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
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
Editorial! Chairmanship of CRFFN: Mortgaging the Freight Forwarding industry
“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).
The Gradual Decapitation of Shippers’ Council under Jime.
The Politics of CVFF disbursement.
The Cabotage Vessel Financing Funds (CVFF) has become a wild card in the hand of the government which it uses at will to dribble the hapless indigenous ship owners in a game of deceit.
For about 18 years when the Cabotage Act of 2003 was promulgated and 14 years when the CVFF guidelines 2007 were issued by the Ministry of Transportation and approved by the National Assembly, the disbursement of the interventionist fund has become a rat race between the government and indigenous ship owners.
All over the world, governments seek and strive for the development of their maritime Industry either through direct intervention as the CVF was designed to be or through the creation of conducive environment to attract private participation.
It was with this mindset that the promoters of the Cabotage Act promulgated the ACT in 2003.
The ACT, akin to the Jones Act of the United States, was meant to reserve the opportunities in the coastal trade for the exclusive rights of indigenous ship owners.
To enable them to participate effectively in coastal trade, the promoters of the Act mooted an interventionist fund to be given to the operators as soft loans under the Cabotage Vessel Financing Funds (CVFF).
The fund, which is a pool of the deductions of the two percent of the contracts executed under the Cabotage trade, will be given out to qualified shipowners in a low-interest loan.
But 14 years after the fund berthed, no single operator has benefited from the fund.
Successive governments have played a game of deceit on the disbursement of the fund, making fools of the hapless indigenous operators.
Over the years, the accrued amounts of the fund from the deductions which are still ongoing despite non-disbursement, have been a subject of controversy as various, unverified figures are being churned out by the government and its agency, the Nigerian Maritime Administration and safety agency (NIMASA), thus leaving operators to make wild guesses.
The last unverified figures given out by NIMASA during the press conference to mark the one year in office of the incumbent Director-General of NIMASA, Dr. Bashir Jamoh, was $20m and N32 billion.
We call it unverified because the fund grows almost on daily basis from the two percent deductions from Cabotage contracts.
Unfortunately, the fund has been serially abused by successive governments which gleefully dip their hands into the hilt and use it for purposes other than what it was meant for.
The circus display of a game of deceit over the disbursement of the fund started during the last administration of President Good luck Jonathan when Mr. Patrick Akpobolokemi was at the helms of affairs as NIMASA DG.
The closest the indigenous operators came to getting the loans was the shortlisting of six applicants from the 100 applications for the loans.
Nothing was thereafter heard until 2015 when the Jonathan administration gave way to the present government.
It was even rumoured that the fund was depleted by the previous government in the run on to the 2015 General elections.
The game of deceit continued under the present government which even elevated the circus show into an act of mind game.
Under the present dispensation, promises of disbursement were not in short supply as the Chief Executive officers of NIMASA, starting from the erstwhile DG, Dakuku Peterside, regaled indigenous operators with his power of rhetorics to hoodwink them when he made several unfulfilled promises of disbursement.
This act of deceit continued under the present leadership of NIMASA which has continued with the same old tradition of unfulfilled promises.
Even though Dr Bashir Jamoh, the incumbent NIMASA DG, appears to be genuine in his passion to disburse the fund, but he was handicapped by the insincerity of his principals.
If the Jonathan Government was being diplomatic about its insincerity over the disbursement, the present government, who incidentally criticized its predecessor over the non-disbursement, left no one in doubt about its intention, to play to the gallery.
It was under this government that the fund was taken over and deposited into the TSA account at the Central Bank of Nigeria.
As laudable as the move was to safe guide further pilfering of the fund, the Buhari Government, through his Minister of Finance, Zainab Ahmed, said the fund belong to the Federal Government.
Despite several efforts and promises made by NIMASA and the Ministry of Transportation to disburse the fund, the Presidency inexplicably yielded to the antics of the Finance minister who curiously objected to the disbursement.
To confirm that this government never had any intention of disbursement, Rotimi Amaechi, the Minister of Transportation, told the bewildered audience at a Lagos event last week, that the President has withdrawn his earlier approval granted for disbursement, thus shattering the forlorn hope of the expectant beneficiaries.
We are as confused and bewildered as the hapless indigenous operators over the turn of events.
Two months ago, Amaechi told his audience that the fund was on the verge of disbursement when the Minister of Finance, despite the approval of Mr President and the endorsement of the Attorney General of the Federation, Abubakar Malami, protested and stalled the process.
In another breath, the President was said to have withdrawn his approval over what Amaechi called the petition letters which he alleged the indigenous operators wrote against him to Mr President.
The whole thing doesn’t add up.
It was Amaechi who advised the operators to write a letter, protesting the meddlesomeness of Ahmed Zainab who allegedly stalled the process.
We find it curious that the same operators, who should be grateful to Amaechi for fighting their battle, would now turn against him and instead of protesting against Ahmed Zainab, their common enemy, will now turn their anger against Amaechi.
The whole scenario seems illogical to discerning minds.
To us, it was giving a dog a bad name before hanging it.
The government, as the risk of being controverted, had never intended to disburse the fund, if there is still any fund to disburse.
With the legendary propensity of this government for borrowing, we may not be entirely surprised if it later turns out that this government has “borrowed” the accrued amount into the fund while playing to the gallery to buy time until more money is accrued. After all, the two percent deductions and other fees accruable to the fund are done on an almost daily basis, if not on daily basis.
If this government could deplete the pension funds through borrowing, we would not bat an eyelid if the CVFF has suffered a similar fate.
We are sad to note that the noble objectives of CVFF have been distorted and bastardized on the altar of political expediency.
The fund, which has become an object of serial abuse, has been turned into a buffer to cash back political expenses while leaving the indigenous shipping to bleed and suffer stunted growth due to mindless neglect.
Going by the guidelines set by the Ministry of Transportation and approved by the National Assembly in 2007, the hijack of the fund by the Presidency and the interference of the Minister of Finance is illegal and negates the spirit and letters of the guidelines.
Schedule 4 of the guidelines spell out the parties to the fund which include the Ministry of Transportation as the supervising Ministry, NIMASA, the Primary Lending Institutions (PLIs) and the fund applicants.
Nowhere was the presidential approval nor the inputs of the ministry of finance indicated before the fund could be disbursed.
Using the fund for purposes other than what was stated in the guidelines was not only uncharitable but criminal.
Under the purpose and beneficiaries stated in the guidelines, schedule 3.1 (financial support), it states that:
” The fund shall be utilized by the agency (NIMASA) to offer financial assistance, create access to funding by financial institutions with the sole aim of increasing retail indigenous ship acquisition capacity.
“The disbursement of the fund shall be subject to the approval of the Minister of Transportation upon recommendations by NIMASA”.
For 14 years, these objectives were met in the breach
From the foregoing, the current circus show which the present government has engaged with the CVFF disbursement is against the spirit of the ACT.
For a government that prides itself as a defender of rule of law, it should have caused the National Assembly to amend the Act before the president took over the administration of the fund.
We find as distasteful the political game to which the present government has subjected the CVFF disbursement while neglecting its critical role of intervention to empower the indigenous operators to enable them to participate effectively in coastal trade.
We urge the National Assembly to step in and stop the serial abuse of the fund and cause a forensic audit to be carried out to ascertain the level of pillage that the fund has suffered since 2007.
Ending this rat rate and political circus show over the disbursement of the CVFF, to us, will halt the gradual but steady tipping of indigenous shipping from its present precipice of disaster.
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