Forex, poor policies worsen abandoned cargo crisis

The prolonged foreign exchange scarcity and poor policies have led to increased volumes of overtime and abandoned cargoes at various ports across the country, writes ANOZIE EGOLE

The persistent foreign exchange scarcity in the country has adversely affected almost every facet of the economy. The forex scarcity, which has been attributed to oil theft in the Niger Delta, has significantly affected the country’s crude oil production output. Nigeria gets over 90 per cent of its forex earnings from oil sales.

The Chairman of Shell Companies in Nigeria, Dr Osagie Okubor, during the recent Nigerian International Energy Summit held in Abuja, said the country lost an opportunity to produce and sell about 65.7 million barrels of oil in the last one-year, due to issues bothering pipeline vandalism and the resultant oil theft.

According to Okubor, the 180, 000 barrels per day Trans Niger Pipeline had remained shut for more than one year.

The loss from March last year to March this year brings the total shut-in/loss to about 65, 700, 000 barrels. Brent Crude price averaged about $83 per barrel from March 2022 to March 2023, meaning the country could have lost as much as N2.3tr to the menace.

Consequently, the country’s external reserves have been moving southward, dipping by $2.85bn in the first half of 2023, according to data obtained from the Central Bank of Nigeria.

The CBN revealed in its figures on movement on foreign reserves that the reserves, which commenced January 3 at $37.07bn, fell to $34.22bn as of the end of June 26, 2023.

The maritime sector has been seriously hit by the forex shortage. The difficulties that importers faced sourcing for forex, which has resulted in a significant depreciation of the naira, has led to at least 70 per cent drop in vehicle sales in the country. Many Nigerians are now opting for locally used vehicles instead of imported ones, whose prices have shot up significantly.

The drop in vehicle importations does not have to do with forex alone. Inconsistency in government policies has also been attributed to the dip.

To compound the challenge, cargo owners having issues sourcing for forex to clear their consignments.

Importers are facing challenges due to the increasing rate of overtime cargoes which has resulted in the abandonment of cargoes. One of the major reasons for this is the inconsistency of government policies, apart from the high exchange rate. Importers have complained about the difficulties they face in planning due to frequent changes in policies. They also mentioned that another challenge they were facing was the ambiguity of some policies.

“Sometimes, some of these policies are cumbersome. It will take some time before you ratify some necessary documents before proceeding to clear cargoes and this eventually leads to demurrages,” an agent, who gave his name as Ignatius Chibuike, told The PUNCH.

According to Chibuike, over time, demurrages from both shipping companies and terminal operators will rise and the importer may not be able to pay up the debts and be unable to clear the cargo. He stated that that was one of the reasons for the rate of overtime cargoes at the seaports was alarming.

The Minister of Marine and Blue Economy, Adegboyega Oyetola, recently confirmed the alarming state of the overtime and abandoned cargoes. He said that about 6,000 abandoned cargoes were currently trapped at both Apapa and Tincan Island ports.

Oyetola said that during his familiarisation visit to the head office of the Nigerian Shippers Council in Apapa, Lagos.

He said, “Well, talking about the abandoned cargoes, I went on a tour and it was in Apapa port that they took us to where they have overtime cargoes. And they said some have been there since 2011. So, I now want to believe that it is likely to happen in other ports. Particularly, Tincan and Apapa ports have about 6,000 abandoned cargoes. You can imagine how much space it is occupying and the type of revenue the country is losing. So, I am going to engage the management of the Nigeria Customs Service to see what we can do. There must be a time frame by which a cargo can stay otherwise declared abandoned. To have kept cargo since 2011 is unrealistic and unacceptable.

“If someone brings in a cargo and it has accumulated demurrage for one reason or the other, it becomes uneconomical for him or her to clear; the person will abandon it there. As a port regulator, you may encourage early clearance of cargo.”

