Danish shipping and logistics firm Maersk has introduced two additional surcharges for freight services on its key routes, including Kenya, resulting in higher costs for traders and more expensive goods for consumers.
This move comes despite a directive from the Kenya Maritime Authority (KMA) to delay implementing the new charges to allow for stakeholder dialogue.
The regulator has written to Maersk twice, responding to complaints from the Shippers Council of Eastern Africa (SCEA), which represents the interests of cargo owners (importers and exporters) in the region.
Maersk, which handles the largest share of imports and exports through the Port of Mombasa (28% of total throughput), has introduced emergency surcharges due to the Red Sea situation and peak season surcharges. These range from $300 (Sh38,931) to $2,000 (Sh259,540), depending on the size and type of container, and the destination.
Additionally, Maersk had earlier implemented a surcharge on containers, ranging from $13 (Sh1,687) to $151 (Sh19,595), which took effect on July 15.
“In order to keep providing you with our global services, Maersk is increasing the peak season surcharge for United Arabs Emirates, Bangladesh, Bahrain, Bhutan, India, Iraq, Jordan, Kuwait, Sri Lanka, Maldives, Nepal, Oman, Pakistan, Qatar, Saudi Arabia, Yemen to Djibouti, Tanzania, Somalia, Kenya, Sudan, effective August 1 2024,” parent company A.P Moller had said in a customer advisory.
A.P. Moller, Maersk’s parent company, announced in a customer advisory that the new surcharges would take effect from August 1, 2024. These rates are also subject to other applicable surcharges, including local and contingency charges.
Maersk noted that the impact of the Red Sea crisis extends beyond the Asia-Europe network, affecting its global operations. The surcharges have been implemented despite the Kenya Maritime Authority’s (KMA) call for their suspension.
In a letter to Maersk, KMA criticized the adjustments, stating they were against the tariff review process. The KMA requested Maersk to provide reasons for the rate changes, justification for the review, the magnitude of the new charges, and their duration. Maersk was also asked to quantify the business losses that warranted the decision.
KMA planned to consult relevant stakeholders to assess the market situation and engage in discussions with the shipping lines to find a resolution.
“Your institution is aware that part of the application process for issuance of licence/certification is to submit tariffs to be applied during the period of operations to the Authority.
It is therefore expected that in the event of any change in tariffs, a submission of such changes should be made,” KAM said in a letter to the shipping line, directing it to suspend “with immediate effect” the surcharges.
The shipping line is however yet to suspend the new charges as they remain in force.
“SCEA has been waiting for Maersk to rescind the decision…very difficult times for shippers, three increases in less than one month,” the shippers council CEO Agayo Ogambi posed.
Speaking , “These new surcharges will adversely impact ongoing initiatives to promote a modal shift from air to sea freight and which is already gaining traction, especially against the backdrop of climate and carbon reduction initiatives and resultant market demands especially in Europe,” Ogambi said.by telephone, Ogambi said the move would increase the cost of doing business, with other shipping lines likely to follow suit. Other key players at the Port of Mombasa include the world’s leading container carrier, Mediterranean Shipping Company (MSC), which accounts for 18.9 percent of total throughput, and China’s CMA CGM, which handles 13.9 percent of containers at Mombasa.
Shippers have warned that the new surcharges will increase the cost of exporting a 20ft container from the Port of Mombasa by more than 13 percent, raising overall shipping costs.
From an industry perspective, the Shippers Council of Eastern Africa (SCEA) noted that the initial surcharge alone will cost the industry an additional Sh27.5 million annually to export 20ft containers through Maersk, increasing from Sh204.9 million to Sh232.4 million, based on 2023 volumes handled by Maersk.
The industry will also incur an additional Sh51.2 million annually for 40ft containers, rising from Sh486.8 million to Sh537.9 million. Similarly, the cost to import 20ft containers will increase by Sh501.9 million annually, from Sh3.3 billion to Sh3.8 billion, and the cost to import 40ft containers will rise by Sh653.3 million annually, from Sh5.3 billion to Sh5.9 billion, based on Maersk’s 2023 throughput share and current dollar rates.
