a closer working relationship between the various national bureaus of standards. KIFWA recommends a mandatory inspection of all goods covered by Certificate of Conformity (CoC) programme from source and marking of quantity and value on the certificate to help the computation of the correct tax. KIFWA also proposed punitive penalties for goods imported without CoC. KIFWA also proposes regular review of fast moving commodities. “The list of fast moving trade commodities should be reviewed on a quarterly basis and trend The Transporter

analysis done to establish the reason for upsurge in importation of such commodities through transit countries.” Currently, high tax commodities includes sugar, edible oils, rice, spirits, used clothing and electronics, which according to Mr Bundotich have been targeted in the over 65 cases of theft reported recently. “The above should be subject to improved surveillance and verification to avoid diversion especially when entered as transit goods,” KIFWA says. In order to avoid opportunities of collusion between cargo declarants and customs officers at Document Processing Centers (DPC), there is need to reduce the time taken for entry approval and decline from the present 48hrs to 15-30min. “Failure on the part of the office assigned the entry to take any action on it should lead to automatic and random reallocation of the entry to another officer for processing,” the association proposes, advising on enhancement of a zero tolerance attitude on the use of phones at DPC along with use of mobile phone jamming equipment in this area as a way to dismantle cartels. With cases of mis-declaration on entries increasing in the recent past, KIFWA suggests that targeting of containers for verification should be done using a numbering system that will apply on the Bill of Lading and containers and communicated even before manifest submission.

“This will be communicated per vessel to KIFWA and other government agencies involved in the verification process so that they can fully participate in this activity.” And to avoid establishment of cartels, customs officers should be rotated regularly including being exchanged between regions. Also, there should be strict enforcement of target percentages of containers verified from current level to 10 per cent to minimize the tendency of the unscrupulous behavior of hiding of misdeclared cargo especially big-lot shipments, says KIFWA. On theft of the cargo, the association recommends regular stock reports and joint audits on all CFS operators, Kenya Ports Authority, bonded warehouse operators, transit sheds and customs border control. “Enforcement department should also be reconciled with shipping lines documentation and action taken for unaccounted goods. Regular inspection and auditing of bank transactions would also assist in identifying areas of malpractice,” says KIFWA, adding that goods should be auctioned after every 60 days instead of the current period of 2 years. KRA has over the years been put on the spotlight on how it auctions the overstayed goods to recover unpaid taxes. Industry players complain that the auctions are not done in a transparent manner, exposing them to possible manipulation by cartels.

ISSUE 26 VOL. 1

Ports

KPA INCREASES CAPACITY as cargo volumes at Mombasa port grows

argo passing through the port of Mombasa grew by 10.8 per cent over the first nine months of 2015, helped by improved efficiency and increased imports within the region. Kenya Ports Authority (KPA) Managing Director Gichiri Ndua said the port handled a total of 19.87 million tonnes of cargo from January to September, against 18.05 million tonnes recorded in 2014. The half-year performance saw the port handle a total throughput of 13.21 million tonnes compared to 11.88 million tonnes handled over the same period last year. Mr Ndua attributed the growth to increased business at the port due to the fact that the facility is now the preferred entry point for goods in the region. According to the Economic Survey 2015, there was a significant increase in container traffic handled at the port, where the facility registered a total of 1.01 million Twenty-foot Equivalent Units (TEUs) in 2014, compared to 894,000 TEUs handled in 2013. By the end of 2015, cargo volumes were expected to further surpass the 2014 figures. The volume of dry bulk exports

ISSUE 26 VOL. 1

increased tremendously from 65,000 tonnes recorded in 2013 to 422,000 tonnes in 2014, which was mainly due to exports of titanium which were estimated at 363,000 tonnes. Titanium products exported by Kwale based Australian mining firmBase Titanium included Ilmenite, Rutile and Zircon. However, the volume of bulk liquids exports declined to less than half the amount handled in 2013 recoding 45,000 tonnes down from 100,000 tonnes while the number of motor vehicles which landed at the port grew by 15.3 per cent from 136,915 units to 157, 856 units in 2014. The survey also attributed the rise in TEUs to improvement of the port facilities, which led to the 13.2 per cent increase from a drop of one per cent in the previous year. The implementation of the Single Window System platform also played a role according to the survey, which states the system which facilitates online transactions for international trade, led to the maximising of port efficiency. Mombasa port is among the top 120 world container ports due to

