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Published On: Mon, Oct 26th, 2015

Terminal operators groan over declining profits

By Funso Olojo  |

Private terminal operators at the nation’s sea port have cried out over the debilitating level of their revenue base which they said has affected their profit margin.
The operators, under the aegis of the Seaport Terminal Operators Association of Nigeria (STOAN) bemoaned the excruciating effect of the sliding value of the naira coupled with the low volume of cargo which they said has significantly eroded their income by at least 58 per cent.
Princess Vicky Haastrup, the chairman of STOAN, who ventilated the agony of the port concessionaires, observed that at the current exchange rate of the naira to the USD, Terminal Handling Charges (THC) have effectively reduced by more than half of their original value.
“Most of our commitments are in dollars whereas we charge in naira but due to the devaluation of the naira, you’ll see that what we charge today is effectively 42 per cent of its value in 2006 when you convert to the USD.
“This is significant for us because we now need more naira to fulfill our dollar commitments. It might be recalled that in 2006, one USD exchanged for about N130 but today it is more than N220 to the dollar which implies a significant decline of about 65 per cent in the value of the national currency since the port concession,” she said.
Princess Haastrup said the situation has been compounded by a drop in cargo volume at the port since the beginning of the year.
“Vessel call dropped by half in the first month of this year while volume also dropped significantly by an average of 27 per cent across the various terminals. Some terminals suffered more drop in volume than this,” she asserted.
Haastrup further declared that only 29 vessels were declared for the Lagos Pilotage District (LPD) between the last week of February and the first week of March 2015.
“This number includes tankers, container vessels, general cargo vessels and all. It is very unusual. Ordinarily, about 60 vessels would be declared within the same period,” she lamented.
The STOAN Chairman also said that some policies of government on importation are affecting volume of cargo handled at the port.
“For instance due to the automotive policy, the number of cars/vans discharged in Lagos dropped from 27,000 units in January 2014 to 8,000 units in January 2015.
“It must be noted though that in the first half of 2014, the volume of vehicles imported was extremely high in anticipation of the introduction of the new duty regime on vehicles. Average number of cars/vans for previous years was in the range of 20,000 units per month. We are talking of more than 60 per cent drop in volume here.
“For trucks, the volume dropped from 2,700 units in January 2014 to 1,700 units in 2015. The number of trucks discharged in 2014 was in line with the figures of previous years.
“But in Cotonou port, the total number of cars/vans discharged in January 2015 was 30,000 units against 20,000 units discharged in January 2014. This represents a 50 per cent growth. Similar trends have been registered also for trucks.
“This means Cotonou is gaining from Nigeria’s loss due to the auto policy as more importers are discharging there to avoid paying the 70 per cent duty and levy in Nigeria. These vehicles will eventually find their way into the Nigerian market,” she observed.
Haastrup said the same fate has befallen general cargo terminal operators especially those handling rice and fish.
“Terminal operators generally are facing a tough time here. This certainly is not the best of time for our operations.
“Notwithstanding these challenges though, our members remain committed to deepening reforms at the ports. We have achieved tremendous success in the ports and at our various terminals with well over USD1billion invested collectively by terminal operators and this has resulted in a more efficient port operation. We will continue with the success story.
“The congestion and vessel queue which we successfully eliminated upon takeover in 2006; upgrading of port facilities and the continuous transformation of our ports in line with the vision of the present government are major milestones in the history of the seaports,” she said.
Cargo owners accuse Customs of creating bottlenecks in cargo clearance procedures.
Cargo owners under the aegis of Manufacturers Association of Nigeria (MAN) have accused the officers of the Nigeria Customs Service of deliberately creating bottlenecks in the clearance of goods at the ports.
According to them, the process of clearing cargo at the Apapa and Tin Can Island ports, the two largest ports in the country, requires a combination of 110 signatures.
The cargo owners alleged that before a manufacturer can get his raw materials out of the Tin Can Island Port, about 70 people will have to inspect the goods and append their signatures to the documents releasing the goods, while about 40 signatures are required for the same process at the Lagos Port Complex (LPC), Apapa.
The industrialists made this observation during an interactive session between the Nigeria Customs Service and the Manufacturers Association of Nigeria in Lagos last week.
The manufacturers, who used the visit of the Comptroller-General of Customs, Col. Hameed Ali (rtd) to ventilate their feelings, claimed that physical examination of goods and scanning at the Tin Can Island port took longer than what obtained at the Apapa Port.
A member of the group simply identified as Bagu declared that the situation was not limited to imports but also to exports as well.
“We are also into exports. It takes three days to close Customs export entry in Apapa. In Tin Can, it took me three weeks to close the entry. My goods had already reached their destination and we had to pay heavy demurrage. So, we stopped using them for exports.
“The 48-hour clearance is becoming a dream. The predecessor of the CG was working very hard to achieve the 48 hour- clearance, I don’t see anybody discussing this again.  The scanners are not working in any of the Lagos ports. Please help us look into it.”
A corruption risk assessment report released by the Independent Corrupt Practices and Other Related Offences Commission and the Bureau of Public Procurement, with the support of the United Nations Development Programme, on the Nigerian ports stated that importers or agents required a minimum of 79 signatures of government officials to clear their goods at the nation’s gateways.
The President, MAN, Dr. Frank Jacobs, described the slow clearance of cargo at the ports as one of the issues that had been hampering the manufacturing sector.
In addition to the delay at the ports, Jacobs also bemoaned the late response to complaints raised by members of the association.
In order to address the challenge, he suggested a decentralisation of the complaints unit of the Customs in the six geopolitical zones of the country as opposed to one location.

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