South Sudan suspends Nairobi Freight Terminal deal over costs

South Sudan has suspended a deal with Nairobi Freight Terminal that had been given exclusive rights to handle all its cargo passing through the Port of Mombasa^[1]. 

In a letter dated July 28, South Sudan Minister for Transport Madut Biar said the arrangement had led to an increase in freight rates, charges and delays in clearance of cargo that had resulted in skyrocketing prices of goods in his country.

“Concerns of the business community and general outcries from consumers of high prices in the markets were discussed in South Sudan Parliament on July 26, 2022,” said Mr Biar, adding that a committee would be established to look into the issue afresh. Mr Biar said in a letter to Transport CS James Macharia that South Sudan Parliament resolved that the directive to deliver cargo through Nairobi Freight Terminal be suspended.

In an earlier letter dated February 25, South Sudan said the appointment of the Nairobi Freight Terminal would decongest the Port of Mombasa, reduce transport costs to South Sudan by partly using Standard Gauge Railway (SGR).

South Sudan is the second biggest transit market for the Port of Mombasa after Uganda. More than 800 containers and 2,000 vehicles pass through Mombasa to South Sudan every month.

Kenya International Freight and Warehousing Association (Kifwa) yesterday confirmed the development in South Sudan, but said Kenya had not responded to the letter.

“I also followed what happened at the South Sudan Parliament and I do not think that Mr Macharia has any other option,” said Kifwa national chairman Mr Roy Mwanthi.

Cargo at the Inland Container Depot, Nairobi. [Phillip Orwa, Standard]

Mr Mwathi said the directive to restrict transport of South Sudan cargo through the Standard Gauge Railway (SGR) to Nairobi Freight Terminal went against international trade practices that allow free trade.

Local freight firms had petitioned the Kenyan government to guarantee a free market economy, where all logistics companies are allowed to market themselves and operate freely.

Mr Mwanthi said Kenya has a galaxy of well-trained customs agents and cargo handling experts who would have lost business because of the South Sudan directive which he termed a monopolistic tendency aimed to elbow Kenyan firms out of the lucrative market.

According to the list released by the South Sudan Commissioner of Customs Mr Akol Madut, the companies that were to clear that country’s cargo are Safina Merci Company Limited, Met Connection International Company Limited, Nimbus Company Limited, Safinass Company Limited, Le Comex Afrique Limited, and Manzil Developers Company Limited.

In a letter dated April 25, addressed to Kenya’s Commissioner of Customs and Border Control Ms Lilian Nyawanda, Dr Madut said the said six firms were authorised to handle all South Sudan cargo moved to the Nairobi Freight Terminal. 

“This authorisation applies to and covers all goods that are transported through Nairobi Freight Terminal, arriving on trucks or rail but destined for South Sudan and this authorisation remains valid, subsisting, and continues until revoked. Further to that, this supersedes all previous authority letters issued in respect of authorising other companies to clear goods destined for South Sudan,” wrote Dr Madut.

On June 13, the Association of South Sudan Manufacturers (ASSM) wrote to the Trade and Industry CS expressing disappointment at the cargo haulage order, noting that it would raise transport cost by $1,500 (about Sh175,500) per container following double handling in Mombasa and Nairobi, as well as rail charges. ASSM chairman Adam Kubanja argued that most traders and manufacturers in South Sudan had invested in trucks to transport cargo, but were forced to pay extra costs for transportation by rail to Nairobi.

References

1. ^{^} Port of Mombasa (www.standardmedia.co.ke)