2013-02-03 16:30:06 - Fast Market Research recommends "Kenya Shipping Report Q1 2013" from Business Monitor International, now available

BMI believes the performance of the Kenyan economy on the one hand, and its ports and shipping sector on the other, are following an 'asymmetrical' pattern across 2012 and 2013. We see the economy accelerating, while port activity, measured by cargo throughput at Mombasa, appears to be slowing down. After estimated growth of 4.5% in 2012, we forecast Kenyan GDP to accelerate to 5.8% in 2013, on the back of stronger consumption and investment. We envisage growth in gross tonnage and box traffic at Mombasa, which enjoyed double-digit percentage expansion in 2012, reducing to single digits in 2013. The explanation, we believe, lies in the fact that 2012 was an exceptional year, when the easing of traditional capacity constraints and

congestion problems at the port led to a release of 'repressed demand'. We anticipate that, in 2013, there will be a return to business as usual, which underlines the strong freight potential of the East African hinterland. It could be argued that the Kenyan authorities are not helping themselves, having introduced a tax on transit freight to Uganda, which could push shippers to take their business elsewhere in 2013 - to Dar es Salaam in Tanzania.


Full Report Details at
- www.fastmr.com/prod/529397_kenya_shipping_report_q1_2013.aspx


However, we remain broadly upbeat about Kenya's ports and shipping sector, based on three main factors: reasonable economic growth in Kenya itself; a dynamic East African region (this is important because Mombasa acts as a trade gateway for many of Kenya's neighbouring countries); and finally, the continuing signs that the port's ongoing congestion problems are easing.

Headline Industry Data

* Port of Mombasa tonnage throughput forecast to grow 17.5% in 2012 and 4.5% in 2013 to reach 24.07mn tonnes at the end of the latter year. Growth to average 5.2% per annum between 2013 and 2017.
* Container throughput at the same port forecast to grow year-on-year (y-o-y) 22.2% in 2012 and 7.1% in 2013 to reach 1.008mn twenty-foot equivalent units (TEUs) by the end of the latter year. Box growth to average 7.7% per annum between 2013 and 2017.
* 2013 total trade set for y-o-y real growth of 6.0% and to average 6.8% per annum between 2013 and 2017.

Key Industry Trends

KPA Takes A Calculated Risk With 10% Cargo Tariff Increase: The Kenyan Port Authority (KPA) says it is increasing cargo handling tariffs by 10% but that unlike 2007/08 when a similar move was strongly resisted by shippers, this time in the words of an official: 'we were careful to engage every interested party and accommodated their views as we set the new tariffs.' It is argued that the KPA's annual revenue will be raised by 5% to US$303.65mn by the rate increase, and this will improve services at the port including stevedoring, shore handling and storage services. BMI notes that the extra revenue will also help fund the long-awaited second container terminal at the port. The project is expected to include an investment of KES28bn (US$326mn) and is aimed at increasing the port's handling capacity and enhancing container operations.

Further Port Improvement Work Undertaken: Kenya-based Trademark East Africa (TMEA) is making an investment of KES4.5bn (US$53.05mn) in the Port of Mombasa over the period 2012-2016. The investment is aimed at improving efficiency and capacity of the port. TMEA has suggested specific technical and grant support, including a port-wide productivity improvement study, upgrading rail links and space rationalisation within existing port land along with improving port access, yard facilities and stacking areas at berths.

New Tax Requirement Could Work Against Mombasa: The Kenya Revenue Authority (KRA), has imposed a cash bond equivalent to the value of the import on imports of sugar, other merchandise and cars with an engine capacity of 2,000cc or above in transit to Uganda. The move is to combat the 'short landing' of goods suspected by the KRA; that is Uganda-bound goods ending up on the Kenyan market rather than making it to Uganda. Ugandan shippers, however, are protesting against the move, claiming that even if the bond is recovered the reclaiming of the sum is an arduous process. And a number of analysts are suggesting that this additional obstacle could end up pushing transit business away - benefiting Mombasa's traditional competitor, which is the port of Dar es Salaam in Tanzania.

Key Risks To Outlook

BMI believes the main downside risk to our ports and shipping forecast is political and revolves around the possibility of violence in the run-up to the March 2013 elections. The fear is of a repeat of the riots and tribal in-fighting that exploded during the last elections in 2007/08. Any repeat would have a major negative impact on the economy and on demand for shipping. We acknowledge that Kenya is going through a vulnerable, potentially volatile period, and that there have been a number of potential flash points.

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at www.fastmr.com or call us at 1.800.844.8156.