The recent revelation that Chinese shipping lines and their agents in Nigeria have introduced double charges on the handling of groupage containers means that the country’s ports have become prohibitively expensive. Eromosele Abiodun writes
It is no longer news that the cost of doing business in Nigerian ports ranks amongst one of the highest in the world. This is why customs brokers operating at the Lagos ports recently declared war on terminal operators and shipping companies over the N4 billion demurrage that accrued as a result of a shelved industrial action by truck drivers.
Also last year, truckers shunned the lifting of cargoes at the ports in protest over alleged extortion by security agencies, the result being the accumulation of over N4 billion as demurrages and storage charges that importers had to offset.
Indeed, the country’s ports are notorious for high demurrage charges resulting from delays in the cargo clearing process; high insurance premium of vessels coming to Nigeria and trucks conveying containers to and from the ports, and higher shipping and terminal charges.
This is aside the total freight cost estimated at between $5 billion and $6 billion annually, according to the Ministry of Transportation.
According to the World Bank in its 2017 Annual Ease of Doing Business Report, Nigeria was ranked 145 among 185 countries, while Mauritius, at 32, was ranked the best in Africa. From the report, Trading Across borders, an indicator for measuring a country’s ports’ effectiveness, ranked Nigeria very low at 183 out of 185 countries.
Also, figures released by the Nigerian Ports Authority (NPA) showed that averagely, container traffic at the nation’s seaports, comprising of Lagos Port Complex, Tincan Island Port, Delta Port, Onne Port, Rivers Port and Calabar Port, stands at 822,868 annually.
THISDAY findings from customs agents revealed that it takes about N7.5 million to clear and transport a 20-foot container laden with cargo worth N41.11 million ($100,000) imported into Nigeria from China.
Of this amount, about N6.3 million, representing 82.1 per cent, is paid to the Nigeria Customs Service (NCS) as Import Duty, Comprehensive Import Supervision Scheme (CISS), ECOWAS Trade Liberalisation Scheme (ETLS), Port Development Surcharge and Value Added Tax (VAT). Shipping companies are responsible for 13.8 per cent of the port cost (N997,000); terminal operators 1.8 per cent (N217,000); transporters 1.1 per cent (N91,500) and clearing agents (N88,000).
This means that about N6.11 trillion is required to clear the 822,868 containers annually, while the shipping companies’ charges stands at N838.112 billion annually.
SBM Intelligence Report
Laying credence to this is a report by SBM Intelligence which showed that the cost of shipping goods into Nigerian ports is among the highest in the world, with the figure for Apapa port costing more than thrice of that to Tema, Ghana.
The organisation tracked shipments to three African ports between September and November 2019 and came up with the average cost of shipping goods in from the European Union, the terminal charges on containers while they are in those ports, and the average cost of local transportation from the port to selected warehouses within the port cities. The three ports were Apapa, Nigeria; Tema, Ghana, and Durban, South Africa. According to the report, the cost of shipment to Apapa is nearly five times that of Durban, South Africa.
“The costs for the Apapa Port in Lagos are by far the highest, five times higher than in Durban, South Africa, and three times higher than in Tema, Ghana. While each of the component parts of this dataset, shipping charges, terminal charges and local transport, are highest for Lagos, it is local transport, 10 times the cost in Lagos than in both Durban and Tema, that really makes Lagos an expensive place to do business in,” said Tunde Ajileye, partner at SBM Intelligence.
That is not all, recently, it was learnt that Chinese Shipping Lines and their agents operating in Nigerian ports have massively increased the cost of shipping goods to Nigeria. Inquiries revealed that they are taking advantage of the chaos in the sector to rip off Nigerian shippers through collection of double charges on handling of groupage containers, while also causing unnecessary delays in cargo delivery.
A groupage container is a situation whereby two or three consignees come together and put their cargoes into a single container as a full container load.
Recently, Nigerian shippers raised the alarm that local shipping agents have added a lot of charges against the consignees, which was far and above the cost of the cargo itself.