its efficiency in handling cargo, and cargo volumes are rising this year due to the expanded port capacity and improved efficiency, according to KPA. Speaking at a stakeholder’s luncheon in Mombasa recently Mr Ndua said investments in infrastructure including construction of the Standard Gauge Railway have further pushed up imports. “The increased economic activities and performance in the region has seen us import more cargo,” he said, adding that transshipment traffic increased from 160,000 tonnes last year to 284,000 tonnes. Transit traffic to neighboring countries also increased to 3.9 million tonnes up from 3.5 million tonnes last year. Ship turn-around however fell from from 3.5 days in 2014 to 3.7 days in 2015. “This was attributed to an increase in the number of days for bulk and barge vessels. However, container vessels maintained an improved average turnaround time per ship at 3.4 days in 2015 against 3.5 days in 2014. General cargo vessels improved to 3.6 days in 2015 The Transporter

against 4.6 days registered in 2014,”said Mr Ndua. The development comes even as the Uganda authorities asked traders to clear cargo lying at the facility to avoid higher storage charges and possible auction of their goods as cargo volumes rise at the biggest port in the region. In the past, Uganda-bound cargo has stayed at the port for more than 21 days, raising concern among stakeholders. Over the past three years, the government has undertaken several projects at the port with the aim of increasing capacity at the facility. Early this year, Treasury sought to raise over Sh48 billion ($500 million) for development projects at the port. In May 2015, Cabinet Secretary Henry Rotich in partnership with Trade Mark East Africa (TMEA) pitched for funding when he hosted several international donors at Swahili Beach Hotel, Diani. Donors who were represented at the conference were Japan International Cooperation Agency (JICA), Development Bank of South Africa, African Development Bank (ADB), Department for International Development (DFID), The World

Bank, The EU Delegation to Kenya and United States Agency for International Development (USAID). The key projects include dredging and expansion of berths 1 to 14, relocation of Kipevu Oil Terminal, development of the G-Section area that will be used for project cargo and storage of motor vehicles and deepening of the berths to allow handling of high capacity vessels. The modernization work at the port will also take into account environmental and social aspects, expected to complement existing projects. Britain’s Department for International Development (DFID) and TMEA also signed a Sh3.5 billion grant agreement for modernization works at the port. “The government is keen on achieving its vision 2030 goals and to do this, investments are required in infrastructure that will facilitate growth. The Mombasa port is the region’s gateway and with increased volumes of trade, investments are required to ensure the facility copes with the demands and improve our competitiveness,’’ Mr Rotich said. TradeMark East Africa has mobilized approximately USD 98 Million to support the Mombasa

port infrastructure, construction of a new port access road and implementation of the resilience infrastructure improvement programmes. Key among which are upgrading of Yard 5, expansion of gates 18 to 20 and the development of a 6.4kmPort Reitz Road / Moi Airport Access road, which was launched in February 2015 with the aim of reducing truck operating costs along the transport route, to and from the Kipevu West Container Terminal. Currently, KPA is building the second container terminal, with the first phase which will add an extra 450,000 teus capacity, expected to be opened by March 2016. The entire project is expected to be completed by end of 2018 and create an additional capacity of 1.2 million teus. The Port of Mombasa has over the years recorded significant growth in growth of volumes. In the last 10 years, traffic increased more than six per cent per annum to 22.3 million tons in 2013. Container traffic grew faster on average by more than eight per cent. It is projected that the port will handle 1.6 million twenty foot equivalent units (TEUs) by 2016.

