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NEWS & CURRENT AFFAIRS

The Nairobian

Brace for higher commodity prices as port increases fees

Financial Standard

By Brian Ngugi | Jan 28, 2025

Consumers and businesses importing goods through key ports across the country are likely to face higher prices as the Kenya Ports Authority (KPA) mulls an increase in service fees.

The move comes at a time when traders are already grappling with rising global costs, potentially adding further strain to inflation and household budgets.

KPA announced a review of its 2012 tariff structure, including charges for services like ship docking, cargo handling, storage, and general port operations this week.

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The proposed changes have not been finalised, but stakeholders, including importers, traders, and shipping lines, are being consulted through meetings scheduled in Mombasa and Nairobi on February 5th and 11th, respectively.

The KPA justifies the review by citing its commitment to improving service delivery and keeping pace with operational costs. However, the potential impact on consumers is a major concern, traders and importers who spoke to The Standard said.

Higher port fees would likely translate to increased import costs, which could then be passed on to consumers through higher prices for goods on store shelves, traders warned.

“This is a worrying development, especially considering the current economic climate,” said independent economist Ian Njoroge.

“Rising import costs could exacerbate inflationary pressures, further eroding purchasing power for Kenyan households.”

Traders are also apprehensive about the proposed changes. “We are already facing significant challenges due to rising global shipping costs and supply chain disruptions,” said James Ochieng, head of a Nairobi-based import company.

“An increase in port fees would only add to our burden and potentially make Kenyan imports less competitive.”

The KPA maintains that stakeholder consultations are a crucial part of the process, aiming to find a balance between improving port services and minimising the impact on businesses and consumers.

“The stakeholder engagements on the review of the KPA Tariff 2012 form an integral part of the roadmap taking cognisance of the authority's commitment to the tenets of the stakeholder management framework which aims at creating a collaborative culture to address end-to-end service delivery gaps thereby facilitating cargo logistics to mutual benefit,” said KPA Managing Director Captain William Ruto.

The outcome of the consultations and the final decision on potential fee hikes remains to be seen.

However, the KPA's proposal has sparked concerns about rising prices for consumers and a potential strain on Kenyan businesses already facing a challenging economic environment.