Nigeria shippers council: Still a toothless bulldog

BY FABIAN GEORGE

The Nigeria Shippers Council (NSC) was a child of necessity. Before its establishment in 1978 through The  Nigerian Shippers’ Council Act, activities at the nation’s ports were characterized by deteriorating quality of shipping services and unmitigated increases in Ocean freight rates by foreign ship owners who operated scheduled liner services to Nigerian ports.

This huge foreign exchange outflows arising from the carriage of the nation’s sea-borne trade by foreign shipping lines continued to impoverish the Nigerian economy with attendant adverse consequences on balance of payment in favour of developed countries.

The Nigerian Shippers Council function as prescribed by the 1978 ACT included ensuring efficient and timely delivery of shipping services to the importers and exporters by the shipping services providers under the most economical arrangements, moderation and stabilization of costs (freight rates, port charges, local shipping charges, haulage charges), creation of adequate understanding and know-how amongst the various practitioners in international trade both at the macro and the micro levels and provision of regular and reliable advice to the Federal Government on matters affecting the shipment of goods to and from Nigeria.

However, as time went by the functions of the agency as prescribed by the 1978 ACT was strengthened with the 1997 ACT which empowered the Nigeria Shippers Council to regulate local shipping charges on import and export and to negotiate the charges in the interest of operators.

Other services of the NSC under the 1997 ACT included, stakeholders support services, stakeholders’ representation services; advisory services, complaints handling advocacy services; research services, information and enlightenment services.

But over the years, findings have shown that the prevailing unhealthy activities at the nation’s ports which instigated the establishment of the Nigeria Shippers Council in the first place, are not only still there but has deepened to the extent that the nation’s maritime sector which remains the second highest revenue earner to the federation account after crude oil has been losing patronage because of high charges, inefficiency and lack of transparency by terminal operators.

It is also worthy of note that these teething problems that made the nation’s ports to be unattractive to importers who rather preferred to patronise ports of neighbouring West African countries prompted the 2006 port reforms that heralded the concession of the Nigerian sea ports to private terminal operators.

Instructively, the aim of the port reforms which evolved around ensuring efficiency in port operations later manifested in complaints of extortion and exorbitant charges leveled against the terminal operators by other players. It was these complaints and grumbling by other major operators and their clamour for a regulator to checkmate the port terminal operators that gave rise to the appointment of the Nigeria Shippers Council in 2014 as the regulator of the port.

The fresh mandate given to the Nigeria Shippers Council as economic regulator of the ports were to provide market rules, ensure tariffs reduction, quality service, access to facilities and to provide incentives to port operators. The regulator was also given the responsibility of providing a level playing ground for competition, providing entry rules, reducing the cost of doing business and enhancing infrastructural development to create efficiency in port operations.

The executive secretary of the Council Dr Hassan Bello at the assumption of the new role as the regulator, had assured that the council was equal to the task of living up to its assigned responsibilities. He told maritime stakeholders that the Nigeria Shippers Council has signed a Memorandum of Understanding with TTP companies to bring about competition in the ports, instill transparency in clearing processes and reduced huge tariffs for effective and efficient service delivery.

Prior to its take off as the commercial regulator of the ports in 2014, the former Chief Executive Officer, Nigeria Communications Commission Dr Ernest Ndukwe had enjoined the council to protect consumer interest in the course of discharging its duty as an interim ombudsman in ports operations and make consultations with operators a priority to address issues that affects them.

Similarly,Princess Vicky Haastrup, Chairman, Seaport Terminal Operators Association of Nigeria (STOAN), wanted the council to carry all stakeholders along stressing that the Nigeria Shippers Council should monitor activities of the truck operators at the port.

However two years after the NSC assumed the role of an ombudsman at the port, prevailing trend at the ports have shown that the agency is far from living up to its role of sanitizing the ports, encouraging competition and making the port friendly for operators in terms of cost of doing business to stem the tide of diversion of imports to ports of neighbouring countries

The feeling among shipping companies is that the NSC which was created to provide a forum for the protection of the interest of local shippers against foreign domination has not achieved that objective.

For instance, Bello the executive secretary of NSC had promised that the Inland Container Ports which is a veritable platform to decongest the ports will soon be in operation. But findings have shown that the Council has not lived up to that promise as port congestion still remains the bane of Nigeria Ports, a development that has led to diversion of vessel to other ports like Cotonou.  Stakeholders see this as a failure on the part of NSC that was supposed to act as an adviser to the Federal Government on measures to take to ensure efficiency of ports and measures to take to protect interest of various operators as regards tariffs and quality of service rendered by service providers to make the operational environment friendly and attractive.

The Manufacturers Association of Nigeria (MAN) also has an issue with the Nigerian Shippers Council. Their bone of contention is the bid by the regulator to reintroduce the Cargo Tracking Note (CTN) that was discarded by the Federal Government on the request of the operators within the Nigerian manufacturing sector in 2013. Their opposition is based on the fact that its re-introduction will further drive up the cost of cargo clearance at the ports with a trickle-down effect on businesses. They also argue that such an action without adequate consultation with relevant stakeholders negates the role upon which the agency was appointed as regulator.

Another issue which NSC is accused of not effectively addressing is the Cargo Defense Fund which was aimed at defending the interest of shippers especially in litigation abroad between importers and their clients. Although the Executive Secretary of the NSC said the agency has been performing this role of a mediator but findings revealed that its efforts in helping importers and exporters that are in conflict with clients abroad that often led to their ship and cargo impounded has only been like a drop of tea in the ocean.

But the major issue that is still generating rancour and a source of concern to port users and other maritime stakeholders is the high cost of port charges that heightened after the terminal operators took over the terminals from the Nigeria Port Authority.