+254 703 046 700 | afms.info@afms.co.ke | www.afms.co.ke

The Transporter

ISSUE 26 VOL. 1

Trade

Relief for importers as Northern Corridor

TRANSPORT COST DROPS

This compares poorly with Central Corridor that has recorded a 39 per cent increase in the last five years.

he Northern Corridor has recorded a significant drop in transport costs in the last one year due to an increase in the number of trucks using the route and drop in fuel costs, a recent report reveals. The corridor serves landlocked countries of Uganda, Tanzania, Rwanda, Democratic Republic of Congo (DRC) and lately South Sudan economy- the second biggest transit market of the Mombasa port. However, in Central Corridor, which also serves Uganda, Burundi, Rwanda, DRC and Malawi, the cost of transport

ISSUE 26 VOL. 1

has gone up this year, Logistic Performance Index Survey, an annual study carried out by the Shippers Council of Eastern Africa (SCEA) since 2011, indicates. Over a period of 5 years, the transport costs on the Northern Corridor declined by 28 percent, with Juba recording the highest drop of 44 percent, the study observes. Central Corridor on the other hand saw transport costs go up by an average of 39 percent in the same period, with Kampala recording the highest increase of 79 percent. In 2014 a transporter charged US $ 3700 to haul a container

from Mombasa to Kampala and this has gone done to 2500 this year, the survey said. To Kigali, the drop has gone down to US $ 3700 from US $ 4500 last year with Bujumbura recording US$ 6500 down from US$ 6,900 in the previous year. The cost of ferrying a container to Juba went down from US $ 7,500 to US$ 5500 with that destined to Goma reducing by US $ 100 to record a rate of US $ 6900. In Central Corridor, Kampala importers paid US $ 4500 from Dar-es-Salaam a slight drop compared to US $ 4500 they paid last year. However, all the other destinations The Transporter

Over a period of 5 years, the transport costs on the Northern Corridor declined by 28 percent, with Juba recording the highest drop of 44 percent... the corridor serves either recorded an increase or remained unchanged according to the survey that was released in November this year. Kigali importers paid US $ 4500, an increase from a low of US $ 4300 in the previous year. The transport cost to Bujumbura from Dar remained unchanged at US $ 4500 but transport cost to Goma went up from US$ 4700 in the previous year to reach US $ 5000 this year. The new findings are a major relieve to the shippers, who blame the region as one of the most expensive in the world with logistic costs accounting for 42 percent of the total costs. It is reinforced by an earlier study this year by the Northern Corridor Transit and Transport Coordination Authority (NCTTCA), a regional body mandated to facilitate trade along the corridor. Improved efficiency along the Northern Corridor, noted the NCTTCA findings, had in the last five years brought a significant drop on the cost of transport. The transportation logistics costs between Mombasa and Nairobi recorded the biggest drop of 56 percent in the period between 2009 and 2014, according to the June report. Transit transport costs also recorded a huge drop. The transportation logistics costs between Mombasa and Kampala reduced by 26 percent while that between The Transporter

Mombasa and Kigali, in the period under review, recording a 28 percent drop, according to NCTTCA. Between Mombasa and Bujumbura, the cost went down by 23 percent, while for the transit sections between MombasaGoma and Mombasa-Juba, the total transportation logistics costs reduced by 38% and 37% respectively. “The Transport Logistics Costs structure consists of the primary road transport charges, transit overheads (regulatory agencies compliance costs, forwarding agency fees, handling charges) and hidden costs which consist of direct costs associated with delays (storage charges). Others include container retention charges as well as the indirect costs associated with delays (loss in business opportunity due to delays and unreliability),” NCTTCA said in a recent statement. From 2010 to 2014, Kenyan traffic destined to Nairobi, trucking cost went down from US $ 1300 in 2010 to US $ 1023 2014, a 21 percent drop. On the other hand, hidden costs fell by 74 per cent from US$ 2516 to US $ 658 according to the Northern Corridor report. The report further notes that from Mombasa to Kampala, trucking cost went down from US $ 3400 to US $ 2867 while hidden costs dropped from US $ 5880 to US $ 4003, a 32 percent drop. The trucking costs between

