Mombasa freight providers are migrating cargo to air freight to avoid add-on costs imposed by ocean shipping companies and surcharges used to offset rising oil prices, reports Nairobi's East African.
Unlike shipping lines, road and air freight providers are unable to recoup losses in surcharges and often are locked into long-term contracts of up to five years in length.
The cost of fuel is up 40 per cent year on year and set to climb as high as $120 a barrel by 2035. Current fuel surcharges from Maersk are set at US$925 per TEU and $1,850 per FEU.
Despite rising shipping surcharges, Kenya Transporters Association (KTA) is often slow to revise regional charges and have remained standard since July, said Mombasa-based logistics provider Signion managing director Meshack Kipturgo.
Further KTA restrictions on collecting goods on a return journey unless from country of origin avoid customers via countries on route such as a container's journey from Mombasa to Rwanda missing out pick-ups in Uganda.
"The return trip would fill the margin gap especially for new entrants who don't enjoy economies of scale," said Mr Kipturgo.
The market for transit cargo from Mombasa port to Uganda, Democratic Republic of Congo, Tanzania, Rwanda and South Sudan from Mombasa port is forecast to grow to above 5.5 million tonnes. This is due to "increased demand for construction materials across the region and drilling of oil anticipated to kick off in Uganda by next year," said Kenya Ports Authority spokesman Bernard Osero.