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Viewing cable 09DARESSALAAM154, PORT CONGESTION IN DAR ES SALAAM - TOO MUCH OF A GOOD
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| Reference ID | Created | Released | Classification | Origin |
|---|---|---|---|---|
| 09DARESSALAAM154 | 2009-03-04 13:51 | 2011-08-25 00:00 | UNCLASSIFIED | Embassy Dar Es Salaam |
VZCZCXRO9239
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHDR #0154/01 0631351
ZNR UUUUU ZZH
R 041351Z MAR 09
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC 8320
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHJB/AMEMBASSY BUJUMBURA 2837
RUEHKM/AMEMBASSY KAMPALA 3357
RUEHLGB/AMEMBASSY KIGALI 1285
RUEHDJ/AMEMBASSY DJIBOUTI 0001
RUEHKI/AMEMBASSY KINSHASA 0304
RUEHNR/AMEMBASSY NAIROBI 1196
RUEHDS/USMISSION USAU ADDIS ABABA
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFISS/CDR USAFRICOM STUTTGART GE
RHMFIUU/CJTF HOA//J3
RUEHLMC/MCC WASHINGTON DC
UNCLAS SECTION 01 OF 03 DAR ES SALAAM 000154
SIPDIS
DEPARTMENT FOR AF/E JLIDDLE, INR FEHRENREICH, AF/EPS
STATE PASS USAID/EA, USTDA, USTR
COMMERCE FOR BECKY ERKUL
NAIROBI FOR FCS
E.O. 12958: N/A
TAGS: ECON EWWT PGOV PHSA PINR TZ
SUBJECT: PORT CONGESTION IN DAR ES SALAAM - TOO MUCH OF A GOOD
THING
DAR ES SAL 00000154 001.2 OF 003
¶1. Summary: Ships arriving in the Dar es Salaam harbor must wait
fourteen to twenty-two days before offloading, at a cost of USD
20,000 a day, pushing up the prices of imported goods and squeezing
profits for Tanzania and its landlocked neighbors. The Port of Dar
es Salaam got off to a fresh start in 1999, but as regional growth
caused the number of containers to increase beyond those projected,
an overtaxed infrastructure combined with a developing world
bureaucracy led efficiency to plummet. The GOT has begun to demand
solutions, highlighted by a surprise port inspection by President
Kikwete, but a long-term fix will be hard to achieve. End Summary.
A Fresh Start, but Things Move Too Quickly
------------------------------------------
¶2. The Government of Tanzania loses TSH 20 million (USD 15,000) per
day due to delays at its Dar es Salaam port, according to a recent
newspaper report. On any given day, the coastline of Dar es Salaam
is dotted with long lines of ships anchored at sea waiting to pull
into port. The Port of Dar es Salaam has not always been the pariah
in the shipping industry it has become. In 1999, with support of
the World Bank, the GOT signed a 10-year concessionaire agreement
with Tanzania International Container Terminal Services Limited
(TICTS) to manage the port and became known as one of the more
efficient ports in the region. Port efficiency numbers met
international standards and, by 2004, TICTS surpassed its
contractual benchmark of 20 container moves per hour, hitting 23.1.
Increased efficiency combined with rail access to neighboring
countries helped Tanzania become a valuable transshipment point and
accelerated the growth of the port.
¶3. In turn, the port has facilitated regional economic growth, with
rising exports and an influx of consumer and capital goods. Port
traffic continued to exceed the original forecasts and, in 2007,
343,490 twenty-foot equalivant units (TEUs) containers passed
through the port. According to the Chairman of the Tanzanian
Freight Forwarders Association (TAFFA), Otieno Igogo, the orginal
contract forecast an annual increase of 10,000 TEUs, to 150,000 TEUs
in 2000 and 250,000 by 2010. However, the actual rate of increase
has been closer to 15,000 TEUs per year. With no commensurate
capital investment or significant increases in the amount of
available container storage space, the increased load has overtaxed
a poorly maintained infrastructure, in particular on the already
poorly functioning Tanzanian railway system.
Gridlock Hits a High Point
----------------------------
¶4. With cargo ships waiting an average of 22 days to enter the port,
Dar es Salaam now has the distinction of being the slowest port in
Africa, according to the Chairman of the Tanzania Shipping Agents
Association (TASAA), Emmanuel Mallya. Delivery delays during the
2008 holiday season provided an impetus for private gripes to become
public calls for a solution. Much of this dialogue plays out in thd
-oW}wEfYQDdia; local journalists, spurred on by the highly visible cargo
ships anchored in the bay, have given voice to the debate over the
causes of the slowdown. For several months, at least fourteen and
sometimes more than twenty ships have lain at anchor waiting to gain
access to a berth. Massive container ships burn through fuel, incur
staff costs and are levied late fees from shipping agencies, costs
which are all passed on to consumers through higher prices for
goods.
