By Yusuf Odejobi
In recent years, the freight forwarding sector in Nigeria has been in a warzone over the collection of Practitioners’ Operating Fees (POF) by the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN).
On many occasions the Council had announced the commencement of the payment; but such announcements repeatedly met mixed reactions of backlash and subsequent failures. Despite the setbacks, pending issues and court cases, CRFFN is resolved to start collection on August 1st, 2021.
Does the CRFFN Act empower it to collect POF? How soon would the revised version of the Act be passed by the legislative chambers? What role should terminal operators play in this exercise? Should shippers bear the brunt of delays in cargo evacuation and additional charges accruable as demurrage under the implementation POF? These are some of the questions begging for answers and MMS Plus attempts to proffer solutions and suggestions from industry veterans, especially freight agents.
Last week, Grimaldi Shipping released a statement notifying its customers that it would no longer sign Terminal Delivery Order (TDO) except the payment of POF is reflected, starting from August 1, 2021.
The notice signed by the management reads in part “This is to bring to your notice, the need for all customers to comply with the government regulations with regards to POF charges. We have been advised by CRFFN that payment of the statutory due is one of the conditions to release shipment from the port. We, therefore, urge our customers to make payment of this due through various channels made available by CRFFN before approaching our office for DO/TDO.”
Reacting to the statement, a director at Nigerian Shippers’ Council (NSC) (name withheld) posited that it was wrong for CRFFN to issue such directives to terminal operators.
He argued that POF should be collected as practicing fees on freight forwarders and not be collected on every cargo.
“This is akin to saying that a patient should not be discharged from a hospital because the Doctor that treated the patient failed to remit membership dues to Medical Association of Nigeria. Please let us be guided. Cargo can’t be delayed in port for that. But we encourage all Freight forwarders to pay their POF.” he said
Under the POF regime, CRFFN is targeting between N5 billion to N10 billion annually. Importers would pay N3.5 per of cargo imported into the country, N1.5 per kilo for air cargo, N1, 000 on each imported 20 ft container and N2, 000 per 40 ft container.
While some freight forwarders are in support of the payment for the development of the subsector of the economy, some are against the collection noting that it is without legal backing adding that it is not in CRFFN’s act and also contravenes the federal government’s ease of doing business at the ports as it can pose delays to cargoes and increase in costs of products.
Speaking with MMS Plus on this development, the President of the National Association of Government Approved Freight Forwarders (NAGAFF), Chief Increase Uche said that virtually every payment made at the nation’s port today are hinged on cargo.
He argued that the payment of POF is very technical, therefore anyone without prior knowledge about the technicality attached to the collection shouldn’t comment on it.
“The money being generated by the Nigerian Customs Service (NSC) is made from cargo, the 7 per cent surcharge for the development of the port is based on cargo, the 3 per cent surcharge by Nigeria Maritime Administration and Safety Agency (NIMASA) on the gross tonnage on a vessel is based on cargo, the 2 per cent charge under Cabotage on every contract within the coastal area in Nigeria is on cargo, the money collected on MOWCA is on cargo.
“Nobody is imposing any money on anybody. Is there any formal complaint either from Shippers or the freight forwarders that the collection of POF on cargoes is a problem to them? Are the Shippers complaining that they’re paying money? Or have the freight forwarders increased the amount they charge on clearance of any cargoes out of the port?” He quizzed.
The NAGAFF boss said that Grimaldi shipping is right with the announcement on POF collection noting that POF is a statutory payment approved by the federal government on all freight forwarders.
He added that they are ready to defend it to any length because the money is meant to develop the freight forwarding subsector of the economy.
However, he warned mischievous people who have termed the POF collection as ‘fraud’ to desist from such acts as they are the ones impeding the smooth clearance of cargo out of the port and stopping the federal government policy from being implemented.
He also said that the associations have started sensitization on the need for freight forwarders to comply and pay the POF on time in order not to cause any form of delay on cargoes clearance out of the port.
Explaining the process of payment, he said: “Having registered with CRFFN, all freight forwarders must be up to date. With the bill of laden, they go on to the portal, declare the cargo and follow the procedure that follows suit. It can be done at the comfort of home or office even before the commencement of cargo clearance. it’s a simple process that is not meant to cause any chaos in the cargo clearance procedure.”
He added that freight forwarders don’t have to wait until they declare their cargo to Customs or approach the shipping companies to release their cargo.
Some stakeholders are however of the opinion that with the recent developments in changes in policies in Nigeria, the POF fee might see an increment but the NAGAFF boss refuted the claims saying that the level of POF collection, for now, doesn’t call for any increment.
However, he noted that under the port dynamics and the global shipping operations, when there is improvement in service operation there is always a cost attached to it and likewise risk associated with such a process.
Meanwhile, the National President of Africa Association of Professional Freight Forwarders and Logistics in Nigeria (APFFLON), Otunba Frank Ogunojemite stated that it wouldn’t be appropriate to comment on the situation because the case is still in the court of law.
However, he pointed out that the current CRFFN Act does not empower the Council to collect POF, adding that the Senate is yet to amend the Council’s Act to support the collection of POF.
Nevertheless, he advised that CRFFN should take a professional approach by making use of a subscription method for its members instead of inhibiting trade in a bid to attain the collection of POF.
On his part, a former President of NAGAFF, Dr. Eugene Nweke argued that it is the decision of the Federal Executive Council (FEC) noting that it’s not about CRFFN neither is it any freight forwarding association, it’s a government directive.
He added that anyone that has an issue with POF collection either for or against should go back to FEC to withdraw their directive.
When quizzed on other alternatives that could be explored without tieing it on cargo, he said: “The government has decided what they want to do, why should we be suggesting other means for them. Did you suggest other means why the Shippers’ Council should be collecting the Maritime Organisation of West and Central Africa (MOWCA)?
“We have gone beyond this level, the ‘Agberos’ at the park made billions of naira per annum, who is now saying we the freight forwarders with our contributions to the economy we are not entitled to develop our sector? No one is making an effort to develop the freight forwarders; we are also backward in the committee of freight forwarders.”
Although there are arguments in favour of the POF collection on the grounds that it represents a paltry sum that would enable CRFFN better discharge its responsibilities, especially on training and enshrining professionalism in the practice of freight forwarding; recent history hasn’t shown that the current leadership of CRFFN can astutely manage fiscal resources.
Some freight agents have pointed to the numerous cases of financial misappropriation at the Council, lamenting that there would be no commensurate value from CRFFN to justify the POF collection.