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
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! The incursion of Chinese into Nigeria’s revenue vault.
The ubiquitous Chinese is gradually getting a foothold in the nation’s economy.
On May 30th, 2022, the controversial concession of the Nigeria Customs Service was consummated at the national headquarters of the service in Abuja.
Despite the outcry of stakeholders against the concession of the operations of the Nigeria Customs Service, the Federal Government signed a tripartite concession agreement with a Chinese company, Huawei Technologies, and their Nigerian counterparts, Trade Modernisation Project Limited with Africa Finance Corporation as the lead financiers.
The agreement was facilitated and midwifed by the Infrastructure Concession Regulatory Commission(ICRC).
The concessionaires, under the agreement, will drive the modernisation project for 20 years.
Last Monday’s consummation of the concession agreement was preceded by the approval granted by the Federal Government in September 2020 to concede the operations of the customs to concessionaires
The concession agreement, which spans a period of 20 years, will involve the modernisation of the processes and procedures of the Nigeria Customs Service, including its revenue generation which the concessionaires will take over through which they are to recoup their $3.2 billion investments.
Expectedly, the decision of the Federal government, which was clinically executed in the mould of a coup d’é tat, caught many industry stakeholders pants down.
It also generated animated discussion as the approval and eventual concession was granted in defiance to the popular wish of the operators.
Since 2019, when the industry got wind of this concession deal before the 2020 approval, there has been concerted opposition mounted by the aghast operators who felt the move was an attempt to give away our common patrimony to the foreign interests.
Then, Hon. Jerry Alagbaso, a former Customs chief and erstwhile member of the House of Representatives, rallied the National Assembly against the move.
But to the chagrin of everyone, the Federal government pulled a fast one on all the antagonists of the project.
We are less disconcerted over this concession deal which we believe was willing away the nation’s cash cow for 20 years to the foreign imperialists and their local collaborators.
We are at a loss on which powerful forces could have forced the hands of the Federal government to enter into this type of deal against the popular counsel of knowledgeable stakeholders.
Modernisation of Customs, they said.
What is there to modernise in the processes and procedures of the Nigeria Customs Service?
At the risk of being controverted, we dare say the Nigeria Customs has the most advanced form of automation process among the government agencies in the industry and one of the most automated in Africa.
The Secretary-General of the African Continental Free Trade Area (AfCFTA), Wamkele Mene said as much when he visited Apapa Customs command last week.
Mr. Mene said Nigeria Customs has the most advanced and comprehensive automation programme among its peers in Africa.
The only challenge which the service has is human.
Some of the men and officers of the service are clearly aversed to full automation due to their selfish and pecuniary interests.
The automation process will eliminate human contacts which is the avenue for extortion and exploitation.
Since 2003, Nigeria Customs has gone through a series of automation processes that have made its processes and procedures seamless.
The Automated System for Customs Data (ASYCUDA) and its advanced form of ASYCUDA+, ASYCUDA++, the Nigeria Customs Integrated System (NCIS1 &11), and Pre-Arrival Assessment Report (PAAR) are some of the automation platforms created by the customs management over the years to make customs operations seamless.
Even, in 2013, the Service developed a web-based application to provide information and guidelines for international trade business processors, export and transit trade which is called Nigeria trade Portal which is interactive.
To our mind, what the service needs is to upgrade these automated platforms, and integrate them with other players in the cargo documentation and clearance chains under the neglected single window project.
With adequate capital outlay, we believe Nigeria Customs can achieve full automation status without the involvement of foreign economic imperialists, aided and abetted by their avaricious local collaborators.
The anti- automation officers, who are averred to technology due to their selfish interests, could be reformed.
If they are adamant, they could be shipped out.
Cargo scanning could be emphasised while physical examination of cargoes could be sparingly used.
With these and all other automation platforms well integrated into the single-window under the supervision of a willing Customs administration, the Nigeria Customs will be a world-class agency.
We are however least surprised at the tenacity of these economic vultures in their quest to lay hands on the Nigeria Customs Service, which is gradually emerging as the cash cow of the nation.
Apart from oil, maritime is the second-highest revenue earner for the country and Nigeria Customs plays a key role in this regard.
With the yearly earnings in the excess of a conservative estimate of trillions of naira and the capacity to do more, as well as the dwindling earnings from oil due to the global crisis in the oil market, the maritime industry nay Nigeria Customs is understandably the preferred bride for these economic speculators.
Various attempts have been made in the past to dip their hands in the Customs’ till without success.
In 2011, the illegal concession of Customs key functions between the ministry of finance and a company called Single Window System and Technologies was shot down.
In 2017, another move for Customs modernisation was made by the technical committee on the Comprehensive Import Supervision Scheme(CISS) which was pretentiously acting on behalf of the Federal government, with a technical partner called Adani system Nigeria limited.
The attempt, which sought to concession the Customs then for 25 years, was frustrated.
However, in a blatant disregard for popular opinion, the Federal government, after several failed attempts, eventually forced down the throat of the unwilling stakeholders, the concession of the agency.
However, the deeds have been done.
Any further lamentation by the stakeholders on the issue is crying over spilled milk.
Now that the government has had its way, we can only hope that its aspirations for the concession will be realised.
The Minister of Finance, Budget, and Planning, Zainab Ahmed, has said the government stands to realise $176 billion from the project without spending a Kobo.
The question is how much will the concessionaires realise within the 20- year period of the deal beyond the $3.2billion investments they are expected to sink into the project?
What would be the fate of the customs officers whose jobs will be affected by the take-over of the revenue functions of the agency?
Even though the Comptroller General of the service, Col. Hameed Ali, has allayed the fear of job loss, the redundancy of some categories of officers could not be totally ruled out.
It is instructive to note that one of the two core functions of the customs, which is revenue generation, has now been concessioned under the guise of this new modernisation project, leaving them with the anti-smuggling function.
We hope rather than render some crop of officers reductant which may lead to possible right-sizing of staff, they could be redeployed to beef up the anti-smuggling function of the service.
We are worried about the involvement of the Chinese in the project as represented by Huawei which serves as a technical partner.
The ubiquitous Chinese have gradually become a leech on Nigeria, sucking on the economy of the nation.
We can only hope that the modernisation project will leave the Nigeria Customs service better than it met it.
We equally hope the project will not be sabotaged by disgruntled insiders whose means of livelihood is being threatened.
The misadventure of the Professional Import Duty Administrators (PIDA) between 1996 and 2000 in the Nigeria Customs Service is still poignant in the memory of those who were in the know.
At that period, a firm of an accounting/consultant was engaged as professional Import Duty Administrators to complement the Nigeria Customs Service in the task of revenue generation.
They left the service worst off than they met it.
We appeal to the Federal government to ensure that this project transforms the service into a technologically-driven agency whose operations are seamless and paperless.
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.
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