Early this year, the Nigerian Shippers Council (NSC), through the Port Standing Task Team (PSTT), the operational arm of the Nigeria Port Process Manual (NPPM) domiciled under the council, secured the released of three consignments detained by a Chinese Shipping Company (COSCO) Shipping Limited, after one year of delay. The company to the consignee reportedly waived storage charges worth N1.9 million.
Speaking on the development, the President of Shippers Association Lagos State, Rev Jonathan Nicole, lamented that it takes three months to move groupage containers from the ports for unstuffing at the warehouse, and yet, nobody pays the importers for delays not caused by them.
Nicole also raised the alarm about the threat of capital flight, saying that most of the Chinese shipping agencies carry out clearance of groupage containers with additional cost to be paid in foreign currency.
According to him, “It is confirmed that one aspect of ripping off shippers and importers in Nigeria is through groupage shipments. Freight charges are paid fully from Port of Loading to Port of Destination in foreign currency. No hidden charges are transferred to the Consignee whether or not there is trans-shipment from another port during transit.”
On arrival, he said the shipping line’s agents notify the consignees who have the Original House Bill Ladings indicating their own cargo to come and pick up their cargo after unstuffing.
In some cases, he said the local receiving agency delays in receiving the containers for up to 1 or 2 months.
“After receiving the containers and unstuffing at their warehouse, the consignees are informed to come and pick their cargo. Within this period, the local agent puts in a lot of charges against the consignees far and above the cost of the cargo. It is even cheaper to clear the container direct if all the consignees agree.”
“We really do not understand why it takes 3-months to move groupage Containers from the Ports for unstuffing and nobody pays the Importers for delays. There is no aspect of clearance of groupage containers to attract additional cost to be paid in foreign currency. It should stop.
“On storage charges, the bills must be commensurate with the number of days the cargo was stuffed in the warehouse and not the arrival date of the vessel. The consignee should not be subjected to excessive transfer charges from the designated Port to the receiving warehouses,” he said.
He revealed that all charges relating to the shipment of the cargo were paid upfront before shipment.
In considering the difficulties in the Nigerian clearing systems, he said simplified methods must be put in place to curtail excessive charges on shippers.
Also speaking, the NSC Coordinator of NPPM, Mr. Moses Fadipe, revealed that COSCO Shipping Limited held three containers belonging to a Nigerian shipper from March 2020 and was only released in June 2021 after the Council intervened.
He described the dispute between COSCO Shipping and the consignee as an impediment to cargo clearance processes, which NPPM frowns at.
Fadipe said “We found out that they acted arbitrarily being the stronger party in the transaction and this made them liable for all storage and demurrage charges during the period in question.
The intervention by the officials of PSTT yielded positive results for the consignee to take delivery of his consignments after a long period.”
FG Moves to Check Abuse
In a bid to put an end to the persistent wrangling between customs agents, importers and the negative impact excessive charges is having on the economy, the port economic regulator, the Nigerian Shippers’ Council embarked on a mission to get the shipping companies to cut down charges.
Initially, the move yielded results as the NSC and shipping companies in late 2020 agreed to sign a landmark agreement to reduce charges. However, the agreement was never signed.
Analysts and stakeholders had applauded the effort, positing that the Nigerian economy will be the ultimate beneficiary.
The former Executive Secretary/Chief Executive Officer of the NSC, Hassan Bello, early last year told THISDAY that he was hopeful the agreement will be signed.
“However, we will run the agreed MoU by the Ministry of Transportation, major stakeholders such as shippers, freight forwarders, Manufacturers Association of Nigeria (MAN) and Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA). This will take four days, then we will sign the MOU.”
The total reduction, he added, would be 35 per cent reduction, stressing that the most important development is that the NSC has come up with sustainable mechanism of settling dispute.
In his reaction, National President, of the National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Mr. Lucky Amiwero, praised the federal government for the effort, adding however that 35 per cent reduction is not enough.
He said the most important charge by the shipping companies is the demurrage adding that their charges are higher than what is being charged by the terminal operators, “which is not supposed to be so.”
The shipping companies, he stated, don’t have the right to collect such charges.
“Their charges are contestable and it is a very serious issue. The shipping companies are doing what they are doing because Nigerians don’t go to court, if Nigerians can go to court they will find out that the charges by the shipping companies are illegal, ”he said.