For instance, investigation shows that before the ports were concession, the first six days of demurrage attracted a fee of N95 per day for a 20 feet container but was increased to N900 per day. Again when the demurrage enters the second phase of six days, under the NPA the importer was to pay N250 daily but the amount shoot up to N4, 200 under the terminal operators. Apart from the demurrage, findings also revealed that personnel of the terminal operators often fleeced importers of amount ranging from N30,000 to N50,000 as gratification to get their containers position upfront for express examination to avoid paying requisite fee. Another area the high port charge manifest which operators frowned at is the storage facility charges. Clearing agents accused terminal operators of increasing storage facilities from N4, 000 to N8, 000 per day for 20 foot container and from N8, 000 to N12, 000 for N40 foot container.

The maritime players are also uncomfortable with the number of free days allocated for demurrage and storage facilities which they argue is far shorter than what is obtained in other countries. For instance Nigeria has only three days of grace for storage facilities and five free days for demurrage as against ten free days in Benin Republic and eight days in Ghana. Also cargo dwell time which is the maximum time it takes importers to process and clear their goods in Nigeria is seen as unfavourable compared with other countries. For instance, while in Nigeria it takes between 20 days and two months to under processes and clear goods, whereas in Benin Republic it is said to be between 10 and 15 days and as low as 14 and 12 days in Ghana and Togo respectively.

The cost of clearing containers is again seen to be on the high side in the consideration of maritime players. At the Apapa and Tin Can Island ports in Lagos the cost of clearing containers is pegged at between N150,000 and N300,000. Investors and importers under the aegis of Shippers Association of Lagos State (SALS) recently lamented the high cost of clearing cargoes at Lagos ports which they attribute to multiple charges imposed on imported goods.

Mr Johnathan Nicol, President of the Association listed some of these charges to include five percent Value Added Tax (VAT), 35 percent automobile levy, two percent sugar levy, one percent PAAR and Common External Tariffs (CET) levy. He said the combined cost implication of the charges on one consignment takes away most of the shipper’s capital.

Prominent maritime players and analysts have in recent times expressed concern over the prevailing high cost of doing business in the Nigeria ports, which underlines the argument by many that the Nigeria Shippers Council has failed in its objective of bringing down cost of clearing goods in the nation’s ports.

Olisa Agbakoba, Senior Advocate of Nigeria, (SAN) and maritime lawyer stressed that the 10 year old concession regime in the nation’s ports has failed in its original objective of making Nigerian ports cost effective. He reiterated that the cost of doing business at Nigerian port is still the highest in the world and that it had remained so 10 years after the ports were concession because of the absence of an effective regulator.

Mr Lucky Amiwero, National President, Council of Managing Directors of Customs Agents said Nigeria missed it from the onset when the ports were concession without requisite regulatory body. According to him, one of the consequences of such omission is the loss of cargo to ports of neighbouring countries because the cost of doing business in our ports is high.

The founder of National Association of Government Approved Freight Forwarders (NAGAFF), Dr. Boniface Aniebulam, who was a strong advocator for a regulator to curb the excesses of the port terminal operators whose regime as concessionaires at the ports escalated the cost of doing business is also disappointed that the Nigeria Shippers Council have not been able to address the issue of high cost of doing business at the ports.  “The essence of port reform was to achieve competitive cost of doing business, port administration and management. However, at the inception of the concession, it was expected that there would be a 30 percent reduction in the cost of doing business at the ports. But 10 years after, the cost of doing business is still unbearable”.

Otunba Kunle Folarin, chairman of Port Consultative Forum said the objective of port concession was to reduce cost of doing business at the port, increase productivity, as well as conserve public fund. In his view, although there has been increase in productivity and infrastructural development, the cost of doing business has not reduced, which is a sign that the objectives of the reforms have not been met, even as appointment of NSC as a regulator he argued has also not achieved the desired objective.

Keen observers of the prevailing operational trend in the Nigeria’s maritime sector are worried that despite its capacity to generate for the country an estimated N7 trillion in revenue annually, it remains inefficient and uncompetitive because of high cost of doing business at the ports, cumbersome clearance procedures, bottlenecks  in cargo evacuation, inadequate cargo handling equipment and lack of transparency which they conclude have contributed to importers shunning Nigeria’s ports for those of neighbouring West African countries.

The ineffectiveness of the Council in carrying out its responsibility again re-echoed during the 2015 Maritime Platform Discourse held in Abuja last year when stakeholders in the maritime sector drew the attention of the federal government to the various ills plaguing the maritime sector of the economy. They want President Muhammadu Buhari administration to come up with immediate, short and long term measures to tackle these ills. They particularly pointed out that the lack of financial capability for indigenous ship owners was the reason why they wait endlessly for the disbursement of the Cabotage Vessel Financing Fund (CVFF) which often times were not forth coming. They lamented that the maritime stakeholders have not been adequately consulted in policy formulation which is against their expectation of the role of the Nigeria Shippers Council.

This position of the maritime stakeholders at the discourse came on the heels of an earlier one convened to set agenda for President Buhari shortly after his election as president. The stakeholders had decried the high charges by port terminal operators and shipping agents which they described as inimical to the interest of importers and exporters.

Infact over the years some maritime stakeholders have advocated the scrapping of Nigeria Shippers Council with the argument that in other countries it is privately driven. But to many keen observers of the prevailing trend in the sector, that is just begging the question. The conclusion of stakeholders is that the problems confronting those having business at the ports which gave birth to Nigeria Shippers Council’s new role as the regulator has rather turned from bad to worse. Port operators are still complaining of high tariffs, unfriendly cargo dwell time and lack of a level playing ground for local shipping companies. And their clarion call is for the new administration to address the challenge.