Important port

by World Grain Staff
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While the grain business has been transfixed by the ever-rising prices in 2008, the balance between supply and demand became a more urgent matter of life and death in East Africa earlier this year.

The dispute over whether Mwai Kibaki or Raila Odinga had won Kenya’s presidential elections at the turn of the year quickly boiled over — amidst accusations of electoral fraud — into mass killings along ethnic lines in the Great Lakes area of Kenya during the early months of the year.

As the conflict spread and more people were displaced, it quickly became apparent how important the Indian Ocean Port of Mombasa was to the trade and economic health of the entire Eastern and Central African hinterland it serves, as well as just how susceptible modern food supply chains can be to upheaval.

Once transport links from the Port of Mombasa to western Kenya and the landlocked states beyond were severed, congestion at Mombasa’s quays built up rapidly. While some container services were diverted southward to the Tanzanian Port of Dar Es Salaam, high quality stevedoring alternatives to Mombasa’s grain import facility, operated by Grain Bulk Handlers Limited (GBHL), were in limited supply. With leading charities and the United Nations among GBHL’s clientele, and distressed areas such as Somalia and southern Sudan relying on the food aid shipped via its berths, the ethnic violence swiftly became a threat to the region’s food supply.

"It was a major concern," explains Jon Stokes, finance director at privately owned GBHL. "Our customers include millers and traders such as Louis Dreyfus, Holbud, Seaboard and Glencore Holdings, but we also serve Non-Governmental Organizations (NGOs) such as the World Food Programme, USAID, Care Somalia, and Catholic Relief Services."

By February, available storage facilities were swamped as deliveries to points beyond Mombasa were suspended. The pile-up was exacerbated by an influx of Argentine wheat — the equivalent of six months usage — in the first quarter of the year as the shortage of wheat on world markets prompted importers to buy Argentinean wheat before exports were closed at the end of February.

"The combination of increased receipts and reduced deliveries naturally led to congestion at the terminal, which in turn led to vessel delays," said Stokes. "At the end of February, the terminal held 200,000 tonnes of cargo in a combination of bulk facilities and bagged warehouses, equivalent to almost twoand-a-half months’ demand."

Just as matters were reaching a breaking point, political calm was brokered and many of the logistical difficulties eased, but the events had made it clear to GBHL that planned investments in silo storage and discharge capacity had to be brought forward. "The political problems experienced earlier this year illustrated the difficulties faced by the Port of Mombasa’s

hinterland when key transport systems are disrupted," said Stokes.

The company is now pushing ahead with plans to expand its import capacity for wheat, maize (corn), sorghum and soybeans. "GBHL’s vision is to create at the Port of Mombasa a ‘hub’ for relief agencies, millers and traders to stock sufficient grains to enable a rapid response to regional food emergencies," he explained.

Last year the terminal handled 931,000 tonnes of bulk grains, down from 1.17 million tonnes the year before. Stokes said this was "because of lower importation of cargo by millers/ traders and NGOs due to the high world market prices of grain from secondquarter 2007 until year end."

Current facilities enable the reception of bulk carriers up to 80,000 deadweight tonnes using two Buhler ‘Portalino’ ship unloaders to achieve discharge rates of 600 tph. Automatic scales record the weight of discharged cargo while a 50-tonne mobile crane and seven bobcats are used for lifting and trimming, respectively.

The ship unloaders feed long-term and transit storage silos via fixed belt conveyors. "We have a record of 13,800 tonnes in a day, but our guaranteed discharge rate is 9,000 tonnes per weather working day," says Stokes.

GBHL’s bulk transit silo boasts 24 silos with total bulk storage capacity of 67,500 tonnes, a flat store shed with storage capacity of some 14,000 tonnes and two bagging sheds with a combined capacity of 400 tph, as well as calibrated bulk delivery hoppers for road and rail and three weighbridges.

The existing bulk storage terminal has 14 long-term storage silos with a total bulk storage capacity of 55,000 tonnes.

GBHL’s priority is to invest in shipside equipment with the acquisition of a third ship unloader to double discharge rates "with attendant savings to customers in freight rates," said Stokes.

The third stage of the company’s investment strategy will also see further investment in storage, building on last summer’s investment, which saw the addition of 55,000 tonnes of silo storage capacity, 40,000 tonnes of which is leased out on long-term contract to traders.

An additional 50,000 tonnes of silo capacity is planned to be in place by the end of the year, adding nine more silos with 5,000 tonnes of capacity each, plus four silos with 1,250 tonnes of capacity, providing a total bulk storage capacity of 105,000 tonnes available for long-term lease.

"The combined effect of these investments will be to increase the annual throughput capacity at GBHL to 3.5 million tonnes whilst crucially providing world-class vessel handling rates and adequate silo storage capacity to ensure fluidity of operations," said Stokes. "The investments will cost in the region of $16 million."

Higher discharge rates, he says, will cut grain shipping costs further and help GBHL expand its hinterland coverage.

"The Port of Mombasa is the port of choice for a large hinterland including Kenya, Uganda, Southern Sudan, Somalia and, to a lesser extent, Rwanda, Eastern DRC and Northern Tanzania, with Southern Ethiopia as a potential future destination," Stokes said. "Access to these regions can be achieved through other ports but at considerably greater cost to the importer. So we have a large hinterland already, but these investments will help us take the next step in our hub strategy."

Michael King, freelance journalist and editor, has been writing about shipping, transport and commodities for over a decade. Currently based in Indonesia, he can be reached at