• Tuesday, December 05, 2023
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Why consumers see no gain from drop in haulage cost

Haulage cost: High FX rate, cost of clearing rob consumers of gains

Despite the 50 percent reduction in haulage cost from the nation’s seaports in Lagos, market prices of goods have continued to go up, making it near impossible for consumers to benefit positively from the reduction.

This could be attributed to high exchange rate of dollar to naira, high cost of doing business at the port due to delays caused by bottleneck in clearing created by government agencies at the port, and high exchange rate for payment of import tariff to Nigeria Customs Service (NCS).

Today, the documentation process for cargo clearing has become very clumsy and cumbersome for importers, and as a result, it takes a minimum of 21 to 30 days to clear cargo from the ports. With high exchange rate and delays at the ports, importers would find it difficult to breakeven, and reduce prices.

Jonathan Nicol, president of, Shippers Association of Lagos State, says it is still too early to determine the impact of dropped haulage cost on the final consumers because it now takes longer time to get the goods out from the port.

According to Nicol, it is either the importer is battling with the Nigeria Customs, Standards Organisation of Nigeria (SON) or the Police, which has become a thorn in the flesh of importers and their agents.

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“Shippers cannot say that they are getting good value for their goods now because everybody is making losses due to the increasing challenges of clearing goods from the port. Those that took bank loans could not pay back.

“As it stands, the shipper cannot heave a sigh of relief even when the goods get to his warehouse because the SON may also come to the warehouse. The challenges are too much,” Nicol explains.

He however says that the Police have left their statutory function of providing security to encroaching into shipping, and assessing the ship manifest in order to make money.

With the devaluation of the naira, he notes that the importer cannot determine how much it could cost to clear the goods on arrival, and that more money is now required to clear containers than before, making it impossible for prices to drop.

On his part, Tony Anakebe, managing director of Gold-Link Investment Limited, a clearing and forwarding company, says there is no way the reduction in the cost of haulage would have any impact on market prices of goods because the exchange rate is currently very high.

“Most of the companies that bring in raw materials and other goods are finding it difficult to access dollars in the foreign exchange market. For instance, a dollar sells at N508/$, which means that the importer needs a large sum to get the dollar needed for importation,” he says.

According to Anakebe, the Customs exchange rate for payment of Customs tariff has also increased from N381 per dollar to N404.97/$, which is also not favourable to the importers.

“This means that importers are paying more as duties than before. So, this is why a 50 percent reduction in haulage cost cannot impact on prices of goods,” he states.

Emma Nwabunwanne, a Lagos-based importer, says also that reduction in haulage cost is not enough to bring down prices of goods.

Nwabunwanne, who notes that several red-tape practices are causing delay in cargo clearing at the ports, states that there is more division in Customs now and more units are created for extorting importers and their agents.

“This means that the importer and his agents must pass through these units before their goods would be released, and this causes delays that result in payment of demurrage and storage charges to shipping companies and terminal operators. Therefore, making the cost of doing business at the port very high,” he says.

Continuing, he says: “Delay is the major problem of cargo clearing in Nigerian ports today because government agencies, especially NDELA, Police are creating bottlenecks to ease of doing business. With these, importers incur avoidable expenses that only result in losses at the end of the day.

“Police can now go into the terminal to block any container of choice, and tell the owner to come to Alagbon. This does not help the importer, rather it inflicts pain because the Police would ask the importer to pay as much as N1 million to clear a container from them.”