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Transportation responsible for 30% of cost of goods and services – Hassan Bello

Executive Secretary of the Nigerian Shippers Council, Hassan Bello, in this interview with GODFREY BIVBERE reviewed activities in the maritime industry, especially as it concern shipping, shippers’ transportation, competition with neighbouring countries and more.

Hassan Bello
Excerpt:

I WOULD like us to talk about the new development that Nigerians move their goods to the Benin Republic and go through the borders (Nigeria-Benin borders) to Niger, Katsina and then transit their goods to the East and Abuja. All of these because of the fact that they cannot come back from Seme because of the bad state of the roads.

I think certainly that we are having challenges of infrastructure but at the same time the Federal Government has been on the roads, I know the road leading to the border is being done now. The Badagry -Seme road contract has been awarded and work would soon start. If you take for example Ilorin-Jebba road, for thirty years it has been bad but it has been done now. There is also the Port Harcourt – Enugu road, it has also been done, the second Niger Bridge and many others. The Federal Government has realized that it is important for our trade and for our competitiveness to have the infrastructure and I think they have taken conscious efforts to redress such.

What about the issue of verified gross mass or VGM?

On the issue of verified gross mass, VGM, it is an International Maritime Organisation, IMO, a requirement because it is in all trade, the duty of the shipper to provide information and take certain actions for the carriage of these goods. So weighing a container is very important. Some containers are overstuffed and that will not be good for the storage of these containers and may prove dangerous to the voyage. So the shipper has to take responsibilities and that is in all Verified Gross Mass of a container. This has been implemented in Nigeria and I think it is for the safety of both the cargo and the ship

One of the complaints we had before was that if the terminal operators handle it the charges will be too high. The issue is, who pays for these charges?

We understand that shippers have to pay for a certain service but our concern is that it should not be too much, it should be reasonable and that is what we are keeping an eye on. So far I think it has been reasonable. I would be alarmed if arbitrarily charges are slammed on the shippers.

Let us look at trade generally in Nigerian ports. The environment is a bit difficult because of the poor infrastructure and then the harsh economic activities that we are facing but recently I have heard reports of most of the Customs commands and it shows that there is an improvement in terms of revenue collection. What do you think about this?

Nigeria is a huge market. So Nigeria would certainly have a competitive advantage because of our population. Now, if you have noticed the trend since 2014, except for some minor adjustments, Nigerian ports have actually been winning cargo from all its competitors, you can only do that by the reforms we are having. So, there have been improvements on the transactions and the government is instituting regimes that would call for transparency and a regime that would call for the fast clearance of cargo.

Nigerian Shippers Council, for example, has worked tirelessly to see that there is a Standard Operating Procedure, SOP, for port operations which were launched by the vice president and we are now supervising at every desk there at the Shippers’ Council especially in cargo clearance. We have not measured yet but we have set standards for terminal operators. We are talking about the efficiency of the terminals. We have set these standards. We are talking about the machinery that is supposed to be at the port. We are talking about the turn-around time for trucks; we are talking about the turn-around time of cargo generally. This is to increase the competitiveness of our ports and I hope that we have got cooperation from the terminal operators. I was there last week going around and seeing the kind of machinery they have in place in accordance with the agreement they have signed.

Shippers’ council would be involved in all these things. We have a weekly report which comes to me to see how we can measure the efficiency and the cooperation we have received from these terminals has been tremendous. So, we are increasing the efficiency of the terminal and this could be seen. Of course, there are challenges, I will not deny that infrastructure has let us down but the most important thing is that the government has realized this and is working towards that.

One of the things that the Shippers’ Council is known for is reaching out to other stakeholders. They do a lot of visits and interactions. Has this been fruitful?

Oh yes, extremely so.  This is a stakeholder-based industry. It is multi-faceted: the port system and the transport system are populated by various interests and stakeholders. So, one has to reach as many stakeholders as possible. We are just embarking on three major projects that would change the way we do shipping in Nigeria. The first one is that we have to come out with a bill for the carriage of goods by land. There is a total absence of regulation or laws if one should consider internal carriage of goods, there are no consequences for damages, there is no obligation for the carrier and the transporter, there is no insurance or little of it.

There are no consequences for damage or delay or loss and this has an effect on our international trade. The modern way of transportation is the door to door delivery of cargo which means the carrier overseas would have responsibility until the goods are delivered. The sea carriage of it is governed by international conventions, laws, customs of trade and long-held tradition. But when we come internally there is a large gap so carriers overseas are afraid and would want to limit their responsibilities to the sea only.

But what happens when we want to take the goods on the sea? Because that is the practice now that is the seamless thing we are talking about. Nigerian shipping council is making a lot of consultation with very important institutions to make sure that we have a drafted bill and we are going to from now on the push for its passage so that we protect and assign responsibility and so that we will be part of the global economy.

Right now because of lack of these laws we are really cut off for internal carriage. We are also looking at the issue of container traffic, globally this is to solve many issues. First of all, the congestions which is partly caused by the return of empty containers, secondly, to stem illegal capital flight and thirdly to lower the cost of doing business in Nigeria.

Cost of shipping

We are also having a consultation with stakeholders generally to see that all these things are done. Also in August, we are going to recall all African countries to a meeting, including Global Shippers Forum so that we look at global issues on the cost of shipping in Nigeria. If we see that the cost of shipping or transport in Nigeria covers thirty to forty per cent of the cost of production then there is something wrong, especially when it is about seven per cent in the developed nations but here we are talking about 30 per cent then something is wrong. We have to, therefore, reduce considerably the cost of transportation. That means we are stopping inflation.

