Project boosts cargo clearance, safety in East Africa

By: | Issue #661 | at 03:22 PM | Channel(s): Maritime  Breakbulk News  

By Shem Oirere, special to AJOT

Five countries in East Africa are at different phases of implementing an electronic cargo clearing systems at the ports of Mombasa in Kenya and Dar es Salaam in Tanzania to address the problem of container and cargo congestion at the two ports, cut down on operational costs and increase revenue for governments in the region.

The cargo clearing system is being backed by a new cargo tracking system that eliminates dumping and theft of cargo in transit along the northern transport corridor anchored on the port of Mombasa and the Central transport corridor that is supported by the port of Dar es Salaam.

The two ports have recorded growth in the number of containers and volumes of cargo in the last 10 years as East Africa’s economic performance surged to 6.3% by 2015 compared to the sub Saharan Africa’s average of 4.2% at the time.

Volumes of cargo in the last 10 years has surged 6.3% at East Africa’s ports.
Volumes of cargo in the last 10 years has surged 6.3% at East Africa’s ports.

Inefficiencies at the two ports, which have greatly been addressed for the last two years, led to extended ship dwell times, spatial constraints especially at port terminals as clearance of containers and general cargo took too long. Incidents of dumping and theft of goods in transit have also been reported previously because of lack of an efficient system to monitor cargo movement from port to warehouse. At the port of Dar es Salaam, the World Bank estimates an annual loss of $2.6 billion for Tanzania and neighboring countries that rely on the gateway for international trade such as Zambia, Uganda, Rwanda, Burundi and parts of eastern Democratic Republic of Congo.

The bank estimates the cumulative cost of the delays at the port and additional monetary costs to be equivalent to a tariff increase of 22% on container imports and approximately 5% on bulk imports.

Single Customs Territory (SCT)

But now the countries of Kenya, Tanzania, Uganda, Rwanda and Burundi have through their intergovernmental organization, the East African Community had previously approved the establishment of a Single Customs Territory (SCT) to support the liberalization of intra-regional trade among them and promote domestic and international investment in East Africa.

According to Trade & Markets East Africa (TMEA), a not-for profit firm that supports the growth of the region’s regional and international trade, the SCT will help harmonize the different customs law in the region, remove duplication procedures and multiple declarations, do away with the multiple security bond regimes, harmonize valuation approaches, reduce congestion at the ports of Mombasa and Dar es Salaam and also do away with the existing complex cargo and container clearance procedures at the two ports.

Malaysian firm vCargo Cloud Pte Ltd, which provides e-trade, e-freight, and logistics cloud solutions, is working with revenue collection agencies in East Africa including the Tanzania Revenue Authority, Kenya Revenue Authority, Uganda Revenue Authority, Rwanda Revenue Authority and Burundi Revenue Authority to implement the centralized SCT system that enables interconnectivity of customs systems in the region and boosts efforts to have seamless flow of information between the different customs stations in the region.

The centralized SCT system also creates a payment process that manages the transfer of revenue collected under the single window clearance system to the regional countries in addition to providing legal backing for the governments to enforce customs debts on behalf of each other.

The SCT project aims at reducing turnaround time at the ports of Mombasa and Dar es Salaam by 70%, and introduces single weighing for transit cargo and single customs declaration for goods destined for landlocked Uganda, Rwanda and Burundi.

Under the SCT platform “customs clearance is done while goods are still at the first point of entry into East Africa and the customs declaration is done only once in the country of destination,” according to Uganda Revenue Authority’s Herbert Ssempogo.

“All the taxes are paid to respective country of destination while goods are still at the first point of entry (either Mombasa or Dar es Salaam port) and goods are moved under a single regional guarantee bond, the Regional Customs Transit Guarantee Bond, and physical verification of goods done once at first entry point, which is either the originating or destination country,” said Ssempogo in a previous statement.

Different Phases

To support the SCT, each of the five countries are at different implementation phases of their separate single window system, which they must align to the SCT platform to enable the seamless flow of cargo both along the Central transport corridor and northern transport corridor.

