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MANAGING DIRECTORS SPEECH 

NOTES FOR THE KENYA PORTS AUTHORITY MANAGING DIRECTOR MR GICHIRI NDUA, MBS, ON THE OCCASION OF THE STAKEHOLDERS LUNCHEON ON 12TH SEPTEMBER 2012 AT CROWNE PLAZA HOTEL,  NAIROBI


• The Minister for Transport, Hon. Amos Kimunya, EGH, MP
• The Assistant Minister Hon. Hassan Joho
• The Permanent Secretary, Ministry of Transport, Dr. Cyrus Njiru, PhD, CBS
• The Chairman of the KPA Board of Directors, Mr. Shukri Baramadi, CBS
• Port stakeholders
• Distinguished guests
• My Colleagues
Ladies and Gentlemen
I welcome you all to this joyous occasion and thank you most sincerely for honoring our invitation. My special appreciation goes to our guest of honor Minister for Transport, Hon. Amos Kimunya, for finding it appropriate to share with us this moment.
For the past four years or so, world ports have evolved from a situation of boom and congestion to one of uncertainty and loss of business, associated with the effects of the world economic melt- down.
Distinguished guests, on 17th of August last year at this same venue, I indicated that despite the bleak situation, confidence was gradually returning to the industry with equipment manufacturers introducing new machines to meet customer demand. At the same time, construction of the largest container ship in the world with a capacity of 18,000 TEUs was underway ready for delivery by next year.

I also observed that we had witnessed a high degree of political openness and increased democratization worldwide, a trend in the long run likely to spur higher growth in trade.   In the same vein I shared with you the measures we were putting in place to respond effectively to the needs of the industry. They included acquisition of new cargo handling equipment, expansion of yard and berth capacity, dredging of the channel and security upgrades. Today we shall share more on the progress we have made in this direction.
Lastly, I equally remember having cautioned against early celebration on the recovery of the industry. True to my words, what followed towards end of 2011 confirmed my reservations.

Current global trends

Distinguished guests,
The recovery of 2010 up to mid 2011 has unfortunately not been maintained. There are still threats to global economic recovery posed by the Eurozone crisis and US debt negotiations, rocketing fuel prices, and high container prices among others which have affected investor confidence, blowing world trade growth off course once again.
In January 2012, IMF forecasted that global economic growth would be only around 3.3%, whilst advanced economies would only register 1.2% this current year. Consequently, trade volume is expected to grow by between 4.5% and 6.5% by the end of 2012. This will result in projection of 585 to 596 million TEUs this year.
Nevertheless, while there are still slow growth in global economic recovery, economists seem to be in consensus that a reasonable level of global economic growth will be sustained for several years to come. Hence, industry experts project a global container throughput growth by an average of 7.5% a year over the next six years, rising to around 840 million TEUs in 2016. This would be a near- 300 million TEU increase on 2010 levels, equivalent to an uplift of 55%.
Hon. Minister,
Although global operators are now re-activating many terminal investments deferred during the financial crisis, there are indications that in the next five years demand growth will significantly outstrip capacity expansion, leading to rapidly rising utilization levels in many ports of the world.
Increasing ship sizes
Industry research indicates that average ship size will triple by 2014. In 1996, largest vessel size was of 4000 TEU capacity. This capacity increased to 6000 TEU in 2001 and to 16000 TEU in 2011. By 2014 and 2020 vessel capacity will be standing at 18,000 TEUs and 20,000 TEUs respectively. The steady increase in ship sizes coupled with reducing average trade distances will put more pressure on terminal capacities.

Our Performance
Back home, we began this year on a very challenging note. Having handled 19.95 million tones of cargo in 2011, almost exhausting our port capacity, the start of 2012 equally witnessed heavy cargo upsurge. The increased business coupled with other limitations in the transport logistic chain resulted in unprecedented congestion. I wish to thank all of you key stakeholders for your support and more specifically our Permanent Secretary,  Dr. Cyrus Njiru, for skillfully chairing the inter-ministerial 100 days Rapid Results Initiative (RRI) team whose efforts enabled us to return the Port to normalcy within three months.