¶5. Beyond costs, the amount of time needed for products to arrive in
Dar is a major concern. Hassan Dhalla, the owner of a large freight
forwarding business, stated that Tanzanian Breweries Ltd. almost ran
out of beer last holiday season due to delays in the arrival of a
150,000 ton shipment of malt. An Embassy officer was dismayed when
the container ship carrying his POV twice bypassed Dar es Salaam to
stop at other regional ports rather than wait for a berth.
According to TASAA, all the major shipping lines have decreased the
number of ships coming into the Dar es Salaam port. Mallya said
companies were consolidating goods at transshipment points, then
sending one large ship rather than three smaller ones. Sending one
large vessel may decrease waiting time, but can increase congestion
at the port because of the extra time needed to load and offload
cargo.
DAR ES SAL 00000154 002.2 OF 003
Mombasa Not the Answer
----------------------
¶6. Despite the inefficiencies and delays in Dar es Salaam, it
remains the port of choice for most shippers to Tanzania and its
landlocked neighbors. While Mombasa port is significantly more
efficient, according to Dhalla the costs of shipping goods to
Tanzania through Mombasa can be almost three times that of using Dar
es Salaam. As a result, nearly all smaller importers prefer to wait
for delivery rather than reduce their profit margins. Only large
companies, such as Barrick and other major international mining
firms, will routinely resort to Mombasa to ensure faster delivery of
necessary equipment.
Bureaucratic Solutions Not Enough, New Contract Needed
--------------------------------------------- ---------
¶7. The resolution of contractual issues with TICTS is essential for
improving port operations. The ten-year contract was renegotiated
in 2005 to expand the role of the concessionaire from operation only
to include infrastructure development, and was extended through
¶2025. However, the new contract was recently put on hold by the
Parliament to address allegations of corruption during the
negotiation process. Some claim that TICTS is purposefully slowing
down container handling by not adequately servicing its heavy
lifting equipment, in an effort to force the GOT to make a quick
decision on a contract biased in TICTS' favor. A new contract would
do more than spur infrastructure development in the port; it would
also help to more accurately delineate the role of the Tanzania Port
Authority (TPA) vis-a-vis TICTS. Currently, TICTS complains that
TPA has an inherent conflict of interest by acting as both landlord
and competitor (TPA has its own cranes and docks). TICTS alleges
some of TPA's decisions have hampered TICTS, thus slowing overall
port activity, to the benefit of TPA.
¶8. President Kikwete's surprise port inspection March 2, after he
reportedly refused to read TPA's latest "useless report," indicates
that the highest levels of the GOT recognize the impact of port
congestion. Earlier in the year, Kikwete established a Presidential
Port Decongestion Committee, which has overseen recent steps to fix
the port's problems. The Tanzania Revenue Authority (TRA) has
opened Inland Container Depots (ICDs) to relieve congestion on the
port property. The nine ICDs in operation have opened up
much-needed new space to offload containers, but they have also
added extra costs for importers. The GOT also dusted off an old
regulation that allows the auction of containers that remain in the
port for over twenty-one days. The auctions are intended to
penalize importers who allegedly use the port as storage space, as
well as to clear out abandoned goods. An additional regulatory
change now allows ships to file manifests prior to arriving, putting
an end to the practice of starting the customs process only after
pulling into the port.
¶9. Tiscan, a private company outsourced by the Tanzania Revenue
Authority to verify the contents of containers, causes the most
delays. Tiscan's burdensome processing procedures are improving,
but continue to be a problem, especially for small importers less
knowledgeable on procedures and more likely to try to evade duties.
Low-level corruption remains an ongoing concern; however, it is not
a major obstacle for businesses that follow the regulations. In
most cases, corruption consists of payments for "expedited services"
or assistance in facilitating undervalued containers through the
system without a full investigation. While dwell time has increased
due to the lack of space for container storage, large freight
forwarding operations seem fairly pleased with the process and
report they can generally move a container out of the port within
three business days.
¶10. Comment: The problem of port congestion is clear, its solution
much less so. TICTS, TPA and TISCAN are all eager to shift the
blame (TICTS recently approached donors to seek funding for an
"awareness campaign" aimed at port users). Apart from short term
measures, to keep up with the unplanned growth in cargo the port
needs considerable capital investment, which in turn requires
resolution of the contractual issue of port management. In
addition, investment in the roads, and especially the deteriorating
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rail links, is necessary to keep containers moving out of the port.
One business owner, clearly lacking faith in the GOT's ability to
make quick decisions, dourly noted that in the short term, the only
remedy for port congestion may be an economic downturn.
ANDRE