In Kenya, for example, the Kenya Trade Network Agency (Kentrade) has introduced the Kenya National Electronic Single Window System (KNESW) which allows shippers, agents and traders “to lodge standardized information and documents with a single entry point to fulfill all import, export and transit related regulatory requirements.”

“The single window system reduces cargo dwell time to three days at the port, one day at the airport, and maximum of one hour at the border,” says a previous report by Kentrade.

“Implementing the single window system across East Africa would enable multiple government agencies to access necessary documents simultaneously, which would cut costs and reduce delays,” said the Kentrade.

For example, imports destined for Uganda through the port of Mombasa in Kenya, requires the ship carrying the cargo to transmit its manifest to the Kenya Revenue Authority (KRA), being the agency that collects tax on all goods through the port. KRA will then transmit the manifest simultaneously to Kenya Ports Authority, a government agency that manages the port of Mombasa and also the Uganda Revenue Authority (URA). The Ugandan agent involved in clearing the cargo, will then lodge declaration document to URA. This declaration is transmitted to KRA, which sends exit note to URA when the consignment transits and exits Kenya.

The World Bank, which is partially supporting the implementation of electronic single window system project in East Africa through its lending arm, the International Finance Corporation, says the process of implementing the project in Kenya is “complex.”

“It involved the implementation of 20 modules, streamlining and automation of approximately 42 processes, and establishing connectivity with 29 government agencies—with and without ICT systems,” the bank said.

Since the implementation of the two final modules of the project by Kentrade, the bank says: “Connectivity to the single window has been established with 22 government agencies that issue various permits and 32 procedures that are fully automated.”

“Twelve government agencies boast 100% use of the KNESWS for receipt and issuance of permits and an e-payment system is now operational and has streamlined payment arrangements for permits,” the bank adds.

A similar electronic procedure is being implemented at the port of Dar es Salaam that is expected to reduce the time it takes to clear goods to three days from 18 days.

Single Window

Phaeros Group BVBA, was in 2014 awarded the contract by Tanzania Ports Authority to deliver the electronic Single Window System that is to be extended to the country’s border posts and airports.

“The ultimate goal of the electronic Single Window System is to be the centre point of all communications regarding all cargo entering and leaving the country and one of its functionalities is also the tracking of the cargo throughout the complete cycle starting from the announcement by the shipper until reception at the final destination,” said Phaeros, which was recently acquired by Swedish company SAAB.

“This electronic communication system will be integrated with the Port Management System (Harbour View Plus), the Invoice System (BillSys) and the Terminal Operating Systems (Cargo System), all delivered by Phaeros, as well as with a selection of other external systems,” it said. Similar single window clearing systems are also being implemented by Uganda and Rwanda.

Meanwhile, Kenya, Uganda and Rwanda early this year launched the Regional Electronic Cargo Tracking System “to track goods under customs control from point of loading to a final destination” within the three countries.

KRA’s Commissioner General John Njiraini says the tracking system will “real time tracking of the movement of goods under customs control along the Northern Corridor, minimize diversion of goods under customs control, provide timely response to transit alerts, identify supply chain trends and hence enhance the decision-making process and to safeguard national security.”

Switzerland-based certification firm SGS is one of the companies that has been involved in offering electronic tracking system solutions in East Africa especially along the Northern transport corridor where traders and government agencies relied on GPS technology to monitor cargo movement from the port of Mombasa to various destination in the hinterland.

“The electronic cargo tracking system (ECTS) uses electronic service level agreement (e-SLA) to secure your cargo providing end-to-end visibility and full container intrusion monitoring,” says Vincent Tibbs, Governments and Institutions Services Regional ECTS Manager at SGS Kenya.

“ECTS enables automatic tracking and monitoring, data collection and protection of cargo as it is transported from start point to its destination and the real-time system will alert you of any irregularity with the cargo such as the trailer has been disconnected from the truck, or the container’s electronic seal has been tampered with,” he said.

“ECTS will not only secure your cargo in real time when in transit and in storage thus curbing shrinkage/pilferage, it also offers limited fleet management functions such as vehicle route deviations, excessive dwell times and disconnection of the vehicle battery,” added Tibbs.

American Journal of Transportation