‘Minimising ports charges will enhance ease of doing business in Nigeria’
The Nigerian Shippers Council (NSC)recently achieved the feat of getting shipping companies in Nigeria to sign a landmark agreement to reduce charges by 35 per cent. The Executive Secretary of the Council, Mr Hassan Bello, in this interview with ONYEDIKA AGBEDO, explains that the ports economic regulator has the agenda of making sure that there is not only ease of doing business at the ports but also that the cost is reasonable. Bello also speaks on the outcome of the meeting organised by the Global Shippers Forum (GSF) in London, where issues of arbitrary surcharges against shippers in Nigeria and other African countries were discussed, among other issues.
Nigeria and other members of the Union of African Shippers Council (UASC) attended the meeting of Global Shippers Forum (GSF) in London recently where the issue of shipping surcharges by shipowners against shippers was discussed. Can you give us an insight into what happened?
We had a fruitful meeting. Asian Shippers, Shippers Council from Italy, European Shippers Council and the British Shippers Council were part of the meeting. We also had the International Chamber of Commerce, ship owners, and many others.
Now, the idea is cost. Cost is very important in shipping as you know and to our national economy. We want a reasonable cost. We want the effective cost and we want a fair cost. What we seem to have is global understanding as shippers that some of these charges, especially the surcharges, are not as transparent as we want them to be. But even more fundamental is that these charges are done arbitrarily, without consultations with owners of the cargo. We think that when you go to the restaurant at least you will see the cost and you will be given a receipt and then you will know what you have consumed and what you have not. So, we are looking at a participatory level whereby shippers will participate in deciding the cost of shipping; and that is fundamental.
So, a lot of things came up and we think that shippers should directly deal with the carriers instead of the agents so that we have a framework for setting up these charges. And we suspect that because freight has been very stable and low until recently because of competition, there is a tendency for carriers to make up charges elsewhere apart from their freight. So, the position of our total team – we were with Ghana and others – is to have more transparency by shipping lines. We want participation in decision-making.
On the surcharges, the information sector observers have is that the ship owners disowned some of the charges, saying the agents imposed them?
I want to confirm that. The surcharges are on abnormal things. If such things disappear, the surcharge should also disappear. If you have a congestion surcharge, maybe it is justifiable, but when there is no congestion, why should the surcharge remain? When we have bunker adjustment surcharge, that means the fuel price is high, but what of when the fuel price comes low? What happens? Look at what we have been saying about war risk – making Nigerian cargo the most expensive may be in the world. $1,500 to bring a 20ft container to Lagos and $3,000 if it is going to the Eastern port. We have to know what the risks are; you cannot unilaterally, arbitrarily decide these surcharges.
The Global Shippers Forum (GSF) is engaged now with Lyods to find out what is happening to these war risks. Then, one of the most important things is that GSF has asked Nigeria to host its next meeting probably in March or April next year. This is an opportunity for Nigeria to come and make its stand because it will be effective. There is a legislation Sri-Lanka did. Sri-Lankans were at the meeting. The idea is to minimise some charges that are already freight inclusive because we believe by paying the freight, some of these charges have already been dealt with. Freight is part of that. You have incoterms, which says liner in liner out for example, which means evacuation of the cargo from the ship to the terminals where the shipper collects. You don’t have to pay that; or loading of cargo from the destination. The shipper has already taken that in the freight.
Then the issue of delay of cargo; we have to look at it because delay could be dangerous. The responsibility of the terminal operators must be taken into consideration in all these things. What is the responsibility of the freight forwarder? What is the responsibility of the shipping lines and so forth? We all have to go to class now and determine them according to international practice. We have no fear of paying charges but let it be related to services.
Let me give you an example of what happened during our negotiation with shipping companies. Container cleaning charge is that all the containers that come here have to be cleaned. Is this possible? We said no; you have to convince us that these containers will have to be cleaned. So, that is what we are doing now. We have removed container cleaning charges during our negotiation unless you prove that it is dirty. Then we have inserted a clause that says if through no fault of a shipper, he cannot return the container, he should not be charged demurrage. What people don’t know is that the Central Bank of Nigeria (CBN) has given us responsibility now to look at demurrages. We are looking at not only freight charges but also the reasonableness of demurrages.