Mombasa to Kigali reduced from US $ 6500 to US$ 4833 while hidden costs went down from US $ 13,012 to US $ 9348. From 2010 to 2014, direct costs for Mombasa-Kigali have fallen by 26% while hidden costs have fallen by 31 per cent. Trucking costs from Mombasa to Bujumbura went down from US $ 8,000 to US$ 6350 while hidden costs reduced from US$ 14,977 to US $ 11,566. Between Mombasa and Goma, trucking cost went down from US $ 9,500 to US $ 6,750 with hidden cost going down from US $ 12,116 to US $ 13,460. Trucking cost between Mombasa to Juba went down from US $ 9,800 to US $ 4,678 while hidden costs went down from US $ 11,458 to US $ 8709, says NCTTCA June report. “After a highly appreciated “Impact Assessment of the Northern Corridor Performance Improvements Activities” study, the 10th Summit of the Northern Corridor Integration Projects tasked the NCTTCA to undertake a “further study to determine the reduction in the cost of doing business under the Single Customs Territory (SCT) reforms”, comparing the three years before and after implementation of the SCT,” NCTTCA said in a statement. The meeting was held in Kampala in June 2015 and the next report, which will be compiled in collaboration with Ministries of Trade and Revenue Authorities, is expected in March 2017. ISSUE 26 VOL. 1

Trade

KENYA TRADENET

now running smoothly despite hitches

he cost of clearing cargo at the country’s entry points has reduced significantly and efficiency enhanced since introduction of the Kenya TradeNet system with over 6,000 users already registered, the Treasury announced recently. The Kenya Trade Network Agency (KenTrade) was established in January 2011 with a mandate of setting up the national electronic single window system intended to facilitate international trade. The system enables importers and exporters to submit cargo clearance documents electronically, leading to improved business environment. “The system has also helped reduce incidents of corruption and enhanced service delivery for private and public entities,” Treasury Cabinet Secretary Henry Rotich said in December last year during the launch of the agency’s Mombasa office. Mr Rotich noted that with clearance procedures requiring submission of several documents from a number of agencies some of which use manual procedures, the situation creates multiple duplications that lead to wastage and high transaction costs. “These requirements, together with the associated compliance costs, constitute a burden both to government and to the business community. This has been a major barrier to the development

ISSUE 26 VOL. 1

of domestic and international trade in Kenya and the region in general,” he said in a speech read on his behalf by KenTrade chairman Joseph Kibwana. When fully operational, the system, which was rolled out in October 2013, will provide a single entry point for importers and exporters to electronically submit and receive approvals from 27 regulatory agencies. This is expected to make the processes faster and reduce costs of cargo clearance. It is projected that the system will save the economy $150 million (Sh15.7 billion) in the first two years, $200 million (Sh21 billion) in the third year and up to $500 million (Sh52 billion) over the next five years. Kenya TradeNet was set up with funding of $3.5 million (Sh367.5 million) from Investment Climate Facility (ICF), which is funded by the World Bank. According to ICF chief executive officer William Asiko, Kenya’s system is one of the 40 that have been set up in several countries in Africa, which have helped facilitate trade in all the countries it is in use. The system is now able to process export and import permits issued by Kenya Bureau of Standards (KEBS), Kenya Plant Health Inspectorate Services (KEPHIS) and Department of Veterinary Services.

Other permits include those issued by Horticultural Crops Development Authority (HCDA), Pharmacy & Poisons Board and Port Health. The system is also fully integrated with Kenya Ports Authority (KPA) system, where it is able to process vessel manifests. When the system was introduced, clearing and forwarding agents complained that it was taking at least three days to lodge documents and clear cargo. TradeNet came live on July 1 2015 after piloting and has been interfaced with the Kenya Revenue Authority’s Simba system. Shippers said after going live, the system could not generate documents to enable them pay taxes. Juma Tellah, Kenya Ship Agents Association (KSAA) executive officer said submission of manifests took up to four days when the system came live, but the situation had improved. “What we want going forward is consistency and stability because when it takes too long to get a number after submitting the manifest this delays the entire process,” he said. Other players such as the Kenya Auto Bazaar Association (KABA) were affected, with secretary Charles Munyori saying the an entry would take more than five days to go through. However, the issues have been sorted out and agents are enjoying a flawless system, according to William Kidima, business representative for Uganda. Ms Ann Odero, corporate communications manager at KenTrade said they acknowledged that initially there were challenges faced regarding integration between the two systems in the initial stages, but added that the problems had been resolved. The Transporter

