Why Some Shipping Line Don’t Return Container Deposits

Why Some Shipping Line Don’t Return Container Deposits
Chief Val Usifoh

Chief Val Usifoh is the Chairman, Shipping Association of Nigeria (SAN); a position he has occupied since 1999, he has been in the shipping corridor since 1963 during when he has worked with many Shipping lines including the defunct Nigeria National Shipping Line (NNSL). In this interview, he clarifies the ambiguity behind container deposit fund which many agents have severally accused the shipping lines of not refunding as well as essence of the shipping association of Nigeria and the experience of the members of the association during the economic down-turn in the country.

Can you tell us the activities of Shipping Association of Nigeria?

It is an association of major shipping agencies that work and operate here in Nigeria. They render services to importers and exporters.


What is the difference between the Shipping Association of Nigeria and Association of Shipping Line Agencies?

ASLA is the name with which the association was registered with at the Corporate Affairs Commission. It is generally known as SAN. They are the same organisation and if you go to our website,you will see it there. Our members are the shipping companies that you know very well.

Most of your members are mostly foreigners?

They are international shipping companies that are registered in this country. They have local directors. They are international shipping companies with foreign-based major ownership. International shipping is a very competitive and complex thing to do all over the world. So, their Nigerian offices are the people you have here and some of them go on transfer from one country to another.

How has shipping business been this year with all the electioneering campaigns, drop in oil price and dwindling value of Naira in the country of late?

The economy is on the low ebb now, all sectors of the economy affected and the barometer is also on shipping. We are an import-dependent nation even with the oil now. We import all our finished products so, economic situation and devaluation of the Naira as a result of the exchange rate fluctuation eroded capacity of Nigerian business men.

If you look around the port, the volumes are down and we are not talking of foreign investment now, we are talking of the normal business that people do. The financing regime not as easy as it is today. Banks don’t give loans again, business men depend on support from the bank based on their credibility but even at that, when the foreign exchange is high, you have difficulty in your exportation and importation commitments.

Why is it that when importers deposit money for containers and after returning the containers, the shipping companies find it difficult to refund their money? How true is this?

You have to ask the shipping companies this question. I can’t answer this question. You have to go to these shipping companies and find out. I understand that all the shipping companies are in competition so, if you go to a shipping company and you don’t like their services, you go elsewhere. I think they all will like to retain their customers, they give a level-playing field for everyone so, the customer is king, he decides.

The issue of somebody hanging on to your deposit, there must be a reason. A deposit is a deposit; you have to meet the conditions to get your deposit back. I cannot speak for the companies because each company has its own profile on how it runs its business. I am not here to speak for any particular company.

In terms of terminal concessioning, can you say that the government has been fair to the shipping companies and terminal operators in fulfilling its own part of the agreement?

Concession is one of the best things that happened in this country. It attracts foreign investment, value has been added so much to the port and ports are working better than they have been. The port can be efficient; Lagos is now a metropolitan port because it is surrounded by many other economic activities. The adjoining infrastructure achieve all the efficiencies in the port but to take your cargo out or bring it in becomes a nightmare and with hindsight, the proliferation of these tank farms around the dry cargo area has tended to constrain cargo throughput because in the past, you could load a trailer with containers from Tin Can for instance to Ikeja and be able to get there the same day return the empty to the depot but these days, you can load but it becomes difficult to get out of the port so, these are the challenges but concession has brought a lot of efficiency in terms of equipment, system improvement, staff training and discharging and loading have improved.

Also, government interface with the private sector has been very good but moving the cargo in and out of the port is where the problems are. There are allegation s that scanners are faulty or that the Customs does one thing or the other but it is an electronic thing and we have various levels of evolutions and many of them have not keyed into the new technology in the system.

There is an allegation that most shipping companies bring goods into the country in containers but only one third of these containers are taken back to the countries where they are brought from. Can you clarify this?

Shipping transportation now is containerized mostly for cargoes. What does it pay shipping companies to bring cargoes in containers and abandon the containers? It doesn’t make sense and that is not true.

