Positioning Kenya’s Lamu port as East Africa’s gateway

East African maritime waters have become a hub of activity once again as the shipping business makes a gradual comeback. Despite facing headwinds such as high fuel prices and a shortage of dollars, shippers are optimistic about improved business for 2023. The shipping industry experienced significant disruptions during the COVID-19 pandemic, leading to a shortage of vessels and containers. As a result, the prices of containers for maritime trade surged, reaching three to four times their initial cost. The blockage of the Suez Canal by the vessel, Ever Given, further exacerbated the situation by holding up approximately 21% of global shipping capacity. These challenges had a profound impact on global trade, affecting trading patterns and economic conditions across countries. Since then, the industry has been on a path to recovery, with freight rates dropping and vessel traffic increasing in East African ports. Gilbert Langat, a maritime expert, highlighted these developments in a recent interview with CNBC Africa. He explained that the recovery post-COVID has led to a decrease in freight rates from China to East Africa, signaling a normalization in the sector. However, challenges persist, particularly with soaring fuel prices and a scarcity of dollars. The shortage of dollars has affected trade not only in East Africa but globally, leading to currency fluctuations and constraints on imports. East African countries, heavily reliant on imports for essential goods like petroleum and food, have faced shortages and price hikes as a result. Langat emphasized the importance of strategic infrastructure projects like Kenya's Lamu Port in positioning the country as a gateway to the region. As the chair of the Public-Private Partnership for the Northern Corridor, Langat underscored the significance of ensuring that ports meet the needs of their hinterland. He cited positive trends in port performance, with significant improvements in handling volumes, particularly for transit countries like Rwanda and Uganda. While Lamu Port has not yet fully realized its potential for transit countries, Langat noted that South Sudan is keen on utilizing the port to streamline its logistics and reduce costs. By using Lamu Port as a gateway, South Sudan can significantly cut down on border crossing fees and enhance trade efficiency. The ongoing infrastructure developments, including road projects supported by the World Bank, are set to further facilitate cargo transportation and improve connectivity between Kenya and its neighboring countries. Langat highlighted the potential for Kenya to leverage its strategic location to access not only East African markets but also extend its reach to Central and North Africa. By enhancing logistics networks and promoting regional trade, Kenya aims to play a pivotal role in facilitating commerce across the continent and maximizing the benefits of the African Continental Free Trade Area.