The Clamour For A New Port Order

Port users and stakeholders had thought that with the concession of the ports to private operators, the myriads of problems bedeviling the port industry would be a thing of the past. But that has not been the case as, apart from some old problems refusing to die, new ones have popped up, thereby eliciting the clamour for a new port order.

First it was clamour for reforms. Now it is clamour for a new port order. Nearly a decade after the stringent calls for reforms in Nigerian ports materialized in the concession of the port terminals to private operators, another agitation has arisen: a new port order. The clamour this time is engendered by the failure of the concession to address some key issues in the system as well as new ones that have been thrown up by the reform programme itself.

Leading the charge this time for a new port order is the Nigerian Shippers Council. Mustering its newly-acquired muscle as the new commercial regulator of the ports, the Council is pushing for a total break with the past and enthronement of a new order at the ports. The order being advocated by the agency is a new environment that ensures efficiency and fair play for all and which sees the shipper as the bride of the shipping industry.

Prior to 2006, the agitation for reforms was informed by the remarkable poor service delivery, high cost of doing business, lack of investment in port infrastructure and general inefficiency at the ports. Today, the clamour has shifted from these to centre on a neglected aspect of the concession programme – regulation. The concession of the ports was carried out without the necessary regulatory framework or a clear legal backing. This naturally threw up the problem of economic regulation and industrial and inter-agency disharmony at the ports.

Since the concession of the ports, the shippers have been crying out against lack of price moderation, monitoring of the availability, adequacy and quality of service, protection from the providers of shipping, terminal and transport services.

Even though the Nigerian Shippers Council has been trying to intervene in all these, it has been doing so from a position of weakness as the enabling laws do not give it any power of enforcement. It is in response to all this and the problems caused by the absence of an economic regulator at the ports that led to the strengthening and appointment of the Shippers Council as the port economic/commercial regulator by the government. By this, government sought to influence market behavior of individuals and organizations in the sector and to correct the disorders prevalent in the system as a result of the free for all environment caused by the concession.

As explained by the Nigerian Shippers Council, “economic regulation in a given sector is normally required when there is lack of competition and there is a risk that monopolies or oligopolies may emerge and distort markets through predatory pricing and other anti-competitive practices as it is being witnessed currently in the Nigerian ports sector.” This is exactly the case in the ports today. Sadly, some of the benefits touted for the concession of the ports were that it will bring about competition and bring down the high cost of doing business. But these benefits are nowhere to be seen more than eight years after concession. Instead, the cost of doing business has grown astronomically.

After wide consultations and discussions following its appointment as commercial port regulator last year, the Nigerian Shippers Council has come out to assert its authority as a regulator and to mobilize stakeholders to embrace a new order by doing away with old ways of doing things which have neither helped the development of the industry nor the nation’s economy.

According to the Council, eight years after concession, economic and commercial activities in the nation’s port sector remain largely unregulated, thereby making it difficult for the nation to reap the benefits of the reforms in the sector. Costs have continued to rise while arbitrariness generally characterize the operations of the old and new private operators. This arbitrariness takes the form of “unapproved increases in tariffs, introduction of new tariffs, various practices aimed at rent seeking poor customer relations etc.” Against this background, the Council, a fortnight ago, in collaboration with the Shippers Association of Lagos State, organized a special one-day workshop to address all these issues and several others confronting shippers who, as cargo owners, constitute the key element in shipping. The theme of the workshop was “Working for a New Port Order.”

The Executive Secretary of the Council/ Chief Executive Officer, Barrister Hassan Bello said at the workshop that the Nigerian Shippers Council in its new role as the port industry commercial regulator was poised to transform the Nigerian port sector for better performance in line with global standards in order to attain the quest for a hub status in the West and Central African sub-region. He noted that nation’s ports before now had been unable to compete favourably with other ports in the sub-region as a result of numerous factors that have made the ports unfriendly to port users. He said one grave consequence of this was the diversion of Nigeria-bound cargo to neighbouring West African ports.

Bello said that the port system has continued to undergo reforms in order to place it where it ought to be. He noted that the appointment of his Council as the port economic regulator is not only a recognition of the need for a regulator in the system but also represents the culmination of a series of efforts by government to address the ills of the port system with a view to putting it in a more secure path of sustainability and growth.

