Govt’s Plans For Local Content Compliance In Freight Forwarding – Jukwe

The Council for the Regulation of Freight Forwarding in Nigeria (CRFFN) appears to have woken up from slumber to begin some chart-breaking programmes for the freight forwarding industry. In this interview with the Registrar and Chief Executive Officer (CEO), Sir Mike Jukwe, he took the team of MMS Plus Weekly on many issues bothering the practitioners, but most importantly, the opportunities in the local content Act. Excerpts:

You talked about categorization of freight forwarding profession into areas of specialization, is it for the practitioners or the Council members of Staff?

It is for freight forwarders. Freight forwarding is a profession just like you have journalism. In journalism you specialize. As a journalist you could be a print journalist or electronic journalist. In addition to that you can specialize in maritime, sports and so on. So, we too we have areas of specialization today in freight forwarding profession. We are trying to model freight forwarders to face specific areas. It is not a matter of being a Jark of all trade and then you master nothing. We want to specialize in a particular field as far as freight forwarding is concerned.

How will you enforce it?

We are working with the training institutions. Luckily, for us freight forwarding is just being introduced as a formal education in Nigeria. Now that we have the international professional qualification, approved by the world regulatory body, we are also bringing in local content. And the area of local content is where we are now trying to get them specialized in different areas. And to do this, we have accredited training institutions. We will work with these training institutions to see how people can take up these areas of specializations when they go to read freight forwarding in schools.

For instance, you may ask, what we mean by brokerage services. It is a customs licence to specialize in customs brokerage and so on. One other area is freight and insurance management, the man in the bank processing Form ‘M’ is doing a freight forwarding services. He is a freight forwarder specializing in international trade formalities. The man in insurance company writing insurance policies like cargo insurance, etc is doing a freight forwarding job. So, we want these people in the banking and insurance industries to come back to school and read freight forwarding for specialization because there are certain technicalities in the job that they may not understand.

How much of freight forwarding content do you have in logistics?

Logistics is the aspect of planning. Planning here entails how the cargo can be moved from one point to another, procurement, etc, all these areas are called logistics and they are part of freight forwarding.

By this, what sectors of the economy does CRFFN cover?

We cover the areas of specialization highlighted. We cover port clearance using the brokerage services, and customs formalities; logistics and consolidation of cargoes, because they are taken from one place to another; freight insurance in the insurance industry; freight finance in the banking sector or all aspect of payment that have to do with international trade, supply chain management as a whole, then we cover the regulatory arm as freight forwarders. We may not be in the brokerage sector or any other but we are formulating standards. So we are involved also in freight forwarding services from the regulatory aspect.

Freight as it were, does it cover pipeline and distribution of petroleum products, because I know that pipeline is a mode of transportation?

Let me give you how the freight forwarding chain works. If you decide to order cargo, right from the factory where the goods are produced, that is where the freight forwarding business starts, up till where the cargo is finally delivered. All these are freight forwarding chain. And this cuts across the transportation where haulage comes in, which is part of freight forwarding.

How do you intend to ensure that people who man foreign or local freight forwarding companies are registered with you?

Let me give you example of how it works. Take for instance, Africa Bolore, former SDV. They do a lot of freight forwarding even as a foreign company but they were  registered in Nigeria. But now that is Africa Bolore, I am sure they must have registered as Africa Bolore Nigeria Limited. So it is registered in Nigeria as a Nigerian company while the parent company is not in Nigeria. Situations like this, we will register them but we will ensure that they comply with this particular provision where either the chief executive officer or chief operating officer is a Nigerian and registered with CRFFN.

Ok. Either of the two?

Yes, it must not be the CEO. It could be the COO or general manager operation. If you insist on the CEO it may not be possible because some of these companies are involved in many other things when they come into Nigeria. Usually, the freight forwarding aspect is a part of their services which they ventured into when the opportunity presented itself.

On the local content push, the National Council on Transport (NCT) is an advisory body, so how do they intend to give it a bite?

