Operational inefficiencies working against Tanzania’s efforts to woo Uganda’s traders to its Dar port

by Business Times writer
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Tanzania is courting Ugandan traders to pass through its port at Dar, however, the expense involved is discouraging Ugandan traders.

The port of Dar es Salaam has seen an increase in cargo to most of its environs in recent years, but Dar is concerned about the transit traffic going to Uganda, which has remained at two percent even after the port invested millions of dollars to compete with Mombasa in Kenya.

Eighty percent of Uganda’s cargo still passes through Mombasa, according to data from the Private Sector Foundation Uganda (PSFU), because the Central Corridor is still plagued by inadequate infrastructure, high transportation costs and slow port clearance.

However, Tanzania has been working to modernise its Dar port as part of the $421 million Dar es Salaam Maritime Gateway Project (DMGP), which the Tanzania Ports Authority (TPA) launched in 2017.

The goal was to modernize the port’s infrastructure so that post-panamax-sized ships could dock there by deepening and enlarging the entrance channels and berths.

In addition, TPA made investments in numerous other service facilities, including a new roll-on/roll-off vessel terminal, with the goal of improving the port’s overall performance. 

As a result, since 2020, container traffic has increased at an average annual rate of 12 percent and transit traffic has increased at an average annual rate of 23.5 percent.

But this has not offered Mombasa fierce competition to materialise cargo increments to Uganda through the Dar-Mwanza-Port Bell leg of the Central Corrido. 

The inefficiencies in the corridor, such as the road-user fee and insufficient capacity on rail and inland waterways, are to blame, according to Juma S. Kijavara, deputy director-general of TPA. 

But according to TPA data, this has not stopped the Democratic Republic of the Congo from accounting for the most cargo transit along the 1,374-kilometer Kigoma route from the Dar port at 42 percent, followed by Zambia at 23 percent.

Cargo has also swiftly gone to Malawi and Rwanda at high margins.

Tanzania has, therefore, been forced to provide incentives to neighbouring states in order to encourage the use of the central corridor in conjunction with the Dar port. 

These include free 30-day storage for all imports and a special goods shed at the port that can be used as a consolidation and deconsolidation center whenever needed. 

This is more than the 15 days of free storage Mobasa offers. The objective is to create a bilaterally friendly business environment that removes barriers to the efficient operation of logistics and transportation networks.

However, one of the things that is slowing down the use of the Central Corridor route is the delays in clearing cargo at Dar es Salaam Port.

“Take an example of cargo using Mombasa port which is in most cases cleared within one day as compared to about two days of cargo clearance at the Port of Dar es Salaam and as a result, the business community would find it convenient to use Mombasa Port as compared to the Port of Dar es Salaam,” Dr Julius Byaruhanga, the director policy and business development at PSFU said, during a workshop aimed at facilitating an efficient logistics system through the Central Corridor route organised by the Tanzania Ports Authority in Kampala.

In order to improve compatibility and shorten the time required for cargo clearance, he stated that coordination with the Tanzania Revenue Authority (TRA) is necessary in order to implement Uganda’s electronic single window system.

But the central corridor route has, of recent, been plagued by its lack of a reliable transportation system, and convenience in obtaining truck and port permits.

At the moment, Ugandans shipping goods to the Port of Dar es Salaam pay roughly $4,500 for a container’s transportation which lasts at least 4.5 days on the road, whereas $3,000 is spent from the Port of Mombasa for three days.

This has, therefore, prompted Ugandan traders to fancy the Port of Mombasa, according to Mr Byaruhanga, enabling it to handle 80 percent of Uganda’s cargo, leaving the Dar port with only 20 percent.

In order to utilize the Port of Dar es Salaam as a time- and money-efficient port—PSFU now suggests that cargo from Uganda be transported by railway from the Dar port to Mwanza port, since it only takes eight hours to reach Uganda’s borders.

This has two options: connecting the Port of Dar es Salaam to Port Bell and Jinja via Mwanza on Lake Victoria by road or rail, both of which require significant investment.

But Uganda is endeavouring to actualize the plan by constructing a new vessel to substitute the MV Kabalega, renovating and modernizing the piers at Port Bell and Jinja, setting up centres for search and rescue operations on inland water bodies, conducting a new survey of Lake Victoria, and installing navigational aids, through private partnerships.

Tanzania, on its part, wants to develop inland container depots closer to the Ugandan border through public- private partnerships with Ugandan businesses.

However, a large amount of cargo also intimidates the Dar port, which is why, as was the case in December, compelled it to stop bagging loose cargo at its facilities in order to lessen the number of waiting ships that cause traffic jams.

TPA representatives clarified that the action was taken to raise the number of waiting ships, which had reached 40, in a letter to port stakeholders. This shortens the time ships must wait at the outer anchorage and gives the port time to evacuate cargo.

The Kenya Ports Authority (KPA) reports that some ships that were originally headed for Tanzania are now being rerouted to Mombasa port due to delays that regional ports have been facing in recent weeks.

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