Container Deposit as tool for extortion by shipping companies.

Shipping is a big business. So the shipping companies are in this business to make profit, just like all the players in the sector.

Therefore, container deposit, which is one out of the numerous charges made by shipping companies, is an avenue to make profit.

All over the world, container deposit is not a strange phenomenon. It is a refundable amount charged by a shipping company payable by a shipper for the use of the item but which acts as a guarantee against damage, theft or detention.

This charge is often imposed because containers are valuable properties cherished by shipping companies.

A standard 20″ container can cost above USD3000 while a standard 40″ may cost more than USD4000.

So shipping companies guard this prized possession jealously.

However, how this concept of container deposit applies varies from country to country, depending on the advancement of their economies.

In most of the developed economies of the world, container deposits are not required by shipping companies mainly due to the high level of professionalism and industrial competency within all players in the supply chain, i.e consignors, freight forwarders, haulers, warehousing operators, ship liners etc. as well as proper legal environment which ensures a secured transport environment among stakeholders.

In other words, there is high degree of trust and certainty among the shipping companies that the consignees in the advanced countries shall return the containers on time and in good condition without fear of theft or detention.

In another clime,what is required is letter of indemnity, collective guarantee or insurance which replace the requirement of container
deposits.

However , the case is different with consignees in the developing countries where there are high risk of containers theft, damage, delay or detention.

So, shipping companies do demand container deposits in the developing countries such as Nigeria to indemnify their properties.

So it is not out of place or illegal as some people may want us to believe for shipping companies to collect container deposits.

What we and other stakeholders frown at is the tool of extortion to which this otherwise legitimate concept has been turned by the shipping companies in Nigeria.

The shipping companies in Nigeria, unlike their counterparts in other countries, have converted this concept into an instrument of oppression and economic subjugation of the hapless shippers, taking undue advantage of the system collapse and gross maladministration in the country.

Countries where container deposits are charged, refunds are made within a period of one to three weeks when the containers are returned.

Even at other countries, container deposits are not charged on exports.

But in Nigeria, not only such refunds are not made or multi-lated, shippers are often surcharged for other sundry infractions.

The amount deposited for containers depends on the size of container and the place of delivery.

Container deposit for 40 feet container within Lagos is NGN200,000.00.
Container deposit for 40 feet container outside Lagos is NGN400,000.00.

Automatic demurrage for a 40 feet container is NGN100,000.00.

Container deposit for 20 feet container within Lagos is NGN100,000.00.

Also, Container deposit for 20 feet container outside Lagos is NGN200,000.00.

In other words, the consignee loses these deposits or half of them for various infractions such as late return of containers, damage to the containers while surcharge will be imposed on theft of containers.

However, the issue of container deposits in Nigeria is a complex one which does not lend itself to easy solution.

We concede the right to collect these deposits to the shipping companies as being done in some others developing countries as Nigeria.

Even though, critics of this concept may disagree with us but it must be acknowledged that shipping companies, just like other players in the sector, are in business to make profit.

But the area of friction is the failure of the shipping companies to made refunds of the deposits or mutilate them.

Are they justified in their decision not to made refunds or multi-late the deposits?

If the consignee falls foul of any of the terms of agreement such as damages to the containers, late return or outright theft of containers, are the shipping companies not justified in their refusal to made refunds or mutilate the deposits?

The answer may seems obvious but very complex within the context of Nigeria’s peculiar situation.

Why do Nigerian Shippers often fall foul of the rules of engagement?

Was it done deliberately or made inadvertently?

The answers to these posers will expose the complexity of the situation.

Due to the break down of the port access roads, the port environment has been gripped by intractable traffic gridlock which has made evacuation and movement of cargo as well as empty containers in and out of the port slow and cumbersome.

Often times, trucks laden with empty containers meant to be returned to the port are caught up in traffic for more than one week, thereby resulting to delay in return.

In another breath, the shipping companies have continued to defile the directive on having their holding bays to wharehouse the empties.

The hapless shippers are therefore caught in the web of complex situation of government failure that results to infrastructural collapse that engenders traffic gridlock and lack of capacity to enforce the rule of engagement on the recalcitrant shipping companies.

This is the situation which the shipping companies have maliciously exploited to milk the hapless shippers.

The nigeriamaritime360.com frowns at this unconsciencenable conduct of the shipping companies.

We also blame government lackadaisical attitude towards whipping the arrogant shipping companies to line.

We must however quickly recognise the efforts of the Shippers’Council which has severally confronted the exploitative conduct of the shipping companies.

We are particularly comforted by the latest move of the Council to prevail on the shipping companies to abolish the concept of container deposits.

In as much as the idea sounds noble, we dare say it would be an uphill task to achieve the objective.

Firstly and as we have earlier mentioned, the shipping companies are in business to make profit.

Asking them to abolish one of the means to achieving this will be like asking a hungry lion to spare a fat goat trapped in its den.

To us, the only feasible alternative for the Shippers’Council to resolve this logjam is to ask for a reprieve for shippers until government does the needful that will ensure that shippers return the containers on time.

As long as the embarrassing traffic gridlock remains unresolved, shippers would continue to lose their deposits due to late return.

As long as government does not put its foot down hard in an uncompromising enforcement of procurement of holding bays by the shipping companies, shippers and importers will continue to lose their deposits or have them multi-lated.

We feel it is preposterous to wish away containers deposits, if we must be sincere with ourselves.

Unlike their counterparts in the advanced countries with high degree of trust, Nigerian importers often display loose morals.

One can not rule out deliberate act of mischief in terms of theft of containers, damage or outright abandonment of containers on the road sides.

Whoever transverses the country will see scores of containers abandoned along the roads while some are damaged due to poor handling.

We are glad that the Shippers’Council acknowledged this fact when its Executive Secretary, Barrister Hassan Bello said the freight forwarding practice needs to be structured before the advocacy on container deposits could succeed.

He even said shipping companies often complain of outright theft and detention of their containers as 300 of such containers were retrieved from a state government recently.

To us, this lend credence to the almost impossible task the Shippers’Council embarks upon to abolish container deposits.

The relieves which the council could seek on behalf of the hapless shippers and importers is to streamline conditions governing return of empty containers, taking into cognizance the decayed road infrastructure which makes early return of the containers impossible.

Nobody can actually predict correctly the number of days he could return the empty containers after evacuation, given the state of our roads.

The shipping companies know this and that is what they exploit to their advantage.

Since the concept is legal and governed by international standard, the Shippers’Council can only appeal to the emotions of the shipping companies, if they have any, to give mutually agreed concession to shippers and importers on the issue of container deposits until sanity is restored to our roads.

Better still, the Council can act as a guarantor, as done in a sane society,to credible and established shippers to enable the shipping companies to waive the deposits.

We know this option will be too expensive and unattractive for the council to take.

Resorting to blackmail or coercion will not work.

However, the only form of coercion which we think the government could exert on the shipping companies over this issue is to made the procurement of holding bays as a condition for imposing container deposits.

And that is if both the Nigerian Ports Authority (NPA) and the Shippers’Council have the prerequisite political muscle to confront the shipping companies on this issue.

Until these measures are taken, there is little Shippers’Council, as noble as its intentions are,could do to stop the shipping companies from using container deposits as veritable tool for mindless extortion .

We think this is an avoidable extortion made possible by government failure.