Kenyan Shippers lose Sh 25.6b annually from clearance delays

The Kenya International Freight Forwarders Association (KIFWA) and the Federation of East African Freight Forwarders Associations (FEAFFA) in partnership with other relevant industry associations have unveiled the Kenya Customs Agents and Freight Forwarders Bill 2020 in a bid to enhance professionalism in service delivery and compliance to the existing regulations.

The bill aims at ending the cargo delays at Ports, improving cargo flow, improving revenue collection by the revenue authority and lowering the cost of doing business.

FEAFFA President Mr. Fred Seka said the new regulation is meant to streamline cargo clearance by ending the deployment of untrained agents, promoting fair competition, protecting industry players from unfair liability, supplementing existing government regulations and introducing mandatory registration and training of all customs agents and freight forwarders and fines and penalties for non-compliance and misconduct.

“Kenya trades over 30m tonnes of cargo within the East African community and the volumes keep growing, putting ever more pressure on a system that is inherently inefficient due to the lack of obligatory qualifications,” said Mr. Seka.

The consequent delays are costing shippers as much as KeSh25.6bn a year in extra demurrage charges.

The proposed bill will require all customs agents to demonstrate their understanding of the clearance processes, valuations, classification, rules of origin and management, of the changing regional regulatory regime, and of the country’s clearing systems, digital gadgets and portals.
This will make for a step change in cargo efficiency, with 62.5 per cent of Kenya’s customs agents and freight forwarders currently lacking the skills to ably clear goods, according to the International Journal of Supply Chain and Logistics.

The skill gaps have resulted in frequent clearance errors, across the wrong tariff classification and valuation, the wrong duty and tax payments, cargo entry errors in the system, and acquisition of the wrong certificates, all of which frequently add extra delays.

“The result has been spiraling shipping costs, which are now three times higher than in other countries and making nearly all of our goods more expensive to consumers,” said Mr. Roy Mwanthi, National Chairman KIFWA.

Tags: Shippers lose Sh 25.6b annually from clearance delays