400% Global Shipping Hike: FG To Rejig Policies, Expedite Private Investment In Ship Acquisition

• COVID-19 restricted Fleet Implementation Committee – Bello
• Apapa port crisis: 27 policemen per shift on one spot – NPA

By Kenneth Jukpor

Following the 400 percent increment in 2020 peak period charges by the multinational shipping firms, the Federal Government intends to speed up processes to create a fiscal environment that will enhance private sector investment in ship acquisition.

This is coming on the heels of protests on the arbitrary hike in charges by the global shipping companies, as organized private sector (OPS) groups and shipping stakeholders kicked against the increment.

With the new development, the 2020 peak period charges is between $1000 and $1,500 per twenty-foot equivalent unit (TEU), which has taken effect, is over 400 percent increase from the previous $200 freight charge per TEU during peak period, between September and January.

Nigerian-bound cargoes are already subjected to frivolous charges including; congestion surcharge, which has no fixed rate across liners; extra risk insurance surcharge,7,500 euro; freight tax surcharge across liners,3 euro; bunker adjustment factor, no fixed rate; currency adjustment factor, no fixed rate; low sulphur surcharge,2euro; waiver surcharge,120 euro; freight rate tax,3 euro; change of destination service charge, no fixed rate; nigerian ports surcharges destination,$100; isps code charge,16 euro; peak season surcharge,700 euro, which is never lifted after season; IMO surcharge, no fixed rate.

Speaking with MMS Plus newspaper last week, the Executive Secretary of Nigerian Shippers’ Council (NSC) Mr. Hassan Bello opined that the nation would have been in a stronger position to prevent such arbitrary charges if indigenous ship owners had capacity to carry a sizeable volume of the nation’s cargoes.

Bello, who was speaking on the sidelines when NSC hosted OPS groups and other shipping stakeholders to resist the new freight tariff regime, stated that the new fiscal challenge is connected to Nigeria’s lack of ships to convey her cargoes.

His words: “Those who control the means of transportation also control the cost. But having a fleet isn’t a small venture; what we are planning with the Fleet Implementation Committee is a five year project. We have done a lot to make the private sector come to invest in the initiative to attain a national fleet but the private sector can’t come onboard until the impediments are cleared.”

“We have gotten pioneer status for that but we are still looking for more incentives to encourage private sector investment in ship acquisition.”

He, however, assured that the government would have to be more deliberate in its efforts to expunge the constraints which have hindered indigenous ownership of ocean-going vessels over the years.

Meanwhile, the NSC boss debunked claims that the Fleet Implementation Committee has been moribund, stating that the group’s progress has been limited by the outbreak of the coronavirus (COVID-19) pandemic

“COVID-19 pandemic slowed down some of the processes the committee had, but we are going to revive the discussions to ensure that the private sector is adequately incentivized to come and participate,” Bello assured.

Two years after the Federal Government expanded the National Fleet Implementation committee to include the Federal Ministry of Finance, Nigerian National Petroleum Corporation (NNPC), Nigerian Import and Export (NEXIM) Bank, Nigerian Investment Promotion Council (NIPC), Federal Ministry of Trade and Investment, PEBEC, and Nigerian Export Promotion Council (NEPC) and Presidential Enabling Business Environment Council (PEBEC), in a bid to create investment incentives and tax holidays for investors, the committee is yet to attain these goals.

Fiscal challenges mitigating against indigenous ship ownership include Customs duties on ships and spare parts, absence of long term funding at single digit interests, lack of government guarantees via cargoes or finances, among others.

Speaking with MMS Plus recently, a member of the Committee and Chief Executive Officer, Starz Group, Engr. Greg Ogbeifun posited that lack of political will was the major inhibiting factor in addressing the myriad of issues stifling ship ownership in the country.

Ogbeifun stressed that Nigeria was doing itself a great disservice to be operating as a maritime nation in the global shipping industry without a national carrier.

His words: “I can honestly tell you that the committee is moribund. As a member, I don’t think I have been involved in any discussion for over a year. No nation that has the opportunity of coastal assets and trade for the global market, should allow the advantage of the national fleet go by. I believe that it is only a matter of time before someone sees this as a top priority for the nation and achieves it. However, this may not happen in our generation. National fleet is too important to the shipping sector of the nation’s economy to be abandoned. My impression is that the political will to get this done has been missing.”

Meanwhile, the Head of Maritime Trade group at Nigerian Association of Chambers of Commerce, Industries, Mines and Agriculture (NACCIMA), Barr. (Mrs.) Margaret Orakwusi, posited that Nigeria has a strong bargaining position in the bid to reverse the over 400 percent increment in charges.

Her words: “Nigeria may not have vessels but we have a strong bargaining power because we own the cargoes. We generate enormous cargoes for export and import. Foreigners own the ships but ships without cargo are nothing. Nigeria isn’t the only country that they slammed the charges and we are also not the only country protesting.”

“We are all recovering from the impact of COVID-19 so a lot of issues come to play. If you increase the cost of production and cost of shipment amid the current economic situation; more people will lose employment. It is a huge problem and we need to rise up and say no with other countries. This would bring the shipping companies to a table to discuss.”

In another development, investigation carried out by Nigerian Ports Authority (NPA) has identified Area B axis of the Apapa/Wharf road as the most problematic spot with twenty-seven police officers on the spot per shift.

These police officers from different Commands cluster the area, intercept most containers existing the ports, re-examining cargoes already cleared by Nigeria Customs Service (NCS), thereby worsening the already strenuous cargo evacuation process from the port.

The Managing Director of NPA, Ms. Hadiza Bala-Usman, represented by the Port Manager, Lagos Port Complex, NPA, Mrs. Olufunmilayo Olotu revealed this while speaking at a virtual conference on “Identifying and Building Alliances with Western Port Users on Cargo and Vessel Transactions”, last week.

According to the NPA boss, “Area B is a central bottleneck with over 27 police officers per shift with officers from various police commands. These policemen add to the challenge of accessing the ports. They prevent vehicles from proceeding to the ports.”

“There is no reason for a policeman to intercept trucks that have been duly cleared by Customs. There is a Port Commissioner of Police whose jurisdiction covers Lilypond truck terminal and the ports. However, he doesn’t cover Area B police. If anything happens at Area B or any interception is made by the officers at Area B, the Port Commissioner isn’t responsible. There is a need to harmonize police commands and their operations on the port corridors”

She also stressed that some truckers after obtaining approval to access the port for export delay on the port corridor to negotiate for import Terminal Delivery Orders (TDOs) so they could also exit the ports with containers.

“Trucks for export stop on Apapa port corridor to bargain for containers to take out. The bargaining chip is usually that they are already at Wharf. As they do this, they remain on the roads when they have no reason to be there. This further compounds the gridlock on the port corridors,” she explained.