We have to thank the CBN for doing that. They know we are experts in the shipping business and they have leased some of their regulatory functions. We have saved a lot of money. We are going to give the report very soon. Why is that coming from CBN?
CBN is the one that controls foreign exchange. One thing I will say is that we have to commend the shipping companies because of their understanding and their commitment to finding solutions to the arbitrary and unilateral fixing of costs. They have been here; we have been meeting for one and a half years. The deal we are going to sign, maybe we could do better, but let us start. It has opened a vista of dispute settlement mechanism and effective cost. We have reduced the charges from the nomenclature from 16 to five so that we don’t have all these charges.
But one of the problems, which I have highlighted to the Ministry of Transportation, is the agencies of government we are going to face next. Neither the NPA nor NIMASA nor Nigeria Railway Corporation (NRC) will charge any kobo without coming to the Nigerian Shippers Council. And I am happy the Minister is agreeing with what we are saying. So, if NPA wants to make changes, they have to come and negotiate with us because a charge from NPA could wipe out all the gains we have made.
We had a problem with the Oil and Gas Free Zone Authority because one of the terminals raised some charges and we wrote to them that they had no right to impose such charges. We met and through that, we stopped the charge. They (Oil and Gas Free Zone Authority) are economists; they understood the implication of that quickly. So, if we could have such cooperation from an organisation outside the Ministry of Transport, why can’t we have it with people inside?
For example, NIMASA is charging environmental fees; NPA is also doing the same. And we can’t have that. That is duplication. This will raise the charges more. We want charges to be tied to services. We are getting a lot of support from the Ministry of Transportation. We are also getting to understand ourselves now.
For instance, we are doing a lot of things with NIMASA now. We think that coming together with NIMASA is very important as far as these charges are concerned. Gradually, what we are trying to do is to make sure that there is not only ease of doing business but also that the cost is reasonable. Nigerian ports are very expensive and that is a disservice to shipping, a disincentive to shipping. That is why people may take their cargo elsewhere as an economic decision.
There was a suggestion that you adopt the Sri-Lankan option in Nigeria ports. How possible is that?
Yes. It is possible. What we are saying is that legislation will cure these kinds of things. We met with the Sri-Lankan authorities in London. You know Shippers Council engages stakeholders. We cannot do anything without the stakeholders. Even this MoU, we have just got a draft now. So, I’m going to meet with the shippers, freight forwarders, MAN, NACCIMA, and all the trade groups, and say this is what I have been able to extract. For many years, we never had such kind of thing. It is not something we go all the way and say we have done that, but gradually. The most important thing is that there is now a basis for negotiation. And when we are going to negotiate, we have to bring the shippers in. It is not only NSC. For example, when we went to GSF, we carried shippers with us. We are just the institution. But we have to make sure that shippers are involved.
The plan to have the Cargo Tracking Note (CTN) appears to have been forgotten. What is the stage of the initiative now?
The International Cargo Tracking Note (CTN) is another instrument that will add tremendously to shipping development. It will boost the revenue of the government through Customs revenue collection in the sense that it will abate under-declaration and concealment. It will boost the revenue of NPA because there will be no more alteration of the manifest. It will boost the revenue of NIMASA because under-declaration on the weight of ships will not be there any longer. But most important is that the CTN is a veritable source of data. You will know everything that is coming into your country.
We have many African countries having this because it is the initiative of Union of African Shippers Council (UASC). Cameroun, Niger that is even land-locked and many other countries have CTN. So, you have got to know what is coming to your country. It is a security document because if you know there will not be proliferation of firearms. We discussed with the Comptroller-General of Customs when he came here and we have been talking with him and he is on it.
There are technical hitches because we ran into problem with the agent that was supposed to do that. But now we — NSC, NPA, NIMASA and Customs Service — are coming jointly, with Shippers Council, in the lead to make sure this thing is done. I hope by the time we have the final report on it we should be able to start the CTN.
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