NSC and Move Against Illegal Surcharges by Shipping Lines
By Francis Ugwoke
The challenges facing Nigerian shippers are too many and from different directions. Apart from the issues of infrastructure in Nigerian ports environment that have impacted negatively on trade facilitation locally, importers have had to contend with the surcharges imposed on them by shipping agents who are acting on the dictations of multinational shipping lines under different conferences involved in movement of goods from one continent to another. Although imposition of surcharges in itself is not out of place as certain situations demand for this, what is worrisome is the tendency for the shipping agencies to fail to vacate them when the need arises. The United Nations Conference on Trade and Development (UNCTAD) provides for surcharges by liner conferences who are made up on individual shipping lines from different continents involved in shipment of goods worldwide. But UNCTAD provision makes it clear that these surcharges are supposed to be temporary and subject to cancellation when the situation is normalized. In the Nigerian environment, there are instances in which shipping lines impose surcharges without justification. For instance, in September last year, some shipping lines, including CMA CGM had given a notice to introduce a congestion surcharge of $400 per container. In a notice, the shipping line had said “Port congestion at Lagos ports, Nigeria, is currently increasing our operational costs and generating severe service disruption for several weeks”. The surcharge was to take effect October 15 last year but for the timely intervention of the Nigerian Shippers Council (NSC). Yet, the shipping agencies are not done, as they are again drumming for the introduction of more surcharges.
Surcharges by liners
Among the surcharges that have been identified as prevalent in Nigerian ports in different colorations according to the Nigerian Shippers Council (NSC) include peak season surcharge (PSS); extra risk insurance (ERI)/carrier security fee (CSF) surcharge; congestion surcharge (CS); freight tax surcharge (FTS); operations cost recovery (OCR); low sulphur surcharge (LSS); B.A.F (bunker adjustment surcharge) and C.A.F. (currency adjustment surcharge).
Negative effect
As the ports economic regulator, the NSC believes that most of the surcharges are not justifiable and negative to trade. The fear being expressed among stakeholders is that the surcharges if allowed to take place will affect traffic flow of cargoes to Nigerian ports. And this is considering the neighbouring ports surrounding Nigerian ports in the West and Central African sub-region. Nigeria had competed over the years with neighbouring ports for the transshipment hub. Such surcharges will further worsen the situation and many Nigerian shippers may be forced to use neighbouring ports like Cotonou and resort to smuggling through the various porous border routes.
The Director, Special Duties, NSC, Mr. Tahir Idris said the surcharges are built into the freight costs from parent companies. But he expressed concerns that the shipping agencies often ignore to suspend the surcharges even with the knowledge that the situation which justified their imposition has changed.
Tahir said, “it seems to be permanently being deployed as it is mostly built into the freight cost from parent companies”.
He explained that the surcharges are fees collected by shipping companies in addition to freight rates prevailing in Nigerian seaports.
He explained, “There are about eight or more surcharges imposed on Nigerian ports. The UNCTAD provisions in its Article 16 of the code stipulate that surcharges imposed on cargo moving to and from a particular port shall be regarded as temporary and likewise shall be increased, reduced or cancelled subject to when the situation in the port changes.
“But what we have observed is that, we hardly witness a total suspension of these surcharges as was intended to be a temporary measure, designed to bring equity in the recovery of some unexpected costs increases or losses. It seems to be permanently being deployed as it is mostly built into the freight cost from parent companies”.
Global Shippers Forum
In a bid to stop the shipping lines from the continued exploitation of Nigerian shippers, the NSC leadership said it will take the matter up with the Global Shippers Forum (GSF) which is an apex association of shippers councils all over the world. As a member of the African Shippers Council (ASC), Nigeria will report the matter first to its parent body which will then take up the matter to the GSF. The Forum has a way of checking the excesses of shipping lines operating in different continents of the world. Speaking on the surcharges, the Executive Secretary, NSC, Mr Hassan Bello described them as unjustifiable.
Bello explained that while some of the charges were supposed to be temporary, reduced or cancelled as allowed by UNCTAD and as the situation in the ports changes, the shipping lines have maintained a permanent imposition of the charges on helpless shippers.
He said what is worrisome is that even incidents of piracy that have nothing to do with Nigeria are given different colorations in what is targeted at placing a surcharge on cargoes coming to Nigeria.
He added, “Everything that happens, even if it is in Togo or Benin Republic, it is attributed to have taken place in Nigeria. Even local infractions like somebody just enters the ship illegally even without weapons, it is reported as incidence of piracy. But that is not piracy, it is probably robbery incident. Piracy is total command of the ship on the high sea”.
Stakeholders’ Reactions
Worried about the effect of the surcharges on cost of shipping and to the final consumers, freight forwarders are of the view that except the ports economic regulator moves fast in checking the shipping lines, Nigerian ports will become unfriendly. Former President, National Association of Government Approved Freight Forwarders (NAGAFF) Dr. Eugene Nweke said the shipping lines are out to inflict economic woes on shippers and should not be allowed to have their way. Nweke said the shipping lines fail to understand the effect on the importers and their customs agents who he said will pass the cost to the final consumers. He urged the ports economic regulator to stop the shipping lines and their agents in Nigeria. Nweke recalled that it was the NSC that stopped the first planned surcharge that would have taken effect in October last year, adding that the decision of the NSC to take the matter to the GSF through the African Shippers Council (ASC) was a welcome development. He argued that there is no situation now that calls for surcharges by shipping lines. Nweke said, “there are conditions spelt out by UNCTAD for surcharges. The NSC should ensure that these conditions are followed by shipping lines”. Similarly, a maritime lawyer, Mr Kasa Opara also kicked against any surcharge being proposed by shipping lines. Opara said that in the first place the shipping agencies collect as much as N60,000 administrative charge on all 40-foot container despite the contract of affreightment entered between the shipping line and the importer for which freight charge had been paid abroad before the goods left for Nigeria. He said that it was only the NSC as the ports economic regulator that will be able to stop the shipping lines from taking advantage of the helpless situation of shippers in Nigeria. “It is only in Nigeria that these shipping lines want to try their luck on certain surcharges and am happy that this is being resisted by not just the freight forwarders but also the leadership of the Shippers Council”, he said. Opara said what most shipping lines coming to Nigeria do is to test the waters with illegal charges and enforce it permanently if not challenged. “It is only in West Africa and particularly Nigeria that they try this nonsense, but am happy that the NSC has risen swiftly against them”, he added.
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