New Telegraph

Consumers Under Repression Of Unfair Trade Practice At Ports

Annually, importers using Nigerian seaports pay about N6.11 trillion to clear average of 822,868 containers and about N838.112 billion to liners because of multiple surcharges which are finally borne by final consumers. For instance, since 2019, they have paid N18.33 trillion illegally on various surcharges not approved by the government, thereby making the cost of consumer goods imported into the country on the high side.

Surcharges

Some of the arbitrary charges are the bunker adjustment, currency adjustment, war risk, extra risk insurance surcharge, freight rates surcharge and port operations recovery surcharge. Others are Basic Service Rate Additional (BSRA), Bunker Adjustment Factor (BAF), Currency Adjustment Factor (CAF) IMO, ISPS or SEC – security charges, Terminal Handling Charge (THC), Full Container Load shipments, Heavy Weight Charge (HWC), Overweight Surcharge (OWS), Port Congestion Surcharge, Peak Season Surcharge (PSS) and Winter Surcharge (WS). Moreover, figures released by the Nigerian Ports Authority (NPA), revealed that container traffic at Lagos Port Complex, Tincan Island, Delta, Onne, Rivers and Calabar stand at 822,868 annually, as it takes N7.5 million to clear and transport a 20-foot container laden with cargo valued at N41.11 million ($100,000) imported into Nigeria from China.

Also, it was revealed that about N6.3 million, representing 82.1 per cent, is paid to the Nigeria Customs Service (NCS) as import duty, Comprehensive Import Supervision Scheme (CISS), ECOWAS Trade Liberalisation Scheme (ETLS), Port Development Surcharge and Value Added Tax (VAT). Shipping companies are responsible for 13.8 percent of the port cost (N997,000); terminal operators 1.8 per cent (N217,000); transporters 1.1 per cent (N91,500) and clearing agents (N88,000).

New surcharge

Also, there is a new surcharge called Motor Vehicle Administration Agency (MVAA) from Lagos State which attracts N4,600 on all imported vehicles coming out of Lagos ports known as Temporary Vehicle Tag (TVT). The new fee is different from Wharf Landing Fees being collected on all cargoes, including vehicles by the state government. Annually, an average of 240,000 used and new vehicles are being shipped into the country. The Nigerian Ports Authority (NPA), it was learnt has linked TVT payment to Terminal Delivery Order (TDO) and directed terminal operators not to release any vehicle without evidence of payment. Also, it was revealed that after payment of N4,600, clearing agents would be issued a sticker that would be placed on the vehicle to allow it to be driven within Lagos for the period of one month. The TVT collecting office is domiciled at the Lagos State Wharf Landing Collecting Authority in Apapa, Lagos.

The Chairman of Lagos State Wharf Landing Collection Agency, Chief Gboyega Salva- dor Adebayo explained that the TVT collection was different from Wharf Landing Fees. According to him, the TVT is strictly for security purposes, especially in the face of importation of arms and ammunition, stressing that people using imported vehicles without numbers commit crimes. He said: “The money is being collected by Motor Vehicle Agency, but because of polarity in the port environment and harbour area, we decided that you cannot have two agencies running after the same people in order to pay different levies. “The Wharf Landing Fees is based on goods brought into the country through the Wharf. So, what we decided was that, for areas where Motor Vehicle Agency is operating, they are basically security issues.

Vehicles are imported into this country without any number to identify them, when they leave the port premises, they could be used for criminal activities or they could even have an accident killing people, how do you identify the vehicles that did it? “It was based on such security issues, because people are using vehicles to bring in guns and all kinds of ammunition, so we decided to start giving the identification tags and temporary numbers. Before these vehicles leave the port, they must have a temporary number, and that is why Motor Vehicle Agency is now present at the port.”

Operators react

However, the former President of the National Association of Government Approved Freight Forwarding (NAGAFF), Eugene Nweke explained that from professional and industry practice point of view, the excuses posited by Salvador in defence of this seeming arbitrariness was weak. Nweke noted that it was casting operational integrity question on the proper Customs officer of non application of due diligence in cargo inspection and documentation. For instance, the freight forwarder stressed that the imposition of the tax should not be at the detriment of the international trade supply chain and abuse of international trade protocols. Nweke noted: “I will be surprised and ashamed if the NSC allows this trade exploitation and this system abuse is not halted immediately. The NSC has a duty to ensure that all charges on imports has a cost function addition. Also, bear in mind that, the concept of port value addition supply chain, entails that all imports charges adds up to value obligations.

