Car importers cry foul over accumulated demurrage

COVID-19     LOCKDOWN

Car importers cry foul over accumulated car storage costs (demurrage) at ports and local custom bonded warehouses during the COVID-19 pandemic lockdown.

Dealers want the government and regional East African Community partner states to come to their rescue.

Francis Kanakulya the spokesperson for the Associated Motor Dealers 2015 said from the port of Mombasa the vehicles are relocated in privately owned commercial bonds. This also applies to the Uganda Revenue Authority (URA) gazetted custom bonds that are operated by individuals on a commercial basis.

Car storage fees in custom bonded warehouses range from an average of sh5,000 and Sh20,000 per day depending on the size and negotiations.

Just like other sectors of the economy, the three-month COVID-19 lockdown paralysed the car import industry. The lockdown started when some importers had just ordered for vehicles while others were on shipping lines with some already at Mombasa or Dar es Salaam Port pending clearance.

Frank Kalema a bulk commercial importer of used vehicles from Japan, Dubai and other countries, is among those affected by the lockdown.

"As car importers, we appreciate the government efforts in controlling the COVID-19 pandemic through the lockdown. However, unlike some other businesses, car import industry is a bit fragile with numerous stringent statutory and regional custom laws that can lead to forfeiture when violated," Kalema says.

Locally, vehicles are given a lifetime of only 270 days or nine months in a custom bonded warehouse to have paid the due import duties, registered and exited the bond or else they are advertised for public auction to recover the import duties and the balance if any is given to the importer.

"There are vehicles that were caught up in custom bonded warehouses due to the lockdown. Their shelf and the shelf life expired not because importers failed to pay taxes, but because of the prevailing condition.

Clearing vehicles at Port of Mombasa was either impossible or a tassel due to the imposed restrictions yet the storage costs (demurrage) for vehicles were accumulating," Kalema added.

Kalema said that some car importers are in the business for profit motives, all the additional costs that were not anticipated have directly affected their capital with many indebted by banks.

However, Bush Katende the chairman for Associated Motor Dealers-2015 (AMD) said they are in talks with Kenya Ports Authority to waive the demurrage costs that accrued during the lockdown and several cases have been successfully handled. 

He said talks have also been extended to locally operated custom bonded warehouses for reduced or waived demurrage during the lockdown.

Kanakulya said though URA has been supportive some custom bonded warehouse operators are still adamant to talk to their clients in a friendly manner.

Vincent Seruma URA spokesperson said it is true that car importers have been affected by the COVID-19 lockdown just like other businesses. He said several engagements are being made to reach a mutual position.