The Nigerian Shippers’ Council And Its New Mandate

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.