Shippers’ Council rallies regional forces against indescriminate surcharges by shipping companies 

Abiola Seun writes          |           

In a year, it is estimated that Nigeria Nigeria economy losses an average of 150 Billion yearly to surcharges placed on Nigeria bound import along the Europe routes by foreign shipping companies.

Also, Nigerian importers lost N2bn yearly to demurrage charges on container deposit paid to the shipping companies

However, disturbed by the surcharges and capital flight by foreign shipping companies, the Nigerian Shippers’ Council (NSC) rallies other African countries under the aegis of the Union of African Shippers’ Council (UASC) to discuss the economic implication on the region in Abuja.

The 3-day Sub-regional Summit tagged, “Unfair Shipping surcharges and High Local Shipping Charges At the Ports of West and Central Africa,’’ held at Sheraton hotel Abuja, bemoaned the increasing number of surcharges and demurrage from the foreign shipping companies.

Shippers Council who hosted the summit had identified 16 different surcharges to Nigerian ports as at 2017 on goods from Europe alone and 12 local charges, saying that shipping lines place surcharges on cargoes to the country arbitrarily and some of the surcharges have remained permanent.

For instance, the council said Nigerian importers paid a whopping $166.9 million on Peak Season Surcharge and $267.1 million congestion surcharge in 2017.

According to statistics from the council, Nigerian importers paid a total of N67.45 billion surcharges in 2017.

Theses surcharges are Bunker Adjustment Factor, Currency Adjustment Factor, War Risk Surcharge, Congestion Surcharge Peak Season Surcharge.

Others are, Extra Risk Insurance Surcharge, Freight Rates Surcharge, Port Operations Recovery Surcharge among others.

However, the federal government rued the slamming of surcharges on Nigerian bound cargoes by foreign shipping companies.

The vice president, Prof. Yemi Osinbajo who was represented by the Minister of Transportation, Rotimi Amaechi complained about the process of the introduction of the surcharges which he said lacks transparency and not based on verifiable and available resources.

According to him, the surcharges amount to huge sums of illegal capital flight from Nigeria and the other West and Central Africa countries.

He said, “These surcharges amount to huge sums of illegal capital flight from the countries of the sub-region depleting their limited foreign exchange/reserves.

For instance, data obtained from Nigerian Shippers Council (NSC), confirmation of reasonableness of demurrage charges for Central Bank of Nigeria (CBN) revealed that more than 2 Billion is repatriated by multinational shipping companies in a quarter of a year.”

The vice president further stated that the introduction of surcharges without consultation contradicts the norms and ethic of maritime transportation.

“The process of introduction of theses surcharges lack transparency and are mot based on verifiable and available statistics.

“In addition, the unilateral and arbitrary imposition of such surcharges on West and Central Africa bound cargo contradicts the norms and ethics of maritime transport.”

He however advised that the sub-region must at the summit adopt a common position on reduction of incidences of unfair surcharges and related issues.

“The federal government of Nigeria through the Nigerian Shippers’ Council has put in place a machinery to address some of the challenges posed by high cost of doing business in Nigeria.”

“For instance, in 2018, NSC harmonised the tariff nomenclature for local shipping charges in Nigeria, established a sustainable framework for future review of tariffs and established standards of service for all container terminals in Nigeria.”

On his own, the executive secretary of the council, Barr. Hassan Bello decried multiples surcharges levied of cargoes destined to West and Central Africa countries by international shipping companies due to some ugly situations in the region, but which remain even after the situation has  been arrested

He said, “Some of the identified surcharges have been prevalent in the sub-region under various nomenclatures such as the Peak Season Surcharge and War Risk Surcharge to mention a few.

“According to the United Nations Conference on Trade and Development (UNCTAD), surcharges are supposed to be temporary measure by shipping lines involved in the shipment of goods worldwide to address peculiar challenges of shipping at destination and are subject to removal when the situation normalizes. Regrettably, some of these charges have assumed a permanence without justification or basis for negotiation.

The shippers council boss said for the past one or two years, the NSC has actively engaged the foreign shipping lines in Nigeria in a comprehensive negotiation on local shipping charges.

“The kernel of these negotiations are based on these points; to establish a sustainable mechanism for further tariff negotiations; to collapse the myriad of charges to a manageable standard nomenclature, the charges have been collapsed from 18 to five; all charges must be justified and tied to measurable services; and no review of charges will be made without negotiation with NSC,” he said.

“In conclusion, it is important to state that in the long run, arbitrary and unilateral increase in charges would not benefit operations or general procedures in our countries. A chaotic, unbridled situation of sporadic sometimes astronomical pricing regime is adverse to the development of shipping. It is a lose-lose situation.”

“Transport should be scientifically, fairly and appropriately priced with the aim of providing balance and equilibrium. A fair and level playing field for all parties,” he said.

He further disclosed that the council had Collaborated with the Central Bank of Nigeria (CBN) has helped Nigerian Importers saved 2 Billion demurrage charges from foreign shipping companies.

According to Bello, about 2 Billion has been saved through the confirmation of reasonableness of demurrage and freight rates by the CBN.

He said, “in order to reduce capital flight, the CBN sought for the assistance of shippers’ council as economic regulator to confirm reasonableness of freight rate and determine reasonableness of demurrage and about 2 Billion has  been saved through the confirmation of the reasonableness of demurrage. We thank CBN for the collaboration.”

Bello who said the Council had collapsed shipping charges from 18 to five informed the summit that the aim of the council is to reduce the local shipping charges by 35 percent.

The director, Global Shippers’ Forum, (GSF) James Hookham, who presented a paper on GSF surcharges campaign, enumerated the efforts being made by the forum to tackle surcharges by shipping lines.

According to him, the cost of running shipping lines are constantly going up, with the sea carriers now using surcharges to cushion the effects of costs of maintaining their businesses.
He however said the Global Shippers Forum has been in the business of checking surcharges, for which it at the Colombo 2016 annual meeting adopted to influence renegotiation of Incoterms 2020; educate shippers on optimum use of Incoterms; and raise awareness of global bodies on impact of surcharges on cost of exports and imports in selected economies.

“We also adopted to extend investigations to charge imposed by ports and stevedores (THCs); expose basis for surcharges to provide transparency and ensure legitimacy as well as to promote quotation of all inclusive freight rates by shipping lines,” Hookham said.
Hookham believes that while surcharges may not be eliminated, its basis and purpose could be made more understandable and transparent.

The secretary general of the UASC West and Central Africa sub-region, speaking on how his organization intends to check the multiple surcharges said, “We have to request to have the components of these charges. Secondly, we will put together all the technical issues involved so that we can be able to find specific solutions to each of them.

“The third thing we will do is to consolidate our relationship with GSF to deal with the issue of multiple surcharges at its conference coming up later in the year in London.
We wish to be invited to the London conference to make our contribution and relate the peculiar surcharges and all issues around it. Then we should work on our transport cost element. We should be able to put in place, a framework for negotiation. I think, as a sub-regional body of shippers council, we should be able to negotiate deals with multinational shipping lines,” he stated.