Nigeria, others to lose $240 billion to spike in freight charges

There are indications that the projected increase in bunker fuel oil may cause significant increase in freight charges, and Nigeria, among other countries, may lose about $240 billion to the varying cost.

This is against the backdrop of the new regime introduced by the International Maritime Organisation (IMO) that by January 1, 2020, it would begin to regulate global Sulphuric levels from 3.5 per cent to 0.5 per cent.

Industry experts have predicted that the new regime would increase the bunker fuel oil by more than 50 per cent leading to increase in the cost of port–to–port sea freight by 10 to 20 per cent.

To this effect, shipping lines would strive to recoup the extra cost of fuel through introduction of bunker surcharges on cargoes in that shipping companies such as Maersk Lines, CMA CGM and Mediterranean Shipping Co. have already announced plans to introduce bunker surcharges to recover costs from this regulation.

The rising fuel cost means rising freight rates with majority of the cost being passed on to consumers as it is estimated that the total impact to consumers’ wallets in 2020 could be around $240 billion.

The Executive Secretary of the Nigeria Shippers Council (NSC), Hassan Bello, while speaking at the Union of African Shippers Council sub-regional sensitisation workshop and Joint Standing Committee meeting yesterday in Abuja, expressed worry that the new regime was being introduced despite the high freight rate in the sub-region.

Bello mentioned that freight rates to the sub-region were relatively high compared to other parts of the world due to low vessel ownership in the sub-region. He said that the workshop would be used to fashion out strategies to address the peculiar challenges hindering the efficient service delivery and competiveness at the ports.

He further said that the meeting would also help in the domestication and implementation of the Facilitation of International Maritime Traffic (FAL) Convention in the 19 UASC members’ states, with the objective to prevent unnecessary delays in maritime traffic, aid cooperation between governments, secure the highest practicable degree of uniformity in formalities and other procedures, and reduce the number of declarations, which can be required by public authorities to just eight.

The Minister of Transportation, Rotimi Amaechi, in his remarks also stressed the need for the sub-region to come up with a common position to ensure that the extra costs on the fuel bunk oil are not imposed arbitrarily on West and Central African bound cargoes.