How FG Adopted Cargo Palletization Policy

By Kenneth Jukpor

Palletization has become a trending issue in Nigeria’s maritime industry; not because it is a new concept in packaging goods for import or export in the country, but as a result of the new government directive issued on December 22nd 2017 that all intending shippers should palletize all containerized cargoes.

A document issued by the Ministry of Finance titled, “Addendum To 2017 Revised Import Guidelines, Procedures And Documentation Requirements Under The Destination Inspection Scheme In Nigeria” with Ref. No. F.194600/TR/IG/I/282 had stated in Section “I” that shipping lines and other carriers shall advise all intending shippers to palletize all containerized cargoes that are not exempted from the Nigeria Palletization Policy.

Subsequently, Section “J” SANCTIONS 2, stated that defaults on the mandatory palletization of containerized goods imported into Nigeria shall be liable to the fine of 25% of Freight on Board value in naira equivalent of the un-palletized goods. The amount shall be paid into the Comprehensive Import Supervision Scheme Account (CISS) with the Central Bank of Nigeria (CBN).

While the arguments for and against the policy continues to trend, it is obvious that only very few are aware on what made the Federal Government to adopt the policy. However, it also amounts to fallacy for one to assume that Nigerian Shippers’ Council misled the Federal Government into taking this decision. This document also went through a rigorous procedure with several meetings involving different government agencies which the Council was only a member, but duly advised the government of the economic disadvantages of the policy which led to the recent amendment.

For the avoidance of doubt this policy came about following the Federal Government’s Policy on the ease of doing business. Recall that in November last year, the Federal Ministry of Finance in collaboration with the Technical Committee on Nigeria Export Supervision Scheme (NESS) held a sensitization workshop on Understanding the Nigerian 2017 Revised Export and Import Guidelines, Procedures and Documentation Requirements in Lagos.

At the event, the Minister of Finance, Mrs. Kemi Adeosun, stated that the workshop was to enlighten the relevant stakeholders on the major provisions of the 2017 Revised Import and Export Guideline so that all could “read from the same page, minimize the chances misinterpretation and /or misapplication and ensure seamless implementation.”

She said; “The current review is informed by the need to further promote the ease of doing business in Nigeria in line with the Executive Order No. 1. Attention has been focused principally on measures to ensure drastic reduction in time spent on processing of export and also ensure 24 hours clearance of cargoes imported into Nigeria in order to promote formal trade and block loopholes for leakage of revenue accruable to the government”.

She disclosed that the committee on the review of the export guidelines was made up of the Federal Ministry of Finance, Federal Ministry of Industry, Trade and Investment, Federal Ministry of Agriculture, and Rural Development, Central Bank of Nigeria (CBN), Nigeria Custom Service (NCS), Department of Petroleum Resources (DPR), Nigeria National Petroleum Corporation (NNPC), Nigeria Export Promotion Council (NEPC), National Agency for Food and Drug Administration and Control (NAFDAC), Nigerian Shippers’ Council (NSC) and the Nigeria Investment Promotion Council (NIPC).

The Finance Minister also drew the attention of the audience to some of the sanctions introduced by the committee. She said; “shipping lines shall ensure that all inbound containerized cargoes are palletized” even as she noted that the government would allow a three-month grace period before full implementation of the guidelines, especially in recognition of the time-lag that might be required for the commencement of full implementation of the government policy on mandatory palletization of all containerized cargo imported into Nigeria.

Also speaking at that event, the Permanent Secretary, Federal Ministry of Finance, Dr. Mamoud Isa-Dutse stressed that the need for the review of the import/ export guidelines became more evident and inevitable when the present administration introduced a set of reforms being driven by the Presidential Enabling Business Environment Council (PEBEC), the Secretariat (Enabling Business Environment Secretarial – EBES)

He said PEBEC was working assiduously toward ensuring the establishment that guarantees the conduct of business in a timely, hassel-free and cost effective manner.

