In the beginning
Established in 1978, the Nigerian Shippers’ Council was primarily charged with the responsibility of protecting the interests of Nigerian shippers. This, it is expected to do through provision of adequate and up-to-date trade information to Nigerian importers and exporters as well as the international business and shipping community.
The Council also has a Shippers’ Complaints Unit, through which it attends to the numerous needs of shippers. It also operates through the Shippers’ Associations that have been created all over the country.
The Council has also had to take on other responsibilities that are adjunct to the execution of its immediate mandate. One of such is the conceptualization of Inland Container Depots (ICDs) and Container Freight Stations (CFS).
The Council was also the arrowhead of the creation and nurture of the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN).
But, in its efforts to protect interest of Nigerian shippers, the Council was for a long time erroneously perceived as a toothless bulldog.
It is a known fact that for many years, the Shippers’ Council fought unsuccessfully to check the arbitrary imposition of charges by suppliers of shipping services – the multinational shipping lines. For years, the shipping agents successfully dared the Council.
It was usual to see the various shipping lines/ agents take on the Nigerian Shippers’ Council at will and dared it to punish them.
The inability to successfully call the shipping lines to order in the face of glaring arbitrariness rubbed the Council of the much-needed respect as opportunists took advantage of the loophole in the Council’s enabling Act.
Port Concession Without Regulation
This went on and even the flag-off of the Federal Government’s port reform programme in 2006 did not make much difference as defiant providers of shipping and terminal services continue to rip-off Nigerian importers.
The Government noticed that the service providers were taking advantage of the vacuum created by lack of a post-concession regulator of the port system. It acknowledged that there was absence of an Economic Regulator that will act as a referee in port activities.
And as an answer to this, the Federal Government in February 2014 appointed Nigerian Shippers’ Council as the Economic Regulator of the ports.
It is significant to note that this new role came just few months after Barrister Hassan Bello was appointed as the Executive Secretary/Chief Executive Officer of the Council.
Regulation
Specifically, the new role includes assessment of options for competition, deciding on entry rules, regulating pricing freedom and monitoring the outcomes.
Effective regulation requires much more than just competent economic and financial analysis, but it must also manage often complex interaction with the regulated firms, consumers, politi¬cians, courts, the media, and a range of other interests. It is essential that the regulator provides a level playing field among the various actors.
A Regulator needs to be independent, transparent, legitimate and credible, bearing in mind that the transition to a competitive market is a major reg¬ulatory challenge. It is also germane that the regulatory pro¬cess is fair to all parties, by not taking arbitrary decision and by balancing the needs of stake¬holders.
Exhibiting a good understanding of its new mandate, the Council’s Executive Secretary; Mr Hassan Bello said: “Effective regulation requires much more than just competent economic and financial analysis, but must also manage often complex interaction with the regulated firms, consumers, politicians, courts, the media, and a range of other interests”.
And apparently conscious of the challenges of the role of the Council, he acknowledge that: “In our capacity as the Port Eco¬nomic Regulator, our role is to consult, coordinate, moderate and harmonize the various processes and procedures with a view to achieving operational efficiency at our ports. Where there is unreasonable resistance, we shall not hesitate to apply appropriate sanctions to ensure compliance. We shall remain open, independent, neutral and consul¬tative and all decisions will be based on the buy in of stakeholders. We are also to assess options for competition; to decide on entry rules; to regulate on pricing freedom; to monitor outcomes and all that”.
Carrying everyone along
The involvement of stakeholders is an important source of legitimacy and public acceptability for regulatory agencies and their decision-making procedures.
As a start-off, the Nigerian Shippers’ Council met with all stakeholders, including freight forwarders, shipping agents, importers, private terminal operators, all of whom acknowledged the need to have an umpire to regulate activities of the various players.
As a follow up, the Council has also met and received the support of the Nigeria Ports Authourity (NPA), whose managing director; Mallam Habib Abdullahi affirmed that: “it would amount to failure on the part of NPA if the Nigerian Shippers Council fails”.
At the meeting, the Managing Director assured that the NPA is ready to cooperate and support the Shippers’ Council in its new role as the economic regulator of the nation’s port system.
In similar vein, the CEO of Shippers’ Council has held similar consultations with the Nigeria Customs Service and the Central Bank of Nigeria (CBN). At these meetings, the CEOs of the agencies gave assurances of their support.
The New Port Order
While giving an insight into what the Shippers’ Council is doing to further entrench its new role and espouse a new port order, he disclosed that it is establishing a new plat¬form for everyone to integrate.
Experts explain that the new port order involves a situation where the cargo is scanned before it is stacked. As the ship is discharging, the cargo is also being scanned, and the im¬age is used by the Nigeria Customs Service to commence clearing process in terms of segregating the cargo for whatever line of inspection, such as: green, yellow and red light, as the case may be.
On the new port order, Bello says: “We are working with the CBN, Customs and other relevant stakeholders so that every payment made in the maritime domain is reflected on the platform. In doing this, we have designed a tem-plate and standard tariff system that will ensure 30 to 40 percent reduction in cost to achieve harmony in tariff. This involves all service providers. The system harmonizes every transaction in such a way that transfer of containers to off-dock terminal does not attract extra charge in terms of payment of royalty to the terminal operator.” He insists that transfer of containers to off-dock facilities should not attract extra charge, and assured that the “practice will be discontinued as it amounts to double charges to the shippers”.
He explains further that, “the idea of harmonizing the system creates transparency as the importer trades with certainty as to how much to pay and how long to take delivery of the goods. This new port order will eliminate all the wastages in the system so that the cost of doing business is re¬duced. Part of the arrangement is that the owner of the cargo should know when his cargo arrives to prepare him to make arrangements to clear his goods in good time”.