2011 performance

Distinguished guests, before I proceed, allow me to share key performance figures of 2011 and part of the current year.  Despite the sluggish global economic performance and volatility in foreign exchange, the Port of Mombasa registered impressive results in 2011 due to improved local and regional economies. Total freight grew by 5.4 per cent to handle 19.95 million tons in 2011, against 18.93 million tons handled in 2010. This upward trend in performance was largely driven by containerized traffic which registered an increase of 11.8 per cent.

Imports grew by 4.5 per cent to 16.94 million tons while exports and transshipment grew by 8.3 per cent and 43.7 per cent respectively. However, non-containerized traffic declined by 7.5 per cent while dry bulk and liquid bulk posted an increase of 0.8 per cent and 4.4 per cent, respectively.
Container traffic, which accounted for 39.0 per cent of the total throughput, increased by 75,204 Twenty- Foot Equivalent Units (TEU) or 10.8 per cent from 695,600 TEU in 2010 to 770,804 TEU in 2011.
2012 performance

The first six months of this year (January – June 2012) have registered exceptionally good performance. Total throughput reflected a significant growth of 1.4 million tons or 15.1 per cent recording 10.7 million tons compared with 9.3 million tons handled in the same period last year. Containerized cargo grew by a staggering 23.9% recording 458, 110 TEUs during the first six months of this year up from 369,667 TEUs handled during the same period last year.

Transit cargo has continued to grow faster than the domestic segment of our traffic. Whereas total domestic traffic grew by 11.7% in the first six months this year, transit traffic has grown by 25.6% in the same period.  Uganda remains the biggest user of our port while South Sudan is growing faster than all other transit markets. 
However, Hon. Minister, the last two months (July-August) have recorded some decline in container volumes. Although the levels are still higher than what was achieved in the same period last year, we are keenly analyzing the causes despite our strong suspicion of low season and decline in global economic growth rate.
Nonetheless, the port is currently very fluid with no waiters. Due to further improvement in planning and equipment availability levels, we have been achieving performance records especially with container vessels.  In July, CMA-CGM vessel MV. Violetta  made 1,275 moves  in 24 hours translating to  53 moves per hour respectively.  Violetta had broken a long standing record set by MSC Eagle on 4th March 2009 when she made 1125 moves in 24 hours.
The latest record performance was on 20th August 2012 when Mv. Jumme Trader made a total of 1,368 moves in 24hours, translating to 57 moves an hour. On her first working shift (8 hours) she had done record 614 moves, translating to 77 moves per hour (38 moves per crane per hour). International average performance stands at 38 moves per crane per hour.

Working towards customer delight

Ladies and Gentlemen;
In tandem with our theme for today’s function, our chief objective in whatever we are engaged is to work towards satisfaction of customer needs. We know it is not a walk in the Park and it is not a one off accomplishment.  It is a process that takes time and thus must be endured and sustained. Currently we are facing challenges ranging from:
• Coping with demand as a result of constrained capacity,
• Constrained hinterland infrastructure
• Occasional unreliability of our ICT networks
• Power outages
• Security challenges to
• A number of other non-tariff barriers.

Ongoing and planned Development Projects
However, to keep the drive and sustain our responsiveness to customer demands, we have a number of ongoing projects aimed at addressing the above challenges as follows:

New equipment
• We have religiously adhered to our equipment maintenance and acquisition schedules to meet customer demands. We are now better equipped and expect more equipment next year.
• Last week, we acquired 27 new state-of- the -art terminal tractors to enhance container yard operations.
• Earlier this year the Authority bought 8 new Reach Stackers and 2 empty container handlers. Last year we bought one more state of the art pilot boat.
• We are in the process of acquiring more terminal operations equipment this financial year as follows; 2 Ship to Shore Gantry cranes, 10 Rubber Tyred Gantry cranes (RTGs) 9 Reach Stackers, 35 skeletal trailers and additional 10 Terminal Tractors.

