Inefficiency, high charges, infrastructure dearth de-marketing Nigerian Ports
One of the harshest news that jolted many within and without the country’s maritime industry recently, even though it was not totally unexpected, was the confirmation that Apapa Port, Lagos State, was no longer West Africa’s leading and busiest container port. That reputation now belongs to Lome Port in neighbouring Republic of Togo.
Data from Dynamar, a Dutch maritime intelligence and consulting firm revealed that Lome Port upstaged the Lagos facility largely as a result of wide-ranging implemented reforms, as well as container traffic. Consequently, the port’s earnings have grown more than three-fold since 2013.
In contrast, things have not only stagnated at Apapa Port, which is Nigeria largest port, but are also slowly going from bad to worse, especially as the port is bogged down by inefficiency, corruption induced by redtape, and age-long bottlenecks, which have successfully paved way for slow port operations, leading to perpetual congestion.
What is more worrisome in the emerging scenario is that loss of cargoes to ports in neighbouring countries may not come to an end anytime soon, as they continue to perfect top-notch policies in the competitive maritime region to continually lure importers from Nigeria and landlocked West African countries.
In fact, The Guardian understands that while Republic of Benin, Ghana, Togo and Cote D’Ivoire are currently considering several steps to take to bolster their fortune, by way of attracting cargoes, particularly transit cargoes their way, Nigeria is the major loser and has been introducing some reforms and planning new ports developments at snail’s speed, and severely hampered by poor implementation strategies.
Statistics revealed that Cotonou Port, which is the closest to Nigeria, has been the highest beneficiary of the cargo challenge, with many Nigerian importers shipping their cargoes through it, largely as a result of several incentives and reduced tariff structure. It is also from here that a lot of goods are being smuggled into the country.
Not long ago, Senate President Bukola Saraki said over N1.4t worth of smuggled goods are brought into the country from Cotonou, Benin Republic yearly.
Relying on World Bank data, Saraki noted that, an “astonishing N1.45t worth of assorted goods are smuggled into Nigeria through Benin Republic alone every year.”
Yearning for more patronage, the Council of Ministers of the country had approved the Port of Antwerp International (PAI), one of the world’s topmost ports to manage and modernise the Port of Cotonou.
The agreement between PAI, a consultancy and investment subsidiary of Antwerp Port Authority, and the authorities in Cotonou is expected to turn around the fortunes of the port.
The Port of Cotonou, which handles an annual freight volume of around 12 million tons, wants to grow further, but both the infrastructure and organisation are outdated. Therefore, the country’s government decided to temporarily outsource the management of the port, as explained by
Antwerp Port Authority.
As a way attracting more Nigerian business to the country, the Benin Republic Ministry of Transport also approved the reduction of the amount charged for vehicles in transit.
As a result of this reduction, the price to clear a car discharged in Cotonou in transit to Nigeria was slashed from CFA 399, 920 (N257, 000) to CFA 290, 000 (N186, 000) with effect from July 1, 2017.
This tariff reduction also led to diversion of more vehicles to Benin Republic, while the volumes in Lagos remains low because Nigeria’s tariff on imported vehicles remains astronomically high at 35 per cent import duty, and another 35 per cent surcharge amounting to a total of 70 per cent, which is adjudged the highest in the world.
While this development effectively discourages the use of Nigerian ports, most West African countries are forming alliances and partnerships in addition to the far-reaching reforms they are embarking on.
For instance, spurred by many modernisation reforms, the Port of Lomé (PAL) has rapidly expanded. From 311, 500 twenty-foot equivalent (TEU) containers in 2013, the number of containers transiting the port now has almost tripled reaching 1, 193, 800 TEU in 2017, while at other ports in the region, it barely rose.
Dynamar, attributed the surge to the commissioning of the Lomé Container Terminal (LCT), which handles containers shipped through the Port of Lomé. LCT actually handles nearly 890, 000 TEU yearly, that is about 75 per cent of containers that transit via the PAL.
Beyond the LCT’s commissioning, Lomé profited from the congestion that is hampering activities at Lagos Ports complex.
The Dynamar’s report specifically detailed that congestion and low quality service, caused Lagos to lose its position of leading port in the region. Indeed, the flaws cost the port of Lagos close to 30 per cent of its container traffic over five years, bringing it to 1, 050, 000 TEU at the end of 2017.
