As the Nigerian Shippers Council (NSC) gets set to sign a landmark agreement with shipping companies to reduce charges by 35 per cent, the ports economic regulator says the planned reintroduction of Cargo Tracking Note (CTN) will address security issues , malpractices in tonnage and goods declarations in Nigerian ports. The Executive Secretary of the Council;, Mr Hassan Bello, in this interview with SHIPPING DAY says CTN apart from being a strong security measure for the country and veritable source of data will equally boost revenue collections by the Customs Service, NIMASA and NPA as there will be no more alterations of the manifest and weight of ships. Bello among others, also speaks on the dry ports projects in some states as well as the outcome of the meeting organised by the Global Shippers Forum (GSF) in London where issues of arbitrary surcharges against shippers in Nigeria and other African countries were discussed. Excerpts
African shippers under the Union of African Shippers Council (UASC) attended the meeting of Global Shippers Forum (GSF) in London recently where the issue of shipping surcharges by ship owners against African shippers were discussed, can you give us an insight on what happened?
Yes. We had a fruitful meeting. We had Assian Shippers, Shippers Council from Italy, European Shippers Council and the British Shippers Council who were part of the meeting. We also had the International Chamber of Commerce, ship owners and many others..
Now, the idea is cost. Cost is very important in shipping as you know and to our national economy. We want a reasonable cost. We want effective cost and we want fair cost. What we seem to have is global understanding as shippers that some of these charges, especially the surcharges are not as transparent as we want them to be. But even more fundamental is that these charges are done arbitrarily – without consultations with the owners of the cargo. We think that when you go to the restaurant, at least you will see the cost and you will be given a receipt and then you will know what you have consumed and what you have not. So, we are looking at participatory level whereby shippers will participate in deciding the cost of shipping and that is fundamental. So, a lot of things came up and we think that shippers should directly deal with the carriers instead of the agents so that we have a framework for setting up these charges. And we suspect that because freight has been very stable and low until recently because of competition, there is tendency for carriers to make up charges elsewhere apart from their freight. So the position of our total team, we were with Ghana and others is to have more transparency by shipping lines. We want participation in decision making.
On the surcharges, the information we had was that the ship owners disowned some of the charges, saying they were imposed by the agents?
I want to confirm that. The surcharges are abnormal things. If such things disappear, the surcharge should also disappear. If you have congestion surcharge, maybe it is justifiable, but when there is no congestion, why should surcharge remain?. When we have bunker adjustment surcharge, that means the fuel is high, but what of when the fuel price comes low what happens?. Look at what we have been saying about war risk – making Nigerian cargo the most expensive may be in the world. $1,500 for 20ft container to bring it to Lagos. $3,000 if it is going to the Eastern port. We have to know what are the risks, you cannot unilaterally, arbitrarily decide these surcharges. So, there is no transparency – and it is against all European anti- trust laws. I know that the anti- trust laws have been a little bit lenient to shipping for some obvious reasons, but we ought to know. The Global Shippers Forum (GSF) is engaged now with Lyods to find out what is happening to this war risks. Then, one of the most important thing is that GSF has asked Nigeria to host its next meeting probably in March or April next year. This is an opportunity for Nigeria to come and make its stand, because it will be effective. There is a legislation Sri-Lanka did. Sri – Lankans were there. The idea is to minimize some charges that are already freight inclusive – because we believe by paying freight, some of these charges have already been dealt with. Freight is part of that. You have in-coterns which says liner in liner out for example which means evacuation of the cargo from the ship to the terminals where the shipper collects. You don’t have to pay that. Or loading of cargo from destination. The shipper has already taken that in the freight..
Then the issue of delay of cargo – we have to look at it because delay could be dangerous. All these things, the responsibility of the terminal operations must be taken into consideration. What is the responsibility of the freight forwarder, what is the responsibility of the shipping lines and so forth. We have all to go to class now and determine them according to international practice. We have no fear of paying charges but let it be related to services. Let me give you an example during our negotiation with shipping companies. Container cleaning charge is that all the containers that come here have to be cleaned. Is that possible?. We said no, you have to convince us that these containers will have to be cleaned. So, that is what me are doing now. We have removed container cleaning charges in our negotiation, unless you prove that it is dirty. Then we have inserted a clause that says if through no fault of a shipper, he cannot return the container, then he should not be charged demurrage. What people don’t know is that the Central Bank has given us responsibility now to look at demurrages. We are looking at not only of freight charges but also reasonableness of demurrages.
We have to thank the CBN for doing that. They know we are experts in shipping business and they have leased some of their regulatory functions.
