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Container Deposit as tool for extortion by shipping companies.

Shipping is a big business. So the shipping companies are in this business to make profit, just like all the players in the sector.

Therefore, container deposit, which is one out of the numerous charges made by shipping companies, is an avenue to make profit.

All over the world, container deposit is not a strange phenomenon. It is a refundable amount charged by a shipping company payable by a shipper for the use of the item but which acts as a guarantee against damage, theft or detention.

This charge is often imposed because containers are valuable properties cherished by shipping companies.

A standard 20″ container can cost above USD3000 while a standard 40″ may cost more than USD4000.

So shipping companies guard this prized possession jealously.

However, how this concept of container deposit applies varies from country to country, depending on the advancement of their economies.

In most of the developed economies of the world, container deposits are not required by shipping companies mainly due to the high level of professionalism and industrial competency within all players in the supply chain, i.e consignors, freight forwarders, haulers, warehousing operators, ship liners etc. as well as proper legal environment which ensures a secured transport environment among stakeholders.

In other words, there is high degree of trust and certainty among the shipping companies that the consignees in the advanced countries shall return the containers on time and in good condition without fear of theft or detention.

In another clime,what is required is letter of indemnity, collective guarantee or insurance which replace the requirement of

container deposits.

However , the case is different with consignees in the developing countries where there are high risk of containers theft, damage, delay or detention.

So, shipping companies do demand container deposits in the developing countries such as Nigeria to indemnify their properties.

So it is not out of place or illegal as some people may want us to believe for shipping companies to collect container deposits.

What we and other stakeholders frown at is the tool of extortion to which this otherwise legitimate concept has been turned by the shipping companies in Nigeria.

The shipping companies in Nigeria, unlike their counterparts in other countries, have converted this concept into an instrument of oppression and economic subjugation of the hapless shippers, taking undue advantage of the system collapse and gross maladministration in the country.

Countries where container deposits are charged, refunds are made within a period of one to three weeks when the containers are returned.

Even at other countries, container deposits are not charged on exports.

But in Nigeria, not only such refunds are not made or if they are ever made, they are mutilated while shippers are often surcharged for other sundry infractions.

The amount deposited for containers depends on the size of container and the place of delivery.

Container deposit for 40 feet container within Lagos is NGN200,000.00.
Container deposit for 40 feet container outside Lagos is NGN400,000.00.

Automatic demurrage for a 40 feet container is NGN100,000.00.

Container deposit for 20 feet container within Lagos is NGN100,000.00.

Also, Container deposit for 20 feet container outside Lagos is NGN200,000.00.

In other words, the consignee loses these deposits or half of them for various infractions such as late return of containers, damage to the containers while surcharge will be imposed on theft of containers.

However, the issue of container deposits in Nigeria is a complex one which does not lend itself to easy solution.

We concede the right to collect these deposits to the shipping companies as being done in some others developing countries as Nigeria.

Even though, critics of this concept may disagree with us but it must be acknowledged that shipping companies, just like other players in the sector, are in business to make profit.

But the area of friction is the failure of the shipping companies to made refunds of the deposits or mutilate them.

Are they justified in their decision not to made refunds or multi-late the deposits?

If the consignee falls foul of any of the terms of agreement such as damages to the containers, late return or outright theft of containers, are the shipping companies not justified in their refusal to made refunds or mutilate the deposits?

The answer may seems obvious but very complex within the context of Nigeria’s peculiar situation.

Why do Nigerian Shippers often fall foul of the rules of engagement?

Was it done deliberately or made inadvertently?

The answers to these posers will expose the complexity of the situation.

Due to the break down of the port access roads, the port environment has been gripped by intractable traffic gridlock which has made evacuation and movement of cargo as well as empty containers in and out of the port slow and cumbersome.

Often times, trucks laden with empty containers meant to be returned to the port are caught up in traffic for more than one week, thereby resulting to delay in return.

In another breath, the shipping companies have continued to defile the directive on having their holding bays to wharehouse the empties.

The hapless shippers are therefore caught in the web of complex situation of government failure that results to infrastructural collapse that engenders traffic gridlock and lack of capacity to enforce the rule of engagement on the recalcitrant shipping companies.

This is the situation which the shipping companies have maliciously exploited to milk the hapless shippers.

