Peak Season Surcharge: Paying the penalty for Import-Dependent  Economy

Last week, the Nigerian Shippers’ Council rallied the Organised Private Sector to protest the Peak Season Surcharge (PSS) slammed on Nigeria and other countries in the world by the cartel of big shipping companies.

 

The African Shippers’ Council also joined forces with the beleaguered Nigerian Shippers to protest what Nigeria described as inhuman, insensitive and arbitrary surcharge.

 

For the uninitiated, Peak Season Surcharge (PSS) is one of the several surcharges deployed by the shipping companies to mitigate the impact of unexpected operational costs.

 

It is an emergency surcharge that is global and imposed annually, especially during high demand for their services.

 

It specifically targets exports from China to other part of Europe, Asia and America.

 

It started in 2018.

 

However, Nigerian Shippers had to cry out against this year’s surcharge because of its high percentage over the last year’s surcharges.

The big players in importation business such as Dangote Group also squealed over the surcharge. 

 

The 2020 PSS on Nigeria-bound cargo by shipping firms ranges between $1000 and $1,500 per 20- foot equivalent unit (TEU), which is over 400 percent increase from $200 freight charged per TEU during peak period in 2019.

 

Apart from the astronomical increase of the charges over the 2019 PSS, Nigerian Shippers had to protest because they are yet to recover from the killer punch of Covid-19 pandemic.

 

Our indignation over this issue is further accentuated by the fact that this same cabal in ocean freight business has for long subjected Nigerian shipping sector to suffocating stranglehold through their serial hiked charges and surcharges.

 

We are equally miffed at the timing of this surcharge when the global economy is lying prostrate under the crushing impact of Covid-19 pandemic.

 

And the developing economies like Nigeria are the worst hit.

 

 It also came to us as a rude shock that the 2020 PSS slammed on Nigeria is about the highest when compared with the rest of the countries.

 

Whereas the PSS imposed on European countries are in the rage of $50 to $200 per 20-footer TEU, that of Nigerian is outrageous.

 

But beyond the expression of grief and anger by the stakeholders, especially the beleaguered shipping community, we are constrained to say that the position of the shipping companies, as reprehensible as it may seem, was largely determined by economic consideration.

 

It was influenced by demand and supply factors.

 

As unpopular as our submission may be, we believe the shipping companies, who are in business to maximise profits, only exploited Nigeria’s weak point.

 

Nigeria’s economy is import-dependent and mono-product.

 

In that case, the country will do more of importation than exportation which exposes her to the exploitation of this shipping cabal.

 

As we have said earlier that the PSS is a global charge but specifically targets export products from China.

 

Interestingly, more than 70 percent of Nigerian imports are from China.

 

Little wonder the PSS on the country’s imports are higher.

 

The principle of the higher your imports, the higher your PSS, explains the lower PSS of about $50 – $200 imposed on European countries whose economies are highly productive.

 

Nigerian situation is so pathetic that even the crude oil, which we are the six largest producer among the OPEC countries and which is the mainstay of the economy, is still being imported in a refined form.

 

At the risk of been vilified by angry shippers, we dare say the PSS is the penalty they have to pay for the country’s over-reliance on imports.

 

Unfortunately, the PSS, as others charges, will continue to be operational until the shipping companies decide otherwise.

 

We commend the efforts of the Shippers Council for living up to its statutory functions of protecting the rights and interests of Nigerian Shippers.

 

But how much of impact will its coordinated protests have on this shipping cabal to back down?

 

Even though, the shipping firms knew that the surcharge is a gross abuse of fair trade practices, but do they care a hoot?

 

What degree of emotion does this shipping business cabal betray for its long and mindless extortion and exploitation of Nigerian Shippers?

 

The six musketeers, as we choose to call them, namely: Cosco, Maerskline, MSC, CMA CGM, Hapag-Lloyd and Evergreen shipping, have no moral scruples as their operations are profit-driven.

 

This explains why Maerskline made a profit of $1.7billion in the second quarter of 2020, despite the ravaging effects of Covid-19 that have drown many companies.

 

We are by no means spurning the latest efforts by the Shippers’ Council and the organised private sector to protest this inhuman increase in the surcharge.

 

With the support of the Federal government and the African shippers’ Council,  we hope the shipping companies will be able to shift ground and slash the charges.

 

After all,  Hapag-Lloyd, one of the cabal, in June, 26th 2020, informed its customers that the firm will cancel the implementation of the PSS for all dry, reefer, flat rack and open-top containers from East Asia to US and Canada.

 

The surcharge, as it affects those countries, was originally planned for July 5th, 2020.

 

Notwithstanding the outcome of the orchestrated protest of the Nigerian Shippers, they will continue to be victims of the plethora of surcharges by the shipping companies as long as the country’s unbridled passion for imports is not mitigated with an aggressive export drive, which the present government is half-heartedly pursuing.

 

We scoff at the suggestion from certain quarters that Nigeria should boycott the services of this big six to show its displeasure.

 

We ask, where else can our shippers go to?

 

Not when the shipping development in the country is being treated with kid glove and the lack of National carrier of the country is still hunting the industry.

 

Unfortunately, we are stuck with these big players in the international shipping business.

 

The best bet of Nigerian Shippers under the present circumstance is to engage the big six in negotiations in order to bring down the surcharge.

 

As long as Nigeria’s economy is still predominantly import-based, Nigerian shippers will continue to pay the price for such economic misadventures.

 

But unfortunately, such a penalty will all be borne by all Nigerians who are the final consumers.