$23M Tea Exports Stuck at Mombasa Port

Kenyan Tea Exports Navigate Stormy Seas Amidst Middle East Conflict

Kenyan tea exporters are facing significant financial setbacks, with an estimated $23 million worth of tea currently held at the Port of Mombasa for the third consecutive week. This unprecedented situation is a direct consequence of the escalating Israel-US-Iran conflict and its ripple effects on vital shipping routes.

The disruption has been amplified by the closure of the Port of Salalah in the Arabian Sea, a critical hub for sea transport that serves as a gateway to numerous tea destinations, including Pakistan, the United Kingdom, and various European nations. This closure has effectively severed a key artery for Kenyan tea reaching its global clientele.

Mounting Losses and Market Fears

The impact on Kenya’s tea sector is profound. George Omuga, the managing director of the East African Tea Trade Association, highlighted the weekly losses, estimating that the sector is losing approximately 2 to 3 million kilograms of tea intended for export to the Middle East each week.

“We export about 20-25 percent of our teas to the Middle East, and we have lost the market due to the ongoing conflict,” Omuga stated. He further elaborated on the sheer volume of tea affected, with an estimated 8 to 10 million kilograms, valued at over Ksh3 billion (approximately $23.12 million), currently warehoused or stranded at the Port of Mombasa since the conflict erupted.

The situation has been further complicated by the recent closure of the Port of Salalah. Following an attack on March 11, which saw several drones strike its fuel storage tanks, the port, a crucial point for consolidating Kenyan tea exports before dispatch to markets like Iran, Egypt, Pakistan, the UAE, Russia, and even the UK, has ceased operations. This has created a bottleneck, leaving a substantial amount of valuable product in limbo.

Geopolitical Disputes and Past Market Losses

These recent challenges are not entirely unprecedented for Kenya’s agricultural exports. Last year, the nation experienced losses in the Iranian and Sudanese tea markets due to existing geopolitical disputes. The current conflicts in these regions only serve to heighten existing fears of continued market erosion and financial strain on the agricultural sector.

The ramifications of this crisis extend to hundreds of farmers affiliated with the Kenya Tea Development Agency (KTDA), who are now facing the grim reality of unsold produce and diminished income.

The Strait of Hormuz Blockade and Extended Delays

A significant factor contributing to the current crisis is the closure of the Strait of Hormuz. This vital maritime passage, a critical chokepoint for global oil and trade, has been effectively paralysed by the ongoing conflict. Consequently, numerous vessels have cancelled their scheduled trips to Mombasa. Other shipping lines are forced to undertake significantly longer and more circuitous routes to reach Kenya, leading to substantial delays in the delivery of tea and other goods.

Thushara De Sliva, managing director of Empire Kenya EPZ, corroborated these concerns. “We used to clear our cargo within 2-3 days, but now it’s taking longer, as ships are taking more time to reach the port of Mombasa while others have cancelled their trips,” he observed. This extended transit time not only incurs additional costs but also impacts the freshness and marketability of perishable goods.

A Wake-Up Call for Intra-Africa Trade

The persistent conflict in the Gulf region, now in its third week, has underscored the vulnerability of Kenya’s export-dependent economy. The United States and Israel’s attacks on Iran, followed by retaliatory actions by Iran against US and Israeli interests in several Gulf States, have created a volatile geopolitical landscape that directly impacts international trade.

Floice Mukabana, CEO of the Kenya Export Promotion & Branding Agency (Keproba), emphasized the far-reaching consequences of the war on Kenyan exports. Beyond tea, coffee and meat exports are also reportedly stranded at the port. Mukabana views this crisis as a critical turning point, urging Kenyan producers to actively seek alternative markets, particularly within the African continent.

“The ongoing conflict in the Gulf region, which has led to the closure of key maritime routes, is a wake-up call for Kenya to invest more in intra-Africa trade,” Ms. Mukabana asserted. This sentiment highlights a growing recognition of the need to diversify trade partnerships and reduce reliance on potentially unstable global shipping lanes.

The current situation at the Port of Mombasa serves as a stark reminder of the interconnectedness of the global economy and the significant impact that geopolitical instability can have on even seemingly distant markets. For Kenya’s vital tea industry, it presents an urgent challenge to adapt, innovate, and forge new pathways for its prized commodity.