CARGO TRACKING NOTE: REVISITING A DISCREDITED PROJECT

 
The recent clamour for the re-introduction of Cargo Tracking Note (CTN) in Nigeria’s shipping sector is already raising a number of issues. To what extent have stakeholders changed the notion that it is still a rip-off? IZUCHUKWU OZOEMENA asks.

The Cargo Tracking Note (CTN) being championed by  the Nigerian Shippers Council (NSC) if implemented is expected to enhance the security functions of government, generate real time information and statistics, revenue collection and trade facilitation at the international scene. This was revealed in the memorandum of understanding entered into recently by the Importers Association of Nigeria (IMAN) and the freight forwarding agents under the aegis of Accredited Freight Forwarding Associations of the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN).   
                                                           
Is this recent development resurrecting the issues involved in an initiative which became shrouded in controversy and therefore, became moribund as soon as it was mooted in the past?  The Cargo Tracking Note is a way of verifying the contents of every cargo, and then tracking that cargo between ports. Every cargo travelling by sea must be issued with a CTN by an approved agent prior to departure. As a means of improving the security around marine shipments, the CTN was introduced following the September 11, 2001 terrorist attacks in the United States of America. Most countries like the United States, the European Union, Asia, the Middle East and Africa have all implemented the scheme.
 

Hassan Bello, Exec Sec., NSC

 

In accordance with the International Ships and Ports Security (ISPS) Code and their roles, all international moving companies are required to comply with the cargo tracking note scheme. The shippers comply by collecting the required information on the goods to be shipped at a particular port. The carriers comply by checking that all cargo is covered by a CTN number before receiving it for shipment.  The port authorities check the details and the statistics to eliminate any threat to the safety of lives and port facilities.
 
The year 2010 opened for the Nigerian maritime sector with a controversy spurned by the introduction of what stakeholders perceived as new regime in shipping calculated to increase their cost of doing business.  A lot of heat was generated. Prominent among these stakeholders were members of the organized private sector (OPS). In a petition to the Presidency, they quickly registered their opposition to it. The controversy trailing the policy was such that the Senate intervened so as to unravel the circumstances surrounding the conception and introduction. At a public hearing, the upper legislature berated the Nigerian Ports Authority (NPA) and the Transport Ministry for introducing a scheme which, they said, had all the trappings of a scam. But in what appeared the Nigerian way of doing things, the Senate made a u-turn and allowed the NPA to go on with the implementation of the policy.
As argued by the NPA, the owners and executors of the scheme, the nation stood to gain tremendously from the CTN as Nigeria was poised to make a whopping 6 million Euros (about N1.194m) annually.
 

Habib Abdullahi, MD, NPA

BMWA recalls that the then Managing Director of NPA, Mallam Abdulsalam Mohamed had argued that the CTN was not the creation of either the NPA or the federal executive council (FEC) but an international imperative emanating from the global maritime community as a result of the September 11, 2001 terrorist attacks in the United States and the subsequent introduction of the ISPS Code.  Mohamed said that after meeting up with the imperatives of the ISPS Code, there was the need for different countries to also put in place a mechanism for accessing advance vital information on the consignments coming into their ports. He added that many African countries such as Angola, Benin Republic, Central African Republic, Togo and Cote D’Ivoire had introduced CTN to track cargoes coming into their respective territories.  
 
“In addition to the proactive measures that are provided in the ISPS Code, you also need to be able to know the shipment that is coming into your country”, Mohamed explained.  “The reason essentially is that you need to trap adequate information relating to cargo ship movement into your country well in advance. That will help you to be ready if possibly you have something suspicious relating to either the cargo that is coming in or the ship that is coming in,” he explained. He added that with the CTN regime kicking off, it became imperative to source the funds for its execution. The expected earnings from the scheme, he revealed, will be used essentially to improve facilities in the nation’s sea ports.”
 

Alhaji Suleiman, former Transport Minister

In a determined effort to convince all and sundry to embrace the new regime, NPA recruited many unprincipled adventurers in the maritime industry and even beyond who tried to outdo one another as they laboured to convince the largely unimpressed operators and stakeholders on the merits of the CTN. NPA’s managing agent for CTN, Transport and Management (TPMS) Antasser, was not left out in the campaign. In her proposal to the Transport Ministry, the firm said “Cargo Tracking Note is a web-based high tech tool for monitoring of import/export goods that allows generation of real-time statistics. It notes the cargo type, origin, quantity and other shipment information and generates automatic information alerts to the ports of destination. Most countries engage this service pack depending on their peculiar needs to complement other cargo-verification solution packages particularly destination inspection.” According to the company, the CTN is a revenue- generating project at no cost to either the government or the shipper as the fee/charge is an integral part of cargo freight.
 
However, these arguments by NPA and her agent did not impress opponents of the scheme who saw it as nothing but a policy designed by the NPA to grab more money from importers following the ceding of cargo- handling operations to the private sector. TPMS and NPA had, ab initio, said CTN would not attract any charges or constitute additional burden on shippers. They also told industry operators that the fees payable had already been built into the Bill of Lading, claiming that shipping companies had all along been collecting these fees from Nigerian importers with the nation losing huge sums of money that should have accrued to the federation account. However, this claim was contradicted by the shipping companies as they said they had not been collecting such fees from anybody. For instance, Rotimi Osuntola, a stakeholder, said his company had never charged for CTN in the past; this had never been listed on the invoice. “If the idea is to redress the abnormality claimed by the NPA, why would the shipping companies be distributing the waiver form to shippers?” Osuntola queried. He contended that the new policy was nothing but another means of grabbing money from Nigerian importers. He wrote from Canada. He described the CTN as uncalled-for; a design to make more money for government officials to the detriment of the masses to whom the atrocious charges would eventually be passed. According to Osuntola, a foreign shipping company official in Canada had said: “Does Abdulsalam Mohamed think my company will absorb that cost without passing it to the client in Nigeria?”