Dredging of Mombasa Port
• We completed dredging the channel to -15 metres in early April this year thereby allowing bigger vessels to come to the port. The project which was launched in July 2011 by Hon. guest of honor, involved dredging and widening of Navigation and Main Channels and turning basin. Equally, the new container terminal has been dredged to -15m while the existing one was dredged to -12.5 metres.
• Following this accomplishment, we have so far received five maiden calls to Mombasa notably: MV. ROBERTA, MV. JADE, MV. JOLLY DIAMANTE, MV. Jolly PERLA and MSC TIA, which by any standard has been the highest number of “first-calls” ever handled within such a short period. Of these vessels, MSC TIA is so far the longest container vessel measuring 261 meters with a draft of 12.3 meters to ever call into Mombasa

Construction of Berth No. 19
The project was also launched in July last year. It involves the development of a new berth with a quay length of 240 metres thereby giving a total  quay length of 840 metres to the current container terminal. The construction is to be completed in February 2013.  The associated stacking yard is approximately 15 acres and is expected to have throughput capacity of 200,000 TEUs annually.
Second Container Terminal
The project involves construction of a new container terminal west of Kipevu Oil Terminal on 100 hectares of reclaimed land and with a capacity to handle 1.2 million TEU annually when completed.  The new container terminal will have three berths that measure 230, 320  and 350 metres.  The two phased construction started on 1 March 2012 and completion of phase 1 is expected in March 2016.

Integrated Security System
KPA  is  implementing  an Integrated Security System to safeguard   the  Port  from  intrusion  and  raise security standards.    The   system  include,    among  others: 
• Main Security Center & Security Backup Center
• CCTV system
• Taut barbed wire Perimeter Intrusion Detection (PIDS) fence, 4.6 km long and 2 m high
• 17 Detector grid barriers for protection of water channels
• Access Control System X-ray and metal detector equipment at entrances
• Alarm controller systems

Development of Crude Oil handling facility
A new modern Oil Terminal to replace the current Kipevu Oil Terminal will be built at a newly identified site within the harbor and construction works is expected to commence within this financial year.

Lamu Port and New Transport Corridor to Southern Sudan & Ethiopia (LAPSSET)
Due to the physical features and environment within which the Mombasa Port is situated, its expansion has certain natural limitations. This has necessitated development of a second commercial port at Lamu under the LAPSSET project to complement Mombasa. In this regard, I wish to thank the government through your Ministry Hon. Minister, for making Lamu Port a reality. The administration block and other supportive facilities are already under construction and tenders for the process of port construction have been advertised.
The  port  will  have 32 berths and dredged  entrance channel done to -18 meters to enable it to accommodate ships of 100,000 tons. 
The cost for the Short-term Plan for Lamu Port Project, including the first 3 berths, is estimated to be US$ 664  million.  The development is expected to be completed  by 2016.

Dongo Kundu Freeport
To explore and actualize the concept of value addition in trade logistics, the Government is facilitating development of Free Port facilities on a 3,000 acres of land owned by the Authority at Dongo Kundu area through public private partnership arrangements. Also underway is the Road Bypass project to link the project area and Mombasa – Lunga Lunga – Nairobi Highway. The road design is ready and the construction is expected to start next year. 


Conclusion:
Hon. Minister, distinguished guests, no matter how much we want to accomplish, without your support, we won’t make much headway. Hence, we shall always seek your opinions, views and constructive criticism to make us move faster, steadily and in the right direction. Together we form an indomitable team that shall always work towards ascertaining and sustaining a ‘relay’ rather than a ‘delay’ of cargo at the Port of Mombasa.

THANK YOU FOR COMING AND MAY GOD BLESS YOU

 13/9/2012

CORPORATE AFFAIRS DEPARTMENT