Hapag-Lloyd, the world’s sixth largest shipping company, has
announced the opening of a new line from Jeddah in Saudi Arabia into the
ports of Mombasa and Dar es Salaam, opening the door to faster transit
times and lower freight charges expected competition.
Hapag-Lloyd
will start the service in April with four vessels plying the line from
Jeddah in weekly connections to to the east African cities.
The
shipping company currently offers services linking Asia to Europe and
port coverage in Mexico and the Caribbean, among other regions, making
the move to serve East Africa a significant one.
It
will establish local representation in Kenya, Tanzania and Uganda
through Diamond Shipping Services Ltd, a transport service in Nairobi.
Mombasa will act as a gateway to other neighbouring countries,
including South Sudan, Rwanda, Burundi, DRC, Malawi, Uganda and Zambia.
“With
our East Africa Service (EAS), we will be entering a trade which our
customers have wanted us to serve. In the process, the EAS will benefit
from Hapag-Lloyd’s strong presence in the Middle East and connect to our
global network,” said Lars Christiansen, senior managing director
Region Middle East in a statement.
The demand for more lines from the Middle East has been driven by sharp import growth.
Kenyan
imports from Saudi Arabia, led by petroleum imports, rose by 25.2 per
cent between 2015 and 2016, to total Sh69 billion in value.
Part
of that rise was due to rising oil prices, but the flow has also
increased in volume, up 9.5 per cent in tonnage in 2016, to 4.85 million
tonnes, from 4.43 million tonnes. East Africa additionally imports
molasses, paper and chemicals from Saudi Arabia.
Kenya’s
exports to Saudi Arabia, however, remain far smaller at Sh6.7 billion
in 2016, and spanning tea, coffee, vegetables, textile materials,
fruits, nuts and beef.
However, the Mombasa port traffic is heavily slanted towards imports across all of the current shipping services.
Mombasa
serves more than 100 ships a month, including container vessels,
conventional vessels and tankers. Yet, typically, last week, the Kenya
Ports Authority reported that from the 22 incoming general cargo
vessels, it discharged 285,348 metric tonnes, and loaded another 4,265
metric tonnes for export.
Much of the incoming freight,
however, is then exported to surrounding nations, prime among them
Uganda withcontainers equivalent to 3,740 twenty feet equivalent units
in the week ending February 14, according to the KPA.
The
port also took in 472 TEUs for Tanzania, 256 for South Sudan, 141 TEUs
for Democratic Republic of Congo, and 164 bound for Rwanda.
Local freight companies hope the additional inwards and outward capacity may also reduce prices.
“The
entry of a new player in the industry is exciting news for us because
it means all shipping companies will now be competing for cargo and if
the volume is maintained, they will have to lower the charges in order
to win business,” said John Orwa, service delivery manager at Multiple
Solutions Limited, a logistics company based in Mombasa.
“Other
than the container shipment charges, importers may also benefit from
the reduction in container deposit fees and demurrage charges as
shipping lines start using these charges as marketing tools to attract
more customers,” said Abhishek Sharma, a logistics analyst at TradeMark
East Africa.
“The entry of the Hapag-Lloyd East Africa
service is a vote of confidence in the expected growth of trade in the
region in coming years,” said Sharma.
- African Laughter
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