The inflation we have in the country today is because of the cost of transportation but this would mean that we have to bring out vibrant and transparent processes for clearance of goods, then infrastructure and attitude of people who are involved in that. If you see the task force, for example, you would know they are making progress. They have now removed extortion. Nobody is being extorted anymore. The drivers say it and the truck owners say it. There is a free flow of goods and of manual call up system designed by the managing director and it is working before we go to electronics.

So, the short term issues are being resolved successfully. They are now moving into medium and long term despite the fact that the port and Apapa and Tin-can ports are operating well above their initial capacity which means there must be a response as regards the infrastructure but you would agree with me that we have achieved moderate success. Now the issue is the sustenance of that which would have to be by medium and long term. We are happy that the Lagos State government is positive on that. The Lagos State government focuses on tackling the traffic problem because it also affects everything including revenue generation.

When we have this global shippers’ forum in August we are going to question so many things like the cost of transportation of goods by international carrier and the so-called “short charges” like the work laws which we don’t know how it is determined. We don’t know what the premium is. We want to come out with adequate laws to protect Nigerian shippers. Many things have been overlooked as less of an affair but we need stakeholders’ engagement. These three things are what the council hopes to achieve before the end of the year and we want to see a 30 to 35 per cent reduction in the cost of doing business so far as shipping is concerned.

Normally what it takes is for some of these foreign companies to engage local agencies till it reaches the doorstep of the importer but if you look at the big shipping companies they usually have their subsidiaries here; therefore, it is seamless because from abroad their subsidiaries handle it here. Are you not worried that Nigerians are losing out?

Yes, we should be worried about Nigerians being unable to participate in some of the logistics. The whole thing is about competition, we need Nigerian companies to be structured to be able to do that. Why do we have one thousand forwarders when we can have six major forwarding companies and these six major forwarding companies should be able to be non-vessels common carriers so that they can even hire vessels, they can have warehouses, they can transport a large volume of goods; that is why they are forwarders, including Customs licensed agents.

We would like to have the same thing that is truck fleets, transportation and trucking. Trucking is very important because 70 per cent of the economy is based on trucking but what types of trucks do we have? And we want to re-fleet but how can we re-fleet when the companies are not structured. You do not need two thousand trucking companies; you need six trucking companies in Nigeria to do all these businesses and then you can apply laws to them.

But as for these ones you wouldn’t even know where they are. I am always giving the example of abolition of container deposits which we wanted to do but the shipping companies do not collect deposits of certain companies because they are well structured. If we want to abolish certain things we need a well-structured system and that is one of the things to be reformed.

Also read: Senate gives Shippers’ Council one week to present details of 2018 recruitment exercise

What is the reason behind recent visits to some major industries?

We are working with large shippers, we have been having micro effects on the shippers but now we want a bargaining team. We want large importers and exporters, we have some of them that are already registered members and we can collectively come together with the manufacturers and the Lagos Chamber of Commerce, big-time shippers like Unilever, Nigerian Breweries, Dangote, Coscharis, Promasidor and even Vanguard Newspaper.

We would have the bargaining chip and it’s not a confrontation, it is just finding common ground. We are representing the shipping companies, the terminal operators, the shippers, the forwarders in global shipping. The Nigerian Shipping Council has been transformed. We are not purely cargo interest. We need equilibrium in shipping. We need the ports to be empty of people we need it to be like the banking sector.

Equilibrium in shipping

In the present times you don’t see a lot of people at the banking halls but previously the reverse was the case but because of automation the human interaction is nil that is what we want in the ports that is why the ports are located on the outskirts of the country for easy supervision but it is not so in Nigeria, the water ports are very difficult to maintain. Ports would be ineffective when sited in towns. We hope to be able to hit the international standards in the remaining parts of the year we also hope to abolish alien carriage of goods in the remaining part of this year, reducing the cost of shipping and maintaining competitiveness is also one of our goals. We are also taking pro-active steps to see that Nigeria’s interest is protected globally when it comes to shipping.

Lastly, one of the things that stakeholders say about you is your pro-activeness and openness. Why did you go for this?

You know we are serving the private sector, we have to operate more like that. Bureaucracy has been thrown away in Nigeria, PEBEC has really helped to institute accountability of agencies. Hitherto agencies saw themselves as masters but now they are servants.

The Nigerian Shipping Council sees itself as a servant and as such, is able to reform the shipping sector. We are also concerned with the return of investments to the private sector and also we are concerned with employment. We also focus on how transport contributes to the economy, the GDP. We are also talking of infrastructure and that the way of doing business must be simplified, transparent and up to international standards.

We also aim to properly structure the dry ports and seaports in its entirety with adequate technology and infrastructure. We are to keep the transport sector relevant so that Nigeria can compete globally

What is your take on Maritime’s contribution to the GDP?

The efficiency of an economy rests on its transport system and the result of efficiency is competition which would, in turn, bring about reasonable market prices. The Nigerian Shippers Council has also been able to bring stability in the price system you don’t hear of arbitrary prices anymore, you also do not hear of unilateral imposition we have made conscious and concerted efforts to reduce prices to a reasonable amount.

We would soon start publishing periodicals that would indicate the amounts to be spent in doing business with Nigeria We have the rates for any kind of transaction internally and externally hence reforming the shipping sector as a whole.

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