But these are some of the allegations by clearing agents who are affected because they represent the shippers

Clearing agents that complain are not importers but they are only acting for the importers. A clearing agent is just like a cargo broker; if I am clearing for you, you transfer your problems to me, even the money to work with, a shipping line is interested in the customers, the customers are its business. The container is needed worldwide. Why abandoning them when they are needed for business elsewhere? Let’s say a shipping line discharged here and they are empty and they are based somewhere, they have to bring them back to be used by other people. A carrying line needs these containers to pick cargoes all over the world then if I need the containers for business, what does it pay me to leave them in Nigeria? It is a wild allegation.

For instance, if a ship comes here and discharges, it will want to go back with full load of empty containers but it cannot do so with the traffic situation. A ship will be discharging and loading concurrently to save time because a ship doesn’t make money as at the time it is in a port, a ship makes money when it is afloat, meeting commitments, loading cargoes and discharging cargoes. So, no shipping company will like to abandon its containers here because that is what the company needs to load its cargoes. I want us to differentiate this from the issue of container deposit, you come to clear your cargo, you say you are taking your cargo to Surulere, then you are told to deposit a hundred Naira that if you come back with the container at a particular time, and you bring out document to prove you will return the container and get your deposit back, it is the clearing agent that does this, not the importer so, when the clearing agent returns the papers and returns the container, he gets his money provided, he has met all the conditions.

I am not saying everybody is an angel here, among all the shipping companies; there are some where you can go and get your deposit immediately, some in five days, some in ten days. They are on different platforms but this is why I told you that it is a free market. If you have problems with this company, the other one will be begging you to cross over. So, these are the issues.

Why is it that the costs of doing business in some shipping companies are high and there is no good business relation between them and their customers?

Shipping companies don’t talk much because they like to deal with issues. No shipping company will like a customer to go out and say I am not getting good services. Fifteen serious multi-national shipping companies are in competition so, everybody wants to win customers, some don’t even collect container deposits from their well-known customers. If I know you do business with me and we establish a relationship, they don’t collect container deposits. Container deposit invariably is collected from one-off business men. We have the experience where some will tell you the container is going to Orile and the next thing is that you find it in Akure. Some will tell you they will return it in one week but in forty days, it is not back. So, when it is discovered that the deposit paid is over and cannot cover for the number of days, they abandon the container because if they come back, they will pay a lot more for the detention of the box. That is why I said it doesn’t make sense that shipping companies abandon the box. If you return the box, somebody else will use it for export, if we are really a producing nation, every box we bring here must go out with export cargo. A country that does not add value to export can never grow, if you are totally import-dependent, it is just like somebody who has one source of income and once it finishes, that is the end.

Our local ship owners are nowhere to found in the comity of global ship owners. What do you think is responsible for their plight? Is it government or the problem is self-inflicted?

It is the combination of both. There was a time in this industry that there were many indigenous shipping companies like African Ocean Line, Green Line, Folawiyo, Nigeria National Shipping Line and so many others and they were doing well. The problem of indigenous shipping companies is multi-faceted. The government is not supporting them enough because shipping is very expensive. Everybody wants to run a shipping line, it doesn’t work that way. Then you have elephants coming together to form a shipping line and everyone wants to be chairman.

Shipping is not something like cassava you plant today and by tomorrow, you want to start sharing profits; the gestation period is very long and cannot depend on the fact that you come to Nigeria and load your cargo and you are going somewhere; when you get somewhere, you have to establish credibility even within the West African environ, you must be known in Ghana, Ivory Coast; you must have agents there that will generate cargoes for you.

So, the only way Nigeria shipping companies can grow is to get government patronage. Fully paid government cargoes should be carried by local ships. Indigenous shipping can only grow if people are sincere to themselves, come together, have foreign partnership. If you don’t have strong foreign partnership, you can’t grow, you have to create a tradition of trust and excellence and be well known all over. These are the challenges that indigenous shipping companies face and those of them that died, died because of so many thing. Owing money all over the world, competition for leadership and government gives you some support you don’t refund the money, how can government give you more money? There are still people owing among the first generation of people that government loaned money to buy ship and government memory is very long. Then what is the guarantee that if people are given now, it will come back? That is why I said that in international business as shipping, you have to have strong international partners.

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