LogicBook was the service partner for implementing CW1 in FFK. Below are few challenges which we face during 10 month of implementation. The good news is that FFK has gone Live. Hope my below observation will help you in finding the solutions :
In FFK 95% of the shipment are Ocean Import. Where the shipment comes to Mombasa Port and after custom clearance delivered to local consignee or transhipped to other East African Nation.
FFK’s major business is Transit and Local Import and they are as follows
Transit Import (TR) – Cargo comes from outside Africa, pass through Kenya and goes to neighbouring countries in Africa.
Transit Export (TR) – Cargo comes from neighbouring countries in Africa, pass through Kenya and exported to outside world.
Local Import (IK) – Cargo comes from outside Kenya to Kenya
Local Export (EK) – Cargo comes from neighbouring countries in Africa, pass through Kenya and exported to outside world.
Our clearance process involves clearance from 3 different entities
- Shipping Line – This is to pay all shipping line charges, sign the guarantee form for the container and receive the Delivery Order from Shipping Line
- Customs – This is for the customs and duty clearance by KRA – Kenya Revenue Authority. This process includes
- Local – Entry lodged, passed, pay duty and taxes and clear to use in Kenya. In this case only one customs entry called Inward Entry, which means cargo came in to the country.
- Transit – The cargo is not for Kenya, so we don’t want to pay duty. So, we allocate a bond amount to the government equivalent to the customs duty and taxes so that in case if the cargo didn’t leave Kenya, KRA gets the duty ad taxes. The bond gets released when all the cargo cross Kenya border. In this case there will be an Inward Entry for the cargo came in to the country and there will be Outward Customs entry for each truck which carries the cargo outside Kenya. When the number of packages and the weight of all the Outward entries equals to the Inward entry, we request KRA to release that bond.
- KPA ( Kenya Port Authority ) – KPA release the cargo once they receive message from the shipping line and KRA that they released the cargo and then after clearing all KPA charges we get the Pickup Order, which is the authority to move the cargo out.
The cargo will be always either at the Kenya Port Yard or at the CFS. Mostly the loose cargo only goes to CFS. Rest all container and bulk cargo gets offloaded at the KPA ( Kenya Port Authority ) yard only.
KPA gives 9 days free period for transit cargo. Which means, even if you have 100 containers, you must load out all the containers within the 9 days free period. KPA will charge for every extra day the cargo remains in port yard. So, out challenge is to move out the cargo within the free period to avoid KPA rent. For dangerous cargo, open top container etc. there is no free period at all. That means we will have to have our truck ready to load directly from the vessel. If that cargo touches the KPA ground, we will have to pay the rent for that day. For the local cargo for Kenya, we get only 4 days free period.
So, our challenge is to move out the cargo as fast as possible to avoid rent.
Our operation includes the below types of transports.
- Local Delivery – Cargo loaded from the KPA yard to the final destinations inside Kenya.
- Local Shunting – If a transit shipment is of big volume and if we can’t move out the full cargo in 9 days, we submit permission from customs to move the cargo to transit warehouses which are under customs control. This is to save storage charges as we have our own transit yards which gives more than 20 days free period. In that case we use the local trucks to move the cargo from the KPA yard to our transit warehouse so that we don’t have to pay KPA rent. In this case, the cargo is still in Kenya, but in a transit warehouse. Later we allocate transit trucks to carry them from the transit warehouse to the final destination outside Kenya. I was calling it Transit truck because it required the transit permit for carrying cargo out of country. Shunting trucks will not need transit permit as they are moving within Kenya.
- Transit Direct Delivery from KPA Yard – In this case we load the cargo directly in transit truck and it heads to the final destination outside Kenya.
- Transit Delivery from Transit Warehouse – In this case, the cargo was previously shunted from KPA yard to the transit warehouse using a local truck. Those cargo from transit warehouse now load to a transit truck and deliver to the destinations outside Kenya. When you track this cargo, you will see one movement by a local truck from KPA Yard to transit warehouse and then another truck carrying it from transit warehouse to the final destination.
In the case of local delivery, we will have only departure origin location and arrival final destination.
But in case of transit delivery, you will see many tracking locations.
For e.g. if the cargo is for any destination in Kampala, the truck will have to cross Malaba border which is the border point for Kenya and Uganda. There will be Kenya and Uganda customs offices at the border. The truck will first undergo clearance at Kenya side and the customs stamp the outward entry for that particular truck load to show that it exited Kenya. Once the Kenya side is cleared, documents are submitted to Uganda side. Once we get Uganda clearance also, then the truck goes to the final destination.
If the final destination is Democratic Republic of Congo, the truck will have to cross Malaba border, travel through kenya and reach the DRC border and then undergo the same clearance process there for Uganda customs and DRC customs and then it goes to the final destination.
We do get lot of delays at the border points. There are cases where by our trucks were kept at the border more than 30 days because of some error in documentation etc. In that case the transporter will charge us for truck detention charges per day and that is the reason we need proper tracking of the truck at each border.
If a transit shipment has 10 containers, we will have one inward customs for all the 10 containers. But we can’t move all the 10 containers together as it will go on different trucks at different times. That is the reason we will have 10 outward customs entries. When we get all the 10 outward entries stamped by border customs confirming that those containers exited Kenya, that is when we can cancel the bond allocated for the inward entry for 10 containers.
Challenges we face during implementation :
- Most of the shipment has multiple container, Break Bulk etc.., which was later on split to different truck for delivery of cargo. Example 1: One shipment with 100 container which need to be split to 100 different truck and then deliver to consignee. Example 2 : One Road Import shipment with 3000 Ton transported through truck from Tanzania to Mombasa in 100 truck with 30 Ton capacity and after custom clearance at Mombasa it was split to 27 Ton per truck as Kenya Government don’t allow to load more than 27 ton in one truck.
- Transit Bond : since most of the shipment are transported outside Kenya, hence they need to maintain the Transit Bond. Hence Transit Bond management is one of the key operation activities.
- Electronic Invoicing through ATR machine provided by Government of Kenya.
- Custom Clearance Activities
- Border Clearance Activities
- With holding Tax
- Invoice customization
- Specific report Customization
Solutions provided to FFK – Group
1.He identified that Sales & Marketing Module, Tariff Module, Freight forwarding Module and Transport module .
2. To address the issue of Transit Border ( in coming and out going ) we have created custom field with dropdown border and in and out date.
3. For printing the electronic invoices we have install the pdf writer and then with the help of coding we read the pixel and print the invoice with electronic no. without any manual work around.
4. Custom clearance we have created certain custom field along with milestone which help the company to address their custom operation since custom is on link with Kenya custom.
5. Withholding tax setup with full automation only we have created the new VAT report which can be uploaded directly to government portal.
6. Invoice customization was the challenge as they require different type of invoice which was not available in CW1 . can be explain in details if require
7. Since most of the CW1 operation report do not support the business requirement we have customize a set of 25 different report as per customer requirement. Can be specify in details if require
8. Transit Bond we have user assemble master feature as advice by CW1 and the client is satisfy with the same.
Since this was the major implementation project we tool almost 10 month to implement with full automation. We really thanks to all CW1 African team who has help us in this important implementation. We are just sharing the views as we believe this was one of the difficult project end up in successful implementation.