We frowns at this unconsciencenable conduct of the shipping companies.

We also blame government lackadaisical attitude towards whipping the arrogant shipping companies to line.

We must however quickly recognise the efforts of the Shippers’Council which has severally confronted the exploitative conduct of the shipping companies.

We are particularly comforted by the  move of the Council to prevail on the shipping companies to abolish the concept of container deposits.

In as much as the idea sounds noble, we dare say it would be an uphill task to achieve the objective.

Firstly and as we have earlier mentioned, the shipping companies are in business to make profit.

Asking them to abolish one of the means to achieving this will be like asking a hungry lion to spare a fat goat trapped in its den.

To us, the only feasible alternative for the Shippers’Council to resolve this logjam is to ask for a reprieve for shippers until government does the needful that will ensure that shippers return the containers on time.

As long as the embarrassing traffic gridlock remains unresolved, shippers would continue to lose their deposits due to late return.

As long as government does not put its foot down hard in an uncompromising enforcement of procurement of holding bays by the shipping companies, shippers and importers will continue to lose their deposits or have them multilated .

We feel it is preposterous to wish away containers deposits, if we must be sincere with ourselves.

Unlike their counterparts in the advanced countries with high degree of trust, Nigerian importers often display loose morals.

One can not rule out deliberate act of mischief in terms of theft of containers, damage or outright abandonment of containers on the road sides.

Whoever transverses the country will see scores of containers abandoned along the roads while some are damaged due to poor handling.

We are glad that the Shippers’Council acknowledged this fact when its Executive Secretary, Barrister Hassan Bello said the freight forwarding practice needs to be structured before the advocacy on container deposits could succeed.

He even said shipping companies often complain of outright theft and detention of their containers as 300 of such containers were retrieved from a state government recently.

To us, this lend credence to the almost impossible task the Shippers’Council embarks upon to abolish container deposits.

The relief which the council could seek on behalf of the hapless shippers and importers is to streamline conditions governing return of empty containers, taking into cognizance the decayed road infrastructure which makes early return of the containers impossible.

Nobody can actually predict correctly the number of days importer could return the empty containers after evacuation, given the state of our roads.

The shipping companies know this and that is what they exploit to their advantage.

Since the concept is legal and governed by international standard, the Shippers’Council can only appeal to the emotions of the shipping companies, if they have any, to give mutually agreed concession to shippers and importers on the issue of container deposits until sanity is restored to our roads.

Better still, the Council can act as a guarantor, as done in a sane society,to credible and established shippers to enable the shipping companies to waive the deposits.

We know this option will be too expensive and unattractive for the council to take.

Resorting to blackmail or coercion will not work.

However, the only form of coercion which we think the government could exert on the shipping companies over this issue is to made the procurement of holding bays as a condition for imposing container deposits.

And that is if both the Nigerian Ports Authority (NPA) and the Shippers’Council have the prerequisite political muscle to confront the shipping companies on this issue.

Until these measures are taken, there is little Shippers’Council, as noble as its intentions are,could do to stop the shipping companies from using container deposits as veritable tool for mindless extortion .