Equally, I believe that the NSC knew and understand the import of international trade protocols and convention, especially with regards to the WTO preamble on Trade Liberalisation, which Nigeria is signatory to. “The duo of the NSC and the NPA has an administrative tasks at ensuring that the inter- change points (port system) are not unduly caged or choked with arbitrariness in the neighbourhood of excessive taxation, with a capacity to cause a subtle impediment to the fluidity and smooth flow of cargo clearance out of the ports.” The former president further explained that the way with which terminal operators and ship- ping lines offered themselves, serving as a conduit pipe or tool for collection of charges was alien to port industry and was becoming rampant and should be revisited. According to him, the leadership of the freight forwarding association, should brace up to its professional advocacy objective by reactivating their respective trade negotiation tools and redirecting it.

Implication

Within this year, despite the sharp drop in the importation of used vehicles into the country, a terminal operator, the Ports and Terminal Multiservices Limited (PTML) said it would begin to charge an additional N50,000 on imported cars handled with forklifts from May 1, 2023. However, the perturbed Association of Nigerian Licensed Customs Agents (ANLCA) said that additional N50,000 per unit charge imposed on forklifted cars should be cancelled as members of the association fear that the new charge would further lead to drop in vehicle imports as the Nigeria Customs Service (NCS) recorded a 40 per cent drop in imported vehicles in the terminal in 2022.

According to the taskforce Chairman, Tincan chapter of the association, Rilwan Amuni, the proposal was illegal, arguing that there was no basis for the imposition of the N50,000 charge. He said: “The feelers we are getting is that it has been suspended, our own is that it should not be suspended, but jettisoned completely. This is because it is illegal, the costlier the cost of clearing these goods for the importers, the more it spoils business for us, the agents. “If the cost is escalating, no importer will import and what will the agents do? So, it is very important we fight this obnoxious proposal.” Besides, Amuni added that the association would not accept a downward review of the charge, pointing out that there were already charges for forklifted accidented vehicles and Port Recovery Charges (PRC).

Complaints

Early in the year, Nigeria Customs Service, PTML Command also had complained that the introduction of Vehicles Identification Number (VIN) for clearing of imported vehicles led to a 40 per cent drop in imported vehicles in 2022. It said: “There was a drop in 2022; there was a drop of almost 40 percent of roll-on-roll-off importation. The shipping lines can also confirm that there was a drop, but despite the drop, look at the revenue we got. “In the year under review about 80 percent of the cargoes handled in the terminal were vehicles. As a customs command, we employed dialogue with our strategic stakeholders on the need to understand the basis of VIN valuation and engaged them severally to solicit their cooperation.

We also strengthened our relationship with our strategic partners who are sister government agencies in the port. “Our robust interface with private sector stakeholders and government agencies is ongoing in 2023 and beyond in line with our extant standard operating procedures. It is important to state that implementation of all government policies and directives are ongoing with increasing degree of compliance being recorded so far.” The former Controller of the command, Suleiman Bomai noted that some government policies such as the VIN had affected automobile importation through the command within the year under review, this is even as importers using Nigeria and other ports in West Africa were slammed with $200 price surcharge by a liner, CMA CGM on a unit of dry and reefer container leaving Turkey to Lagos ports and other port in the region.

The surcharge takes immediate effect from in April, 2023 as the shipping line attributed the payment to congestion and increase in waiting time. It said: “We inform our customers that we are experiencing important delays in Iskenderun and Mersin, Turkey between congestion/waiting time plus berth time on the current vessels berthing sequences with following impacts: laden cargo lead-time is being increased, empty equipment reloading / repositioning frequency is affected and operating costs are increased. “In this respect, CMA CGM will be implementing a Port Congestion Surcharge (PCS) in Iskenderun as applicable from April 13th, 2023, loading date and amount: $200 per Unit.”

Past surcharges

Regardless of its excuses, in May 2022, the liners also imposed new local charges and demurrage on container shipped by Nigerian importers to the seaports two months after it imposed additional costs on all dangerous goods shipped to Lagos seaports. It was gathered that importers were forced to pay importation documentation fee for 1×20 feet container which attracts N37,000, while 1×40 feet container would cost N59,000. Also, it listed the import charges as documentation fee, port additional charge, and demurrage, while export charges remain un- changed. In a document titled: “Tariff Review for CMA CGM Nigeria Local Charges” the liner explained: “Following inflationary trends in Nigeria, we want to formally inform our cherished customers that some of our local charges will be amended. We have, after discussion with the Nigerian Shippers’ Council (NSC), implemented the below increase which will be effective from the 20th of April, 2022.