“But the truth is that I don’t think there is any importer who will go through the rigorous processes of importing goods into Nigeria with no plans of clearing them. Most of them abandon their consignments at the ports when that is their only alternative looking at the numerous bottlenecks associated with cargo clearance in Nigeria.”

Agents react

However, licensed customs agents have said that there was a constant rise of overtime cargo at various terminals in Lagos ports because most importers had abandoned their consignments due to the floating exchange rate.

The agents, who spoke with The PUNCH, said about 70 per cent of importers could not take delivery of their cargoes due to the inability to clear their consignments.

The Deputy National President of the National Association of Government Approved Freight Forwarders, Mr Nnadi Ugochukwu, said there was a high number of overtime cargoes at different terminals in Lagos because many importers cannot afford the cost of clearing their consignments.

He said, “There is a rise of overtime cargoes at the terminals due to the high exchange rate. So, many people were not able to take delivery of their consignments, so there is a serious rise in overtime cargo at the terminals. There is about a 60 per cent rise because about 70 per cent of the people that have their cargoes at the ports are having difficulty clearing them because of the high exchange rate.”

Also, the Tincan Island Chapter Taskforce Chairman of the Association of Nigerian Licensed Customs Agents, Mr Riwane Amuni, said, “There is the serious rise of overtime cargoes at the port and the floating dollar is the major factor causing it because people do not have enough money to clear their consignments. We are having up to 60 per cent rise because if they had approved some containers to be taken to Ikorodu, it would have been better. At Ikorodu, we pay less rent than what we pay here at the port. If it is still here at the terminals, they will still expect you to pay the normal rent.

“The charges and the exchange rate are going up and the cost of clearing has also gone up. There is no money in town. So, everyone is grumbling.”

Meanwhile, the General Manager of Ports & Terminal Multipurpose Limited, Mr Tunde Keshinro, explained that it was obvious that import volumes had reduced drastically over the past two years. “This year is worse and import volumes continued to be impacted. Port terminal have no visible signs of port congestion.

“The situation of overtime cargo is a different matter. Yes, there are overtime cargos,” he said.

A source at one of the terminal operators in Lagos admitted that their terminal was half-filled.

“My terminal is half-filled we are waiting for more cargoes to fill the terminal.

However an attempt to get the volume of unclear cargo list from the Nigeria Customs Service was not fruitful as the National Public Relations Officer of the service, Abdullahi Maiwa, said, “You can’t get it.”

To find a way of evacuating the abandoned cargoes across the country, the former Permanent Secretary at the Ministry of Transportation, Dr Magdelene Ajani, recently led an inter-agency team comprising the Nigerian Ports Authority, Nigeria Customs Service, and the Nigerian Shippers’ Council on an assessment tour of overtime cargoes littering the ports. During the tour which took place in June, the team observed that Lagos and Tincan Island Port Complexes and the terminals, including Ikorodu Lighter Terminal, had over the years been occupied with 3,200 units of overtime cars and about 3,295 units of overtime containers. It disclosed that the eastern ports had a combined total of 956 overtime containers.

Way forward

As a way of finding a lasting solution to the issue of overtime cargoes, the minister said that the ministry would be engaging the management of the Nigeria Customs Service to encourage the service to make use of scanners more than the physical examination that takes longer to be completed.

A car dealer, Mr Johnpaul Ejiogu, advised the government to ensure the reduction of tax and levies, especially on imported vehicles.

“If you are privileged to visit some terminals, especially in Lagos, you will see how most of them are filled with imported used (Tokunbo car). Some of them have been abandoned by the importers because they cannot afford the high clearing costs, due to the floating exchange rate. For instance, someone who imported a vehicle at the rate of N450/$ and you now coming to tell the person to clear the same vehicle at 700/$. This is far beyond the person’s budget. It will be difficult for the person to handle. And remember, the more they stay, the more they pay demurrages to shipping companies and terminal operators. So, some of them end up abandoning the cars there,” he elucidated