Shippers Council And The Task Of Regulating Seaport Business

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When in February 2014, the Federal Government declared the Nigerian Shippers Council (NSC) as the seaport economic regulator, shippers and other port users were in fury of excitement. The reason is not far-fetched. Shippers and their clearing agents and freight forwarders had cried and yearned for an economic regulator for many years since the concession of the ports in 2006 and have even sponsored a stakeholders’ bill for the creation of the economic regulator for the port.

There had been for the period between 2006 and 2014 severe complaints and allegations of arbitrary charges imposed on imported goods by foreign shipping lines and port terminal operators.  When the ports were concessioned to private operators in 2006 till February 2014, the port system only had a technical regulator, which is the Nigerian Ports Authority (NPA). Even though the NPA was the landlord in the concession model, it could not handle economic commercial issues of the port. It only provides technical backbone and support to the port, such as dredging of channels and building of buoys, among other related responsibilities.

So, the coming of the NSC as the economic regulator saw the council taking deeper role in business conflict resolution between shippers and shipping lines and terminal operators on one hand and between shippers/agents and government agencies such as the Customs service on the hand. The complaints were many and bothered mainly on cost of doing business in the port most of the time and refusal by shipping lines to refund container deposits even after the containers are returned in good condition. The importers had argued that without an economic regulator, port service providers lack regulators and would fix arbitrary and high rates for the services. The need for a port economic regulator was real.

Indeed, the NSC had a huge task before it, but it was not new to it totally, as the council had been engaging importers and exporters, shipping lines and terminal operators and resolving business issues between them, hence its adoption by the Federal Government as the agency for the economic regulation of the port.

However, the task has not been easy. Bringing a new order to the system, regulating cost and ensuring healthy competition among port operators means that the Shippers’ Council will encounter operators who may feel threatened. Experts and stakeholders believe that beyond the Council being gazetted, the economic regulator must be established by an act of parliament. Seizing the avenue of this seeming weakness, port operators and shipping lines now institute litigations and sometimes, get exparte order to restrict the regulatory role of the Council.

In its very first main regulatory decision in October 2014, the in a bid to cut cost and stop Nigeria-bound cargoes from being diverted to ports of neighbouring countries, slashed port charges by as much as 20 per cent.

The council in the public notice to terminal operators and shipping companies, announced major reviews of some controversial levies and charges, in which it ordered terminal operators to reverse collections in respect of progressive storage charge, free storage period to the pre-May 2009 rates approved by the Minister of Transport, as well as increased the container storage free days’ grace to seven days, up from three days that the terminal operators had been allowing.

It also pegged the maximum charge for storage to N10,000, irrespective of the number of days imported containers would stay at the terminal.

On the controversial refundable container deposit charge, the council ordered that with effect from November 3, 2014, the deposit must be refunded to the importer or the clearing agent within 10 days after the return of the container or pay interest rate on such deposit for the number of days the refund was not made.

These orders were however challenged by the affected operators in the court, with the NSC winning the initial suit in which the court also confirmed its powers as the port economic regulator.

Regulation through Stakeholder Consultations

As an economic regulator of an industry, the NSC recognises that the involvement of stakeholders is an important element in decision-making procedures. So, the Council relishes in meeting with all stakeholders, including terminal operators, shipping lines, shippers, freight forwarders, shipping agents and relevant government agencies present in the port, all of whom acknowledged the need to have an umpire to regulate activities of the various players.

The executive secretary of the Council, Mr Hassan Bello says in its capacity as the port economic regulator, the role of the NSC is to consult, coordinate, moderate and harmonize the various processes and procedures with a view to achieving operational efficiency at the nation’s ports.

He says, “Where there is unreasonable resistance, we shall not hesitate to apply appropriate sanctions to ensure compliance. We remain open, independent, neutral and consultative and all decisions will be based on the buy in of stakeholders. We are also to assess options for competition; to decide on entry rules; to regulate on pricing freedom; to monitor outcomes and all that.

“A regulator needs to be independent, transparent, legitimate and credible, bearing in mind that the transition to a competitive market is a major regulatory challenge. It is also germane that the regulatory processes are fair to all parties, by not taking arbitrary decision and by balancing the needs of stakeholders.”

In realising its objective of resolving complaints by port users and service providers, the NSC established the Shippers’ Compliant Unit, where complaints from exporters and importers were received and subsequently followed up for recovery of lost monies where applicable. In recent time, especially since its pronouncement as the port economic regulator, the NSC has resolved thousands of complaints and recovered about N100 million for shippers and other port users in charge rebate and container deposit refunds, among others.

In two years of discharging its duties as the economic regulator, testimonies are rife among port users about the many interventions of the Shippers’ Council, saving them time and cost.

The general manager of Duncan Maritime Ventures Limited, Barde Abiodun applauds the air of unprecedented professionalism now exhibited by the personnel of the Council.

At a complaint resolution meeting convened to resolve some issues between the agency and the frontline licensed customs agency, Abiodun said, “We hope these attributes will continue so that the maritime industry will grow,” and commended the Council for resolving all the issues outlined in a letter of protests dated June 2, 2016 written by Kezim Services Agency Limited.

The council recently intermediated in a cost scuffle between some freight forwarders belonging to the National Association of Government Approved Freight Forwarders (NAGAFF) Tin Can Island chapter and some shipping lines, leaving both parties with a balance of interest.

“We really thank the Shippers’ Council for their quick response and the reduction therein from three foreign shipping companies namely, Mearsk line Nigeria, China shipping and Safmarine shipping. We wish the management of Nigerian Shippers Council more fruitful services to Nigeria,” says Deacon Kate Dike, a NAGAFF scribe.

Also, the chairman and CEO of Enugu-based Sunchi Integrated Farms Limited, Eze Obiora, reels out more of the testimonies on the works of the port economic regulator.

He testifies, “We brought before the Council an appeal for waiver on demurrage and rent on 13 containers of poultry keeping equipment totaling millions of Naira held in the port by the Nigeria Customs Service (NCS) the Council  prevailed on all the parties involved.

“The shipping company, Safmarine, the terminal operator, Tin Can Island Container Terminal (TCIT) and the consignee, my company were called to meetings by the NSC for an amicable settlement. In fairness to all parties, we have lifted the 13 containers and are very proud of shippers council and her personnel that handled the matter.”

Driving Efficiency through Automation, ICDs

With myriads of issues bedeviling the country’s port system, major among them being vicious  corruption, the Shippers’ Council is not resting on its oars to instill a standard procedure for operations and ensure that port operations are automated to reduce human physical contact with agencies and services providers, which breeds corruption and gulp business time like a wildfire.

 

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