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Shipping firms ride on digitisation to grow revenue

May 2, 2023 business

Shipping companies are exploring ways to leverage new technologies to improve efficiency and revenue after the government pushed costs.

The Kenya Revenue Authority (KRA) recently directed small traders to pay taxes based on the value of their product and not their weight, disrupting consolidation.

The directive which came into effect on March 1 removed the general charge on a kilo of cargo from Sh200 to price per value in accordance with the World Trade Organisation (WTO) agreement on tariff and trade.

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.

“Currently, the shipping industry is facing challenges brought about by new regulations in Kenya,” Skyway Cargo CEO Dahiye Mumin Yakub told the Star.

His sentiments are shared by a Nairobi-based importer Catherine Wairimu who says the changes have significantly affected her business.

“Unfortunately, this has made me add on the selling cost in order to meet the profit margins,” Catherine Wairimu, a Nairobi-based importer said.

Even so, some shipping companies are making major moves to cushion the customer through digitisation and consolidation methods of shipping.

For instance, Skyway Cargo is making it easier for small traders to ship their cargo and pay for it bit by bit as they continue to sell. The firm pays for cargo on behalf of businesses who in turn can get the goods they pay for.

Additionally, small businesses or individuals can ship their goods through the cargo consolidation method whereby smaller shipments are bundled together within one container thereby allowing them to share shipping, storage and even delivery costs.

This leads to minimized shipping costs, as well as decreased wait time which all contribute to increased efficiency.

They are also using a tracking system to handle the logistics, carefully labeling, logging and tracking assets to prevent damage and losing cargo.

“Customers can also calculate costs digitally. This is meant to support greater customer-centricity including digital transformation, security growth and new business models,” Skyway Cargo chief said.

He adds that the secret to ensuring that your international shipping goes smoothly is to engage a cargo company that has significant experience.

According to him, an ideal cargo company will help you with everything from securing packaging your items, to filling out the paperwork, to tracking your shipment every step of the way.