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To curb Inflation, Shippers’ Councils rally against surcharges by ship owners

By Onyedika Agbedo
14 September 2019   |   3:09 am
After many years of a barrage of surcharges by foreign ship owners hiding under a number of excuses, shippers in the West and Central Africa are now crying out loud over the excesses of the ship owners. They had endured the rip-off for years just to remain in business

The Executive Secretary, NSC, Hassan Bello

After many years of a barrage of surcharges by foreign ship owners hiding under a number of excuses, shippers in the West and Central Africa are now crying out loud over the excesses of the ship owners. They had endured the rip-off for years just to remain in business, as they know quite well that some of the surcharges they are subjected to do not obtain in advanced countries.

Some of the surcharges being imposed on shippers by different shipowners include bunker adjustment factor, currency adjustment factor, war risk surcharge, congestion surcharge, peak season surcharge, extra risk insurance surcharge, freight rates surcharge, and port operation recovery surcharge. The foreign ship owners always cite infrastructure and security issues to justify these charges.

Nevertheless, worried about the negative effects of these surcharges on the economies of West and Central African countries, shippers councils from the affected countries have resolved to confront the issue.

Rising from a meeting attended by 16 countries in the West and Central African states in Abuja, hosted by the Nigerian Shippers Council (NSC), recently, members of the Union of African Shippers’ Councils (UASC), expressed concerns that most of the surcharges which are supposed to be temporary measures to address some problems were still being collected even when those problems that necessitated the charges had been solved.

Vice President Yemi Osinbajo had on the occasion said the Federal Government was disturbed by the negative effect of such surcharges on the national economy.

Osinbajo, who was represented by the Minister of Transportation, Rotimi Amaechi, said it was more worrisome that the shipping companies did not usually consult affected countries when such surcharges were being imposed.

He said the process of introducing the surcharges lacked transparency, as they were not based on verifiable and available statistics.

Osinbajo described the unilateral and arbitrary imposition of such surcharges on cargos bound for the sub-regions as a contradiction of the norms and ethics of maritime transport.

He also said the surcharges amounted to huge sums of illegal capital flight from the countries of the sub-regions and thereby depleting their limited foreign exchange/reserves.

“For instance, data obtained from Nigerian Shippers Council’s confirmation of reasonableness of demurrage charges for Central Bank of Nigeria (CBN) revealed that more than N2 billion is repatriated by multi-national shipping companies in a quarter of a year,” he said.

On how best to curtail the excesses of the ship owners and their agents, the union resolved to take the matter to the Global Shippers Forum (GSF), which would be meeting in London soon. 

Participants at the meeting also welcomed suggestions by the Executive Secretary of the Nigerian Shippers Council (NSC), Mr Hassan Bello, who is also the Chairman of the Standing Committee 1 on Trade and Transport.

Bello had said it was time for member states to confront the foreign ship owners to save individual shippers as well as the economies of the sub-regions. He stressed that shippers’ councils must be consulted by the ship owners for negotiation in the event of any new surcharge. He advised individual shippers who are always ready to pay such surcharges to first ask questions on their components and be satisfied before making payment.

He reminded the shippers of the negative effect of such a decision on the economies, adding that this was capable of causing inflation.

Bello explained that being part of the decision making before new charges are introduced was the best for all parties, including the ship owners, as they would be in a position to explain the reason for such charges and then reach a cordial agreement with the shippers.

He enjoined members to be ready to use legislation in the event of ship owners refusing to negotiate such charges with individual countries.

He said: “Shippers must be part of the decision making on charges. Sometimes, if you are part of the decision making, it will even help the operators. There are things you may see and sympathise with them and agree.

“We can do a lot of things through legislation. If the European shipowners remain on their feet that we cannot be part of the negotiation, we use legislation. But there is no law that can say we cannot talk to them.

“If we cannot negotiate charges, if we cannot reduce charges, if we cannot fight arbitrary charges not only on behalf of shippers but for our national economies, then we should be dissolved. These charges are affecting our national economies. It affects inflation because all the charges are passed to you and me as the final consumers. It means that the standard of living will reduce drastically because of the issue of affordability. If there is monopoly then we don’t have a choice. So, we are doing this not only for the shippers but also for the service providers. I want shippers councils to be total, to look at the whole economy. We should work towards having the law so that we can do what we ought to do.”

Bello’s suggestions on how to tackle the shipowners were unanimously adopted by members.  The suggestions by Ghana, Cameroon, and others for the constitution of experts to identify unfair trade practices in individual countries for presentation during the GSF meeting in London were also adopted. The union also resolved to reach out to similar organisations in Latin America and Asia to learn from them how they have been able to tackle the issue of illegal charges.

Participants stressed that the move was not meant to deny ship owners or their agents their due profits but to get them to obey regulations.

“We are not denying you profitability or anything. You should make a profit. You should benefit. In fact, you are employing people, you are creating wealth in our country but there is a limit. We have ethics. It is mutual respect,” Bello added.

The Secretary-General of the Global Shippers Forum (GSF), Mr James Hookham, opined that members of the sub-region should rise against the surcharges through legislations.

Hookham said Sri Lanka, for instance, introduced an all-inclusive freight law that has checked such arbitrary surcharges by carriers.

Governments from the sub-region were, however, reminded of their responsibilities in addressing issues of infrastructure in the port environment. For instance, member states were advised that ships calling at the ports do not have to be delayed as a result of issues of infrastructure and corruption. They were advised to embrace automated services with state of the art cargo handling equipment that would ensure improvement on the turnaround time for vessels calling at the ports.  This, they noted, would stop the shipowners from imposing arbitrary charges.

On the issue of insecurity, members were advised to call on their respective states to fight against piracy in their territorial waters. Noting that the problem in the Gulf of Guinea has led to the imposition of surcharges because of the extra costs incurred by shipping lines, many of which now carry onboard armed guards, member states supported the ongoing move championed by Nigeria for joint action by governments of the regions against piracy.