We think this is an avoidable extortion made possible by government failure

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Editorials

Editorial! Chairmanship of CRFFN: Mortgaging the Freight Forwarding industry

Alhaji Tsanni Abubakar, Chairman CRFFN
For the second consecutive terms(2018 and 2022), a non-professional has emerged as the chairman of the Council of Regulation of Freight Forwarding Practice in Nigeria (CRFFN), sitting atop the regulatory body that is statutorily charged with directing and deciding the fate of the teeming freight forwarders in the country.
To put it more succinctly,  Alhaji Tsanni Abubakar, a retired army Colonel who is not a practising freight forwarder, has for two terms, emerged as the number one regulator of an industry he knows little or nothing about.
Ironically,  there are 15 hard-core professional freight forwarders, elected by their constituents in the industry to represent and take care of their interests on the Board and who are also on the same board as Alhaji Tsanni Abubakar.
We could not comprehend this act of absurdity and oddity where a retired soldier will be allowed to be the chief regulator of a freight forwarding industry.
The same oddity and absurdity playing out in the Nigeria Customs Service where another retired army Colonel is the Comptroller General.
While we may excuse the career customs officers for allowing this oddity due to the fact that the retired soldier was appointed and foisted on them, giving them no option but to obey as a paramilitary agency, the same thing cannot be said of the CRFFN where there is an option of voting.
We are puzzled why the 15 full-fledged professionals on the board of CRFFN would keep mute while a non-professional was made the industry’s chief regulator.
What makes it more confusing is that the same Act which the present board of CRFFN is operating and used to produce a retired soldier to govern the industry was the same Act that produced the first two chairmen of the board who are practising freight forwarders.
The first governing board was chaired by Tony Iju Nwabunike, the present National President of the Association of Nigerian Licensed Customs Agents (ANLCA) while the second governing board was equally chaired by another crack professional freight forwarder, Alhaji Akeem Olanrewaju who was ironically the Vice-Chairman to Nwabunike in the first governing board in 2008.
Those first two boards have the same membership composition as the present board: 17  government-appointed members and 15 elected freight forwarders as members, making 32-  member governing board.
What then has gone wrong?
If the first two boards could produce freight forwarders as their chairmen and deputy despite being in the minority (15  as against 17), why should the freight forwarders in the third and fourth governing boards become so docile and timid as to concede this vital position to an outsider, a retired soldier?
Informed commentators have hazarded a guess.
They said that the elected freight forwarders in the third and fourth governing council were too frightened to stand up against the barefaced impunity of the now – resigned Minister of Transportation, Rotimi Amaechi, who brow-beat them into silence while carrying out this absurdity.
Another set of commentators claimed, though not verified, that the frightened freight forwarders may have been compromised to accept this oddity.
Events that played out in 2018 and 2022 when the principal officers of the council were elected or selected lent credence to these insinuations.
At the 2018 inauguration of the board by Ameachi, he practically imposed Alhaji Tsanni Abubakar as the Chairman as he didn’t allow an election to take place to the chagrin of the elected freight forwarders.
He brushed aside a muffled protest put up by Increase Uche, who was then the National President of NAGAFF and a member of the third governming board.
He bullied and browbeaten them to silence when he said he already knew the chairman while giving them the opportunity to produce the Vice-Chairman.
That was the only position put to vote that produced Chief Henry Njoku as the Vice-Chairman in 2018.
The same scenario played out in the 2022 inauguration or meeting? of the 32- member governing body with Amaechi in Abuja recently.
Prior to that date, Ameachi was said to have told those who were elected that he has gotten his chairman.
So when he met them, he used the same gimmick which returned Alhaji Tsanni Abubakar as the chairman without a voting process.
He was said to have sauntered into the meeting and glared at them before he asked them if they wanted the status quo to remain as he has just only one minute to spend with them.
Obviously, he didn’t want to brood any protest or entertain any long process of voting so they all chorused in affirmation.
Which electoral process could be conducted and concluded within a minute,  anyway.
So it was another imposition.
But we are perplexed when some members of the elected freight forwarders, who are supposed to oppose this obnoxious method by the outgone Minister are now justifying and defending the oddity by dressing it as a consensus arrangement.
If there was going to be a consensus arrangement, why not take an elected member of the council, who is a freight forwarder, as a consensus chairman?
How could all the 15 freight forwarders agree to a consensus arrangement that returned a retired soldier as the chief regulator of your industry?
That is why the second postulation by some informed commentators looks credible and tenable to us.
It is even more curious to know that members of  NAGAFF who are in the majority among the elected members ( about eight of them) will look on while this oddity in the name of consensus arrangement was shoved down their throats.
It is sad that they tacitly endorsed this impunity that produced this oddity given the stance of the association’s high command on the absurdity in 2018.
Hear what Dr. Boniface Aniebonam, the Founder of NAGAFF said when Alhaji Tsanni Abubakar emerged as the chairman of the CRFFN board in 2018.
On October 31st, 2018, Aniebonam described as a “black day” the day Alhaji Tsanni Abubakar was made the chairman of CRFFN.
 “A black day in freight forwarding profession in Nigeria. A day rule of law and constitutional provisions may have been thrown overboard by Hon. Minister of Transportation”,
“Hon. Rotimi Amaechi, the Transport Minister, maybe a man with impunity and gut as he set aside CRFFN Act electoral provisions to appoint the chairman of the Council Board 2018 in mafia circumstances”.
Another  chieftain of NAGAFF, Freight Forwarder, Simeon Nwonu,  declared in 2018 thus:

 “Following Chibuike Amaechi’s imposition of one Alhaji Tsanni as chairman of the governing council, Amaechi’s action, contrary to the legal provisions of the CRFFN Act as regards the position of chairman and vice-chairman, has automatically placed the Council on the precipice.”

