How Nigeria, operators lose billions of revenue over inactivity at seaports
Maritime workers under the aegis of the Maritime Workers Union of Nigeria (MWUN) last Wednesday shutdown port operations across the country over unpaid entitlements by the International Oil Companies (IOC). TOLA ADENUBI examines the attendant losses from the continuous inactivity at the ports.
On May 28, 2018, the Nigerian Ports Authority (NPA) appointed Stevedoring contractors to provide labour services at the nation’s seaports. The Stevedoring Contractors provide labour for loading and unloading activities at the ports, and they source this from registered dockworkers who are members of the Maritime Workers Union of Nigeria (MWUN).
The foremost responsibility of stevedoring Contractors is about the safety of cargo, crew. The Stevedores unload cargo from ships when they come into ports and load until the cargo work is completed. In the curse of unloading or loading cargoes, the Stevedores also inspect the merchandise for any damage that might have occurred at sea or pre-loading.
For a country like Nigeria which is faced with many insecurity issues, the role of inspecting merchandise during loading and unloading processes by dockworkers provided by the Stevedoring firms cannot be over emphasized. Many dangerous cargoes that had been shipped into the country but detected during inspection by men of the Nigeria Customs Service (NCS) have their successes in some of the dockworkers who, while unloading cargoes, inform Customs officials of the contents of some of the inspected cargoes.
However, problem started when the IOC’s refused to pay the newly appointed Stevedoring contractors the wages of the dockworkers, and the workers vented their frustration of having to wait for over a year for their emblements by shutting down ports activities at all seaports nationwide.
Nigeria loses revenue
The withdrawal of services by the maritime workers since Wednesday implies that no activity has been taking place at the quay side of all port formations in the country. The quay side of the port is where containers are loaded or unloaded from ships. With no activity at the quay side of the ports, it implies that no new container was loaded or unloaded at the nation’s ports on Wednesday (the day strike commenced). With no activity at the quay side of the ports, the cargo throughput records of the terminal operators became altered.
According to a seaport worker, Ben Alibe, “when there is no activity at the quay side, it means no new cargo is offloaded at the ports, and this affects the projection of the terminal operators. The terminal operators already had a projection of the numbers of cargoes that they were going to take delivery of for that Wednesday when the strike began, but with no person working at the quay side, all such projections disappears and this has a multiplier effect on the nation because the terminal operators are tenants at the ports. They pay certain fees to the landlord, who is the NPA. So when the cargo projections of the terminal operators become altered, it also affects the monies that are expected to go into the coffers of government through the NPA. So you see that it is a chain reaction thing. Nigeria cannot afford to have inactivity at the quay side of port formations. It portends halt in revenue generation for the country.”
Haulage business suffer
The strike action also halted movement in and out of all port formations for about four hours on Wednesday before the workers soft-pedaled due to the announcement of a truce meeting between them and the IOC’s. For a nation that relies majorly on trucks evacuating cargoes from her ports, the implication of stopping movement in and out of the port can be dire.
In the words of the chairman of the Association of Maritime Truck Owners (AMATO), Chief Remi Ogungbemi, “we just hope the striking workers continue to let us have access into the ports because if they don’t, then a lot of the container deposit fees will be eroded because many of the truckers won’t be able to return empty containers back to the ports. Aside eroding of the container deposits fees, we won’t be able to pick new jobs, meaning while we are losing container deposits fees, we are not making new jobs.”
In the event that the truckers cannot go into the ports to pick already cleared containers, many cargoes will remain trapped inside the ports, thereby fueling the issue of demurrage surcharge or higher storage payments by the importers to the shipping companies or terminal operators respectively.
In the case of demurrage surcharges, the shipping companies slam this on cargoes that delay in being cleared. This could run into millions of naira depending on the volume of containers a vessel is carrying. The owners of the cargoes who are the importers are always at the receiving end of a demurrage surcharge because they pay the additional fees incurred on the cargo due to delay in clearance.
In the case of storage fees, this affects already cleared cargoes that are still trapped inside the ports due to the labour unrest. Explaining the dynamics of storage fees to the Nigerian Tribune, the vice-president of the Association of Nigerian Licensed Customs Agents (ANLCA), Kayode Farinto revealed that this is grouped in three stages.
“The first three days are the only free period that an importer has to clear his container from the ports. If the importer is unlucky, and there is congestion at the ports due to strike or whatever, he starts paying storage surcharges to the terminal operators immediately after the first three days.
“This payment is divided into three stages. We have First period, Second period and Third period. The First period is very cheap. It is for containers that have just finished exhausting their three days storage period.
“After the expiration of the First period, which is the first seven days after the three days-free storage period, if the container is still inside the port, it moves into the Second period stage where payments made as Storage or Demurrage charges is a little bit high.
“The next seven days are the Second period. If after the next seven days the container is still inside the ports due to congestion borne by the traffic gridlock, it moves into the Third period where payment becomes outrageous for the importer. At rhis stage, an importer would be paying nothing less than N20,000 per day as either demurrages fee to the shipping company or storage charges to the terminal operator.”