The Transporter

ISSUE 26 VOL. 1

Integration

New import rules are

NON-TARIFF BARRIERS

maritime experts warn

hree government agencies have been put on the spot over change of import rules that importers fear might affect Kenyaâ&#x20AC;&#x2122;s competitiveness in international trade. Last year, (2015), the Kenya Ports Authority (KPA) sought to control transfer of cargo to Container Freight Stations (CFSs) in what industry players dismissed as an illegality and protested against the move. Managing director Gichiri Ndua withdrew the notice that would have taken effect on December 1 after importers, through the Shippers Council of Eastern Africa (SCEA) threatened to go to court. Another rule that sparked controversy among importers is the one introduced by Kenya

ISSUE 26 VOL. 1

Bureau of Standards (Kebs) and Kenya Revenue Authority (KRA) requiring all imports to be accompanied by a certificate of conformity (COC). Kebs and KRA said in a notice that the rule was intended to protect the safety and health of Kenyans in addition to securing tax revenues, noting that key concerns had arisen in the past including cases of cargo misdeclaration and under-valuation. The COC is a document that the importer obtains after goods are inspected and certified to be of required standards, with Kebs relying on agents to carry out the exercise at the source of goods. However, Kebs said raw materials are exempted, provided there is proof that the materials are direct inputs to manufacturing processes.

The Coc shall serve as one of the reference documents in Customs declaration in terms of quality, quantity and value of imported goods and importers shall be under obligation to comply with the import requirements including furnishing original invoices for goods, KRA and Kebs said. The two agencies started implementing the rule on December 1, drawing criticism from stakeholders. The Association of Importers of Kenya (AIK) Chairman Peter Mambembe termed it illegal, saying that the current provision allowing goods to be charged a 15 per cent fee based on their value if they are not accompanied by a COC, has never been amended by Parliament. The Transporter

Mr Stanley Chai, Ultimate Maritime Consultants managing director said the rules are new non-tariff barriers that should never have been introduced in a country like Kenya, which is a transit point for goods destined to other regional markets. “I don’t understand the reason for introducing laws that impede trade. It is surprising that Kebs can impose such a requirement yet it is not practical to cover all countries from where Kenyan businesses source goods. This will discourage traders since they will find it difficult to import,” he said. “I think there is a general lack of coordination in whatever is being done because I don’t see how KRA will for instance benefit from this rule. In any case it will deny the taxman of the 15 per cent revenue it has been charging on goods that don’t have the COC. There are other ways of enforcing standards without creating trade barriers,” he added. There is also concern that small and micro enterprises (SMEs) will be hard hit, since importers in this sector have not been sensitized on the rules, even as fears mount over increased prices of commodities as inspection costs are passed on to the end user. However, SCEA executive officer Gilbert Lang’at expressed optimism that the COC requirement will take off smoothly, saying they were still consulting to see how some goods will be exempted. “Oil products may not to be subjected to this rule since they already come with a quality certificate. At the same time, there has been upsurge of fake lubricants being imported into the country resulting to losses in the motor industry and adverse effects on the environment. We expect that COC rule will address this problem,” he said.

The Transporter

Comesa seeks to eliminate trade barriers

t least 95,9% of all the reported nontariff barriers (NTB) s to regional trade in Common Market for Eastern and Southern Africa (Comesa) have been resolved since the introduction of the online system of reporting, monitoring and elimination in 2008. According to a status report presented to the Comesa Intergovernmental committee which concluded its three days meeting on Saturday in Zambia, a total of 171 NTBs have been recorded between Comesa member states on the online system. Out of these 4,1% constitute outstanding NTBs. The outstanding NTBs are those affecting trade in freezers and fridges, UHT milk, palm-based cooking oil, soap, wheat flour, bottled soya oil and import licenses and surcharges on various products. Countries whose bilateral trade has been affected by these NTBs include Swaziland, Zimbabwe,

Kenya, Zambia, Madagascar, Mauritius, Egypt and Rwanda. Comesa said in an effort to bolster the current initiatives to eliminate the remaining NTBs, it has developed NTB Regulations to provide an efficient mechanism to address these barriers. According to Comesa, the NTBs regulations have been circulated to member States outlining the steps that concerned parties should go through. Specifically, the regulations require member States to establish National Focal Points as well as National Monitoring Committee on NTBs. Comesa, however, said the initial stage was the exchange of information regarding an NTB between the imposing and the recipient member State. If the parties fail to resolve the NTB at this stage, they will engage a facilitator to provide factual information aimed at resolving the matter.