“It is absolute disregard of the rule of law. It’s not even healthy for the political future of Mr. President (Buhari).

“In fact CRFFN, and by extension, the entire freight forwarding family in Nigeria may not survive this second coming of Armageddon if President Buhari fails to redress the matter.”
If the NAGAFF High Command could rail and rake against the emergence of Alhaji Tsanni Abubakar as the chairman of CRFFN in 2018 which they described as an imposition, why then changed the nomenclature and coated as a “consensus arrangement” the same process that returned the retired soldier as the chairman.
We sympathize with the teeming freight forwarders who are daily groaning under the heavy jackboot of industry service providers who have taken the comatose state of the CRFFN to subject them to multiple charges and mindless extortions.
That the same CRFFN headed by Alhaji Tsanni Abubakar in 2018 which the freight forwarders unanimously condemned as inefficient, inactive, and self-serving, is now returned with the same principal officers, leaves a sour taste in the mouth.
The freight forwarders would do well not to expect a miracle from the fourth governing council of CRFFN as it is a new wine in the old bottle.
We wonder how a non -professional freight forwarder as the chairman could empathize with the freight forwarders and address their welfare issues and other matters that impinge on their professional well-being.
It is only who wears the shoes that knows where it pinches.
If none of the 15 thorough-bred professional and practising freight Forwarders on the board couldn’t find themselves qualified to be the chairman of the body that is statutorily charged with regulating their industry, then the freight forwarders should brace themselves up to accept what comes to them in the next two years of this council since they found it expedient to mortgage the future of the industry and its teeming players by putting its regulation in the hands of a retired soldier.
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Commentaries

The Gradual Decapitation of Shippers’ Council under Jime.

