Nigerian Shippers’ Unpaid Container Deposit Fund Hits $1Trillion Yearly

Nigerian Shippers’ Unpaid Container Deposit Fund Hits $1Trillion Yearly

…As aggregate sum stands at $10 trillion

   *How shipping companies fleece shippers, agents

*Hassan Bello speaks on the way forward

 Nigerian shippers now have about $10 trillion unremitted container deposit due for collection from the multi-national shipping companies operating in Nigeria, even as one trillion dollar is withheld annually by  shipping companies as unclaimed container deposits, as the United Nations Conference on Trade and Development(UNCTAD) report has shown.

Findings from the Nigerian Shippers’ Council (NSC) revealed that as at early  2021 fiscal year the figure of unclaimed container deposits stood at $7trillion.

While the total number and percentage of the total empty containers for which the deposits are not refunded in a year is not available not even from the regulator, an estimated calculation on the basis of  a quarter of the total  container TEU made in the last ten years in Nigerian ports shows that not less than a trillion dollar is withheld annually by the international shipping firms from Nigerian shippers as unclaimed container deposits.  

This presupposes that with an estimated annual one trillion dollar as unclaimed container deposit for three years which are-2021,2022 and 2023, the total amount stands at $10 trillion dollars, bearing in mind the $7trillion earlier established by the port economic regulator.

   Confirming the amount trapped in the coffers of the shipping firms, the former executive secretary and chief executive officer of NSC, Mr. Hassan Bello said, “Things have changed, while we were there, the operating conditions at that time warranted that about 7 billion dollars was trapped as the container deposit and that is idle money or misused money and we thought it should be released for better application.

 “It’s an economic issue and we said that there was need to begin the use of insurance for the container deposit. That was the emergence of the use of insurance to insure certain services and release the money. For example, with the condition that we had then,(COVID -19) returning container which is an aspect of the shipping companies’ need was impossible, then there’s a force majeure and we argued that even if you wanted to return a container to a terminal at a designated place, you wouldn’t be able to do so because there was chaos, there was gridlock , there was blockage of access to all those places and this is not temporal.

“It went on for about one and a half year, so it means your contractual obligation could not be performed for reasons which is not of your making and that means an act of God has taken place or something has happened to release you from your contractual obligations and that’s what force majeure is all about and that’s why we said, you can’t charge a shipper at that time that he has defaulted in the return of the container within a certain period because it was impossible to do so.”

He added: ”So we looked at all these and said look, the shipping companies, can we insure this instead of paying physical cash for container deposit and these deposits were actually difficult to retrieve even if you return the container until the shippers council intervened.  So what we said was that it’s an asset and it’s insurable, so shipping companies should charge for insurance. Two or three insurance companies can do it, register them, it is now the duty of the insurance company to make sure they are returned not the shipper because it is private sector thing.

 He enumerated other forms of ripe-off institutionalized by shipping firms. “Now it has become a diversion, container returning, container deposit, day in, day out, diverting a whole energy to a thing that should be handled by the shipping company. I was happy that there was a consensus, the shipping companies, those we approached, bought the idea as at that time, then the insurance companies, their regulator, the National Insurance Commission, we had series of meetings with them and we had serious cooperation from the insurance commission and we were about to consummate the understanding, but the circumstances, the policies got us stuck and that was about the time I was about leaving. I think if the situation has not changed the shippers council should go through that trajectory.

Reiterating that the money was for shippers, he added, ”there were also cleaning of the containers which were kicked against, they say we damage containers and these are not accessible by independent panel who had access to where the shippers are.

He highlighted areas of reforms, saying, “You cannot come over board and say every container must be clean, so why do you charge every container for cleaning? That was stopped. Of course, container damage, how do you assess damage? What is damage? And some people pointed out that all the containers have depreciated and should be taken out of circulation and so on and these are things that should be looked into.” 

In another investigation, a freight agent, Mr. Ugochukwu Ukandu  gave an insight on how the shipping companies generate the unclaimed funds. He said they make container deposit of N200,000 for a 20 ft TEU ; a 40 ft TEU is N300,000. You are refunded the money upon return of the container but if it is not returned on time they make deductions. The time line for return of container is dependent on the date on the Delivery Order(DO) used for the loading of the container. For instance, if the DO is dated 20th , November and you return the container on the 19th or before, the deposit will be refunded intact but if it is returned on the 20th or days after, the extra days are calculated and deducted from the total amount deposited.                     

“On damaged or cleaning container surcharges, all the penalties are written on the shipping companies’ debit note. Usually at the point of exit they take assessment of the container status and do same upon return at the receiving point to cross check and ensure that the exit status tallies with the returning status. Where there is a mismatch in status, showing dent, damage or oil spillage inside the container, deduction is calculated for payment. PTML deducts as much as N45, 000 for oil drop on the floor of the container.                         

 “Upon damage or in invent of container accident, the agent is expected to write the shipping company which may send their agent for investigation at the scene of the accident following which they will stop the reading of the container  at the office. In invent of serious damage, they will negotiate how some payment could be made instead of them losing totally or make the agent pay for the container.         

“On missing container, the shipping company will look for the freight agent who is expected to get the importer and truck owners to assume the responsibility of payment which is changed in dollars”, Ukandu added.

Although the NSC did not establish the number of years within which the $7trillion was aggregated, the UNCTAD report on Nigerian ports container throughput record between 2008 and 2021, which had a total of 1,566,109.000 TEU in December, same year. This records an increase from the previous number of 1,548,622.000 TEU for Dec 2020.

The data reached an all-time high of 1,867,409.000 TEU in 2014 and a record low of 72,500.000 TEU in 2008.

According to the report,  a total of 1,627,142,000 container TEU was recorded in 2019 came into Nigerian ports; 1,560,000,000 TEU for 2018;1,408,000,000 TEU for 2017; 1, 272,000,000 TEU in 2016; 1,544,183,000 TEU in 2015; 1,867,409,000 TEU in 2014; 1, 696,000,000 for 2013 ; 1, 583,460,000 in 2012; 1,456,000,000 in 2011 and 1,162,000,000 for 2010

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