Despite the Executive Order on Ease of Doing Business introduced by the Federal Government in 2017 to ease import and export flow, the cost of freight into Nigeria has remained one of the highest in world.
The high cost of shipping into Nigeria, according to checks, is as a result of inefficiency at Nigerian ports due to longer cargo dwell time and slow as well as manual inspection process by the Nigerian Customs Service (NCS) and other government agencies.
Presently, cargo dwells between 21 and 30 days as it becomes increasingly difficult to clear goods out of Nigerian ports due to bottlenecks, and this has demurrage implication on the cargo owner.
A recent analysis on overseas cargo and freight costs by MoverDB, an online resource for international shipping, shows that high costs of shipping to Nigeria do not correlate with distance, as shipping from New York to Nigeria nearly doubled the cost of shipping to South Africa, even though Nigeria is closer.
“The slow pace of inspection of cargo means that congestion and bottlenecks are nearly perpetual in Nigerian ports. The ports’ inefficiencies have for years enabled and incentivised corruption from official and unofficial middlemen that clear goods for a ‘fee’,” MoverDB notes.
A recent report published by SBM Intel, Nigeria’s leading geopolitical intelligence platform, importers using Lagos port pay more as shipping charges for bringing goods from European Union (EU) and high terminal charges when compare with what importers using Tema Port in Ghana and Durban Port in South Africa, pay.
A breakdown of SBM Intel report shows that importers using Apapa Port in Lagos pay about $374 as shipping charges on imports from EU countries; $457 as terminal handling charges and $2,055 on local transport to importers’ warehouses.
Meanwhile, importers using Tema Port in Ghana, neighbouring West African port, pay $321 as shipping charges on import from same EU countries; $284 as terminal handling charges and $285 on local transport to importers’ warehouses.
Also, importers using Durban Port in South Africa pay about $247 as shipping charges on imports from EU countries; $180 as terminal handling charges and $208 on local transport to importers’ warehouses.
Emma Nwabunwanne, a Lagos-based importer, says Nigerian port is losing track on efficient service delivery to cargo owners, as the Federal Government’s Ease of Doing Business policy has failed to ensure seamless cargo clearing.
“The dwell time of containers in Nigerian ports is high due to bottlenecks that make it difficult for importers to take delivery of their consignments in good time. The NCS currently inspects shipments using 100 percent manual procedure rather than automated scanning machines. All these make our shipping and terminal charges high,” Nwabunwanne states.
He calls for full automation of port operations to not only ensure efficiency and corruption free port, but to also reduce the cost and delays at the ports.
Tony Anakebe, managing director of Gold-Link Investment Limited, who blames ineffective regulatory function of government for high pricing of shipping freight into Nigeria, notes that since the port was concessioned to private terminal operators, the government has failed to regulate the charges of service providers.
To Anakebe, there are man-made factors such as rent-seeking syndrome and lack of 24-hour operations that delays timely clearance and delivery of cargo to importers.
Using a Standards Organisations of Nigeria (SON) or the National Agency for Food and Drug Administration and Control (NAFDAC), regulated goods as example, he says when an importer has a consignment that concerns any of these agencies, it could take close to two weeks to get the necessary authorisation before the cargo would be released.
“Shipping companies collect container deposit from which demurrage charges are deducted from consignees. Consignees, who had taken containers out of the port are not supposed to pay for demurrage. Contrary, when a container carrying truck has accident on the way to the importers warehouse, shipping companies compel such consignee to pay demurrage on the number of days spent before returning the container, which is not supposed,” he explains.
Anakebe, who states that it had now become very difficult to clear a container from the port, says it takes an average of one month to clear containers with genuine documents, and within that one month, the owner would pay as much as 200,000 to 300,000 on a 20-foot container or close to 500,000 on a 40-foot container as demurrage.
Hassan Bello, executive secretary, Nigerian Shippers Council (NSC), who calls for automation of clearing processes, says scanning of containers is more efficient and less dangerous than 100 percent physical examination of cargo.
“We need to digitalise because it reduces corruption. If you don’t physically interact with officials and do your transactions electronically, it would reduce corruption in the system. It would be much cheaper, more efficient and Nigerian ports would become more competitive, if shippers do more of online transactions,” according to Bello.
Jonathan Nicol, president, Shippers Association of Lagos State, says the high cost of shipping freight into Nigeria could be attributed to accumulations of all un-receipted expenditures, including official payments as well as payments to government agencies that make Nigerian ports more expensive than others.
According to Nicol, shipping and terminal charges have continued to fluctuate in such a way that it does not benefit the shipper. “The terminal and shipping charges are determined by the current black market rate of the naira to dollar,” Nicol states.
Nicol, who also blamed corruption as another factor that makes Nigerian ports expensive, notes there are various infractions being practiced by shipping companies and terminal operators in Nigeria, especially transferring containers from original port of destination without the consent of the importer.
“This adds to the delay in clearing goods, because assuming the cargo was destined to be discharged in Apapa Port and the owner pre-clear and pay duties with Apapa Customs. It is always very difficult to transfer payment from one Customs command to another because the Customs Service we know as one entity is almost independent from each Command,” he says.