For Ghana, the Tema Port, which used to be second after Lagos for years, is now third in the region with 956, 400 TEU handled in 2017. The Ghanaian port is ahead of Abidjan (663,600 TEU), Dakar (570,500 TEU) and Cotonou (333,000 TEU).
With projections that West Africa should reach 4.3 million TEU by 2021, with containers cargo expected to record a five per cent average annual growth, Ghana Shippers Authority fears the country could lose a significant chunk of its transit trade to Lome, Abidjan, and Cotonou if measures are not adopted to prevent diversion of transit goods before they reach their intended destinations in the various landlocked countries that use Ghanaian seaports.
A study by the Ghana Shippers Authority shows that estimated total revenue of $24m accrued to the Ghanaian economy from some quantifiable services provided by various operators involved in the delivery of transit services in that same year.
Consequently, Ghana’s two institutions have resolved to find solutions to address key issues including new measures for transit tracking, transit process flow, transit vehicle registration, transit insurance requirements, licensing of Freight Forwarders for transit trade and the implementation of the concept of ‘First Port Duty Rule.’
The Chief Executive Officer of the Shippers Authority, Ms. Benonita Bismarck, said, “these interventions are being contemplated as having far reaching implications for the country and it is important that all stakeholders pay keen attention to the issues.”
She explained that specific activities that have engaged the authority over the years in educating and sensitising against transit trade include the signing of Memoranda of Understanding (MoU) with neighboring landlocked countries of Burkina Faso, Niger and Mali, quarterly meetings with representatives of the shippers councils of these countries, hosting of e-platform for addressing non-tariff barriers on the corridor, sensitisation workshops for transit drivers and Transit Shipper Committee (TSC).
Also, Ghanaian Customs has launched a “First Port Rule” an arrangement that allows customs officials from neighbouring landlocked countries, including Burkina Faso and Mali, to set up desks at Ghana’s ports to collect taxes on transit goods.
As all these happen, the Port of Abidjan, in Cote D‘Ivoire is undergoing a major expansion with the aim of cementing its position as one of West Africa’s leading commercial hubs.
In addition, a second container terminal is also being constructed to increase the port’s cargo capacity. The goal is to be able to host larger, new generation vessels, regardless of their sizes.
Chief Executive Officer of the Autonomous Port of Abidjan, Yacouba Sié recently said when the project is completed the Port of Abidjan would be able to accommodate ships carrying 14, 000 containers.
“Here at the Port of Abidjan, we can accommodate vessels with a draught of up to 11.5 metres, that is to say no more than 3, 500 containers,” said Sié.
The project is scheduled for completion in August 2019. More than half of the work is already done, and the cost is estimated to be over $1.2b.
The port is one of the busiest in Sub Saharan Africa serving landlocked countries like Mali, Burkina Faso and Niger. Every year, more than 20 million tons of goods transit through the port. This is set to grow after work is completed to widen and deepen the Vridi channel leading to the main port.
MEANWHILE, Apapa Port/Lagos ports have been dragged to present undeserved level, in the face of stiff competition by ports in smaller countries in the sub-region by deplorable port access roads, high cost of shipping and clearing cargoes, multiplicity of government agencies at the ports, and deficient scanners that lead to physical examination of cargoes among others.
Also, despite its enormous potential, stakeholders are aghast that apart from losing cargoes, Nigeria, which ought to be West Africa’s maritime hub, is at present not servicing any landlocked country in the sub-region.
This, many blame on the cost of shipping at Nigerian ports, which is considered one of the highest in the world. Other factors are lack of cargo scanners and poor access roads to the ports, as well as high import tariff on vehicles, among others.
Pathetic Access Roads To Ports
NOTWITHSTANDING the reopening of the reconstructed Wharf Road, access to Nigeria’s major seaports in Lagos has remained a Herculean task hence truckers still sleep on the road; the terminal operators are imperiled, while importers usually get confounded and distraught.
The inability to access the ports complex finds expression in the fact that at certain times, 40-foot container trucks queue as long as 10 kilometers, snaking their way out of the facilities.
The dilapidated nature of the major link roads to the seaports in Apapa has been on the front burner for over seven years now just as innocent lives have been lost and multi-million naira goods lost to avoidable accidents.
The unchanging situation, apart from the untold hardship it has subjected road users to, has also triggered very high cost of transportation in and out of Apapa. Amid all these, truckers are wailing, terminal operators are worried while importers and clearing agents are agitating for relief.
