ANALYSIS: Shippers in Africa groan under high costs of operation

By most accounts, issues of poor connectivity and high transport costs of international and sub-regional trades in West and Central Africa are major disincentives to shippers (importers and exporters).As part of efforts to address this problem, stakeholders recently converged on Abuja for a sub-regional workshop on “Minimising Transport Costs and Improving Connectivity of West and Central African Countries: A Panacea for Economic Development of the Sub-region’’.

The two-day workshop was jointly organised by the Union of African Shippers’ Councils (UASC), the United Nations Conference on Trade and Development (UNCTAD) and Global Shippers’ Forum (GSF).

The workshop was hosted by the Nigerian Shippers’ Council (NSC) under the aegis of the Federal Ministry of Transportation (FMOT).

The focus of the workshop was also on “New International Maritime Organisation’s (IMO) Rule on Container Weighing and its Implications for Nigerian Maritime Trade’’.

In his address, the Minister of State for Aviation, Sen. Hadi Sirika, urged West and Central African countries to address the challenges of high transport costs and poor connectivity facing the economies of the sub-regions.

He particularly urged the UASC to adopt a holistic transport policy to address the challenges and other issues hindering the competitiveness of the sub-region in international trade.

The minister proposed the establishment of an integrated and sustainable transport system, with emphasis on rail and inland waterways transportation, in order to foster quality connectivity within the system.

Mr Hassan Bello, the Executive Secretary, Nigerian Shippers’ Council (NSC), said integration of the West and Central African sub-regions would reduce the cost of transportation and facilitate efforts to diversify the economy.

Bello said that the cost of transportation within Africa was quite high because of poor connectivity, adding that African countries must strive to improve their transport systems.

“If there is no transportation, all these will not be useful. So, we need it as of necessity; we must improve our transportation system.

“It is that transportation system that will yield or materialise our potential; it is that transportation system that will integrate our West and Central Africa regions,’’ he said.

Bello said that NSC and Nigerian Export-Import Bank (NEXIM) wanted to establish constant shipping services that would internally cut down the cost of transportation.

He said that almost in all the regions, imports and exports were ferried by foreign ships to and from sub-regional countries.

“Most countries in the West African sub-region, including Nigeria, do not own fleets and we are at the mercy of foreign shipping companies.

“To improve connectivity and lower the cost of transport, therefore, we need to look very seriously at the area of ship building and vessels’ ownership in order to increase the number of vessels plying our waters, with a view of encouraging international trade.’’

Bello described the role of NSC in UASC as pivotal because Nigeria, being the largest economy in West and Central Africa, generated about 60 per cent of the trade of the sub-region.

Beyond that, attention was also drawn to the impending implementation of the amended IMO Safety of Life At Sea (SOLAS) convention on container weight, which will come into effect on July 1, 2016.

Mr Chris Welsh, the Secretary-General, Global Shippers Forum of International Maritime Organisation (IMO), said that the new IMO rules placed new responsibilities on shippers to verify the actual gross mass of the container.

This, according to Welsh, includes the goods, packing, stowing materials, pallets and tare weight of the container.

“The responsibility, therefore, would rest with the shippers to verify the gross mass weight of the container and goods,’’ he said.

Welsh, however, said that the new rules would also apply to export containers.

All the same, the Dangerous Goods, Solid Cargo and Containers (DSC) Sub-committee of IMO has approved changes to the SOLAS Convention that would require verification of container weights before loaded containers could be placed aboard ships.

Mr Adamou Abdourahamane, the Secretary-General of UASC, said that Africa’s share of global trade was more than nine billion tonnes, less than 10 per cent of the international trade.

He underscored the need for connectivity in terms of infrastructure in order to improve sub-regional trade.

Abdourahamane said that the infrastructure included roads, railways, ports and airports which offered a lot of socio-economic advantages by connecting enterprises to regional and international markets.

He stressed that the non-availability of these facilities would delay transactions, while increasing transportation costs.

Abdourahamane said that transportation and logistics were known to be slow and costly, particularly in West and Central Africa.

Sharing similar sentiments, Mr Bashir Wali, the Managing Director of Nigerian Export-Import Bank (NEXIM), said that transport and logistics costs were high within the West and Central Africa.

He said that the outcome of the workshop would provide inputs into designed efforts aimed at effectively addressing the challenges facing regional maritime and logistics sector.

He said that NEXIM, in partnership with NSC, had commissioned studies on the viability of promoting a dedicated regional maritime project.

Wali, nonetheless, commended NSC for hosting the workshop, pledging NEXIM’s sustained commitment to its strategic objective of facilitating trade by strengthening regional maritime services and international cooperation.

