An increase in operational costs due to the global economic downturn and piracy in the Gulf of Eden has forced two container carriers to suspend their operations to East African ports, according to All Africa newspaper.
The Kenya Shipping Agents Association said two other liners are also contemplating similar action after recording huge losses in the past financial year.
The association executive officer Capt Frederick Wahutu said that the two lines had each incurred US$1 billion and $500 million losses respectively.
The names of the lines were not disclosed.
"The trend is so bad that we fear that other lines could also follow suit," said Wahutu.
If this happened, Wahutu said, ocean freight costs in the region will go through the roof.
This development also comes at a time when the Kenya government has slapped value added tax on marine services, ostensibly increasing the cost of calling at the port of Mombasa by 16 per cent, with effect from September 12.
The move has already been opposed by cruise ship liners, which have threatened to call off their planned visits to Mombasa next year.
Piracy, according to shipping experts, has forced most shipping lines to opt for the longer Cape of Good Hope route to avoid the pirate infested Gulf of Aden. According to recent statistics released by London-based shipping consultants Drewry Shipping Consultant, approximately 20,000 vessels that use the Suez Canal annually have opted for the longer Cape of Good Hope route, which means that they are spending more on fuel at a time when bunker oil prices are not stable.
Other than the cost of fuel, premium cost for vessels passing through the Suez Canal has also increased tenfold, not to mention the colossal sums of money demanded by pirates as ransom if the vessels are hijacked.
Cargonews Asia
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