To forge a formidable force that would influence government policies and push for necessary infrastructure, truckers under the aegis of the Association of Maritime Truck Owners (AMATO), and Container Truck Owners Association of Nigeria (COTOAN), formed an alliance determined to provide efficacious antidote that would eliminate the gridlock totally.
According to the alliance, which goes by the name Containerised Truck Owners, the move is not just to help their businesses recover from the devastation, but to also check driver fatigue and other threats to the health and lives of road users and residents of Apapa and other locations that have been worst hit by the traffic anomaly.
The group enumerated some of the factors responsible for the gridlock to include, lack of automation system to regulate/control movement of trucks that are going into the ports either to pick imported cargoes, take in exports, or return empty containers into the ports; the whopping sums of money that are exchanging hands between truckers and security operatives, and the absence of modern and befitting public terminals, which has led to large number of trucks parking on roads and bridges.
High Tariff On Vehicle Import
AS part of the automotive policy introduced in 2014 to encourage local manufacturing and assemblage of vehicles in country, the Federal Government increased tariff on imported vehicles from 20 per cent to 70 per cent.
Sadly, that storyline now plays out as a case of “Penny wise, Pound foolish,” as the policy failed woefully in increasing local capacity in auto manufacturing, with assembly plants dying and surviving ones currently in critical state.
Now, despite that the importation of vehicles through land borders has been banned, the seaports are not handling much-imported vehicles. In fact, currently, import figures are so low and far from expectations.
Investigations revealed that importers are shunning Nigerian ports in preference for neighbouring ports of Cotonou, Lome and Abidjan, where tariffs are so low, just about 10 per cent.
The Guardian learnt that a large number of importers are still smuggling vehicles into the country through the porous land borders. Having paid duties to neighbouring countries, the importers only pay smugglers between N100, 000 to N200, 000 (depending on the vehicle model and the bargaining power) to bring these vehicles into the country Nigeria.
By so doing, Nigeria is losing billions of naira on yearly to the ineffective automotive policy. It is also losing capacity, operatives of the Nigeria Custom Service (NCS) to attacks on duty, and losing employment opportunities that would have been created by the vehicle manufacturing plants.
Only recently, the Comptroller-General of NCS, Hameed Ali, called on the Federal Government to reduce the 35 per cent levy on imported vehicles so as to check rising cases of smuggled vehicles into the country.
Ali who spoke during the unveiling of a Strategic Revenue Growth Initiative, which held at the Federal Ministry of Finance, stated that vehicles imported into the country attract an import duty of 35 per cent and an additional levy of 35 per cent, bringing the total duty payable to 70 per cent, which he said was too high and fuelling smuggling.
Speaking in the same vein, the spokesperson, Seaport Terminal Operators Association of Nigeria (STOAN), Bolaji Akinola said: “It is painful that Nigeria is losing enormous cargoes to the port of neighbouring countries. It is interesting to note that 90 per cent of the goods that go to neighbouring countries like Benin, Cote d’Ivoire and Cameroun, will eventually end up in the Nigerian market. So, why do they go to those ports?
“They go there to evade government policy. For example, the national automotive policy is good on paper, but very bad in practice, especially the area that jacked up duty on vehicles from 20 per cent to 70 per cent. What happened is that Nigerians want to circumvent that policy, so they take their vehicles to Cotonou or any other port around where they pay 10 per cent and then smuggle it into the country at night. So, we really have to modify that policy.
“There are many other policies like that which send importers to neighbouring countries and inadvertently encourage smuggling. We want to see government reversing those policies.
The advantages are numerous. Reversing these policies will reduce smuggling automatically; it will reduce pressure on the NCS, and it will automatically boost government’s revenue because these cargoes will now legitimately come through our ports. They will pay government duty and other charges. It will also create work for our dockworkers rather than those of other countries. You can imagine the multiplier effect of that. The review of the automotive policy alone will increase importation of vehicle to Nigeria by almost 400, 000 units, and you can imagine the multiplier effect of that on the economy,” he stated.
Deficient Scanners At Ports
IN June 2017, Ali assured that proposals for the provision of scanners have been submitted to the Federal Executive Council (FEC). He assured that the all-important facility would be delivered in a “few months,” stressing that the NCS had presented a memorandum for approval to the FEC, and the procurement process commenced.
Nearly a year after that, specifically on August 8, 2018, FEC was said to have approved the sum of N8b for the supply and installation of Rapiscan Mobile Cargo Scanner-Eagle M60, but the scanners are yet to be delivered about eight months after that disclosure.