We have saved a lot of money. We are going to give the report very soon.
Why is that coming from CBN?
CBN is the one that controls foreign exchange.
One thing I will say is that we have to commend the shipping companies because of their understanding and their commitment to finding solution to arbitrary and unilateral fixing of costs. They have been here, we have been meeting one and half years. The deal we are going to sign, may be we could do better – but let us start. It has opened a vista of dispute mechanism settlement and for effective cost. We have reduced the charges from the nomenclature, from 16 to 5, so that we don’t have all these charges. We have reduced some of these charges – the headings.
But one of the problems which I have highlighted to the Ministry of Transportation is the agencies of government we are going to face next. Neither the NPA or NIMASA or Nigeria Railway Corporation (NRC) will charge any kobo without coming to the Nigerian Shippers Council and I am happy the Minister is agreeing with what we are saying. So NPA, if you want to make charges, come and negotiate with us because a charge from NPA could wipe out all the gains we have made. So, I am happy, Oil and Gas Free Zone Authority….. we had a problem, because one of the terminals raised some charges and we wrote to them that they have no right to impose such charges, and then we met – and through that we stopped the charge. They (Oil and Gas) are economists; they understand the implication of that quickly. So, if we can have such cooperation from an organization outside the Ministry of Transport, why can’t we have with people inside. For example, NIMASA is charging environmental fees, so also NPA is doing the same. And we can’t have that. That is duplication. This will raise the charges more. We want charges to be tied to services. We are getting a lot of support from the Ministry of Transportation. We are also getting now to understand ourselves, each other or one another with NIMASA. For example we are doing a lot of things with NIMASA. We think that coming together with NIMASA is very important as far as these charges are concerned.
Gradually, what we are trying to do is to make sure that there is not only ease of doing business but also that the cost is reasonable.
Nigerian ports are very expensive and that is disservice to shipping, disincentive to shipping. That is why people may take their cargo elsewhere as an economic decision.
There was a suggestion that you apply the Sri – Lankan example in Nigeria ports. How possible is that in Nigeria?
Yes. It is. What we are saying is that legislation will cure this kind of things. We met with the Sri – Lankan authorities in London. You know Shipper Council engages stakeholders. We cannot do anything without the stakeholders. Even this MOU, we have just got a draft now. So, am going to meet with the shippers, freight forwarders, MAN, NACCIMA, all the trade groups, and say this is what I have been able to extract. Am going to also plead with their patience so that this is just the beginning. For how many years we never had such kind of thing. It is not something we go all way and say we have done that, but gradually. The most important thing is that there is now a basis for negotiation. And when we are going to negotiate, we have to bring the shippers in. It is not only NSC. For example, when we went to Global Shippers Forum (GSF) we carried shippers with us. There was Cadbury, I think and they are with the Lagos Chamber of commerce and industry (LCCI) , because they are the ones we know. We are just the institution. But we have to make sure that shippers are involved.
Sir, we thought the Cargo Tracking Note (CTN) was forgotten, can you throw more light on the stage if is now?.
The international Cargo Tracking Note is another instrument that will add tremendously in shipping development. It will boost the revenue of the government in customs revenue collection in the sense that it will abate under – declaration and concealment. It will boost the revenue of NPA because there will be no more alteration of the manifest. It will boost the revenue of NIMASA because under – declaration on the weight of ships will not be there any longer. But most important is that the beauty of it is that CTN is a veritable source of data. You will know everything that is coming into your country. We have had many African countries having this because it is the initiation of Union of African Shippers Council (UASC), Cameroun, Niger that is even land – locked and many other countries have Cargo Tracking Note. So, you got to k now what is coming to your country. It is a security document because, if you knew, there will not be proliferation of firearms. We have discussed with the Comptroller – General of Custom when he came here and we have been talking with him, and he is on it.
There are technical hitches because we ran into problem with the agent that was supposed to do that. But now we – NSC, NPA, NIMASA and Customs Service, are coming jointly with Shippers Council in the lead to make sure this thing is done. I hope by the time we have the final report on it, we should be able to start the CTN. To check expenses, because of the volume, what we proposed was very very low. It is the lowest in the whole world. Because our own is not actually the direct revenue but what it will do to the economy and the security, and of course data that we will collect.
Any development on the dry port project?
Yes, we have up till December to bring on board Funtua and Jos. Then, the federal government will now finance the connection of rail into the dry ports. In fact, estimates have already been given to the Nigerian Railway Corporation to ensure that this is done. When we do that, by December, January we commission the two. But others, we are still having problems. You know this has been concessioned to the private sector and so we are looking at new business outline cases they are submitting. We are giving them time to do that, and we threaten to cancel the concession if they are not able to do so.