NEXIM has requested for the designation of the Kirikiri Terminal in Lagos as the regional port for the Sealink Project (shipping line) of the West and Central African sub-regions.

Hope Yongo, the Technical Adviser to NEXIM’s Managing Director, who made the disclosure at the Abuja workshop, said that the status of the terminal would be upgraded for container weight verification, in line with the SOLAS Convention.

He said that the regional Sealink Project was aimed at putting in place moderate transport costs for shippers in the West and Central African sub-regions.

He, however, solicited cargo support from all member countries and encouragement of private and maritime organisations to boost the regional project and investment in it.

Yongo said that Messrs Marine Services and Supply Company Ltd. would deploy three ships for the pilot scheme of the regional Sealink Project.

“This is upon confirmation of Notice of Readiness (NOR) from Sealink Promotion Company Ltd.,’’ he said.

Besides, Yongo said that the Regional Sealink Consortium was proposing ways of bridging existing infrastructure gaps so as to facilitate trade.

He described the project as “integrated maritime logistics services; warehousing facilities with container handling and weighing; deepening coastal maritime activities; and inland waterways’’.

Yongo said that the Sealink Project was conceived due to high comparative international transport costs and excessive transit time, making intra-regional trade in West and Central Africa non-competitive.

He said that transport and logistics costs in the two sub-regions were one of the highest in the world.

Besides, Yongo observed the absence of dedicated, safe and modern fleet to encourage and facilitate Atlantic Short-Sea Trade in the West and Central African sub-regions.

“There is inadequate infrastructure among member states and non-tariff measures are barriers to increased intra-regional trade,’’ he said.

Yongo noted that ECOWAS trade in the past 10 years grew from 4.7 million tonnes to 13.2 million tonnes without a comparative increase in transport infrastructure.

He also said that there had been low level of African container traffic; describing it as less than one per cent of the total world container traffic of over 400 million containers.

The ECOWAS Commission has endorsed and financially supported the Sealink Project via road shows.

The project has similarly received technical assistance from the Maritime Organisation of West and Central Africa (MOWCA).

Moreover, the project has received technical and financial support from Nigerian Shippers Council (NSC) as well as Equatorial Guinea and Sao Tome & Principe.

It also got the technical and financial backing of the Directorate of Technical Cooperation in Africa, Africa Development Bank (AfDB), up to the tune of 302,000 U.S. dollars.

Mr Michael Luguje, the Secretary-General, Port Management Association of West and Central Africa (PMAWCA), however, argued that reducing customs duties and having an effective single window platform would aid efforts to reduce port costs to the barest minimum.

He, nonetheless, underscored the need to have a port community system which would serve as a framework for stakeholders to dialogue on how to improve the quality of services and reduce the costs of doing business.

The PMAWCA chief, nonetheless, said that the regulation of port costs was a collective responsibility of both the government and the private sector.

Luguje said that the total port costs on a particular cargo, including customs duties and taxes, accounted for over 70 per cent of the value of the cargo.

“Terminal operators account for the largest share of over 65 per cent of the total port costs.

“Therefore, any government’s effort to reduce the burden of port costs on the shipper should involve the terminal operators,’’ he said.

After exhaustive deliberations, the workshop participants noted the non-declaration of container weight had led to several marine accidents because of overweight containers and poor stowage.

“There is the need for all member countries to come together and re-visit connectivity and trade facilitation programmes in the West and Central African sub-regions.

“Countries in the sub-regions should encourage the development of infrastructure through Public-Private Partnership (PPP).

“Member countries should liberalise trade and cargo flow by dismantling customs restrictions and tariff walls.

“There is need for member countries to develop standard and transparent port tariffs, based on efficiency and such tariffs should be published,’’ the communiqué issued at the end of the workshop stated.

The participants urged member countries to strengthen their fiscal policy measures in order to avoid dumping.

According to the communiqué, there is need to check the activities of concessionaires in the sub-regions by the regulatory authorities so as to ensure fair charges that are commensurate with service delivery.

It added that this would lead to reduction in port costs.

“Members of the sub-regions should deliberate and form a joint taskforce that will go against piracy in the Gulf of Guinea.

“Countries in the sub-regions should adopt an effective cargo transit regime that can harmonise the movement of containers within the sub-regions.

“Member countries should step up efforts toward training, retraining and sensitisation of stakeholders on best practices,’’ the participants said.

Member countries were, however, advised to sensitise and mobilise investors to avail themselves of credit financing and other facilities put in place for indigenous companies that want to venture into regional trade.

NAN