The Controller, Apapa Area Command of the NCS, Bashir Abubakar, earlier this month claimed that efforts towards securing the scanners have started yielding results.
“I want (you) to understand one thing, operations in the ports are multi-dimensional. The issue of security of the nation cannot be toyed with. We are talking to different government functionaries to get us scanners. Right now, the service is doing its best. I am happy that the government has approved the purchase of new scanners to major customs commands,” he said.
But a NCS operative who pleaded anonymity said: “Now you cannot know what is getting into the country because there are so many dangerous items that are easily finding their way in. Just look at the present state of insecurity in the country, some of those arms and ammunition and other dangerous items come in through the ports.
Without scanners, there is very little that we can do. One hundred per cent physical examination does not guarantee 100 per cent thoroughness, the scanner is 100 per cent efficient to pick out any strange image wherever they may be hidden, otherwise, one day, every party thug in this country would be carrying weapons.”
In summary, lack of scanners at the ports is frustrating the much-touted government’s Ease of Doing Business order, as the NCS’s resort to 100 per cent examination, which wastes so much time and requires huge number of human resources.
Besides, this is posing a risk to national security, as dangerous weapons and some other contraband goods might be smuggled into the country due to lack of digital screening.
High Freight Cost To Nigeria
ANALYSIS on overseas cargo and freight costs by MoverDB, an online resource for international shipping, shows that the cost of shipping both 20-foot and 40-foot containers to Lagos ports from New York is the most expensive globally. The report covers the shipping costs from New York and Los Angeles to 47 port cities globally.
It revealed that the high cost of shipping to Nigeria does not correlate with distance. For instance, shipping from New York to Nigeria is nearly double the cost of shipping to South Africa, even though Nigeria is closer, by nautical miles, to New York compared to South Africa.
“Much of the high costs of shipping to Nigeria are tied up in entrenched inefficiency at the local ports. Nigeria has very few functional ports even though its economy- Africa’s largest continues to rely heavily on imports. The slow pace of inspections and offloading of shipping arrivals means that congestion and bottlenecks are nearly perpetual in the seaports, particular in Apapa Port Complex, Lagos. The ports’ inefficiencies have for years enabled and incentivised corruption from official and unofficial middle men promising to clear goods for a “fee,” it stated.
Indeed, shades of inefficiency at the ports have ensured that clearing agents continue to play a key role in processing goods for importers while likely in cahoots with local customs officers. “You can try to clear your container yourself, but the problem is that Customs will frustrate you. You have to go through an agent,” said an importer.
Irked by the dire implications, the Executive Secretary, Nigerian Shippers Council (NSC), Hassan Bello, recently said the government was working on processes and modalities to drive down the high cost of shipping goods to Nigeria by at least 35 per cent, by making its ports efficient.
“Yes, Nigerian ports are the most expensive in West Africa. But don’t single out anybody for blame; don’t single out the terminal operators; don’t single out shipping companies, don’t single out the freight forwarders and don’t single out the government. All of them are culpable,” he said.
According to him, the so-called diversion of Nigeria-bound cargo to other ports is not diversion, but a decision of shippers based on high cost and inefficiency at Nigerian ports.
“It’s a matter of choice because of the cost. Cost and inefficiency drive shippers away. The long dwell time of cargo also drives away shippers away. But we are trying to restore this. Trade facilitation is what will bring cargo to Nigeria,” he said.
Although, the shippers council has been firm in its mandate to protect importers from being extorted with several interventions that halted illegal fees arbitrarily charged by terminal operators and shipping firms, the industry watchdog ironically, introduced registration fee for port service providers recently. Expectedly, stakeholders kicked, insisting that the fee was adding to their misery.
After a lot of criticisms by the stakeholders, the NSC announced a 50 per cent reduction in the registration fee, but also met stiff rejection by the operators.
A breakdown of the fee released by NSC showed that shipping lines and terminal operators would now be paying N50, 000 per annum, down from the initial N100, 000; inland container depot/dry port operators will now be paying N25, 000 instead of N50, 000; off dock terminal operators, cargo consolidators and shipping agency (non-vessel operating agency) will pay N10, 000 down from N20, 000, while freight forwarders and clearing agents, haulage firms, stevedoring companies, cargo surveyors and shippers will now pay N5, 000 instead of the N10, 000 initially imposed by the NSC at the beginning of this year.
