Why Terminal Operators, Shipping Companies Flout FG Directives On Cargo Evacuation – Uche
By Kenneth Jukpor
Chief Increase Uche is the President of the National Association of Government Approved Freight Forwarders (NAGAFF). In this interview with MMS Plus newspaper he appraises the impact of recent government directives for efficient operations at seaports. He also reveals the opportunities and emerging threats to freight forwarding with the African Continental Free Trade Agreement (AfCFTA). Enjoy it:
Nigerian Shippers’ Council (NSC) recently reduced some shipping charges by shipping companies. The aspect of container deposit refund to importers/agents was given a deadline of four days from the day the container is returned. What effect has this directive had on your operations?
I want to seize the opportunity to thank the Executive Secretary of NSC, Mr. Hassan Bello because he has continued to show that he has the interest of the sector at heart with commendable policy directives and actions. He has been very proactive in addressing issues bothering on fast cargo clearance and associated delays. The recent pronouncement by the Council that container deposit refunds should be paid four days after the container is returned is a good development. In fact, it stimulated hope for freight forwarders because this issue of container deposit refund tarried for over three months in the past, but it has seen some degree of positive adjustments.
At PTML today, it doesn’t take more than five days to get your container deposit. However, I have also discovered that MSC is still operating with the old order as it takes almost a month for refunds to be paid. Sometimes, it could take up to six weeks if the freight forwarder isn’t proactive in following up the job. There are other issues associated with these refunds. MSC claims that the refund must be paid only to importers but this claim isn’t substantial.
IN Port Harcourt, CMA CGM earlier made some changes after the NAGAFF Chairman there took actions that saw them come down to seven days for the refund of container deposit. We are hoping that the new directive by the Council would ensure CMA CGM and Maersk Line comply in Port Harcourt.
In Lagos, Maersk Line and other shipping companies are yet to key in fully as it still takes up to ten days or more for refunds to be made on container deposits to shippers and freight agents.
Has the imposition of progressive demurrage charges stopped?
The issue of progressive service charge is still on. It is an area we want NSC to intervene seriously because the practice of terminal operators has become to deliberately detain cargoes. This delay allows the operators exploit the freight forwarders and their clients with demands for demurrage.
Delays caused by service providers at ports or their failure to provide services after collecting charges further increases the bottlenecks at the ports. Are there penalties meted on such service providers, relating to the failure to provide such services?
Shippers are still charged for services not rendered and held responsible for delays caused by other operators. I have a particular issue at hand where TICT delayed the transfer of a container that was originally destined to the terminal. The carrier that brought in the cargo was CMA CGM. The cargo was allowed to be examined at TICT, unfortunately TICT refused allowing the container to be examined and delivery taken. It took about six weeks before the containers were moved to a bonded terminal in Square, contrary to the wish of the owner of the cargoes. Today, the worrisome aspect is that the terminal operator is still insisting that the importer must pay to the last kobo for the delays caused by TICT and CMA CGM.
I can recall that in 2013 there was a Ministerial directive that whoever causes delays in the process of cargo clearance would bear the fiscal burden of it. However, we have seen that despite the intervention of Shippers’ Council on this matter, the legal team and the Managing Directors of these companies insist that shippers pay for the delays. There are numerous cases that have been reported by NAGAFF members to the Council. Shippers’ Council has to address this problem in order to guarantee ease of doing business at the ports.
The Council also directed Terminal Operators that the 3 days free storage duration should take effect after the discharge of cargoes from the ships and carried to stacking area/delivery area of the Terminal. That the positioning of containers for customs examination should be done by Terminal Operators within 24hours after the importer/exporter/agent has made the request. Since Shippers’ Council issued the directives, have the Terminal Operators, shipping companies/shipping agencies been complying?
The delay in Customs examination is still there. There haven’t been changes in that aspect of cargo evacuation. The unfortunate thing that compounds the issue is the lack of scanners which has led to 100% physical examination of cargoes by the Nigeria Customs Service (NCS). Scanner still poses of the biggest challenges to quick cargo evacuation from the ports. Provision of scanners would see the importing public as well as Customs enjoy relief in cargo clearance. Following the new arrangement, we were told that local shipping charges would drop while other inefficiencies would be eliminated but that hasn’t happened.
Today the land border has been closed, but we should also note that these challenges forced importers to use neighbouring ports and bring in the goods through land borders.