“We are also working to streamline and professionalise freight forward¬ing to strengthen its position in the ports. We prefer to have them in companies rather than individuals”, he said.
According to him, in doing all these, the Nigerian Shippers’ Council is not competing with any Government regulatory agency, but thrives to actualize the mandate of making Nigerian ports to become the sub-regional hub and an international logistics centre.
Flexing Muscles
But, the first confirmation of the Shippers’ Council’s resolve came in October 2014, when in consonance with its new roles, it published notices directing shipping companies and terminal operators to reduce certain charges, increase free storage time and also announced interventions in other levels of pricing.
Wanting to test the will of the Economic Regulator, shipping companies and terminal operators filed two separate actions against the Nigerian Shippers’ Council and obtained interim orders of injunction restraining the Council from implementing the directives contained in its notices to them. The substance of the actions challenged the exercise of powers of economic regulation by the Council and questioned the validity of the Council’s appointment as the Economic Regulator by the President of Nigeria.
Not done yet, 12 shipping line agents under the umbrella of Association of Shipping Line Agents, filed an originating summons wherein they sought the court’s declaration that the Nigerian Shippers’ Council does not have the power to introduce or impose local shipping charges on them, and that the notices that were issued by the Council were illegal. In the counter-claim, the Council had sought for the ‘Shipping Line Agency Charge’ levied by the Plaintiffs to be declared illegal, and for payments collected thereby to be refunded.
Delivering judgment on the two similar matters, Justice Ibrahim Buba of the Federal High Court agreed with arguments of counsel to the Nigerian Shippers’ Council; Mr. Emeka Akabogu that the Nigerian Shippers’ Council was properly appointed and empowered by virtue of the Constitution of the Federal Republic of Nigeria to undertake its role as an Economic Regulator. He ruled that in the clear absence of any existing law in Nigeria making provision for an economic regulator for the ports, section 5 of the Nigerian Constitution was adequate basis for the President to issue orders in relation to the subject, as government exists for the welfare of citizens. The court thus affirmed that the Nigerian Shippers’ Council was validly appointed as the economic regulator for ports in Nigeria and could exercise powers in that regard.
The court further ruled that the ‘Shipping Line Agency Charge’ (SLAC) being collected by the shipping companies is illegal. The court therefore ruled in the case filed by the shipping companies that the Plaintiffs should render account and refund all money collected under the heading of ‘SLAC’, declaring that it is illegal.
Responding to the court cases, Hassan Bello said, “We’ve resisted attempts to in¬crease charges and we said no to impunity, economic brigandage, fleecing of Nigerians”.
Regulation’s a win –win for all
Surprisingly, the terminal operators who have been up in arm against the Shippers’ Council will be top beneficiaries of the emerging port order. Part of the benefits is the protection of their investments from undue interfer¬ence. This on its own leads to guaranteed return on investment and increased profitability; predict¬ability in processes and procedures; assurance of level playing ground; availability of Common User Informa¬tion Service provided by the Regulator; strengthening of complaint and arbitra¬tion mechanisms among other benefits.
Apart from the private terminal operators, the government will also enjoy improved revenue generation; improved infrastructural development; creation of efficient market; reduction of cost of doing business; improve¬ment of the nation’s Global Competi¬tive Index and consequent attraction of Foreign Direct Investment (FDI).
For the shipping companies, there will be im¬proved delivery of marine and terminal handling services leading to reduced turn-around time of vessel and re¬duced cost of vessel operations. There is also the benefit of improved image due to increased customer confidence; transparency, efficiency and effective¬ness and consequent improvement in image. The presence of an economic regulator ensures the strengthening of complaint and arbitration mecha¬nisms; prompt issuance of Ship Sail¬ing Certificate and the consequent avoidance of demurrage accumulation against shipping companies and other effects.
For the freight forwarder, it en¬sures professionalization of freight for¬warding practice. This on its own leads to elimination of touting, sanitization the port environment; and harmoniza¬tion of clearing processes and proce¬dures and the consequent reduction of clearing charges. There is also the strengthening of complaint and arbitra¬tion mechanisms.
The Nigerian Ports Authority will also enjoy the effect of the presence of an economic regulator because it will lead to enthronement of clearer Standard Operating Procedure (SOP) derived from International Laws (Con¬ventions) and Practices. The NPA will also enjoy transparency, efficiency and effectiveness and consequent improve¬ment in image; improved revenue generation; improvement of com¬petitive advantage in the sub-region; strengthening of complaint and arbi¬tration mechanisms, and more.
For the Nigeria Cus¬toms Service, the emergence of the Economic Regulator will translate to improved revenue collection, enthronement of clearer Standard Operating Procedure (SOP) derived from International Conven¬tions and Practices, improved level of compliance by importers, exporters and freight forwarders and others.
Above all, the ultimate beneficiaries are the consumers. The Economic Regulator will ensure harmonization of clearing processes and procedures and the consequent re¬duction in cost and time of cargo clear¬ing; reduction of Cargo Duel Time, in particular, and generally the trade cycle; strengthening of complaint and arbitration mechanisms etc.
When the new port order comes full on stream, providers of haulage services will also enjoy decon¬gestion of port access roads leading to improved truck transit time at ports; there is also the ability of re-fleeting of rickety trucks; installment of electronic gating and call system guaranteed loading opportunity for truckers.
Conclusion
It is apt to conclude that the emergence of the Nigerian Shippers’ Council as the Economic Regulator and the consequent enthronement of a new port order is a win-win situation for users and providers of shipping and terminal services. A little empathy and and understanding is all that is required.