At a point you were sourcing some investors for them to make the project faster. What is the situation?
We did, in fact, some are dealing with Chinese companies. Like Jos, some with the Canadian investors at Isiala Ngwa.
They are working at it – always having meetings. Two days ago, we had meetings with Funtua and Jos – and we gave them the timeline for us to work so we see things are done. Am worried about the capacity of the railway. Nigerian Railway Corporation now takes containers from Lagos to Kaduna where they are examined. Of course, because it is a narrow guage, we are worried about the speed which is 60KPH – that is the average. Am also worried about derailment. We need frequency and certainty – so that we can schedule that in every two days, it will take about 40 containers. They are overwhelmed in Kaduna. Many shippers have come, companies like Nokako in Kaduna, Orland Farms. They want to use Kaduna, but the capacity of the rail. But now, we have upped the number of containers. Nigerian Railway has been very committed and the containers are taken there, they are examined there. The Customs Service has upgraded their Command ….Central Bank has recognized Kaduna in electronic Form M – Kaduna as a port. Many banks are moving because of the transaction. NDLEA, SON, SSS, Police are in Kaduna. Export has grown in Kaduna. Cow horn, ginger, habiscus are being exported through Kaduna. So what Shippers Council is trying to do is to acquire the land adjacent Kaduna dry port so that we have it for processing. We don’t want these raw materials to be exported. We want ginger to be processed and packaged so that there will be value addition. This will mean employment for people. We want Zobo to be processed and packaged. We have been working with the Ministry of Finance to have a pre – inspection agency so that what we do, immediately this is done, the ship is waiting because of schedules and train will take these things. So more exports will be done. Kaduna will be a success story. Especially with rail coming on. And then we are looking at Kano which unfortunately has not been able to do anything. But we are into it. The moment we do that we will decongest the seaports and we bring shipping closer to the people and we grow the economies where these dry ports are sited.
Am happy with what is happening in Kaduna, am happy with the regulators, CBN, Nigeria Customs and many others who recognized Kaduna and they are doing business there.
There is this worry that an operator expressed recently that the volume of cargo from Lagos to Kaduna in about 20 per week. How do you react to this?
It is low because of the capacity of the rail. But he has forgotten that trucks also come with the containers.
What we want is that with rail, we can tract the containers – so that there will not be any diversion – so that Customs will not lose that revenue. That is very important. But in two weeks time, the Niger people are coming to inspect Kaduna – which is significant. We had meetings with Niger three weeks ago. They want their cargo to come, but they are looking at Kaduna. Already the Kaduna State government has led a trade delegation to Niger – so that they will consolidate that. Whatever happens to Kaduna, we should not forget, has the support of the Kaduna state government which has been solidly behind the Kaduna dry port. They provided so many things, the roads. They have done the in and out of the roads, they have provided security, light, water and any other infrastructure. So, what we are trying now to do is to make Kaduna security compliant, ISPS Code. It is very important, that is what is remaining. Then, the FIATA recognizing them which we are doing with the Council for the Regulation of Freight Forwarding (CRFFN) – And like I said Shippers Council wants to acquire the land so that we have factories at the port processing and packaging. We are acquiring more land with NRC. But we also have another land in Kaduna which has more space than the one near the dry port.This we are doing with Commonwealth Investment and Enterprise Council and the NEXIM Bank. They are going to give the support and Kaduna will be a full port. This we hope to do in Jos where we have two applications for industries to be located near the Jos dry port. We have Smelters there, we are already talking with them to see what could be done. But this whole idea is that we could reach Europe from Jos more than South Africa. It is about five hours to Europe, Germany, Britain and so on. We have that dream to do that.
We understand that there are proposals for building of dry ports in Delta State, can you comment on this sir?
Delta is just like every other state where we are bombed with proposals. I have met with the Economic Adviser of Delta State who is very very vast in economics and we have discussed. We also have proposal from Prof Pat Utomi and many entrepreneurs. We are considering them – because we encourage them to submit the outline case if they have proposals so we check the viability. We can’t be building dry ports if they are not going to be viable. We don’t want any white elephant project. Many state governments have come to say they want to have freight station, they want to have dry ports but we look at them and say, no, you can’t, either because it is proximate and already existing dry port or there will not be enough throughput to support such dry port. So, we are looking at the Delta issue. Staff of Shippers Council were in Delta just two weeks ago and had a meeting. We are looking at which is the most viable of them.