“One of the areas of focus is the enhancement of trading across border, and this has to do with export and import operation. There are some procedures, rules and regulation that Government must put in place to ensure a level playing ground for all operations, hence the necessity of the guidelines.

“The Vice President, Prof.Yemi Osinbanjo (SAN, GCON) as the chairman of the PEBEC specifically directed the Federal Ministry of Finance to: (i)  Ensure drastic reduction in the number of document required to do export and import business in Nigeria; (ii) Ensure the use of pallets in the packaging of imports into Nigeria; (iii) Evolve independent  mechanism for the monitoring  of  PIAs  appointed by the Federal Government; and (iv) Ensure a reduction in the time it takes to process NXP,E-Form  `M` and inspection of exports” .

According to Mamoud, the forgoing directives of the Vice President actually propelled the review of the Export and Import Guidelines by an Inter-Ministerial Committee comprising the relevant Ministries, Extra-Ministerial Departments and Agencies.

“The revised Guidelines have taken into account the directives of the Vise President and there is that inherent potency to facilitate trade without compromising the interest of the national economy” he added.

Although the concept of palletization is a good one, there are several bottlenecks that could see the policy lead to inflation in the prices of all palletized goods, hence the massive kick against the palletization policy by all cadre of maritime stakeholders, the Federal Government equally issued an amendment to the addendum on the palletization policy.

In the latter document also issued by the Federal Ministry of Finance on February 12^th, 2018 with Ref No: F/194687/TR/EBECS/T¹/28, read;

“Sequel to the series of complaints and requests received from the trading public in respect of the palletization policy contained in the 2017 Revised Import Guidelines, the Addendum to the guidelines of 22^nd December 2017 is hereby amended to further strengthen our Ease of Doing Business drive.

“Consequently, all containerized cargoes coming into Nigeria should comply with:

^a)                International standards for packing/ stuffing and loading into containers.

^b)                Specific packing and stacking standards prescribed by the original manufacturer of the product.

^c)                 Dead-pile loading or loading without pallets of containerized cargoes is acceptable provided it conforms to the criteria outlined in paragraph 2 (a-b)

^d)                With the exception of used automobiles and heavy machinery, any loosely packed new or used items without manufacturers loading and packing prescription should be packed in crates or cartons a-top pallets accordingly.

^e)                Furthermore, it is advised that all containerized cargoes should be loaded neatly in a manner that will promote safety in handling and facilitate speedy examination and clearance at the ports by the Nigeria Customs Service.

^f)                  Failure to comply with the above provisions designed for seamless implementation of palletization policy, the Nigeria Customs Service (NCS) shall invoke sanctions as prescribed in the Addendum 2017 Revised Import Guidelines issued by the Federal Ministry of Finance.

^g)                Note that the grace period given up to 31^st of March, 2018 for exemption from palletization policy of goods for which Form ‘M’ had already been established prior to the effective date of 1^st January, 2018 for full implementation of the policy still remains in force.

Although there are some good reasons to support the introduction of palletization, especially as it makes it easy for Customs to carryout their examinations using forklifts to pull out the pallets and confirm the content and quantity of the items.

However, there are no forklifts readily available at the ports and the freight forwarders have frowned at the possibility that they could be charged with the responsibility of hiring these equipment.

“It is the duty of terminal operators to provide forklifts because they have been collecting monies for this under handling charges but they were not rendering the service. Those freight forwarders involved in shoddy deals may not welcome this practice because it makes it difficult for them to conceal items or disclose the wrong quantity of goods”, a veteran freight forwarder told MMS Plus last week.

However, there is also an issue that affects palletization with regards to Plant Quarantine Service. They collect charges to examine any wood that comes into the country and the use of pallets would mean all inbound containers would be subject to this examination and possibly charges by the Plant Quarantine Service. Plant Quarantine has to address this issue of examining these wooden pallets.

It’s barely one week to the commencement of this palletization policy, an initiative alleged to enhance the ease of doing business at the ports. However, maritime industry stakeholders posit that there are more pertinent issues at the ports; such as the state of the port access roads and absence of scanners at the ports.