“The Council shares and identifies with the vision of all users of the port system and the service providers towards a well-developed port system in Nigeria. This includes having a system that is fairly priced, automated, settles disputes timely and amicably, efficiently and with easy access to and from the ports. Such port system will definitely eliminate corruption and reduce the problem of demurrage and human traffic at the ports to the barest minimum,” he declared.
In a paper presented on his behalf by the Deputy Director, Legal Services, Mr. Akan Uwe, Barrister Bello noted that the new role of the Nigerian Shippers Council as the economic regulator of Nigerian ports would encompass all the tasks and activities it has already been carrying out ‘from a disadvantaged position’ and others that the Council is now better positioned to carry out effectively. In this new capacity, he said, the Council would ensure that:

• A level playing field is provided for all stakeholders in the sector.
• Tariffs in the port sector would be cost-reflective and fair to both service providers and users.
• Services providers provide the contracted level of service and at agreed prices.
• Service levels are consistent with benchmarked levels and
• Sector disputes are resolved amicably and without prejudice.

The NSC boss said the Nigerian Shippers Council through years of active and vigorous service to shippers and the maritime industry has gained experience, built physical assets and developed strong human capacity to face the challenges of playing a key role in the nation’s economy.

The shippers represented by the Shippers Association of Lagos State, recounted all their ordeals in the nation’s port system. Some of these include the numerous agencies that have something to do with cargo clearance and to whom the shipper pays some kind of charge or the order as well as the high cost of doing business that has continued to escalate.

Articulating what the shippers expect in a new port order, the President of the association, Rev. Jonathan Nicol, said the shippers want a port system that is fully automated, where truck terminals would be built within 100 metres away from the port and trucks would enter the port only when they are called upon with a computerized card. Other expectations of a new order are:

• Roads leading to the ports are constructed to accommodate heavy duty trucks.
• Port access roads are only for port users.
• A systematic and well-computerized method of monitoring the gateway to the ports by sophisticated security outfits.
• Cargo clearance is done within 48 hours as required by government.
• Customs queries are minimized to manageable proportion without allowing cargoes to remain indefinitely in the ports.
• Raw materials for industries cleared expressly without queries and reckless neglect.
• Customs fast track simplified.
• Priorities are given to export commodities.
• Transportation of containers charges are reduced and properly controlled and demurrages on truck commence 24 hours after leaving the port to destination.
• Federal Operations Units of Customs withdrawn from the roads since goods were released by authorized customs officers and from authorized customs ports.
• Cargo exit be done once by the Nigeria Customs resident officers and gate control at the main gates abolished.
• Scanned items are released immediately and trucks loaded for delivery.
• Documentations are reduced the barest minimum.
• Human traffic be drastically curtailed or prohibited except on invitation by port operators. Etc.

The shippers would also want the Nigerian Ports Authority (NPA) to usher in a new order where waiting time for vessels for berthing would be reduced, turnaround time for vessels be within 5-7 days and port charges reduced to facilitate trade. They also want a new era of enhanced port security and NPA would stop clamping of vehicles when loaded. NPA also should provide back-up power supply at the ports.

Among other things, government should ensure that all roads leading to the ports are in good condition at all times. Excessive and double taxation on shippers such as 5% VAT and port development levy should be revisited and ultimately abolished.

Similarly, terminal operators should allow a new order where:
 Terminal charges are reduced by a reasonable proportion.
 Demurrage is free during all public and official holidays including Sundays.
 There is prompt positioning of cargo for examinations when necessary.
 Release and delivery order are received within the loading bay complex.
 Sufficient plants to load containers are provided.
 Excess demurrage charges are refunded to the importer and
 Empty containers are received promptly from trucks.

Shipping companies on their part should allow 21 days free on containers before demurrage, raise shipping and terminal charges at one point and stop the collection of container deposits for local deliveries and streamline container deposit for up country. Other demands of the shippers in the new order from shipping companies are:

 Free demurrage on all official public holidays and Sundays.
 Monitoring of loaded vehicles to main exit.
 No demurrage for failure of inter-connectivity –network problems.
 Receipt of empty containers promptly.
 Payment of container deposits promptly within 7 days and evacuation of empty containers regularly.

According to the shippers, “when all these are properly put in place, there will be no room for human contact and when this is so, corruption will be controlled. The New Port Order will not compromise with blackmail and blatant abuse of the law. It is morally right to protect the innocent. It is therefore in our hands to change the course of history, and we should,” said Nicol.

