Freight haulers are feeling the heat of the nationwide fuel shortage

Shipping & Logistics

Freight haulers are feeling the heat of the nationwide fuel shortage


Vans ponder their next move at a gas station in Jomvu, Mombasa. PHOTO | LABAN VALLOGA | NMG

Geraldandae

Summary

  • The government and oil marketers have been fighting back and forth over arrears owed to oil traders in recent weeks, a move that has paralyzed the transportation sector in the country.
  • The shortage has impacted not only transportation but also farming activities as farmers struggle to get diesel, coinciding with the peak of the planting season.
  • Gilbert Langat, chief executive of the Shippers Council, said the fuel shortage has impacted shipping activities as well as other sectors of the economy.

The logistics sector is feeling the heat of a fuel shortage that has hit different parts of the country, even as hauliers stuck with cargo at Mombasa port are asking authorities to waive storage fees.

Freight forwarders argue that some of their trucks cannot move the cargo from the port because they do not have enough fuel to move the shipments from the facility to the final destination.

The government and oil marketers have been fighting back and forth over arrears with oil traders in recent weeks, a move that has paralyzed the country’s transport sector, particularly in western Kenya where the deficit has been acute.

The shortage has impacted not only transportation but also farming activities as farmers struggle to get diesel, coinciding with the peak of the planting season.

Gilbert Langat, chief executive of the Shippers Council, said the fuel shortage has impacted shipping activities as well as other sectors of the economy.

“Of course, the shortage has affected the movement of goods, but the extent of the damage caused by this shortage can only be determined in the coming days,” Mr Langat said.

Disruptions in the transport sector are likely to cause port congestion, leading to higher storage fees as some cargoes would not be evacuated within the required free storage time.

Kenya Transporters Association (KTA) chief executive officer Mercy Ireri said the shortage had affected their financial and operational planning, noting that some of their members had to allocate additional funds for fuel that they had not planned.

“Some of the transport companies have had to redirect their finances to unplanned fuel purchases due to the shortage, which has had a negative impact not only on liquidity but also on operations,” Ms. Ireri said.

Ms Ireri said transport companies usually buy fuel in bulk, but there are those who buy on an as-needed basis and may have been impacted by the current shortages.

Mr. Dennis Ombok, a logistics consultant and former CEO of KTA, says the Ports of Kenya Authority (KTA) needs to issue a waiver to intervene in the current situation.

Claiming a waiver

“Cargo acceptance time is obviously being impacted by the ongoing shortage and we would like KPA to consider a waiver of storage fees given the ongoing circumstances,” said Dennis Ombok, a former chief executive officer of the Kenya Transporters Association.

KPA usually grant free warehouse days or cargo owners as they prepare to ship to their final destinations.

Mr Ombok noted that petrol stations in Mombasa have rationed fuel, making it impossible for trucks to get enough fuel to make an entire journey from the port city to Kampala and beyond.

Oil marketers are said to have been slow to evacuate their products from storage to protest delays in paying subsidies to the companies.

fuel rationing

The government says it owes the companies Sh13 billion but traders say they are owed more than Sh20 billion. On Monday the government released Sh8.2 billion to traders to ensure partial payments.

The state has announced it will fine fuel marketers accused of hoarding petrol and diesel as it released Sh8.2 billion in subsidy arrears to ease nationwide fuel shortages and forestall a crisis.

Petroleum Secretary-General Andrew Kamau said on Monday that investigations into the shortage were complete and the setting for fines and license suspensions was in place.

He added that supply difficulties that have caused nationwide fuel shortages are expected to ease from Thursday after oil marketers soaked supplies from depots to stations.

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