VZCZCXRO9239
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHDR #0154/01 0631351
ZNR UUUUU ZZH
R 041351Z MAR 09
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC 8320
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHJB/AMEMBASSY BUJUMBURA 2837
RUEHKM/AMEMBASSY KAMPALA 3357
RUEHLGB/AMEMBASSY KIGALI 1285
RUEHDJ/AMEMBASSY DJIBOUTI 0001
RUEHKI/AMEMBASSY KINSHASA 0304
RUEHNR/AMEMBASSY NAIROBI 1196
RUEHDS/USMISSION USAU ADDIS ABABA
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFISS/CDR USAFRICOM STUTTGART GE
RHMFIUU/CJTF HOA//J3
RUEHLMC/MCC WASHINGTON DC

UNCLAS SECTION 01 OF 03 DAR ES SALAAM 000154 
 
SIPDIS 
 
DEPARTMENT FOR AF/E JLIDDLE, INR FEHRENREICH, AF/EPS 
STATE PASS USAID/EA, USTDA, USTR 
COMMERCE FOR BECKY ERKUL 
NAIROBI FOR FCS 
 
E.O. 12958: N/A 
TAGS: ECON EWWT PGOV PHSA PINR TZ
SUBJECT: PORT CONGESTION IN DAR ES SALAAM - TOO MUCH OF A GOOD 
THING 
 
DAR ES SAL 00000154  001.2 OF 003 
 
 
¶1. Summary:  Ships arriving in the Dar es Salaam harbor must wait 
fourteen to twenty-two days before offloading, at a cost of USD 
20,000 a day, pushing up the prices of imported goods and squeezing 
profits for Tanzania and its landlocked neighbors.  The Port of Dar 
es Salaam got off to a fresh start in 1999, but as regional growth 
caused the number of containers to increase beyond those projected, 
an overtaxed infrastructure combined with a developing world 
bureaucracy led efficiency to plummet.  The GOT has begun to demand 
solutions, highlighted by a surprise port inspection by President 
Kikwete, but a long-term fix will be hard to achieve.  End Summary. 
 
 
A Fresh Start, but Things Move Too Quickly 
------------------------------------------ 
¶2. The Government of Tanzania loses TSH 20 million (USD 15,000) per 
day due to delays at its Dar es Salaam port, according to a recent 
newspaper report.  On any given day, the coastline of Dar es Salaam 
is dotted with long lines of ships anchored at sea waiting to pull 
into port.  The Port of Dar es Salaam has not always been the pariah 
in the shipping industry it has become.  In 1999, with support of 
the World Bank, the GOT signed a 10-year concessionaire agreement 
with  Tanzania International Container Terminal Services Limited 
(TICTS) to manage the port and became known as one of the more 
efficient ports in the region.  Port efficiency numbers met 
international standards and, by 2004, TICTS surpassed its 
contractual benchmark of 20 container moves per hour, hitting 23.1. 
Increased efficiency combined with rail access to neighboring 
countries helped Tanzania become a valuable transshipment point and 
accelerated the growth of the port. 
 
¶3. In turn, the port has facilitated regional economic growth, with 
rising exports and an influx of consumer and capital goods.  Port 
traffic continued to exceed the original forecasts and, in 2007, 
343,490 twenty-foot equalivant units (TEUs) containers passed 
through the port.  According to the Chairman of the Tanzanian 
Freight Forwarders Association (TAFFA), Otieno Igogo, the orginal 
contract forecast an annual increase of 10,000 TEUs, to 150,000 TEUs 
in 2000 and 250,000 by 2010.  However, the actual rate of increase 
has been closer to 15,000 TEUs per year.  With no commensurate 
capital investment or significant increases in the amount of 
available container storage space, the increased load has overtaxed 
a poorly maintained infrastructure, in particular on the already 
poorly functioning Tanzanian railway system. 
 
Gridlock Hits a High Point 
---------------------------- 
¶4. With cargo ships waiting an average of 22 days to enter the port, 
Dar es Salaam now has the distinction of being the slowest port in 
Africa, according to the Chairman of the Tanzania Shipping Agents 
Association (TASAA), Emmanuel Mallya.  Delivery delays during the 
2008 holiday season provided an impetus for private gripes to become 
public calls for a solution.  Much of this dialogue plays out in thd 
-oW}wEfYQDdia; local journalists, spurred on by the highly visible cargo 
ships anchored in the bay, have given voice to the debate over the 
causes of the slowdown.  For several months, at least fourteen and 
sometimes more than twenty ships have lain at anchor waiting to gain 
access to a berth.  Massive container ships burn through fuel, incur 
staff costs and are levied late fees from shipping agencies, costs 
which are all passed on to consumers through higher prices for 
goods. 
 