ISSUE 26 VOL. 1

Truck

world

New truck from Fuso FUSO Trucks Southern Africa has unveiled the light to medium-duty FUSO FA9–137 truck which they say is poised to dominate the region. FUSO Trucks is a division of Daimler Trucks & Buses. The FA9–137 not only means the FUSO range is expanding, but it is also the first vehicle to be imported by FUSO Trucks Southern Africa from the Daimler India Commercial Vehicle (DICV) plant in Chennai, and it will set the pace for more “built in India” products in the future. “The robust FA9–137 is custom-tailored and designed to meet the everdemanding customer requirements in Africa. This is a vehicle that represents a key step in FUSO Trucks Southern Africa’s strategy in terms of enhancing customer satisfaction, perfecting operational excellence and demonstrating our commitment to Africa’s growing markets,” says Naeem Hassim, Head of FUSO Trucks. DICV is a 100 percent subsidiary of Daimler AG and is one of the leading manufacturers in the Indian commercial vehicle market.

A quick look at what’s happening in the truck industry and what manufacturers are up to.

Daimler pilots world’s first self-driving truck

Record-breaking year for Isuzu N-Series trucks

October marked a major milestone for the shift towards self-driving vehicles in the automotive industry, when Daimler Trucks operated the world’s first seriesproduction truck to operate on an automated-drive basis in Germany. The truck used was a standard MercedesBenz Actros equipped with Highway Pilot system, enabling it to drive autonomously on public roads. Safety systems and sensors enable the truck to continually observe the area in front of it and take control in certain situations, giving the driver the opportunity to safely take his hands off the wheel. Upon approaching an obstacle like roadworks, the system asks the driver to take over the vehicle. Once the obstacle is behind the truck, the Highway Pilot can take control again. The Actros used for the test drive is fitted with a 12.8L engine and safety features such as the Mercedes PowerShift 3, predictive powertrain control, proximity control, drowsiness detection and a Fleetboard vehicle computer, all linked with the sensors of the Highway Pilot. While the idea of a truck driving itself safely does take some getting used to, the system is well suited for the motorway. It maintains adequate distance from the vehicle in front and brakes in good time if another vehicle cuts out onto the road in front of it.

Isuzu Commercial Truck of America Inc, distributor of America’s best-selling low cab forward trucks, said the truckbuilder shattered two long-standing sales records in 2015 — for the highest parts sales and for sales of Isuzu commercial trucks. Isuzu dealers retailed 20,725 Isuzu trucks to customers in 2015, which was a record for Isuzu trucks in the United States. This record included a 10.5 percent gain in Isuzu N-Series sales versus 2014. This outpaced Isuzu’s competitive set in Class 3 through 5 commercial vehicles. Calendar-year registrations of Class 3 through 5 vehicles through October 2015, the latest month for which figures are available, were up only 5 percent, less than half the N-Series pace. Meanwhile, Isuzu sold 5.5 percent more parts in the U.S. than it did in 2014, representing the most parts ever sold. “After celebrating the 30th anniversary of Isuzu trucks here in 2014, what better way to start our fourth decade in the United States market than with recordbreaking sales,” said Shaun C. Skinner, executive vice president and general manager of Isuzu Commercial Truck of America. Isuzu commercial trucks have been the best-selling low cab forward trucks in America every year since 1986.

Few companies can claim to have been in the commercial vehicle manufacturing business for as long as MAN Truck & Bus has. As the German brand marks a century since its first truck rolled off the production line in 1915, it’s worth examining its history and contributions to the field thus far and plans for the years to come. “We were one of the early ones to make trucks and buses, and we’re one of the few who still make trucks and buses,” says Franz Freiherr von Redwitz, managing director of MAN Truck & Bus Middle East. “The industrial group is now 257 years old, but the commercial vehicle business started a hundred years ago. Many companies have been born and have grown over time in the commercial vehicle industry, but we belong to the early ones.” MAN’s history of commercial vehicle manufacturing in Germany can be traced all the way to June 21, 1915 when a new company entered the trade register of the city of Nuremberg: Lastwagenwerke M.A.N.-Saurer. The company was established as a joint venture between Maschinenfabrik Augsburg-Nürnberg AG and Saurer, a Swiss producer of commercial vehicles. The first MAN-Saurer 3-tonne truck soon left the joint factory in Lindau at Lake Constance, and it was followed by the first buses, which were used as long-distance buses by the Imperial Post Office and transported passengers as well as letters and parcels.

