In the 1960s, Member States trade experienced increased transport costs arising from surcharges imposed on the trade by the liner shipping operators. More specifically, trade was experiencing negative effects arising from the closure of the Suez Canal and the surcharges applied after its closure in mid 1960s.In realization of these challenges, and given the common interests which the regional states shared, the four Member States of Kenya, Tanzania, Uganda and Zambia formed ISCOS in 1967 to perform on their behalf various functions such as negotiation on freight rates, fighting against unjustifiable surcharge and other charges on seaborne cargo. A Permanent Secretariat headed by a Secretary General was established in 1974 to coordinate ISCOS activities. In 1987, member states signed an agreement legally establishing the institution.
To date, ISCOS activities have expanded to take care of the changing patterns in world trade, especially the liberalization of regional economies, globalization, technological advancement, and other economic developments in global commerce. For this purpose in April, 2006 the protocol amending the 1987 agreement was signed to accommodate these new developments.