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Demurrage: Shipping Companies Fleece Importers Of Billions Of Naira Daily

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By YUSUF BABALOLA,

Even as the federal government is said to be determined to reduce the cost of doing business at Nigerian seaports and to move ahead in its current global ranking on ease of doing business index, findings have shown that some shipping companies operating in the country are taking advantage of the limited free demurrage days to fleece importers of billions of naira on a daily basis.

LEADERSHIP investigations show that importers are losing billions of naira to demurrage charges by shipping companies operating in the nation’s seaports.
This was because Nigeria demurrage-free days are the lowest among its peers in neighboring West and Central Africa. According to investigation if not addressed would affect Nigeria ranking in the next global index of ease of doing business.
Demurrage is the charge levied by the shipping line on the consignee if the container is not cleared and returned to the nominated empty depot within the specified free days offered by the line. Demurrage is divided into three periods -First, second and third -that is also far more expensive than others in the sub-region
Investigations have shown that no shippers or importers can clear it’s consignments out of the ports within the stipulated three days free period.
According to document sighted by LEADERSHIP, shipping companies’ demurrage fees are as follows: First period N4,500 as against N1, 512 collected in Ghana, second period N7,500 as against N1,890 collected by Ghana and , third period 12,500 as against N1,890 in Ghana.
And with 1,396,057 TEU of containers received at the Lagos Ports in 2013;  1,551,540 in 2014 and another 1,317,212 in 2015, importers and Shippers have lost over N100billion to Shipping companies in demurrage charges.
Data from the Nigeria Shippers Council (NSC) indicate that Nigeria has five demurrage free days, which is low compared to neighbouring Benin Republic, which has ten demurrage-free days. Ghana, on the other hand, has eight demurrage-free days.
Meanwhile cargo dwell time (time to clear cargo) takes between 20 and 28 days in Nigerian ports, while in Benin Republic, it takes between10 and 15 days. For Ghana, it is between 12 and 14 days and Togo eight and 12 days.
It was gathered that importers who clear their goods from Nigerian ports, pay about 14 charges, while those that clear from off-dock terminals have 20 charges to pay before taking delivery of their consignments.
Confirming this, a recent World Bank report attributed long dwell time of cargo and high cost of doing business at Nigerian ports to rent-seeking on the part of operators especially shipping companies rather than fast tracking cargo clearance.
Maritime experts have argued that the cost of doing business in Nigerian ports started increasing after the concession exercise, which was initially aimed at reducing the cost at maximum efficiency.
Speaking to LEADERSHIP, the former Public Relations Officer of Save Nigeria Freight Forwarders Importers Exporters Coalition (SNFFIEC), David Pius confirmed that it was difficult to clear consignments within the stipulated free period provided by shipping companies in Nigeria. Though, he also attributed dishonest declaration by importers as part of what delay consignments at Seaports and fuel high demurrage.
He said, “There is first, second and third period but as an importer, if you escape the first period, you can’t escape the second period and the third is the highest, N12,500 depending on the terminal. “After that 12,500 they can add any amount depending on how many days the consignments used at the terminal.
Another shipping expert, Tony Anakebe, blamed operators for the delays, saying that when clearing agents’ book for examination, it takes between five to seven days to drop the container for either scanning or examination.
“The service providers are making money from importers.  Take for instance, almost 30 percent of the container deposits collected by shipping companies are not refunded and this generates billions of naira”, he added.

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