They advise the Minister of Transport which represents the federal government of Nigeria. Of course, NCT is composed of the federal government, state governments and all the stakeholders in transport. When they make a resolution, they are captured with the word “urges” which means it is an advice given to the federal government to ensure that Nigerian freight forwarders are involved in the local component of freight forwarding. Most times the government gives out contract, for instance, in buildings in Nigeria. Most of the materials used are imported but we discovered that the freight forwarding component of that is not done by Nigerians. Now that the NCT has urged the Federal Ministry of Transport and the relevant stakeholders to ensure that the Nigerian freight forwarders are there to handle this jobs. It starts with the point of agreement. At the point of entering into the agreement, that component is removed from the foreign contractor so that when the cargo comes the aspect of freight forwarding is now handled by local freight forwarders. So they can enforce it since they have advised the federal government, who can make it happen. What we need to do as the council regulating freight forwarding is to ensure that at the end of every year, we should be able to generate a data that shows how many of these contracts that have taken place, how many that have been handled by the local freight forwarders and those handled by foreigners. We will then confront the government with this data and say that this one was not done by Nigerians, next time let it be done.

And you are covered by the local content Act.

Exactly. It is something that can be gradually handled.

You talked about corporate forwarders, what is it you want them to comply with, is it paying their dues?

No. There are standards we have set. If you look at the requirements in registering corporate freight forwarders, we have standards. We told them the kind of office they should have, the number of staff, minimum they should have. It should be an organized corporate body. It is not like those days that you see a freight forwarder carrying a brief case or having a car as office. No, they should be an accessible and organized office where the freight forwarder can be reached like any other organized business. So, all the corporate freight forwarders registered with us, it is the right of the enforcement team to move from office to office and ensure compliance for instance, there are books required of a freight forwarder to have, if they are not there then it is a breach of compliance. The office should be internet connected. When we registered them we told them not to start running the office until those things are there.

But do you write them before visiting them?

Before we do that we will write to inform them and equally make publicity in the media, giving them time. And when we come and they are not there we will close down the office.

CRFFN just registered a Limited by Guarantee Company, what is the vision behind this?

What we want to achieve with LAKAJI Corridor Management Group (CMG) Limited by GTE is to ensure that the corridor is improved for cargo to move at ease, to reduce the time the cargo moves on the corridor and improve on the cost so that cargo can be competitive in the market.

Don’t forget that the cost element in moving a cargo from its origin to the port and shipping to a foreign land where it is sold is added to the overall cost. So, even if the one from the port to the final destination is competitive when you add the one from the port to the origin, which is the local component in Nigeria, if it is high and you add it to the other one it makes the cost higher. And when it gets to the final destination it is no longer competitive in the market, and when that happens foreigners will no longer buy our commodities. And it has effect on our economy.

So LAKAJI wants to bring the government, organized private sector that use these corridors and we will present the data we generated to them for all of us to collectively find solutions to the problems.

A data distance analysis we had in 2013, showed the same distance in a lace in America with an equivalent of Lagos to Jibia. While it takes four days to run that corridor in America, it takes 19 and half days to run it in Nigeria. It is unacceptable. As a non-governmental body as our function is more of an advocacy, we want to get all the stakeholders using these corridors to ensure that we improve on the cost, time and delivery.

What about the area of infrastructure; putting good roads in place?

We also advocate for that because on our board we have FERMA. We also bring in railway because the rail lines are being rehabilitated. And what we want to achieve is that when we monitor the corridor, and we see that the railway is not performing as obtainable other places they will improve.

You talked about insurance and the plan to increase the premium when subscription fees is increased. How much does a member pay annually?

Members pay N15, 000 and out of that we pay the insurance premium. So, if the sum assured for members life insurance which is N1million is increased the annual subscription cannot carry it. It means we have to increase the subscription fees. For now we will leave it at that because we are also looking at bringing in retirement benefits and accident insurance.

What is your membership strength now?

We have a 1,873 out of which 1,274 are individual registered members while 619 are corporate freight forwarders. So, we are still less than 2000 because we make sure that those we register comply with the requirements. Those that applied initially were 5,000 but after verification we could only register this number.