Logistics Boon for Coffee Traders in East Africa

by

Features

By Shem Oirere

Coffee transportation in East Africa, long a barrier to efficient supply, could greatly improve as governments in the region and the private sector roll out initiatives to address bottlenecks that delay cargo movement and increase the cost of doing business with traders in the region.

Challenges include uneven distribution of trucks, theft of coffee in transit, documentation hurdles, heavy traffic jams, and warehousing constraints. Examples of progress include harmonizing documentation by government agencies in the region, commissioning of modern railway transport systems and a united push towards the use of standardized coffee containers by freight and forwarding operators.

“We still have situations where delayed documentation processes hold coffee shipments to clients for a longer period than expected and this erodes our reputation as coffee roasters,” said Bridget Carrington, managing director at Dormans Ltd, a Kenyan-owned coffee exporter, roaster, and retailer.

“Delays to the port or at the port also lead to deterioration of the quality of the coffee as sometimes it takes many weeks before it reaches its destination. This affects our finances as it increases the cost of doing business,” said Carrington during the 16th African Fine Coffee Association (AFCA) conference in Kampala in mid-February.

Kenya, Uganda, Rwanda, Tanzania, and Burundi are working together to expedite movement of coffee within the East Africa market and to the global market through the introduction of a single customs territory (SCT), which replaces multiple weighbridges, security officers and customs checks along the Northern Corridor.

This corridor is a network of roads, railways, inland waterways, and inland depots that link the port of Mombasa to Kenya’s hinterland, Uganda, Rwanda, Burundi, and eastern Democratic Republic of Congo (DRC). These countries comprise the East African Community, a regional intergovernmental organization that includes South Sudan and Tanzania. All have now computerized clearance and electronic tracking of coffee cargo and other goods along the corridor.

Under SCT a coffee exporter makes one data entry at the customs exit station. It is then electronically transmitted by a state revenue agency such as Uganda Revenue Authority (URA) to a similar agency in the destination country. URA, for example, will transmit the data to Kenya Revenue Authority (KRA) and the Kenya Ports Authority (KPA) if the coffee is being exported via the port of Mombasa.

During transit, the coffee exporter is not required to declare the cargo again or provide additional customs entry data. KRA and KPA will process the data transmitted by URA, which ideally takes about 10 minutes and the coffee will be ready for shipping.

Electronic clearance systems reduce the cost of inland transportation in two ways: quicker turnaround in transit and shorter container dwell times, easing congestion at the port in Mombasa. A new 472-kilometer standard gauge railway (SGR) line linking Nairobi to Mombasa and the commissioning of a 180,000 (TEU) capacity inland container depot in the city significantly increase cargo handling capacity.

At least 96% of goods from and to the port of Mombasa are moved by a 14,108-kilometer roadway network that connects Kenya, Uganda, Rwanda, Burundi, and parts of the eastern Democratic Republic of Congo.

“There is now on emerging new intermodal concept involving road and rail through Nairobi using the SGR that delivers the coffee directly to the port of Mombasa,” said Dino Schmitz, general manager, Spedag Interfreight Uganda Ltd.

Export coffee from Uganda, Rwanda, Burundi, and Kenya is transported either along the 2,000km Mombasa-Bujumbura route, also known as the southwest terminus or via the 3,000km Mombasa-Kisangani route. Transport between Uganda and Kenya is along the 1,170km Mombasa-Malaba-Kampala road which is preferred because of its relative good quality. All these routes are part of the Northern Corridor.

Reliance on roads for transporting coffee is likely to end soon after the first freight service between Nairobi and Mombasa was launched in January 2018.

Cargo is now dropped at the Inland Container Depot in Nairobi by truck for clearance while imported coffee cargo from Mombasa port will be offloaded at the same depot before released for last mile transportation by coffee traders in the region.

It will cost $500 to transport a 20 ft. coffee container between Nairobi and Mombasa and $700 for a 40 ft. (30 metric tons and lighter) containers excluding the last mile transportation costs according to a schedule by Kenya Railways Corporation (KRC), which operates the SGR line. The rates are inclusive of terminal placement charges and all loaded containers are charged at gross weight according to KRC.

“The new SGR line in Kenya from Nairobi to Mombasa will provide a timely, reliable and safe option as it reduces the period cargo is in transit,” said Schmitz.

Both the SGR and the Inland Container Depot in Nairobi have enhanced the security and safety of cargo while in transit and at the depot according to KRC.

The cost of transporting coffee is also expected to reduce according to Hussein Kidedde of the Uganda Freight Forwarders Association.

“The roads should ideally be for the first mile (from ship to port rail station) and the last mile (from Inland Container Depot to the cargo owner premises) delivery,” said Kidedde during the AFCA Conference.

Reduction in reliance on road transport for coffee is also expected to bring down the total cost of business for coffee traders in East Africa and who currently must pay more for spare parts, traffic jams and fuel for trucks. The weighbridge at Mariakani, which weighs imports and exports from and to the port of Mombasa, records an average of 5,000 trucks daily.

KRC has also offered free storage to exporters and importers for 15 days and importers 12 days respectively to enable them “consolidate their cargo prior to shipment and pick-up.” “The exporters and importers responsibility ends and starts at the Inland Container Depot in Nairobi so there is no need to travel to clear the cargo in Mombasa,” says Atanas Maina, the managing director of KRC.