“The new tariff for importation documentation fee for 1×20 container will now be N37,000, while that of 1×40 feet container will be N59,000. For port additional charge, the tariff for 1×20 feet container will be N45,000, while the 1×40 feet container will amount to N82,500. “Demurrage for 1×20 container staying between 0-5 days will be free while 6-10 days will attract N7,000; 11-15 days will be N10,500; 16-21 days amounts N11,900. Any container that stays longer than any of the above days will attract N14,000.” The company noted that 40 feet container demurrage between 0-5 days would be free, saying that N11, 500 would be paid on a container that lasts between 6-10 days. It stressed that 11-15 days would attract N15, 400, while 16-21 days would cost N17,500. The lin- er also explained that containers at the holding bay exceeding the days aforementioned would cost N20,300, while all other local charges on export would remain unchanged.

The liner stressed that the charges would be paid by shippers in addition to freight charges which range from $14,000 to more than $25,000 per Forty Equivalent Unit (FEU), depending on port of loading. It would be recalled that in February, 2022, it imposed additional costs on all dangerous goods shipped to Lagos, Tincan Can Island ports and other ports in West Africa. Dangerous goods are substances and articles that have explosive, flammable, toxic, infectious or corrosive properties. The shipping line said in a statement that the goods were risks to the public, health, safety, property or the environment when transported on board the ship. The company explained that such goods would attract an additional EUR200 or $230 on 20 feet containers from North Europe, Baltic, Scandinavia, West Mediterranean.

Also, it said that 40 feet containers from the same destinations would attract EUR250 or $285, while dangerous goods from Adriatic and Greece would cost an additional GBP170 and GBP210 for 20 feet and 40 feet, respectively. It said: “Dangerous Goods Additional to West Africa” CMA CGM stated that cargoes (Dry, Reefer & Specials) from North Europe, Baltic, Scandinavia, West Mediterranean, Adriatic, Black Sea, North Africa & East Mediterranean and destined for West African ports are affected by the new tariff.” Also, it added that all the dangerous goods shipped into West Africa from the Black Sea, North Africa attracted EUR200 and EUR450 for 20ft and 40 feet containers respectively.

The shipping line stressed that tariffs for goods from East Mediterranean to all West African ports would cost an extra $300 and $450 for 20 feet and 40 feet containers respectively. According to the shipping line, the charge “dangerous goods additional” is paid in addition to the ocean freight. In 2021, illegal surcharge was rolled out on Nigerian cargoes originating from Europe and the Mediterranean region by the same liner despite Nigerian Shippers Council (NSC)’s warning. According to CMA CGM, the Freight All Kinds (FAK) rates which it slammed on importers would commence from April 1st, 2021 until further notice, making it the third time the liner would introduce Peak Season Surcharge (PSS) on Nigerian import and export cargoes within one year. Finding by New Telegraph revealed that the company had slammed surcharges on cargoes from Indian subcontinent & Middle East Gulf to Lagos ports under the guise of providing its customers with reliable and efficient services.

Before the latest charges, the liners have already imposed Peak Season Surcharge (PSS) against Nigerian cargoes under the guise of gridlock and congestion on the port roads, thereby collecting EUR 800 and EUR1,350 per 20 feet and 40 feet container respectively on Freight All Kinds (FAK) since March 1st, 2020 on all goods imported from Hamburg to Tincan Port, while Antwerp and Rotterdam to Tincan Port cost EUR 725 and EUR 1,050 per 20 and 40 feet container respectively. Miffed by the incessant surcharges, import- ers said that they have been paying over N150 billion unfair multiple surcharges introduced by foreign shipping companies on Nigeria- bound cargoes. However, the liners excuse was that they have been losing between $300million and N166.25billion ($350million) weekly since the outbreak of COVID-19 pandemic.

But barely three weeks after the Nigerian Ports Authority (NPA) partially freed the roads from traffic gridlock CMA CGM said that from April 1, 2021, Nigerian cargoes from Tilbury to Tincan/Apapa would attract EUR 1,700 and EUR 2,320 per 20 feet and 40 feet container respectively, while cargoes from the same port to Tema Port in Ghana would attract EUR 1,010 and EUR 1,620. In June, 2020, Asian importers were forced to pay extra charges on dry, reefer, Out of Gauge (OOG), break bulk cargoes coming to Lagos and Tincan Island port. It was gathered that while shipping lines such as CMA CGM, Maersk, Hapag-Lloyd and COSCO Shipping were waiving detention and demurrage fees in some ports, they imposed same on Lagos, Tincan, Cotonou, Lome, Tema and other West African ports.