In a power point presentation, Capt. M. J Al-Bashir, the Managing Director Apapa Bulk Terminal Nigeria Ltd, (terminal operators) noted that port performance and efficiency improvements should target the entire sphere of activities and result in increased competitiveness. The new order, he said, should target change in management practices, customer satisfaction, personnel quality and motivation. The new port system should also be technology based while a job should be accomplished with a minimum expenditure of time and efforts.

He said efficiency at the terminal should be measured by ability to berth immediately on arrival. There should also be fast turnaround, adequate equipment and labour, ample storage space, supporting inland transport network, timey pilotage and gate clearance.

About two days after the workshop, the Nigerian Shippers Council, as if testing the waters, issued a notice to terminal operators and shipping companies directing a downward review of some their charges. The charges in question had been a subject of controversy between these companies and importers and their customs agents, with persistent complaints and lamentations by the latter.
The review which was expected to take effect from November 3, 2014, affected the progressive storage charge, free storage period, shipping line agency charge, container cleaning and maintenance fee and container demurrage.

The Executive Secretary of the Nigerian Shippers Council, Mr. Hassan Bello, He said the decision was arrived at after several meetings and consultations with the terminal operators and shipping companies.

“We were all in agreement with this decision. The cost of doing business at our ports is very high compared to our competitors. Once we remove these charges, we would attract more cargo to our ports, “he was quoted as saying.

The Council directed that the terminal operators should revert to the storage charge to that which was approved as far back as May 1, 2009. “That was when the last approval was given. But they unilaterally increased the charge; now, they have to revert.”

“The free storage period that is the period before you are charged for storage or demurrage has been increased from three days to seven days. We have also told the terminal operators that the seven days free period will take effect from the time when the container is discharged from the ship. The free period formerly took effect even when the ship had not discharged the container. This is in line with what is happening in the region and in the world all over.”

Bello added that shipping companies were required to reduce the shipping line agency charge. For a 20 feet container, the shipping line agency charge was reduced from N26,500 to N23,850. Charge for a 40-feet container was reduced from N48,000 to N40,000. Shipping agencies were also directed to refund container deposits to importers and agents within 10 working days after the return of the empty containers.

The container cleaning and maintenance fee, which shipping companies charge about N2,500, was reduced to N1,500. The free period before which container demurrage was charged was increased from five days to 10 days.

“This is just the beginning of the revolution, we want to drive down cost and have efficient ports. We equally want to stop arbitrariness in tariff increase, and to eliminate unnecessary charges,” the Shippers Council boss.

But no sooner the terminal operators and shipping companies received the directive than they rushed off to court to quash it. And this they succeeded in doing as the court gave an order stopping the Nigerian Shippers Council from implementing the reversal of the storage charges. Ruling on an ex-parte motion brought before the Federal High Court sitting in Ikoyi by the Seaport Terminal Operators Association of Nigeria (STOAN), Justice Ibrahim Buba granted an injunction restraining the NSC and/or its agents from implementing the reversal order pending determination of the substantive suit.

In a similar manner, shipping lines under their umbrella association, the Association of Shipping Line Agencies (ASLA) also secured an injunction from the court restraining the Nigerian Shippers Council (NSC) from acting upon the notice it had published two days before, slashing the shipping lines agency charges, among others.

Members of the association include, Alraine Shipping Agencies, Cross Marine Services, CMA CGM Delmas, Comet Shipping Services, Grimaldi Agency and Gulf Agency. Others are Hull Blyth Nigeria Limited, Lagos and Niger Shipping Agencies, Maersk Nigeria Limited, Mediterranean Shipping Company, Mitsui OSK Lines, PIL Nigeria Limited and Sharaf Shipping Agency.

The suit number FHC/L/CS/1646/2014 was filed on behalf of ALSA and its members by a Senior Advocate of Nigeria, Mr. Chidi Ilogu.

Justice Ibrahim Buba who granted the order as he did the earlier one brought by the Seaport Terminal Operators Association of Nigeria (STOAN) restrained the Nigerian Shippers Council from implementing the directive notice reversing storage charges at the nation’s seaports.

These developments are reminiscent of the legal tussle between the Nigerian Shippers Council and shipping companies in 1998 when the Council sought to curb the excessive shipping charges the companies were imposing on Nigerian shippers. The suit led to out of court settlement with a return to the status quo.
The latest court injunctions restraining the Shippers Council also brings to mind the calls by stakeholders at a public forum for a quick passage of the Ports and Harbours Bill or the strengthening of the appointment of the Council as port economic regulator with a new legislation so as to save the efforts of the Council from being rubbished by operators. The acid test appears to have begun.