New pact to unlock Sh4.5b tied up in cargo levies

Several players in the multi-billion shipping logistics sector are hopeful that the introduction of letters of guarantee for containers as an alternative to cash deposits could spur the growth of businesses in the country, particularly small-scale operators.

Mombasa-based shipping expert Sylvester Kututa, described the entry of Viatrans and its Kenyan subsidiary Viaservice Kenya as a good step in the right direction, saying it is expected to reduce the cost of doing business as money will no longer be tied to container deposits. 

“The container guarantee scheme will likely ease the trade. It is going to reduce the cost of doing business because money costs money. Small freight forwarders will afford it. But we are waiting to see its full impact on trade,” said Kututa, also the Group Chief Executive Officer (CEO) of Express Shipping and Logistics East Africa. 

According to Kututa, in jurisdictions like some European countries where the level of business trust is high, container deposits are lower or none, unlike in African countries. 

Agayo Ogambi, CEO of the Shippers Council of East Africa (SCEA), which represents importers and exporters, is confident that the new development may ease the burden of having to deposit cash for containers, which is costly for small-scale players. 

“We welcome the development because we hope that it will reduce the cost of doing business, especially for transit countries. We have already signed a Memorandum of Understanding with Viatrans,” he stated.

He observed that container cash deposits which are usually up to billions of shillings, has continued to impede business growth in the region. 

Shipping lines routinely demand cash deposits before the cargo leaves the port as a guarantee for the return of the empty container. 

Container deposits

The deposit is Sh64,230 and Sh128,461 for a 20-foot and 40-foot container, respectively, for cargo destined for Kenya. Those in transit are charged between Sh128,461 and Sh642,305 for a 20-foot and 40-foot container, respectively.  

The Geneva-based Viatrans has made its entry into Kenya under Viaservice Kenya Limited after its debut in Africa through Tanzania, targeting freight forwarders and shipping lines. 

So far, the firm has signed in four shipping lines and 35 per cent of the 1,200 clearing and forwarding firms in the country. 

Viaservice Commercial Manager Jairus Kitainge observed that two more shipping lines are also coming on board. 

“Since we came to Kenya in June 2024, we have covered 35 per cent of clearing and forwarding agents. We target to bring on board 80 per cent,” Kitainge explained. 

The firm guarantees clients of shipping lines that it undertakes to take care of the container safety and demurrage so it can be used without having to deposit cash with the shipping lines. 

According to Kitainge, the scheme may free up Sh4.5 billion tied up in container deposits and demurrage in the region that can be ploughed into the economy to spur growth.

Viatrans through Viaservice has also signed an MOU with shipping lines in Mombasa throughcKenya Ships Agent Association (KSAA) and the freight forwarders through the Kenya International Freight and Warehousing Association (KIFWA). 

Boosting efficiency

KSAA chairman Roger Dainty said last week that the partnership will boost efficiency at the port of Mombasa by improving container turnaround. 

“This collaboration with Viaservice is a significant step forward for Kenya and the entire East African shipping and logistics sector. It represents a commitment to enhancing efficiency, reliability, container safety, customer satisfaction and security assurance across the supply chain, benefiting all stakeholders involved,” he said. 

Viatrans’ Head of Global Trade Facilitation, Morgan Lepinoy stated, “As part of the Viatrans Group, our mission is to simplify and facilitate global strategic partnerships and innovation. Partnering with KSAA allows us to deploy proven digital and trade finance solutions that address trade barriers, streamline logistics, lower costs and unlock growth for businesses across the region.” 

The new container guarantees entail the issuance of a guarantee by Viaservice in favour of the shipping line or agent on behalf of registered customs agents, freight forwarders and shippers against which the shipping line or agent waives the container cash deposit.