It would be recalled that the former Executive Secretary of Nigerian Shippers Council (NSC), Barr Hassan Bello, had complained that the sur- charges imposed on Nigerian-bound cargoes by the shipping lines were responsible for the high freight rate in Nigerian seaports, saying it was illegal as the shipping lines failed to consult the council before imposing surcharges on importers. He listed the abnormal charges the liners always imposed to include bunker adjustment, currency adjustment, security, which is called war risk. Others are extra risk insurance surcharge, freight rates surcharge and port operations recovery surcharge.

Sabotage

The executive secretary described the charges as economic sabotage, saying the council was moving vehemently against the action of the shipping firm. Bello said: “It is discriminatory because it is not happening in Togo, Benin or Ghana. Why should it be in Nigeria? We have written a strong letter to the shipping association of Nigeria and we also wrote to their principals overseas, because this is not a local charge. Why should Nigeria be the recovery ground for shipping companies?” Also, the President of Shippers Association Lagos State (SALS), Jonathan Nichol, who bemoaned the shipping costs, expressed the group’s intention to take it up with appropriate agencies. Nichol said the surcharge was uncalled for, considering the negative effect of COVID-19, stressing that importers hardly make profit due to excessive charges.

However, the Vice President of the Association of Nigerian Licensed Customs Agents (ANLCA), Mr. Kayode Farinto explained that the issue of corruption could not be ruled out as it has negatively affected the cost of cargo at the Nigerian ports. Farinto noted that the corruption and under table payments account for about 30 percent of the charges, while arbitrary charges by government agencies and private operators stands at about 55 per cent. He noted: “If you look at the percentage of the under table cuts which is about 30 percent of the port charges and compare that to the 55 percent of arbitrary charges being collected by government agencies and private operators, then you can agree with our submission.”

Farinto argued that the 30 per cent illegal charges could not be traced, but the 55 per cent traceable arbitrary payment should be dealt with. For the last one decade, port users have been clamouring for cancellation of container deposit to lessen the cost of business in the port. The deposit is paid by importers or customs agents before moving containers out of any terminal. The deposit also serves as a guarantee that the operator will return the container in good condition. Finding revealed that importers deposit as much as N200, 000 per 40-foot container within Lagos and N400, 000 outside Lagos.

Twenty-foot container deposit attracts N100, 000 within Lagos and N200, 000 outside Lagos. In addition, importers pay N170, 000 and N180, 000 as terminal charge including automatic demurrage of N100,000 and other charges from Customs and clearing agents. For some years, it has always been a serious hurdle in getting refund for all the deposits paid on containers, while in most cases importers either get less than half of what had been paid as deposits or even lose the money out rightly due to various excuses advanced by the foreign shipping agents .

Worried by the impunity, Nigerian Shippers’ Council (NSC), has resolved to stop the container deposit fee paid by importers. It was learnt that the decision by the council would not only ensure the success of the Ease of Doing Business Policy of the Federal Government in the port industry, but would also reduce the cost of clearing goods and promote efficiency at the seaports. Bello said at a meeting with shipping companies in Lagos that criticism about container deposit fee constituted about 80 percent of the complaints received by the council.

Rationale

According to him, the whole idea of abolishing it was to create a balance in the course of doing business in the nation’s ports. Bello noted: “If you stifle the shipper, you will run him out of business; the council wants a situation whereby you charge according to services rendered. “The return of container deposit takes a lot of time and most times importers forego these deposits. We want to ensure that shipping companies and terminal operators and other operators key into the government initiative of the Ease of Doing Business in the ports, so that we can have very good rating by the World Bank and therefore attract investors to Nigeria.” Bello explained that some importers had lost monies through non-refund of the fee, explaining that there was no reason for any payment of container deposit in the first place.

Agreement

The executive secretary also stressed that the council had concluded plans to sign a Memorandum of Understanding (MoU) on port charges. He noted that agreement was a highly sustainable mechanism in resolving disputes. Bello noted that shippers had complained that the container deposit fee refund regime was harsh.

Last line

Government inconsistent policies and lack of enforcement of good policy will continue to stifle trade facilitation in the port if not wholly addressed.

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