ISSUE 26 VOL. 1

The Transporter

Global VIRGINIA

SYDNEY

GREENBELT

Large trucking companies applaud move away from paper log books

Scania wins commercial vehicle order surpassing 2,000 trucks

Trucking volumes rose in the final month of 2015, though high inventory levels continue to darken the outlook for the industry, according to the American Trucking Associations. Truckers hauled 1% more freight in December than they did a month earlier and 1.1% more than in December 2014, the industry group said. For the whole year, truckers hauled 2.6% more freight than they did in 2014. The ATA’s Truck Tonnage Index hit 135.6 last month, just shy of the all-time high of 135.8 set in January 2015. However, after hitting highs early in the year, the amount of freight shipped fell off, as consumer demand remained tepid and U.S. economic growth remained subdued. Business was also slow through the holiday season. The National Retail Federation reported last week that holiday sales during November and December rose 3% last year, short of the trade group’s 3.7% forecast, and the slowest rate of holiday season sales growth since 2013.

The federal government’s mandate to require electronic logging devices (ELDs) in all interstate commercial trucks by late 2017 is being hailed as a boon for safety as well as a potential gain in efficiency for fleets seeking to squeeze every hour of available workers in an increasingly tighter regulatory environment. “It simply makes us safer as an industry,” Chuck Hammel, president of Pittsburgh-based Pitt Ohio said. Pitt Ohio operates 813 tractors and nearly 400 straight trucks in its LTL fleet. Hammel explained the upfront purchase and installation costs of an ELD unit results in about a 7 to 10 percent loss in productivity. “But once you get up to speed and learn what you can and cannot do, the productivity loss falls to about 3 to 4 percent,” he said. But over time, Hammel and other trucking leaders see productivity gains as a result of ELDs. That’s because it gives shrewd operators better visibility of their fleets and drivers and allows for the most efficient use of both tractor use and manpower.

Scania has won its largest ever order in Europe, with British transport operator Eddie Stobart Limited and its associated companies — including A.W. Jenkinson Forestry Products — placing orders for more than 2,000 trucks. Due for delivery over a two-year period commencing March 2016, the deal will involve many Scania UK dealers, both in terms of vehicle supply and repair and maintenance operations. This is the fourth time Eddie Stobart Limited and its associated companies have placed a major order with Scania in the UK, the first two being for 1,000 vehicles in 2010 and 2012 followed by 1,500 units in 2014. “We are naturally delighted that the long-established relationship between our organizations has not only flourished but continues to grow. We are now very much looking forward to fulfilling this latest order and backing it with second-to-none service nationwide”, says Claes Jacobsson, managing director of Scania (Great Britain) Limited.

www.wsj.com

www.logisticsmgmt.com

Data confirms improved trucking industry safety VIRGINIA: An analysis of data from the Department of Transportation done by the American Trucking Associations shows over both the long- and short-term that the rate of truck-involved fatalities is declining. “America’s trucking industry has invested billions to improve safety and that commitment is paying off,” said ATA President and CEO Bill Graves. According to ATA’s analysis of miles traveled data from the Federal Highway Administration and highway fatality data from the National Highway Traffic Safety Administration, the truck-involved fatality rate fell for the second straight year to 1.40 per 100 million miles traveled. Per NHTSA, there were 3,903 truck-involved fatalities in 2014, a decline of 61 total from the previous year. At the same time, the number of miles traveled by large trucks rose to more than 279 billion. Of note, these figures only represent fatalities where a large truck was involved in the crash and do not reflect causation. Numerous studies have found that trucks are responsible for initiating less than a third of all fatal car-truck crashes, which The Transporter