Executive Director, Finance and Administration, Nigerian Maritime Administration and Safety Agency (NIMASA) Bashir Yusuf Jamoh, also confirmed that Nigerian importers pay the highest freight rate on import in the world due to dangers attached to Nigerian territorial waters. Although, he said this was as a result of false reportage about attacks on the nation’s territorial waters.
Jamoh lamented that Nigeria is slammed war risk surcharge over lump sum data on maritime crime in the country. He said attacks in the Gulf of Guinea (GoG) were erroneously considered as attacks on Nigeria territorial waters, sea robberies are mistakenly referred to pirate attacks thereby giving Nigeria a false image in the international community.
“Already, we are paying war premium in terms of insurance and we stand to be the highest payee of freight all over the world because of the dangers attached to our own territorial waters,” he said.
Comparing freight rate from America to Ghana, he said Nigeria paid the freight rate despite same distance.
According him, “Nigerians pay more than Ghana for the cost of freight from America to Nigeria, which is almost the same distance as America to Ghana, and at the end, the consumers pays the premium because it ends on the consumers.”
Stakeholders Chart Way Forward
ALTHOUGH, every state and port has its own peculiar challenges, Nigerian ports are characterised by many other limiting factors, which include; proliferation of government agencies at the ports; bureaucratic clearing process; lack of single window operations; shallow water channels, under-utilisation of the eastern ports, and security challenges on Nigerian waters, among others.
A renowned economist, Pat Utomi said the Federal Government needs to put in place the right policies and develop necessary infrastructure that would drive investment and aid businesses at the seaports.
Utomi, who is saddened by the fact that ports infrastructure have remained comatose for several years without an intervention that would revive the facilities, said: “It is a shame that Nigerian leaders give priority to politics rather than the welfare of the citizenry.”
He stressed the need for development of the eastern ports in order to reduce pressure on Lagos ports.
His words: “With the right policy and all kind of things, we can do much more than we are currently doing, crippling the economy of Lagos with these dilapidated roads is not a good idea. Firstly, I think there are many ports facilities that can be activated in the country to reduce the pressure on Lagos ports. We have deep-sea terminals that can be given new impetus. When I led the Federal Government team in the commercialisation of NPA in the 1980s, we told them there was this deep ocean terminal in Onne, which was one of the great ports possibilities for our country, for whatever reasons, we did not make use of these opportunities as we should and this has got us into a awkward position.”
A clearing agent, Bayo Adelani said it is imperative for the government to take legislative and policy measures to develop the port system.
According to him: “Nigeria’s waterways need to be properly dredged so as to encourage vessels with higher capacity to navigate our waterways. More river ports should be built along the River Niger and River Benue, which will enhance inland water transportation and ease pressure on existing ports. More so, additional dry ports should be established.
“Government should ensure that port tariffs are moderate to make our ports more competitive. This would probably bring to an end the issue of diversion of Nigerian bound cargo to our neighboring ports. Government should strive to reduce customs clearance for containers in the port to 24 hours, and all transport modes must be properly developed and fully integrated so as to facilitate intermodal through-transport and easier distribution of cargo.
“Furthermore, the government should improve security measures to enhance safety of goods at ports and in transit. The issue of insecurity of cargo in transit is one of the reasons landlocked countries like Niger and Chad do not patronise our ports for transshipment purposes,” he said.
The General Manager, Corporate Affairs, Nigerian Ports Authority (NPA), Jato Adams, assured that the NPA was committed to the implementation of the Federal Government’s directive on Ease of Doing Business, such as 24-hour port operations; creation of online platform for our services; lighting of the ports for effective operations, and establishment of new single interface stations at each port to capture, track and record information about all goods arriving and departing the ports.
He added that the authority has also acquired tugboats to support berthing of vessels and provide comfort for shipping, and has also reviewed tariffs to the advantage of importers, while development and maintenance of port facilities and infrastructure is also expected to drive cargoes in the country’s favour.
The NPA spokesperson said major shipping liners across the globe such as MSC, Maerskline Shipping, CMA CGM, and Delmas, among others already have presence in Nigeria, while plans were in the pipeline to attract more liners.
On incentives to attract more liners to the country, Jato said the Executive Order 001 is premised on creating the enabling environment for speedy receipt of vessels and discharge of cargoes across all ports, and the NPA is in the forefront of driving the process.
On the delay in dredging the Calabar port channel, Jato said, “the delay in takeoff of Calabar Channel Management Company for the Calabar Pilotage District is administrative, but efforts are ongoing to address the dredging needs of Calabar Port.”