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Berbera Port’s Growth Is Envied by Regional Port Logistics

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As Kenya’s neighbors forge ahead with the expansion and modernization of their port infrastructure, the country risks losing its place as the regional logistics hub because of the ascendance of political considerations over economic interests.

The Port of Mombasa was lucky to survive the mistakes that had been made in the years before 2007, in particular the failure to develop the facility’s infrastructure in order to keep up with the growth in the quantity of cargo handled. This may not hold going forward given recent Geo-economic and political developments. Unlike Kenya, our competing regional ports may have learned a vital lesson about the need to develop sufficient port infrastructure to keep up with future developments. They have been keen to create linkages with private sector capital. In Kenya, on the contrary, efforts to concession infrastructure development for ports in Kenya have been met with intense opposition from various actors.

Previously without an alternative, the landlocked countries of Uganda, South Sudan, Burundi, Rwanda, and the Democratic Republic of Congo (DRC) had no option but to pay dearly for Kenya’s failure to develop its port infrastructure to keep up with the growth cargo. The lack of capacity reached crisis point in 2007 when the port experienced immense operational challenges.

Dar es Salaam Port was then in a dire situation and had, indeed, relied on Mombasa Port to address its congestion problems by using Kenya as a transshipment port to avoid long delays for cargo destined for the Central Corridor – largely mainland Tanzania, Burundi, Rwanda, DRC, and Zambia.

The wake-up call came in 2007 when shipping lines threatened to designate Mombasa a demurrage port. This would justify liners calling at the port to charge the unpopular Vessel Delays Surcharge (VDS) – a punitive fine for an inordinately long delay that can be as high as KSh35 million per day depending on the vessel’s size or the type of cargo on board. Although in reality VDS was not claimed – except by oil and LPG vessels that faced storage capacity constraints – the threats were numerous.

However, it is the growth of cargo volumes for the region – and consequently the shrinking capacity at the Mombasa Port – and the emergence of competing ports that should worry Kenyan policymakers who should urgently fast-track the remaining port capacity infrastructure development as well as keenly focus on the other underdeveloped hinterland infrastructure for Lamu Port.

The Kenya Ports Authority (KPA) has proposed a number of projects that must be fast-tracked in order to deal with the growing volume in both domestic and transit cargo.

There is a market of over 385 million people in Eastern Africa, huge unexploited economic opportunities, and a growing demand for port infrastructure to drive growth. Cargo throughput – the total volume of cargo discharged and loaded at the port – has been registering impressive growth. For instance, the port moved 18,063,051 tons between January and June 2023, up from 17,474,311 during the same period in 2022 tons, a 3.4 per cent increase.

Globally, vessels are growing bigger as ship owners seek to maximize profits by carrying more cargo while running fewer ships, and shippers want to get lower freight costs through economies of scale. The biggest ships in the market, such as Maersk Emma, MSC Oscar, and others, are now almost 20,000 TEUS in capacity. Ports thus face the challenge of providing space to accommodate these behemoths. Also, global ship operators are seeking partnerships to provide seamless services – from the source to the end market – and port development plays a key role in this new supply chain.

Ethiopia, Lamu Port’s key target, has turned its focus on Berbera Port in Somaliland, which is set to become the most modern port in the Horn of Africa once it is completed. The Gulf states’ growing interest in the Horn of Africa region due to geopolitical and strategic considerations saw DP World enter into an agreement to develop and manage the facility for 30 years in May 2016. The total investment of the two-phase project will reach US$442 million. DP World will also create a free economic zone in the surrounding area, targeting a range of companies in sectors from logistics to manufacturing, and a road-based economic corridor connecting Berbera with Ethiopia.

The port deal with Somaliland – that declared detached from Somalia in 1991 but which is still not internationally recognized by the international community – has increased Somaliland’s credibility as an independent state. Port Berbera is now the closest sea route to Ethiopia, an 11-hour journey by road. The port opens up opportunities for huge growth in the import and export of livestock and agricultural produce. DP World Group Port officials say that the port, which can currently handle 150,000 TEUs, will expand into handling one million TEUs of 20 and 40-foot mixed units.

By Githua Kihara

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