INDUSTRY NEWS

Trucking volumes rose in December -ATA

www.truckingnewsonline.com

www.claimsjournal.com

is why ATA supports aggressive traffic enforcement and education programs aimed at changing the unsafe behaviors of all motorists. The fatality rate dipped 2.78 percent from 2013 and has fallen 4.76 percent over the past two years. More importantly, it has fallen an impressive 40.6 percent over the past decade. “The short-term decline is welcome news, but the important figure is the long-term trend,” Graves said. “Short-term changes, whether they’re increases or declines, can be blips – and just like you shouldn’t track your 401k on a daily basis, they shouldn’t be the primary lens truck safety is viewed through. The long-term trend – in this case, a more than 40 percent improvement – is of paramount importance.” “Our industry has worked hard, and invested in technology and training to improve highway safety not just for our drivers, but for all motorists,” said ATA Executive Vice President for National Advocacy Dave Osiecki.

ISSUE 26 VOL. 1

Truck&Trailer INOVATIONS, TRENDS

& DEVELOPMENTS

Container locking system

World’s first fully rugged detachable laptop PANASONIC has announced what it calls “the world’s first fully rugged detachable laptop”. The Toughbook 20 combines the features of both laptop and tablet, designed for field workers that need a mobile computing solution and the ability to capture large amounts of data. It’s purpose-built for challenging environments, including transportation and logistics as well as field services, utilities, oil and gas, among others. The computer features a 6th-generation Intel Core vPro processor, a 128GB SSD, 8GB RAM, and a choice of Windows 10 Pro or Windows 7 Professional (available through downgrade rights from Windows 10 Pro). Extremely flexible, it also offers six usage modes. Besides being used as a traditional laptop, the tablet can be detached and used by itself or flipped 180-degrees to show content in presentation mode. The convertible mode allows users to see the display with the keyboard attached and ready when it is needed. Using the built-in handle, the device can operate in carry mode or hanging on a wall, while vehicle mode provides full functionality and operation of the device when on the move. The Toughbook 20 is designed to meet MIL-STD-461F for electromagnetic interference and MIL-STD-810G for drop, shock, vibration, explosive atmosphere, temperature, humidity, rain and sand, as well as waterproof and dustproof ingress (IP65). www.fullyloaded.com.au

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GALBREATH, a WASTEQUIP brand, has launched the ROC-LOC rolloff container locking system, with a patent pending. DOT-compliant, it’s said to offer a simple, low-maintenance method for securing rolloff containers for transport Compatible with most brands of cable hoists, hook hoists, and trailers, ROC-LOC has air-actuated, auto-system airbags that ensure contact with the container and are claimed to need less maintenance compared to similar products on the market. The driver doesn’t have to secure the container manually, saving time and money. It requires only 60 psi of air pressure and has two single-acting airbags - rather than air cylinders - to keep each arm in the ‘hold’ position. It’s mounted to the side of the hoist frame, below the top of the side rollers, and has independent hooks to ensure contact with the container’s long sills. It’s said to work well in cold climates. It’s designed to work with standard air-shift PTOs. Included in the ROC-LOC kit are one air-brake protection valve, one air regulator, one pilot-operated check valve, one 12V solenoid, two ROC-LOC hook assemblies, all required air lines and fittings, and comprehensive installation instructions.

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Advanced starting system KENWORTH and PETERBILT have introduced advanced technology to protect against battery drainage. And Kenworth offers a new inverter/charger option for easier battery recharging while parked. The ultracapacitor-based Maxwell Engine Start Module (ESM) is a factory-installed option for new Kenworth T680s and T880s and Peterbilt Models 579 and 567. The module provides dedicated power to start the truck and frees the truck’s standard batteries to focus on powering accessory devices, such as a laptop, microwave, refrigerator and television electronics, in addition to the truck’s electronics and lights. The ESM is designed to start an engine in temperatures ranging from -40 C or F (they’re equal at that point) to +65 C or 149 F, says Maxwell, even when the batteries have low voltage. The ultracapacitor replaces one traditional battery – reducing weight by up to 60 lb. Maxwell-optioned trucks are in production now. www.todaystrucking.com The Transporter