‘Port business is expected to boom in 2014’

Tony Anakebe, renowned maritime industry analyst, is the managing director of Gold-Link Investment Limited, a clearing and forwarding company. In this interview, he x-rays the port business in 2013, highlighting the high and low points. He also speaks on the outlook for the port business in 2014. Excerpts:

Maritime industry in 2013

There were multiple problems that confronted the importation business in the past one year. The truth is that the Federal Government is yet to understand what the economy is losing for not developing the sector effectively. All the access roads to the two major seaports in the country are currently in a bad shape such that it has become difficult for cleared consignments and empty containers to be moved in and out of the port. The security officials at the port gate contribute greatly to the delays that truck drivers encounter at the gate. They have made it compulsory that every driver must bribe the official at the gate before they would be allowed to leave the port.

The outgone scanning service providers also contributed to the delays importers experienced in the port in the third quarter of the year. Since the port concession in 2006, there has not been electricity supply in the port because the port was removed from the national grid. As a result of this, service providers and terminal operators have been generating individual power to run the port, against the provision of the concession agreement that mandated the Federal Government through the Nigerian Ports Authority (NPA) to supply electricity to the port. The port security was jeopardised early in the year, which led to the ultimatum that the US Coast Guard gave to Nigeria to up the port security strength or risk being sanctioned. However, the nation’s port industry through the Nigerian Maritime Administration and Safety Agency (NIMASA) and other agencies mulled last minute efforts to meet the international port security standards.

To sum it up, I would say that the Federal Government did not realise up to 70 percent of the revenue and other economic benefits that the country ought to have realised from the port industry in 2013.

The cost of doing business at the port even worsened last year. In 2012, the port recorded improvement in cargo dwell time such that importers were clearing and taking delivery of their cargoes within a space of two weeks, but the bottlenecks that were experienced in the port last year hiked the cargo dwell time to three weeks. Regrettably, importers were made to pay for the demurrage and storage charges that were incurred within that period.

Significant issues in 2013

One of the significant issues in Nigerian ports was the ultimatum issued by the US Coast Guard to Nigeria to up the level of maritime security in the port or risk sanction. But at end of the day, Nigeria was recertified by the US Coast Guard. International Maritime Organisation (IMO) has a standard for security stipulated for all the ports in the world. Nigeria made a lot of efforts to sanitise the port within that period because movements in and out of the port were restricted to only those who had business to transact in the port. But there is still a lot to be done to up the level of security in the port system.

Also, the contract of the three Destination Inspection service providers was brought to an end on December 1, 2013. This led to the introduction of the Pre-Arrival Assessment Report (PAAR) to override the Risk Assessment Report (RAR) that was formerly issued by service providers.

PAAR and cargo dwell time

To achieve the needed result, Customs needs to sanitise itself because PAAR is the same as the RAR that service providers used to issue in the past. Customs needs to ensure that cargoes cleared under PAAR by Customs officials are not intercepted on the road by another officer of the Federal Operations Units (FOU). If the PAAR is properly handled by Customs, the system would help in fast-tracking clearance procedure and reducing the days cargoes spend in the port.

Outlook for 2014

Port business is expected to boom in 2014, but with the newly introduced automotive policy that raised the percentage of tariff paid on imported vehicles from 20 to 70 percent, I see Nigerian cargoes being diverted to ports in the neighbouring countries where it is cheaper to clear and bring in goods through the land borders. I also see the growth of the illegal business of smuggling vehicles into the country to avert duties. And there is no way the Customs we have today will be able to curb smuggling down to 0 percent.

If the problems already created by the PAAR are not handled in earnest, I see a situation where Nigeria may also lose some of its cargoes to other ports in the first and second quarter of the year. This is because no importer would want to bring in his or her goods and the goods would be stocked in the port for two or three months after which the person would be made to pay demurrage and storage charges.

Expectations from Federal Government and NPA

This year, there is need for a change from doing the routine to doing extraordinary things. The ongoing construction work on the port access roads needs to be fast-tracked. Government also needs to address the issue of trucks queuing on the access roads by building truck holding-bay to be used as transit park to facilitate free movement of goods in the port.

Comment and observations

Some shipping companies are charging importers a large sum as container deposit. Sometimes they find it difficult to return the deposit to importers on delivering the empty container, while in some cases it takes about two to three months for the shipping company to return the deposit. In some cases too they do not return the full amount paid as deposit. This is why we need an economic regulator in the port to regulate shipping companies, terminal operators and importers.