The State is poised to transfer the responsibility of managing government cargo to the Kenya National Shipping Line (KNSL), a move that may impact the finances of clearing and forwarding firms.
This transition aims to provide KNSL with a renewed lease on life, aligning with President William Ruto’s administration’s commitment to continuing the initiatives of his predecessor in revitalising the dormant agency.
Salim Mvurya, the Cabinet Secretary for Mining, Blue Economy, and Maritime, has issued a directive instructing government entities to process their financial cargo through the Kenya National Shipping Line.
“I have sent a circular to all government departments about the clearance of their cargo by KNSL under Government Clearing Agency,” CS Mvurya said last month.
Additionally, this new directive will extend KNSL’s role in handling financial cargo owned by regional governments, offering incentives like reduced port charges and an extended storage period for transit cargo to attract such consignments.
Kenya International Freight and Warehousing Association (Kifwa) has protested the decision to consolidate government-owned cargo under KNSL, as they are set to lose at least half of the total cargo that is handled at the Port of Mombasa.
In 2018, the Cabinet, under Mr Kenyatta’s leadership, approved the reestablishment of a state-owned financial shipping company to manage government cargo and compete for private financial business.
This involved the restructuring of the dormant KSNL, which would result in the departure of three other foreign shareholders.
The state-owned shipping line has faced financial challenges for decades, with previous efforts to revive it proving unsuccessful, leading to its precarious financial situation due to a lack of business.
The recovery plan proposed by the Kenyatta administration at that time included granting the company the exclusive mandate to handle government cargo.
The new development will see KNSL clear goods imported by government, which were previously offered to private investors, such as importing bulk fertiliser.
Foreign shareholders in the dormant financial shipping line encompass the Mediterranean Shipping Company and MS Oceanfreight Ltd.
Various multinational financial shipping lines have previously expressed interest in controlling KNSL, encouraged by the prospect of handling substantial financial business from the government annually.
The revival of the financial shipping line is expected to restore Kenya to its historical standing as a prosperous maritime nation with esteemed financial shippers.