Shippers’ Council and drive for efficiency at Nigerian ports
When the Federal Government commenced the port reform initiative eight years back, which resulted in handover of cargo handling operations of the Nigeria Ports Authority (NPA) to private terminal operators, the reform was introduced without an umpire to mediate between the service providers and the consumers.
The port reform initiative brought some measure of gains into the ports, such as huge investment in equipment, facilities and other forms of port infrastructure. However, it has not been able to address the issue of delay in cargo clearance as well as high cost of doing business at the ports. Importers say it is very expensive to clear goods from Nigerian ports compared to ports in the neighbouring countries, which accounts for why some Nigerian importers prefer to use other ports.
Industry close watchers blame the identified missing link to the fact that the port business in those days was run like a sheep without a shepherd as a result of which importers suffered undue hardship in the hands of both the service providers and government agencies.
To resolve this apparent logjam, the Federal Government recently appointed the Nigeria Shippers’ Council (NSC) as interim regulator for the port industry pending the passage of the Ports and Harbour Bill to give legal backing to the existing regulator. The council dedicated the early months of its resumption of duty to consulting with stakeholders involved in port operations to understand each player’s issues and challenges.
Observers who spoke with BusinessDay believe the existence of an economic regulator is beginning to make impact in port business, especially in the under-listed aspects.
Reduction in cost of doing business
Determined to reduce the costs of clearing goods at the port, the Hassan Bello-led management of NSC consulted with stakeholders to identify the best way to go about it. The consultation resulted in the critical evaluation of shipping charges, which further led to the reduction of some shipping companies’ charges by 50 percent. The affected charges include shipping line agency and container cleaning charges.
Dabney Shall-Holma, director, Commercial Shipping Services, observed during the consultation that the Shipping Line Agency Charge (SLAC) was not contained in the Memorandum of Understanding (MoU) the council signed with the shipping companies. The committee set up by the council and the shipping companies to review an existing MoU discovered that SLAC was part of the terminal handling charges collected by shipping companies before concession of the ports to cover documentation and administrative charges. The council therefore told the shipping companies to reduce the charge by 50 percent. As a result, importers are expected to pay N14,550 on SLAC instead of N29,100 paid currently.
Shall-Holma, who expressed surprise that the cleaning fees were imposed on imports instead of exports, disclosed that Global Shippers’ Forum, of which Nigeria is a member, had decided to abolish container cleaning fee globally. But because the charge takes care of damage on containers, the shipping companies were asked to change the charge from ‘Container Cleaning’ to ‘Container Maintenance Fee’ at the rate of N1,500 industry benchmark instead of N2,500 earlier collected.
The delay and sometimes inability of shipping companies to refund the container deposit fee paid by importers and their agents was a major contending issue the economic regulator had to look into. In doing this, the regulator mandated the shipping companies to always endeavour to refund container deposits once the empty container is returned, and 10 days maximum was given to the shipping companies to do so. Importers and their agents were also directed not to default in returning the empty containers to the shipping companies in good time.
To enforce this, the council said it would put in place monitoring mechanism to check compliance with the directives, threatening that a penalty would be imposed on defaulters.
Findings show that one of the major reasons cargo clearance is delayed at Nigerian ports is the delay experienced by ships with imports before being allowed to discharge their cargoes. As a result of this delay, some ships spend an average 48 hours on Nigerian waters before being cleared to berth. This results in importers paying demurrage to the shipping companies, which is later transferred to the final consumers. The agencies involved include the Nigeria Customs Service (NCS), Nigerian Maritime Administration and Safety Agency (NIMASA), Nigeria Immigration Service (NIS) and Nigeria Police.
As part of the moves to ensure efficiency in the system, Hassan Bello, executive secretary of the council, is expected to meet with the comptroller-general of the Immigration Service and the director-general of NIMASA to discuss and find solutions, while Customs issues would be discussed with the area controllers.
Efficient service delivery
Having been appointed as ports regulator, the NSC said it was determined to ensure best practices in the ports, improve on efficiency of ports operation and ensure that importers do not suffer undue hardship in terms of delay and costs.
To make Nigerian ports very competitive and ensure that importers are discouraged from diverting cargo to neighbouring ports, the regulator is perfecting plans to send commercial officers to Cotonou (Benin Republic) and Tema (Ghana) ports to study the tariff rates of shipping companies so as to carry out comparative analysis with that of Nigerian ports.
Industry close watchers opined that the new measures put in place by the regulator would assist in deterring shipping companies and terminal operators from introducing new charges. This is as the regulator is also perfecting plans to check the excesses of Customs agents, otherwise known as freight forwarders, by ensuring that they do not overcharge importers.
Stakeholders’ view
To further consolidate on its already growing success in restoring sanity at the ports, stakeholders expect that the council would set up operational guidelines that would put all operators including service providers, government agencies and port users under check. With the guideline, shipping companies and terminal operators would be guided on the charges imposed on imports. It would also help to check the excesses of freight forwarders.
Tony Anakebe, a renowned clearing and forwarding practitioner, noted that the council as a regulator still had a lot to do in sanitising the port system. He applauded the efforts put in so far by the regulator to address the issues that centre on fast-tracking cargo clearance at the ports.
Apart from cutting down on charges imposed on freight by shipping companies and terminal operators, Anakebe said ensuring timely clearing of cargo at the port and delivering same to the importer’s warehouse would go a long way to address the issue of high cost of doing business at the port.
“This can only be done if the regulator succeeds in removing all the bottlenecks that delay cargo clearance,” he said.
Anakebe, who also bemoaned the alarming traffic situation within the port environment, urged the regulator to develop a lasting solution that is capable of bringing the problem to an end. He further suggested that beyond the trailer transit park the Federal Government is building at the Tin-Can Island Second Gate, the regulator should put an automated call-up system in place to ensure that the park is used by only trailers and trucks that have business at the port.
Emmanuel Nwabu, A Lagos-based importer, appreciated the bold step already taken by the regulator, saying if consolidated on, it would help to reduce cost of doing business for the importers. He also called on the regulator to ensure that an automated single window platform is developed at the port. This, according to him, would bring all the port operators and government agencies under a single platform that would go a long way to fast-track cargo clearance at the ports.
Uzoamaka Anagor