Eastern Ports: Promoting Ease of Doing Business through Cargo Diversion
By Francis Ugwoke
The Nigerian Ports Authority (NPA) recently moved to address the protracted issue of congestion in Lagos ports. The problem has been one in which vessels calling at the nation’s Lagos ports spend longer time than necessary before discharging their cargoes. It has been so bad that vessels sometimes spend about three weeks in the Lagos anchorage area before finding spaces to berth. For those conversant with the cost of running a ship, this would indeed be overwhelming for the ship owners. The implication however is that such costs are in turn transferred either directly or indirectly to Nigerian shippers through high shipping charges. The situation in the ports has been worsened as a result of the ongoing rehabilitation of access roads within Apapa and the major Cocoanut/Tin Island ports roads. With limited passage of trucks in and out of the ports to only Ijora/Wharf road, the situation in the past few months has been terrible . It is this scenario that has taken a toll on the vessels calling at the Lagos ports. Multinational shipping agencies have had to complain that average turnaround time of vessels calling at the Lagos ports has been affected significantly as a result as so many containers are not moving out of the terminals handled by concessionaires as fast possible. In apparent move to address the problem NPA had ordered that vessels which are affected by such long delay should be diverted to the Eastern Ports. NPA’s General Manager, Corporate Communications, Engr Adams Jatto, explained in a statement that this was only when Lagos terminals cannot discharge such vessels within four days. He further explained that the measure was mainly to promote the ease of doing business and reduce the negative impact such endless wait will have on turnaround time of vessels. Jatto added, “These actions have been taken to promote the Ease of Doing Business Policy of the Federal Government and curtail the negative economic impact that the long turnaround time of vessels has on stakeholders. We solicit the cooperation of all stakeholders.” The measure by the authority came just as the Minister of State for Transportation, Senator Gbemi Saraki raised concerns over the high cost of doing business in Nigeria. Saraki had described Nigeria as part of West African states where cost of doing business has remained the most expensive in the world. With vessels calling at the ports and spending close to a month before finding spaces to berth, this no doubt means huge costs in bunkering and other logistics. Observers believe that the NPA may have considered all this before taking the latest decision to encourage vessels having such issues to head to the Eastern ports.
Reactions from stakeholders
Since the measure on diversion of vessels to the Eastern ports was introduced with effect from January 27, there have been mixed reactions from industry stakeholders on the issue. The Shippers Association Lagos State (SALS) and members of the Association of Nigerian Licensed Customs Agents (ANLCA) have been divided on the measure by the NPA. President of the SALS, Rev. Jonathan Nicole argued that this will lead to an additional cost. Nicole points to a situation in which shippers who are affected by the diversion had earlier used Lagos ports as ports of destination, arguing that they would be affected by additional costs of clearing and movement of the cargo to Lagos. He argued, “My destination port is Apapa, and I probably have made all preparations to clear my goods at Apapa. If you now move it to Port Harcourt Port, who pays for the transport? The transport fare from Port Harcourt to Lagos now cannot be determined, the price is increasing daily”.
But customs agents in reaction to the statement credited to Nicole think differently, saying it was ill-motivated and mischievous. Immediate past President of ANLCA, Prince Olayiwola Shitu said it was wrong to kill measures that are capable of addressing the nightmares that the Lagos ports have faced in the past few years. According to Shittu, the option of diversion of some vessels to the Eastern and Delta ports as a temporary measure by the NPA as the landlord of the system was a good development and best solution to the issues under the circumstances.
He told newsmen, “We have been crying that congestion in Lagos ports should be alleviated to enable business grow. Ports in the East and Delta have been lying fallow, during the time of Cement Amanda in the late 80s during the military regime, it was the same solution that was adopted and somebody is saying shippers don’t want diversion. Diversion of cargo can be done when there’s emergency or force majure. We have emergency in the western ports, why should a vessel stay for a whole month before it can discharge? Why are cargo already discharged not able to leave the ports?
He continued, “Shippers who handle project jobs are ready to receive their cargo from any port in Nigeria in order to meet their project schedule. Why must we oppose remedial policy regime, for mischief? People should look at the depth of injury already done to the economy. ANLCA has asked for it, our National President, Mr. Tony Iju has written to President Buhari to divert cargo from Lagos to Eastern ports and Delta port. Within the period, the Lagos ports roads would have been done and normalcy would have returned.” Similarly, President, National Association of Government Approved Freight Forwarders (NAGAFF), Chief Uche Increase, described the decision by the NPA as coming at the tick of time to address a national crisis. Uche said, “Diversion of vessels to Eastern ports is a good initiative. What NPA is doing is not wrong because at present, the ports access roads are not in good shape, even as port congestion is leading to hopelessness on the access roads. Recall that some years back, the Federal Government took similar steps of diverting vessels to Calabar port due to congestion in Lagos. So, it is a good idea”.
Diversion as Necessary Alternative
The Lagos seaports have over the years, at least from time to time, suffered congestion. Under such circumstances, the NPA had always resorted to diversion to other ports in the East. In the early and late ‘90s when the ports had not been concessioned, the authority had diverted ships from Lagos to the Eastern ports offering up to 20 percent reduction in dues. Between 2003 and 2004, the NPA had also encouraged diversion to Eastern ports. The reason was to check yet congestion in Lagos ports. The same incentive was offered. Shipping companies did not hesitate to jump into this offer. Other times, even after the ports were concessioned, diversion of vessels had been the alternative to check congestion. Sometimes, goods were stemmed for other terminals, including bonded terminals within Lagos and Ikorodu Lighter Terminal as a measure to check congestion. While the argument by Rev Nicol may not be out of place, the association also needs to consider the reasons given by the management of the NPA in taking this measure. First, is that it is a temporary measure to take care of the current crisis bedeviling the Lagos ports. And this is the point that many stakeholders have come to understand over the measure taken by the NPA. The rehabilitation of the ports access roads, including the exercise from Oshodi Express to Mile2/Tin Can Island is seen by all as the only solution to the crisis. It is from this point of view that many stakeholders are ready to offer whatever sacrifice. When completed, there is no doubt that the gridlock that has over the years remained in Apapa will be over, as trucks and others will have alternative routes for in and out of the ports as against what appears to be one-way traffic that has remained a major problem for everyone in the past few years. Talking about diversion, already some multinational shipping lines and many other shippers have embraced the idea. In terms of cost implication, customs agents hold the view that it costs even more to have a container trapped in the ports for months incurring demurrage than if such goods are diverted to the East where delivery is processed. This is also the view of some shipping lines who believe that remaining for a month in the Lagos pilotage area waiting to berth with the risk of piracy does not make any economic sense particularly when there is an alternative. If Nigeria is to be counted among the advanced global ports, the turnaround time of vessels calling at her seaports must be efficient as part of the ease of doing business.
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