The 3-days free storage period has always been there but before the containers move into the stacking areas the three days must have elapsed. People don’t enjoy this value as they don’t benefit from this 3-days grace period. We are pleading with Shippers’ Council to intervene. With the current state of the nation’s ports two weeks free storage period is even small. If the storage period is extended to about two weeks terminal operators would be forced to fast track the movement of the cargoes out of the ports. If they realize that the cargoes could remain with them for two weeks without collecting any charge, they would be more willing to fact track the exit of these cargoes out of the terminals.
Which of these recent directives have brought relief to importers/ freight forwarders?
The aspect of timely refund of container deposit has made the most impact on importers and freight forwarders at the moment. It is important to note that it has been possible for Grimaldi and PTML to record the quickest refund of container deposit as a result of the fact that the terminal operator and the shipping company are located at one point. If shipping companies have their offices at all the terminals or have marketing departments at places where they move cargoes, container deposit refunds would be prompt. The practice of freight forwarders moving from one terminal to locate a shipping company more than 10km away is cumbersome. It takes time. It causes delay which would lead to high demurrage charges.
Some government agencies are found in the ports when they do not have statutory duties to perform, creating hurdles that can be avoided and delays in clearing of cargoes. How would you rate such practice vis-à-vis the Ease of Doing Business agenda of the government?
Agencies like the Standards Organization of Nigeria (SON) and the National Agency for Food, Drug Administration and Control (NAFDAC) deserve to be present at the ports. NAFDAC is already there, but SON should also be drafted into the ports. SON’s role is so critical because they fight against sub-standard, fake and counterfeit products. This fight can’t be done efficiently when the agency isn’t located at the ports. SON should be at all the entry points to the nation. If Nigerian market is being flooded with substandard cargoes, it’s because the main agency responsible for this isn’t at the ports and other border points. They have resorted to mounting checkpoints on the roads but this isn’t proper as it negates the ease of doing business agenda that the government is promoting.
When they are at the ports, they could inspect the cargoes at the same time Customs and other agencies are examining the container. This would guarantee one-stop shop for inspection so that when the cargo is released there would be no cause for further interception. It isn’t the global best practice for agencies of the government to carry out their enforcement functions along the highways. This would even affect the Presidential Economic Business Environment Council (PEBEC), which was established to tackle problems hindering trade and businesses.
NAFDAC’s role at the ports isn’t more important than SON, so SON should be drafted into the ports the same way NAFDAC was brought in. While SON’s activities outside the ports have become very problematic; having them at the ports would better enable the nation curb influx of substandard and fake product
In recent times, the African Continental Free Trade Agreement (AfCFTA) has been a topical issue in the continent as various experts and professionals assess the impact. What opportunities and challenges does AfCFTA afford freight forwarders in Nigeria and the continent at large?
The African Continental Free Trade Area is primary to create an integration of the entire African countries in terms of trade, services, bilateral relationship. However, freight forwarding is an international business. When you look at the West African sub region, freight forwarders in Nigeria alone out numbers the practitioners in West Africa put together. Nigeria has the market but what we need to do at the moment is to have a Council to determine the standard of skills and knowledge to be acquired by persons.
What we need to do to meet up is human capacity development. If that is achieved, there is nothing stopping us from competing with other professionals. The dominance by foreigners does not mean much because even in other climes, Nigerians are practicing freight forwarding. What matters is their capacity, the training one has.
Another factor is their financial wherewithal. You must have the financial muscle to meet up, not just to play the role of a freight forwarder in terms of facilitating ordinary documentation. You need to be an asset-based freight forwarder. You need to have that capacity to get to the level of third-party logistics service provider. By that, you can always handle contract logistics. Once we are able to get that human capacity aspect in the right perspective and the financial muscle; Nigerians can compete.
For now, the major issue is that Nigeria has remained backward for a very long time. If you look at the logistics performance index of Nigeria, you will see that it’s too low. Nigeria is on the 6th or 7th position in Africa. South Africa, Kenya, Ivory Coast, Ghana and Egypt are ahead of us. The nation has to put measures in place that will liberate the sector to enable us to have seamless integration in the entire supply chain.
The closure of Nigeria’s land border is also a big hindrance for the nation to actually meet up because investors have to come in and the manufacturing sector must be viable to support exports. When the goods are not there for the freight forwarders to move, it becomes a problem.
