Beauty firms blame port delays for stock-outs
Thursday, May 16, 2019 11:01
By DOREEN WAINAINAH
Importers and manufacturers of high-end cosmetics have reported biting stock shortages in recent months attributed to delayed clearance of goods and raw materials at the port.
Global cosmetic firms Yves Rocher and Madora — the importer of Chanel and Dior products — are among those hard hit by the delays, which have seen them suffer huge financial losses as well as attrition of customers who have opted for alternative products.
Shipments for retailers that would ordinarily take two to three weeks to clear are now taking as much as two-and-a-half months to three months as the government enforces a crackdown intended to net counterfeit products as well as catch tax evaders.
“I can confirm that since last year the clearance process is longer. We are not against the new regulations but it is taking time to clear a shipment,” said the Madora Kenya general manager, Kamlesh Nuckchady, in a response to Business Daily queries.
The increased lead time has been as a result of the requirement for 100 per cent verification of imports by a multi-agency team charged with cleaning up operations at the port.
This has also led to an increase in the cost of the cosmetics products in stock as they have become scarce due to the delays.
“In the last year, Kenya has become one of the most difficult jurisdictions in the world for clearing international goods. We apologise for the temporary stock-out of some of our products, while we navigate this unprecedented regulatory uncertainty,” said a notice to customers by Yves Rocher.
A joint technical committee — with membership from the Ministry of Transport and Infrastructure, KPA, Kenya Revenue Authority, Kenya Bureau of Standards, KAM, KEPSA, Shippers Council of Eastern Africa and Kenya Railways — was formed in March to deliberate and make recommendations on how to ensure efficient and cost-effective logistics for the transportation of cargo using the Standard Gauge Railway (SGR).
A key recommendation in the report is a proposal to reduce the number of government agencies working at the port and ICDN from 28 to four critical agencies.
“The long process is hampering importation. Some of the new requirements need to be met from the manufacturer level, which is sometimes out of our control; for instance additional stickers or details on the labels,” said Mr Nuckchady, whose products are sourced from French conglomerates such as Chanel and Dior.
Kenya has struggled to streamline SGR freight operations between the port of Mombasa and Internal Container Depots (ICDs), causing persistent congestion and delays and resulting in increased storage costs and demurrage charges for investors.
Kenya Association of Manufacturers CEO Phyllis Wakiaga, in a response to queries from the Business Daily, pointed out that the quality of storage for these inputs is not guaranteed.
“The facilities are not equipped to store many of these inputs and are overwhelmed by the piling numbers as the days go by,” she said.
“Inputs and raw materials neededed for production, that would originally take two to three days to be cleared now take a minimum of 14 days. There are many reasons for this, including a disconnect between agencies that are mandated to clear the goods, which translates to lengthened and duplicated procedures, and cumbersome administration processes.”
KPA gives importers four days to clear cargo upon arrival at an ICD.
Importers are required to pay storage fees to KPA for any additional days.
“Since the launch of SGR, the average time it takes to clear containers at ICDN is 10 days. This means that the majority of importers pay storage fees to KPA for days over and above four days,” said Ms Wakiaga.
Though the importers have termed the new verification as essential to reduce the counterfeits in the market, they are urging authorities to streamline the process that has seen them counting losses and passing costs to the consumer.
“Importers hire containers from various shipping lines and are given timelines within which they are supposed to return the empty container. Most of the shipping lines give importers nine days to return the container to the nominated shipping lines depot.
“Due to inefficiencies at ICDN, majority of importers/manufacturers return containers having surpassed the agreed period hence paying demurrage charges. This cost is incurred by manufacturers/importers,” she said.