¶5. Beyond costs, the amount of time needed for products to arrive in 
Dar is a major concern.  Hassan Dhalla, the owner of a large freight 
forwarding business, stated that Tanzanian Breweries Ltd. almost ran 
out of beer last holiday season due to delays in the arrival of a 
150,000 ton shipment of malt.  An Embassy officer was dismayed when 
the container ship carrying his POV twice bypassed Dar es Salaam to 
stop at other regional ports rather than wait for a berth. 
According to TASAA, all the major shipping lines have decreased the 
number of ships coming into the Dar es Salaam port.  Mallya said 
companies were consolidating goods at transshipment points, then 
sending one large ship rather than three smaller ones.  Sending one 
large vessel may decrease waiting time, but can increase congestion 
at the port because of the extra time needed to load and offload 
cargo. 
 
DAR ES SAL 00000154  002.2 OF 003 
 
 
 
Mombasa Not the Answer 
---------------------- 
¶6.  Despite the inefficiencies and delays in Dar es Salaam, it 
remains the port of choice for most shippers to Tanzania and its 
landlocked neighbors.  While Mombasa port is significantly more 
efficient, according to Dhalla the costs of shipping goods to 
Tanzania through Mombasa can be almost three times that of using Dar 
es Salaam.  As a result, nearly all smaller importers prefer to wait 
for delivery rather than reduce their profit margins.  Only large 
companies, such as Barrick and other major international mining 
firms, will routinely resort to Mombasa to ensure faster delivery of 
necessary equipment. 
 
Bureaucratic Solutions Not Enough, New Contract Needed 
--------------------------------------------- --------- 
¶7. The resolution of contractual issues with TICTS is essential for 
improving port operations.  The ten-year contract was renegotiated 
in 2005 to expand the role of the concessionaire from operation only 
to include infrastructure development, and was extended through 
¶2025.  However, the new contract was recently put on hold by the 
Parliament to address allegations of corruption during the 
negotiation process.  Some claim that TICTS is purposefully slowing 
down container handling by not adequately servicing its heavy 
lifting equipment, in an effort to force the GOT to make a quick 
decision on a contract biased in TICTS' favor.  A new contract would 
do more than spur infrastructure development in the port; it would 
also help to more accurately delineate the role of the Tanzania Port 
Authority (TPA) vis-a-vis TICTS.  Currently, TICTS complains that 
TPA has an inherent conflict of interest by acting as both landlord 
and competitor (TPA has its own cranes and docks).  TICTS alleges 
some of TPA's decisions have hampered TICTS, thus slowing overall 
port activity, to the benefit of TPA. 
 
¶8. President Kikwete's surprise port inspection March 2, after he 
reportedly refused to read TPA's latest "useless report," indicates 
that the highest levels of the GOT recognize the impact of port 
congestion.  Earlier in the year, Kikwete established a Presidential 
Port Decongestion Committee, which has overseen recent steps to fix 
the port's problems.  The Tanzania Revenue Authority (TRA) has 
opened Inland Container Depots (ICDs) to relieve congestion on the 
port property.  The nine ICDs in operation have opened up 
much-needed new space to offload containers, but they have also 
added extra costs for importers.  The GOT also dusted off an old 
regulation that allows the auction of containers that remain in the 
port for over twenty-one days.  The auctions are intended to 
penalize importers who allegedly use the port as storage space, as 
well as to clear out abandoned goods.  An additional regulatory 
change now allows ships to file manifests prior to arriving, putting 
an end to the practice of starting the customs process only after 
pulling into the port. 
 
¶9. Tiscan, a private company outsourced by the Tanzania Revenue 
Authority to verify the contents of containers, causes the most 
delays.  Tiscan's burdensome processing procedures are improving, 
but continue to be a problem, especially for small importers less 
knowledgeable on procedures and more likely to try to evade duties. 
Low-level corruption remains an ongoing concern; however, it is not 
a major obstacle for businesses that follow the regulations.  In 
most cases, corruption consists of payments for "expedited services" 
or assistance in facilitating undervalued containers through the 
system without a full investigation.  While dwell time has increased 
due to the lack of space for container storage, large freight 
forwarding operations seem fairly pleased with the process and 
report they can generally move a container out of the port within 
three business days. 
 
¶10. Comment:  The problem of port congestion is clear, its solution 
much less so.  TICTS, TPA and TISCAN are all eager to shift the 
blame (TICTS recently approached donors to seek funding for an 
"awareness campaign" aimed at port users).  Apart from short term 
measures, to keep up with the unplanned growth in cargo the port 
needs considerable capital investment, which in turn requires 
resolution of the contractual issue of port management.  In 
addition, investment in the roads, and especially the deteriorating 
 
DAR ES SAL 00000154  003.2 OF 003 
 
 
rail links, is necessary to keep containers moving out of the port. 
One business owner, clearly lacking faith in the GOT's ability to 
make quick decisions, dourly noted that in the short term, the only 
remedy for port congestion may be an economic downturn. 
 
ANDRE