‘Multinational Shipping Lines Want To Truncate CTN Project’
The Director, Commercial Shipping Services, of the Nigerian Shippers’ Council (NSC), the economic regulator of Nigerian ports, Mrs. Dabney Shall-Holma is an expert in maritime matters. She spoke with select journalists on the planned re-introduction of Cargo Tracking Note (CTN) by the Federal Government. Shall-Holma, who believes the CTN will come with huge economic and security benefits to the nation, alleged that some multinational shipping lines and big time shippers are conspiring to truncate the scheme. The Guardian’s ONYEDIKA AGBEDO was there.
The NSC has said that the charges associated with the CTN as published have nothing to do with the shippers but shipping lines. Can you throw more light on that?
Well, the charges as published was a notice to guide shipping companies, lines and agencies in the preparation of their Movement Reference Number (MRN) which is the document they are supposed to prepare after the Entry Summary Number (ENS) has been filled in by the shipper. The ENS is completed by the shipper and it is at no cost, which means the shipper does not pay anything.
However, the intendment of the Cargo Tracking Note (CTN) right from when it was established in 1998 in Libreville, Gabon was to get the major components that make up freight as well as surcharges to the West and Central African sub-region. You will notice that there is a huge outflow of trade from West and Central African sub-region on account of freight; it is not in the basic freight but in freight additionals, in the bunker adjustment factor, currency adjustment factor that is never altered, and in the various surcharges, whether they are war risk or freight taxation or emergency recovery surcharges.
So, there are so many surcharges. And it is this retinue of charges that we have said that for those of them that are freight tax, these payments can come from there because there is already a taxation that is undefined. It has nothing to do with additional cost. So, CTN has nothing to do with the shipper that is importing or exporting at the moment. Rather, CTN comes from payments that are already payable per consignment. Whether Nigerian Shippers’ Council (NSC) introduces CTN or not, shipping companies will continue to collect these freight taxations. The 25 dollars per container and indeed all the other fees listed are expected to come from the already existing taxation on Nigerian freight.
But the shipping lines and MAN are saying it has additional cost to shippers…
No, there is no cost to it. Of course, they will use that so that they can play on the psyche of the readers of the document. They have been informed that CTN would come from the freight surcharges and freight additionals. They are aware but they are resisting it. But they can’t take their resistance to the NSC because we know where they are padding up the cost. They will say that to the Nigerian public and the OPS so that they can create anxiety in the industry and generate this kind of conflict that we are already in because people are beginning to call us and ask questions.
How would the CTN benefit the Nigerian economy?
The major outcome of the CTN is to give us the important component of freight cost, so that subsequently we can even address where there are wastages in the system.
It must also identify choices available to shippers. For instance, if a user of shipping services is insisting on a particular surcharge and that surcharge has no benefit to the economy, and has no relevance to the trade, we can get him to drop that surcharge or get the user of shipping services to go elsewhere. There will be other shipping companies that will be willing once the information is made transparent to say that surcharge ‘A-B-C-D’ is no longer necessary, so we can accept clients that are willing to take our new rates.
This will also assist us in determining what the exact freight rate is. Right now, we do not know, it is a lump sum. And when you have a lump sum freight rate, all the shipping companies and the providers of shipping services are closing up every opportunity of appreciating what is going into the shipping cost.
We also want to ensure that the CTN will enable us pass savings to clients. On the bunker adjustment factor, the cost of crude has nosedived to 47 dollars from 115 dollars per barrel. Has any shipper benefitted from the price fall? Has bunker adjustment factor altered? That is one major outcome. And if that outcome from the CTN is left then every shipping company will be bound to pay.
In addition to paying for the administrative cost of CTN, they will also be made to pay that, and I think that is one of their major fears, that some of the cost components will be so exposed and the cost factors will be so real to shippers and to the Nigerian economy that the economy by fiat will compel them to comply and to also set up residual charges. And they don’t want to do that. There have been increases in insurance premium to cover other things. And those insurance premiums have been fluctuating, but they have been going up instead of reducing; even when we don’t have piracy, insurance premium goes up. Now who is supposed to be responsible for settling the excesses and who is supposed to benefit? CTN must expose that.
In the CTN, you must clearly identify what the premium is. There are other issues that will increase the competition of the importers and exporters in terms of benefits that are derivable from this process. We want the shippers to begin to leverage on the information that is available because if you have the directional spirit of where traffic is going you will know where your business is expected to shift. If it is cheaper to go to the Mediterranean and trade there, it will be exposed through the data available on the CTN and then you can switch your business to that. And then you will also be able to know what kind of business you are to change on to. So, it will give you a varied opportunity for selectiveness in trade and it will create experts and create niche players.
But I want to emphasise one thing. And that is, discussions with shipping companies held in 1998 in Libreville, Gabon and Brussels, had shipping companies as major players. At the meeting, all shipping companies, the principals agreed that the CTN would attract no cost in West and Central Africa. It was extremely successful that as soon as we returned from Brussels, five West African countries implemented CTN instantly. Today, if you go to Clarkson Intelligence and you are looking for freight and releases of information given by shipping companies every July 1 and January 1, you will not see any country that is charged CTN. There is no record of any country charging CTN from the available information, so why should Nigeria’s case be different? If other countries are benefiting from it and they are not being charged, why should our own case where we have over 75 per cent of the traffic not benefit? This means that the shipping companies are already benefitting tremendously from the economy but we are being told that the economy is going to pay for the CTN. This is a misnomer and obviously something being done out of mischief. But most importantly, Nigerian shippers, the mass media and Nigeria’s regulatory agencies should be rest assured that NSC will not rest on its oars until this is addressed decisively. Shipping companies and the principals will be called to order.
Are you saying that the multi-national shipping lines want to truncate CTN?
They are trying to truncate it; they don’t want it because of what it stands for. They are the same shipping lines that are dealing with all the other 18 countries in West and Central Africa that are implementing CTN. And in those countries, they pay 65 euro per TEU and it graduates right down on bulk Cargo, RoRo Cargo, and others. The lowest cost is 34 euro but in Nigeria we are charging 25 dollars, not even euro per TEU, which is less than a quarter of the 65 euro that other countries are charging. But they are not worried about that because if you look at the trade of those countries, Nigeria controls most of the trade in the region, and they know that once Nigerian trade is made transparent they are in trouble because they have too many add-ons as shipping costs that are not made obvious now.
And the CTN that we are doing is entirely different from any CTN being implemented now in West and Central African countries. Ours is advanced cargo declaration; it gives you a column where you must put the cost. You must identify what the cost is and also the surcharges, specifying whether it is freight additional or a General Rate Increase (GRI), which shipping companies do from time to time and they hide it and people don’t really know.
When you go for a shipping invoice, you are given a lump sum, it does not tell you what GRI is, it does not tell you what the basic freight is. Truly, if you look at the basic freight coming to Nigeria, it is very much like that of any other country, but by the time you take lump sum, you have like nearly 75 per cent more than everybody else because they can easily pad it up since they can’t give you the information.
So, what we are saying is that you must identify these costs. If you are charging us for piracy, let us know. If you are charging us for any inefficiency at the ports, let us know. They call it extenuating factors. At least you write it down so we can know because it will also help us to take remedial actions.