In this week’s edition of your education page, Rev. Jonathan Nicol, the President, Shippers Association of Lagos State (SALS) tutors you on what shipping entails, the things you require to become a shipper, the benefits of joining shippers association among other important variables in the business of importation in Nigeria. Enjoy the piece.
What is shipping?
Shipping is related to freight between an importer and a supplier who is resident outside the country and the buyer who is the shipper who goes there to buy the goods and employs the services of a forwarder to transport the cargo to Nigeria. So, the word shipping came out as a result of individuals who own vessels to meet up with the contract of carriage from any part of your choice to your point of disembarkment and delivery of a cargo to you, that is the end of the contract.
What are the activities of shippers?
Shippers are the people who actually own the cargo. They go and purchase the goods and pay for the freight to the owners of the vessels and then bring the goods to Nigeria to the cargo owners.
What are the things one needs to do to become a shipper?
To become a shipper, first of all, you have to know what you want to bring in, the type of items you want to import and you have to do your home work thoroughly. For instance, if you choose to bring in biro, that is unique, you go for that biro abroad and you have to get some capitals to finance the goods. For instance, some of our shippers pay up front for a cargo, most shippers don’t do foreign transactions and there are some that fall within foreign transactions and the ones that fall within form M. so, in order for you to be a shipper, you first of all raise a form M and the form M will dictate to you the type of cargo you want to bring, you will enter the type of cargo and also you have to know the tariff item where the goods fall into to enable you to complete the duty. All of that will be embodied in the form M.
Once that is done, you take the form M to the bank, the bank will now send it to the Customs, and then they know that there is a transaction. Meanwhile, you must get a proforma invoice from the supplier which is not the end of the transaction but it is just to inform someone that a transaction is about to take place. The moment you get approval for the form M, other things required thereafter will be demanded from you and you have what is called the attested invoice. So, you have the final invoice of how much the cargo will be because the proforma invoice is just a provisional document. Once you have the final invoice, you now get the bill of lading which will now show the vessel that carries your cargo and when it arrives, you pay the freight.
Normally, freights are paid and of course the cargo agent will come and pick your cargo, put it on board and then ship your cargo to you. When it gets to Lagos, and you now use Apapa port for instance, you the importer will always find out from the shipping line when the cargo will come. Some Shipping lines will even inform you before the arrival of the vessel and then once you know that, you can now begin to prepare payment of the customs duty.
Once you have the assessment, you will now go and pay your duty and you have the rotation number of the vessel to know where the vessel will berth. So, that is the process.
What are the legal requirements needed for someone to become a shipper?
You must have a registered company with the Corporate Affairs Commission (CAC), you will write your registration certificate to show that you are an honest citizen. It is not cumbersome as such. If you are importing goods on personal grounds, you may not need the certificate of incorporation, it is just like people bringing cars, they don’t need PAAR but the PAAR notice must have your RC Number embodied in the PAAR. When you become a shipper, you have to get a registered office that can be accessible then you have the customs HS code so that you study them and know everything about the items you wish to bring in.
Must a shipper belong to any association before he is allowed to ship in goods or to be efficient?
It is not compulsory that you belong to an association but because of the kind of terrain we are having in the country, I think the Federal Government noticed that the Nigeria Shippers are going through some harrowing experience. Anybody can be a shipper, you don’t really need to be a member of any association but we now notice that the shippers are being short-changed and individually, they cannot talk. That is why the United Nations Trade Conference of Trade and Development (UNCTAD) decided that all countries in respect of the Shippers Council and inside that Act, it was suggested that Shippers Associations to be formed and they will become pressure groups for the council to discuss freight charges and even local charges like what we are doing now.
It is as a result of government policies, the activities of government agencies that necessitate the government to set up Shippers’ Council across the whole West African sub-region over the years even America have Shipper’s Council. So the purpose is to protect the shippers, it started when we were having this saga. The turnout of vessels in Nigeria were now expressively on demurrages and there was nobody to checkmate them, that was why Shippers’ Council came up. At least, you have to tell me when your vessel came in, so that the custodian of any cargo can come in there. Nigerian government was able to checkmate that with the co-operation of Nigeria Ports Authority.
As shippers, we don’t really have time to be chasing after legal issue; so it is safe for Nigeria Shippers to come under an association to come together and decides as an association because we have a practice, when we come in we give our documents to the freight forwarders. The freight forwarder trade access to the Nigeria Customs Service, they do the contact between the customs, shipping companies and all the interested people, all we need is that they bring our goods to us and we pay all the bills but we saw that they have tried their best and things are not changing, they are really getting worse so, we decided to pick it up ourselves and big companies like Dangote, Nigeria Brewaries, as a matter of fact, manufacturing companies are all shippers.