Nigerian ports demurrage-free days lowest among peers

Terminal operators in charge of cargo handling in Nigerian ports, along with shipping companies, are taking advantage of the limited free storage and demurrage days to fleece importers of billions of naira, BusinessDay findings show.

The post concessioning regime at the ports, which gives limited storage and demurrage free days to importers has caused a situation where terminal operators now profit from rent-seeking in the form of storage charges imposed on importers.

Data from the Nigeria Shippers Council (NSC) indicate that Nigeria has three free storage days and five demurrage free days, which is low compared to neighbouring Benin Republic, which has ten demurrage-free days. Ghana, on the other hand, has eight demurrage-free days.

Meanwhile cargo dwell time (time to clear cargo) takes between 20 and 28 days in Nigerian ports, while in Benin Republic, it takes between10 and 15 days. For Ghana, it is between 12 and 14 days and Togo eight and 12 days.

BusinessDay investigations also show that importers who clear their goods from Nigerian ports, pay about 14 charges, while those that clear from off-dock terminals have 20 charges to pay

before taking delivery of their consignments.

Confirming this, a recent World Bank report attributed long dwell time of cargo and high cost of doing business at Nigerian ports to rent-seeking on the part of operators rather than fast tracking cargo clearance.

Amaka Ifeora of the NSC, told BusinessDay in Abuja that when the Council studied the profit margins of terminal operators, which is usually shrouded in secrecy, and it was revealed that one operator made over N11 billion profit and another N9 billion profit annually from storage and demurrage charges alone.

Ifeora siad that terminal operators recently increased their storage charges from N4,000 to N8,000 per day for 20 foot containers and N8,000 to N12,000 per day for 40 foot containers without consultation with industry stakeholders.

One 40 foot container which stays about two weeks at the ports, costs N12,000 per day in demurrage charges, which amounts to N168,000 for terminal operators alone. This is aside from the demurrage the importer will pay to shipping companies.

“In the early days of concession, terminal operators said that limiting free storage and demurrage days would compel importers to be timely in cargo clearance, but now we find that it has become a means of making money from shippers. This is because the same terminal operators sometimes contribute to the delays importers experience at the ports during clearing of goods”, she said.

Continuing, she said: “Lack of adequate equipment on the part of the terminal operators, system delays and failure, excessive physical examination of cargo by Nigerian Customs, insincerity of service providers and under-declaration by importers, are the things that interfere on seamless cargo clearance and delays that translate into money for terminal operators and shipping companies”.

Ifeora added that the absence of a commercial regulator to curb the excesses of terminal operators and other service providers in the port has created the opportunity for market monopoly in Nigerian ports, rather than competitiveness among service providers.

Reacting, Kanikwu David Chuks, a maritime analyst said that the cost of doing business in Nigerian ports started increasing after the concession exercise, which was aimed at reducing the cost at maximum efficiency.

“The longer the container stays in the port, the more beneficial it is for the terminal operator and the shipping company. We are on e-transact but service in a particular terminal could be down for days and the operator will not waive those days for the consignee”, he explained.

This, he said, is why importers divert their cargo to neighbouring ports that are more user friendly and less costly.” The stakeholders have called for the institution of a commercial regulator for the port industry but government has not deemed it fit to look into that, as some operators have started politicise it”.

Tony Anakebe, another analyst blamed operators for the delays, saying that when clearing agents book for examination, it takes some terminals between five to seven days to drop the container for either scanning or examination.

“The major problem is the absence of a regulator at the port and this has afforded the service providers the opportunity to make money from the importers. Take for instance, almost 30 percent of the container deposits collected by shipping companies are not refunded and this generates billions of naira”, he added.

However, the chairman, Seaport Terminal Operators’ Association of Nigeria (STOAN), Vicky Haastrup, said that terminal operators are not responsible for the high cost of doing business at the ports, adding that terminals had since the inception of concession ,invested in equipment that have led to terminal efficiency, improved turnaround of vessels, and increased cargo throughput.

AMAKA ANAGOR