Logistics firm Skyway Cargo has rolled out a buy-now-pay-later model that allows businesses to ship goods and pay shipment fees in installments to attract customers amid growing competition in Kenya’s shipping and logistics sector. This comes at a time shipping and logistics costs have been rising which has forced many businesses to pass on the increased costs to consumers in the form of higher prices of goods.“Small businesses can now ship their cargo and pay for it bit by bit as they continue to sell it. Skyway Cargo is able to pay for cargo on behalf of businesses who in turn can get the goods they pay for,” said the firm’s Chief Executive Officer Dahiye Mumin Yakub.
Increased storage costs
Increased competition in the sector is also forcing shipping firms to tap into digitization in a bid to improve efficiency and productivity to pass on the cost-benefits to their clients.
Shipping firms have also decried increased costs including delayed verification of cargo containers by the Kenya Revenue Authority (KRA) which sometimes takes weeks leading to increased storage costs by the companies which pass the costs to importers.
Last month, shipping companies revealed that the taxman had moved to charge importers of consolidated cargo to pay taxes and levis based on the transaction value of the cargo as opposed to a standard charge of Sh200 per kilogram.
“There is an increasing need for seamless flow of goods in the global supply chain and digitization is the key enabler to shipping companies. Currently, the shipping industry is facing challenges brought about by new regulations from the regulatory bodies in Kenya,” said Mr. Yakub.
Higher freight charges
“The impact of these changes has been felt by the consumer in the form of higher freight charges, slower shipping process, and delays, as well as a backlog in the port. As a result, many customers are opting out of shipping as the costs are no longer manageable,” he added.
The performance of the transportation and storage sector improved significantly in 2021 following the easing of restrictions that had been instituted by the government to curb the spread of the Covid-19 pandemic in 2020.
The total value of output from the sector rose by 16.7 percent to Sh2.29 trillion in 2021, according to the Economic Survey 2022 released by the Kenya National Bureau of Statistics (KNBS).