Port crisis deepens as: Shipping lines drop Dar port


JF-Expert Member
Feb 11, 2007
Port crisis deepens as: Shipping lines drop Dar port

Dar es Salaam

ONE of the world’s biggest shipping fleets, Maersk Line, has suspended making calls to Tanzania due to persistent inefficiency at the Dar es Salaam Port, with more international companies threatening to pull out of the troubled terminal.

Maersk and its subsidiary Safmarine, have already issued a formal notice to their customers stating that they will no longer accept orders for port calls to Tanzania due to the increasing pile up of containers.

Maersk Line, the container division of Danish conglomerate AP Moller Maersk AS, is the largest liner shipping group in the world.

’’I am afraid other shipping liners may soon follow suit and suspend all shipments to Dar es Salaam Port just like what Maersk did,’’ said Otieno Igogo, chairman of the Tanzania Freight Forwarders Association (TAFFA).

Igogo warned that there is a real fear that other international shipping lines with long established major clients, could also scrap their calls to Tanzanian ports.

Sources say some international shipping lines are increasingly becoming wary of the congestion problem and could now be seriously considering berthing options in other countries.

The privately-owned Tanzania International Container Terminal Services (TICTS), which was awarded a hugely controversial contract extension in 2005, has found itself in deep water over congestion problems at the harbour.

The suspension of services by Maersk/Safmarine fleets comes as a number of international shipping lines have also been considering introduction of port congestion surcharge to be levied on containers and other cargo moving through the terminal.

Industry watchers say the proposed inefficiency levy -- vessel delay surcharge (VDS) -- would hurt the country’s economy by making imports more expensive.

This could have a ripple effect in the economy by further weakening the shilling and triggering an increase in inflation, experts warn.

It is understood that some shipping agents have been pressing for an introduction of between $100 and $200 vehicle delay surcharge per day to compensate for the delays in offloading cargo blamed on inefficiency of the container port operator and poor infrastructure.

Congestion problems in Dar es Salaam have already been driving a considerable amount of cargo traffic to the Kenyan port of Mombassa.

Meanwhile, reports say eight private companies in Tanzania have been licensed to operate inland container depots (ICDs) as a means of providing capacity relief for the hard-pressed container terminal at Dar es Salaam port.

The ICDs will be bonded facilities, while the private operators will be allowed to move cargo to and from the port themselves.

The existing port container terminal is reportedly working at 23.1 per cent above engineered capacity of 250,000 teu. However, 40 per cent of the congestion is blamed on importers incorrectly completing documentation.

In 2007, Berth 8 was also allocated to container handling, but has been unable to provide much relief given annual traffic growth rates of 15 per cent.

The Dar es Salaam port as a whole can now theoretically handle 650,000 containers, but will be handling 525,000 units by 2010, prompting David Coty, chief executive officer of TICTS to call for the construction of a second dedicated container terminal.

Both the Tanzania Shipping Agents Association (TASAA) and TAFFA have been accusing TICTS of inefficiency in handling containerised cargo.

Shipping lines say it costs a staggering $25,000 (approx. 30m/-) a day to keep a ship in the outer anchorage, a cost which could ultimately end up being passed on to importers.

According to the TASAA Chairman, Emmanuel Mallya, about half of international shipping liners have reduced their number of calls to Dar es Salaam because of the port�s inefficiency.

Limited installed capacity, a lack of competitiveness and ageing infrastructure are cited as some of the reasons for the ongoing delays and inefficiencies that have overshadowed the Dar es Salaam port in favour of its rivals.

TICTS, which took over the operations of the container terminal under a ten-year lease contract in September 2000, has been blamed for failing to make sufficient capital investment for the upgrading of the overburdened port.

This Pandora’s box was sprung open when it later emerged that halfway before the contract even officially expired, ex-president Benjamin Mkapa personally ordered that the company be given a 15-year extension, thus increasing the contract duration to a whopping 25 years.

There has been an outrage from Members of Parliament over why the previous government had decided to secretly extend the contract without following proper procedure.

In a recent paid advertorial published in several local newspapers, TICTS boss Cotty defended the contract extension, saying his company had improved productivity and efficiency at the Dar es Salaam port, but was facing increased cargo traffic.

’’As volume exceeded handling capacity, the terminal started to run out of container stacking space ... the surge of container cargo came as a result of Tanzania’s impressive gross domestic product (GDP) growth that has averaged at 5.8 per cent for the past seven years,’’ said Cotty.

He said TICTS had by last year invested $15m on container-handling equipment and infrastructure.

The former Minister for Energy and Minerals, Nazir Karamagi, is one of the owners of the TICTS company.
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