Arguably, the Nigeria Shippers’ Council is gradually losing its bite.
The council, which was bequeathed to the present Executive Secretary of the agency,  Emmanuel Jime, by the vibrant and energetic Hassan Bello, its immediate past  CEO, is becoming a lame duck, a toothless bulldog that is gradually losing the sting, ferocity, and vibrancy it acquired under the immediate past helmsman.
Unfortunately, Jime, a politician, who took over the mantle of leadership when his predecessor honourably bowed out of service, is presiding over a whimper of a council, which is gradually becoming colourless in character and hollow in value.
The current face-off between the freight forwarders and the shipping companies has exposed the extent to which the council has lost respect, character and bite within the short period that Jime took over, and these are the vital attributes that the retired Bello has built into the agency.
Before Bello took over the council and shortly after it transmuted into the industry economic regulator, Shippers Council was greatly incapacitated with a voice not more than that of a whimpering child: muffled, shaky, devoid of life and confidence.
But immediately Bello, widely regarded as one of the best and finest technocrats to have passed through the industry, took over the whimpering child, he polished the colourless agency into a formidable, respectable and effective regulator whose words were order to which the powerful but arrogant shipping companies have come to defer and hold in reverence.
But after the exit of  Bello, the Shippers’Council she bequeathed is gradually losing its taste and value for which it was known.
The face-off between the shipping companies and customs brokers has brought this unfortunate reality to the fore.
In October this year, angry freight forwarders issued a two-week ultimatum to the predominantly foreign shipping companies in the country over their unbridled and mindless extortion perpetrated through numerous illegal charges.
They listed their grievances which they wanted to be addressed without which they will ground port operations.
Even though the contending matters are within the sphere of influence of the Shippers’Council, it was the Council for the Regulation of Freight Forwarding Practices in Nigeria(CRFFN) that took the initiative to broker peace between the two feuding parties when it convened a peace meeting.
The Shippers Council, the economic regulator, was only coopted into the peace meeting when it became glaringly clear that it has lost the initiative to be proactive.
Notwithstanding the presence of the Council which is their regulator, the arrogant shipping companies snubbed the peace meeting when they refused to attend.
Undaunted though, the CRFFN, which has clearly seized the initiative from the laid-back and lacklustre Shippers’ Council, reconvened the peace meeting last week Friday with the Council tagging along with other agencies like a lame duck.
Once again, the shipping companies, even though reluctantly sent representatives, didn’t accord much respect to the conveners of the meeting.
With annoying arrogance, the service providers partially conceded to one out of the numerous demands of the aggrieved freight forwarders when they agreed to give them six days period of grace for demurrage instead of the 14 days grace the freight forwarders asked for.
Even, the six days grace period was not clearly defined but dumped on them with you- can- go- to- hell -if- you- don’t want- it – attitude.
Expectedly, neither the Shippers’Council nor the CRFFN could do anything as the meeting was deadlocked.
The outcome of this issue has clearly defined the present state of the Shippers’Council.
It has clearly exposed the council under the present leadership as one which lacks the capacity to protect the interests of shippers it was created for.
It has shown a council that has lost the initiative to act and one which is not proactive.
It has lost the verve, glamour and the springy movement it was known for under the past leadership.
The freight forwarders themselves have expressed their lack of confidence in the ability of the  Council to resolve the lingering issues and stave off the impending strike which the customs brokers have vowed to embark on at the expiration of the new ultimatum, given the deadlocked peace meeting.
Although the shipping companies are not better in character and temperament under the past leadership of the council, Bello was still able to rein them in with his high level of interaction, engagement, consultations and high wire diplomacy that made the  Council achieve a considerable level of compliance and cooperation among the service providers.
Though the battle was tough and long-drawn as the recalcitrant shipping companies resorted to litigation to entrench their operational impunity, they however found the sheer determination, resilience, passion and uncompromising attitude of Barrister Hassan Bello too strong to break.
Does the present ES possess such attributes that helped his predecessor to succeed?
Only time will tell.
But the signal of lethargy, despondency, and lack of direction exhibited by the council so far in handing its core mandate in the early days of the current leadership, gives no reason to cheer and the situation was compounded by the equally visionless public affairs department of the council which is headed by a person of similar professional incompetent genes.
It clearly shows that Jime has inherited an oversized shoe.
The highly exploitative shipping companies may want to take advantage of the lack of will of the present leadership of the council to renew their onslaught on the users of their services.
They may want to exploit lack of experience in the workings of the industry of the present helmsman at the Shippers’ Council to unleash operational terror on the weary freight forwarders.
The present face-off between them and the freight forwarders is a test case.
If the Shippers’Council and the CRFFN fail to broker a truce between the two warring parties and stave off the impending service disruption, then Jime would have failed his first assignment as the Chief Executive officer of an economic regulator which has failed to tame one of its constituents.
Then and unfortunately too, that will signal the beginning of the descent of the council into the pre-Bello era when the agency was a toothless bulldog, which could only bark but shy to bite.
The reason for the sudden dip in the fortune of the council may not be far-fetched if we look at the antecedents of all the agencies of government where top appointments were used as political patronage to rehabilitate politicians, especially those who suffered political setbacks.
Unlike his predecessor, Barrister Hassan Bello, who is an industry man that rose through the ranks in the Shippers Council,  Hon. Emmanuel Jime is a thoroughbred politician and former APC governorship candidate in Benue State whose passion for ruling the state may still have an overring place in his mind.
That has always been the fate of government parastatals which are headed by active politicians as all other assignments will take a back seat in the pursuit of their political goals and ambition.
The same scenario is playing out at the National Inland Waterways Authority (NIWA) where an active politician heads the agency whose 2022 budget proposal was recently dismissed by members of the Senate committee who described the presentation of NIWA’s  Chief Executive as incoherent and inconsistent with the figures presented.
Contrast this with the cheering performance and runaway achievements being recorded at the Nigerian Maritime Administration and Safety Agency (NIMASA) whose Chief Executive, just like Barrister Bello, is a  ”home boy”, a home-grown, thoroughbred professional.
Or better still juxtapose that with the impressive runs of the helmsman at MAN, Oron who is also not a politician but professional.
You can call them a tale of two cities. One headed by politician and the other by professional.
The success of the present ES in his onerous task of steering the ship of the Council will however depend on the willpower, cooperation and commitment of the Directors he inherited who were part of Bello’s roaring success.
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The Politics of CVFF disbursement.

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