But as NPA and TPMS were emphasizing that CTN attracted no additional cost to the importer, an internet announcement conveyed information on the introduction and procedures for obtaining the CTN. The announcement said it could be obtained after paying fees ranging from USD371.20 per 20ft container and USD451.20 for a 40ft container.  It added that for RoRo under 5mt, a fee of USD371.20 would be paid while each additional vehicle on the Bill of Lading would attract USD160 while that for RoRo over 5mt will be USD451.20. The expression of outrage by those who got knowledge of these fees and the strong opposition by most industry operators led to the review of the fees by the NPA. This review which could not be made public had inputs from some stakeholders.

But more than one and a half years after the introduction of the CTN, concealment, undervaluation, over-valuation, smuggling and illegal drugs and arms shipment continued unabated in the ports. In 2010, over four incidents of large scale seizures were recorded at the Tin Can Island Port while the illegal arms shipment from Iran intercepted at the Apapa Port remained a huge embarrassment to Nigeria. All these, stakeholders noted, took place even as the CTN was in full operation! Shortly after introduction five years ago, however, the CTN was scrapped following the high cost it imposed on shippers and the strong opposition to it.
 

Abdulsalam Mohammed, fmr MD, NPA

 

Speaking recently on the CTN regime whose immediate take-off some stakeholders are now calling for, Dr Frank Ojadi, a researcher into the extent of the impact of the pre-arrival assessment report (PAAR) on the flow of imported goods, said that it is very strange to hear the Nigerian Shippers Council (NSC) assuming the full powers of the Federal Executive Council (FEC) to reintroduce the regime. He explained that the reasons given by NSC are not convincing since the Nigeria Customs Service has the means and ways of monitoring the risks associated with imports.

Curiously, the NSC is said to be silent on who bears the cost of this scheme. According to Ojadi, economic regulation of port operations does not cover issues of this nature. How would the introduction of CTN improve port efficiency? This appears to be another taxation which points to increasing the high cost of doing business in Nigeria. “There are a few questions here. Why will CTN succeed in defeating under-declaration if pre-shipment inspection did not achieve that goal? The CTN will be issued by an appointed agent. You cannot write a CTN without inspecting to confirm what has been stuffed into the container. Clean Reports of Inspection were issued at foreign ports by appointed agents during the pre-shipment era. I’m not sure I understand why this will be different. During the days of pre-shipment inspection, a Nigerian company once received a container that had in it goods not meant for that company. But the container had supposedly been inspected and a clean report issued”. The organization to issue the CTN has to be present at the ports of embarkation which are scattered all over the world. Who will pay for this worldwide service? Or are we going to restrict all imports to Nigeria to specific ports abroad?” He argues that if the exporter abroad has to incur any expenses in getting the CTN, it will be passed on to the importer. How will the NSC prevent this?

At what point does the issuing agent verify that the contents of the container tally with the note to be issued: at the embarkation port, the factory?  Shipping companies are generally protected by the clause ‘said to contain’ when they hand out containers to shippers to stuff with the export cargo. How does the NSC intend to deal with this?

How will CTN deal with corruption at the Nigerian end? “How will you write a CTN for a container stuffed with rejected heterogeneous items?” Ojadi asked.  He says that if CTN aims to stop trade fraud, then all imports must follow the Form ‘M’ procedures; all cases of concealment and/or false declaration of imports must be prosecuted.
 
He regrets that there are a series of questions to be addressed and it does not seem that the NSC has taken time to look at these issues before pushing for the CTN.
 On the possibility of CTN increasing the cost of doing business at Nigerian ports, he says this is not arguable. “CTN will add to the cost of doing the business into the country. That point is clear. CTN will not facilitate trade flows because what facilitate trade flows are essentially the processes and procedures that we have in place.”
 
CTN, SECURITY AND TRADE FACILITATION
Security, as has often been said, is the main purpose for the developed economies that had experiences of terrorist issues. So, it has to be as it is, insists Ojadi. “Do not tell people that it will facilitate trade flow or that it would check corruption. It actually came up as a result of security issues and challenges to be able to track a container, track what is in that container so that before it arrives, you have a clear picture of what is in that container. But I tell you that the same information that you have in the Bill of Lading and in the manifest would also be transmitted electronically to the destination country.” He explains that every security instrument that may be introduced in the maritime industry has its cost. “And therefore, people should be prepared for the sake of our country and for the sake of the port and citizens of this country; we must bear the cost of introducing a CTN to check against that but not to tell the people that CTN will encourage trade. Call it exactly what it is. It is an instrument for security purposes not necessarily for improving trade.”
 
Ojadi has an advice for the Nigeria Shippers Council which is championing a fresh move to drive the CTN: they should study the entire procedures, identify clearly the objectives of the reintroduction and figure out clearly if it is really worth the effort or not.

 

 

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