Kenya-Tanzania Compete For Port Business With Infrastructure Upgrades

Kenya-Tanzania Compete For Port Business With Infrastructure Upgrades

Years of underinvestment in transportation infrastructure are costing Kenya market share in port business while freight volume is growing in neighboring Tanzanian ports, according to a Bloomberg report.

Volumes at the Dar es Salaam port in Tanzania have increased an average 9.4 percent per year the past five years, compared with 6 percent in Mombasa, Kenya, Trademark East Africa data shows.

Mombassa’s railways and roads can’t cope with rising volumes moving in and out of the port, the report said. Ports in both countries serve land-locked Rwanda, Democratic Republic of Congo, Uganda and South Sudan, which are among the world’s fastest-growing economies.

“(Kenya) hasn’t kept pace with transport demand,” said Anthony Hughes, senior ports adviser at Trademark East Africa. The Nairobi-based organization helps promote regional trade.

Now East Africa’s biggest port at Mombasa is fighting back by expanding railways and building new berths to tackle congestion.

Plans are underway to begin a $13 billion railway project in November that will link Mombasa to the capitals of Uganda and Rwanda. The Kenya Ports Authority next week officially opens a 19th docking station and is investing $320 million to add three more at a new container terminal that will more than double capacity to 2.3 million containers, the biggest upgrade to the port since 1980. The government is also building a new facility at Lamu.

Cargo deliveries from Mombasa to the Ugandan border town of Malaba 500 miles take about 18 days. By comparison, a container from Singapore to Mombasa, a distance of more than 4,660 miles, takes only a day longer, according to Wolfgang Fengler, a World Bank economist for Kenya.

For its part, Tanzania is spending at least $10 billion building a new port at Bagamoyo, 37 miles northwest of Dar es Salaam, and upgrading an existing facility. The commercial capital, Dar es Salaam, handled 12.1 million metric tons of cargo in 2012, about 45 percent less than Mombasa, according to Trademark East Africa.

Kenyan port’s loss of business to Dar es Salaam has grown since post-election violence in 2008 disrupted trade flows. Ethnic clashes across Kenya hampered traffic by rail and road from the port, the report said.

The port that delivers freight faster gets the business, said Janeth Ruzangi, manager of corporate communications for the Tanzania Ports Authority. “It is natural that we have to work towards improving our port in order to attract these firms.”

Dar es Salaam has increased its share of Rwanda’s imports and exports from 41 percent in 2008 to 68 percent today, according to Trademark East Africa. Mombasa’s share of that trade shrank from 59 percent to 32 percent. Tanzania now handles 89 percent of Burundi’s cargo, up from 76 percent in 2008, compared with Mombasa’s 11 percent.

While the shift in port business is a wake-up call for Kenya, Tanzania’s port operations can be seen as complementing Kenya’s, said Gilbert Langat, CEO of the Shippers Council of Eastern Africa. The agency represents importers, exporters and organizations including the Petroleum Institute of East Africa and the East African Tea Trade Association.

Kenya is the world’s biggest shipper of black tea and will begin exporting oil in 2016.

Dar es Salaam has the fourth-largest container port on Africa’s eastern seaboard after Durban, South Africa, Mombasa and Djibouti, according to the International Association of Ports and Harbors. Companies that use the Tanzanian port include AP Moeller-Maersk A/S (MAERSKB), the world’s largest container line, Mediterranean Shipping Co SA, or MSC, and Mitsui OSK Lines Ltd.