NPA: How Outrageous Demurrage and Import Duties Force Importers To Abandon Their Cargoes At The Seaports

By Stephen Ubanna

More facts have emerged why importers abandon their Containerised  cargoes at the nation’s seaports. This is because of the outrageous  demurrage slammed on their Containers by  shipping Companies and the Terminal Operators and the high cost of clearing and import duties  compared to what obtains in neighbouring  Republic of Benin and other ports in the West African sub-region.

The cost of clearing may have been made worse for importers  because of the additional costs incurred if the Container had to be transferred to terminals outside the seaport. Take for instance , to transfer a ‘’20’’ Containerised Container  from Tin can Island port to Hanova terminal, cost the importer between N180,000.00 to N200,000.00. The Magazine gathered that the importer must pay   for the cost of transferring the Container  to  Terminal from the port before being allowed to take delivery of the Consignment.  The situation is the same in other terminals within Lagos serviced by Apapa or Tin-can Island ports.

Hameed Ali: CG, Customs

Raphael Agbogu, Managing Director, Sovereign  Gate International  Nig. Limited and Director, Public Relations , National Council of Managing Directors of  licensed Customs Agents, NCMDLCA, in an interview with The Magazine lamented  that the Cost of clearing a ‘’40’’ at  the seaport  was  about N480,000.00 and N380,000.00 for a ‘’20’’ Container but higher the terminals outside the port because of the transfer charges

This may have informed why  many importers  abandoned their cargoes at Apapa, Tin can and Grilmaldi  , popular, Port Multi-services Terminal, PTML. Agbogu,  noted that many Nigerian  importers , prior to the border closure  over two months ago had relocated to  Benin Terminal, Cotonou and Bollore port, in Republic of Benin and other ports in the West African sub-region , to take delivery of their goods, because their tariffs are constant. ‘’The amount  an importer  would spend to clear a ‘’20’’ or ‘’40’’ Container this year is the same amount  that could be  spent  the following  year’’, he said.

The NCMDLCA , Director, of Public Relations,  disclosed that the running of the terminals in Nigeria by the Terminal Operators, which are answerable to the Nigerian Port Authority, NPA, which Concessioned the terminals to them  between 2006 and now  are  different from what obtains  in Benin and the other ECOWAS  member countries. According to him, when an importer  could not take delivery of his Consignment at the port  when the grace period of doing so  had elapsed,  the government will write  the company or the individual importer  to know what is holding  their Consignment at the port and the assistance it could give  to facilitate the release of the cargo to them.

Given an insider information, he disclosed that the government  will never  write the importer to know what  is delaying  the Company or the individual importer   from taking delivery of their cargoes from the port. Agbgu who could not hide his feelings said the  terminal Operators and  the shipping Companies prefer the Nigerian arrangement of running the ports as the Consignments would enter into overtime which means more mney money to them as the importer would forced  to pay demurrage which runs into millions of naira.   

An insider information told The Magazine  that Containerised  cargoes discharged at the ports in Nigerian are declared as overtime cargo  after  about  three months  without the importer coming up   to take delivery of it.

It is not surprising why Overtime cargoes litter the terminals as  many of such Containers have been transferred  to Ikorodu Container Terminal in readiness for auctioning.. A source informed the Magazine that  at present  there  are over 5,000 overtime  cargoes at the ports and Ikorodu Container Terminal, witing to be auctioned. Note that if the overtime cargoes are auctioned, the Terminal Operators only get a Statutory of payment of 25% of the auction price. Take  for instance, a Containerised cargo valued at about about N30 million could be auctioned for a paltry sum of N300,000.00, just to create space at the port or Ikorodu Terminal to keep other cargoes.

 ,  The Terminal Operators may have realised that auctioning the Overtime cargoes  in their terminals was not beneficial to them but the government  that they  were said to reached out to the importers with their clearing agents in order  to reach a compromise on how they could take delivery of their cargoes  which had been declared as overtime by the Nigerian Customs Service, NCS .

The Magazine learnt that a recent meeting  between the Shipping Companies, Terminal Operators and Representatives of  the Association of Nigerian Licensed Customs Agents, ANLCA, National Association of Government Approved Freight Forwarders, NAGAFF, and National Council of Managing Directors of Licensed Customs Agents, NCMDLCA, the Companies   were said to have listened to the cries of the  Agents  and the reasons why their clients could not afford  to pay the demurrage imposed in their Consignments at the terminals and therefore, have no option but to abandon it  for government to take over and auction it. 

Given that  they could only be given  25%  Statutory payment from the  government if the Container  had been,  auctioned ,  the Terminal Operators  and the shipping Companies  were said to have agreed at the closed meeting with the agents   to reduce their demurrage charges  on overtime cargoes  by about 90% to give the owners of such cargoes  the opportunity  to pay  and  pick their Containers at their Terminals without further delay.  The terminal Operators  may have seen  the 25 %  statutory  payment for their services was inadequate compared  to the  huge Operational costs incurred when  the Containers were in their Custody.

Investigation shows that  some of the Containers, particular, ‘’20’’ that been auctioned  at the Ikorodu Container Terminal, the amount paid  by the buyers were  said to be below the demurrage and cost of freighting the cargo from Europe , North America, India or China to Nigeria,. The Magazine findings shows that that it is as low as 10% of the value of the cargoes import.  

R Although the Terminal Operators had agreed to the  sharing arrangement of the auctioned cargoes with the government,  , they had raised alarm  in 2018,  that government could not  even fulfill its own part of the obligation by paying  them the Statutory 25% from the auction sales as agreed.

Ralph Agbogu: Managing Director, Sovereign Gate International Nig. Ltd

In spite of the fact that the terminal Operators had reduced their demurrage charges  on overtime cargoes in their Terminals by 90  %, as a way of  encouraging    the owners  of the cargoes to rush , pay and take delivery of their cargoes, the response has  been  very frustrating to the terminal Operators. They had expected a massive response from the overtime cargoes  owners  at the terminals struggling to process their import documents  with Customs personnel at the various terminals but the response  has been very slow, fueling speculations that the importers with their agents want more Concession from the terminal Operators.

 The terminal Operators, according to a source, believe they have made enough Concession to the importers with their agents to encourage them to take delivery of their overtime cargoes at their various terminals that it would be difficult to go below the 90% waiver granted them to take delivery of their cargoes as it would not cover their Operational Costs and other Administrative expenses incurred in keeping custody of the goods.  This is bad news for the importers   whose cargoes had been declared overtime and who could not afford the 10% of the value of the demurrage charged by the terminal operators on the  cargoes as would finally lose it to the government  which would auction it.  

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