Chinese Shipping Company Begins Servicing Two Major East African Ports
On June 12, the MV Cosco Yinkou became the first ship to arrive in Kenya under a new shipping agreement between China Ocean Shipping Company (COSCO) and Maersk Shipping Line inked just three weeks prior. The new shipping service, called “Mashariki” will directly connect the Port of Mombasa to the Port of Shanghai and expand COSCO’s access to East African trade.
The Port of Mombasa is Africa’s second largest port, and the Port of Dar Es Salaam handles 95% of Tanzania’s international trade. Both ports are considered critical entry points to East and Central African trade.
The new Mombasa to Shanghai connection emphasizes China’s growing interest in the East African port. Since 2018, there has been speculation – and government denials – that Kenya collateralized the Port of Mombasa to Chinese interests in the course of accepting a $3.3 billion from the Export Import Bank of China to Kenya in 2013 to finance the country’s standard gauge rail project. In the event of Kenya’s default on that loan, the Export Import Bank of China would, in this scenario, gain authority to step in as the principal shareholder of the Kenya Port Authority (KPA) – the current owner and operator of Mombasa Port.
Notably, it emerged in 2019 that China’s Exim Bank also has a contract with KPA and Kenya Railways that requires the port operator to provide at least, 1 million tons of cargo (rising to 6 million tons by 2024) for the Chinese-built standard gauge railway. Kenyan importers claim that, under this agreement, they are being forced to divert their cargo from Mombasa port via the railway, despite having other less cost-prohibitive options.