Foreign Shipping Firms Re-introduce Congestion Surcharge At Nigerian Ports

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By YUSUF BABALOLA, Lagos

Foreign shipping companies have re-introduced surcharge for congestion due to inefficiency on the seaside at the nation’s seaports, LEADERSHIP findings have revealed.

Nigeria had been saving over N320 billion yearly for the past 11 years before the return of the levy at seaports.

Congestion surcharge is slammed when there is an incident of cargoes piling up at the Quay apron and stacking area and is not being moved out.

Investigations showed that shipping companies now ask importers to pay this surcharge ahead, even before the ship arrives in the shore of Nigeria.

An accounting firm, Akintola Williams Deloitte, in its industry report titled, ‘Public Private Partnership (PPP) as an anchor for diversifying the Nigeria economy: Lagos Container Terminals Concession as a Case Study, had said importers and exporters paid $800 million (N320 billion) annually to shipping companies as congestion surcharge in Nigeria.

The report however noted that, while the huge amount has been saved by federal government’s ports concessioning of 2006, the current traffic gridlock has returned the charges.

But since Nigeria evacuate over 90 per cent of its cargoes through the road and 0.09 per cent on water, and about five per cent through the rail, an incident on the ports artery road leading in or out of the seaports will have an effect on efficiency on the seaside of the ports.

LEADERSHIP gathered the inability of truck drivers to access the seaports to evacuate cargoes, especially bulk cargoes, led to the reintroduction of the congestion surcharge by foreign shipping companies.

For instance, it takes truck drivers about 15 hours to access port gate from various terminals, while it takes over five days to access and another four days to exit the ports.

Speaking to LEADERSHIP, a retired director of the Nigerian Shippers Council, Mrs Dabney Shall-Homa, said slamming congestion surcharge on Nigeria by foreign shipping companies is as a result of lack of efficiency on the country’s landside to complement efficiency on the seaside.

According to her, the surcharge is to tell Nigerians that there is a problem and to tell the country not to call vessel to its shores when its environment is not in a right state to receive it.

She said, “Shipping is a derived demand. If a shipping company wakes up today to increase cost, it is not just doing that unilaterally, neither is it increasing because it doesn’t know what to do. It is doing it while following internationally laid down procedures for increase”.

Although the maritime expert berated the shipping companies for not consulting the Nigerian Shippers Council before slamming the surcharge, she blamed the development on government’s failure to build the nation’s infrastructure over the years.

She said, “To a large extent, they (shipping companies) have not been consulting with the Nigerian Shippers’ Council, the agency responsible for negotiating freight rates and all other charges in the industry however. If we don’t provide the road and the time the vessel uses to discharge cargoes, who will be responsible for demurrage on the ships and containers?

“So, if the business and efficiency on the seaside is not matching efficiency on the landside there is bound to be problems. That is why you see shipping companies introducing surcharge.

“A congestion surcharge means there is a congestion. Unless there is no congestion you can argue it. Congestion surcharge is slammed when there is an incident and in this case there is an incident of not having roads.

“Cargoes are piling up at the Quay apron and stacking area and are not being moved out or in. What it mean is that the ship will wait a longer time, longer period for it to be loaded and when it is discharging, sometimes the terminal will be full to capacity that it cannot hold anymore”.

Also speaking, the chairman, Seaports Terminal Operators Association of Nigeria (STOAN ), Princess Vicky Haastrup, noted that time is of the essence to maritime activities, as ships now spend 30 days waiting to discharge cargoes.

She said, “In the ENL terminal, I have a ship that has berthed and has been waiting to discharge for months because some other ships cannot discharge cargoes and trucks do not have free access to the ports.

“Time is money in maritime activities because the importers of goods are paying demurrage on the ships and that is why freight and insurance cost are more expensive for ships coming to Nigeria than any other parts of the world.

“On high turnaround time of vessels, private terminal operators said trucks have no access to the seaports to evacuate already discharged cargo, hence stalling discharging of new once.”

Reacting to the reintroduction of the congestion surcharge, the Executive Secretary of the Nigerian Shippers’ Council (NSC)‎, Barr. Hassan Bello said the council will negotiate the reintroduction of the surcharge.

He said, “Nothing will be re-introduced without us. We will have to negotiate that. Nobody said things should not be introduced. What we are saying is ‘take the necessary steps’. As a matter of fact, we will see reduction in charges very soon by the time we come out with the whole framework.”