Palletization: Shipping lines to hike freight charges to Nigeria by 40%

Palletization: Shipping lines to hike freight charges to Nigeria by 40% 
L-R: General Manager, Shipping of SIFAX Group, Mr. Henry Ajoh; Executive Secretary/CEO of Nigerian Shippers’ Council (NSC), Mr. Hassan Bello; National President of the Association of Nigerian Licensed Customs Agents (ANLCA), Prince Olayiwola Shittu; and Dr. Frank Ojadi of Lagos Business School at the Ships & Ports Town Hall Meeting on Cargo Palletization held in Apapa, Lagos on Tuesday.

More facts have emerged on the cost implication of the cargo palletization policy introduced late last year by the Federal Government, as a representative of a leading container shipping line disclosedon Friday that the policy would certainly lead to an increase in freight cost by as much as 40%.

Speaking via telephone from France last week, the shipping line representative, who did not want his name in print, said container carriers operating the Nigeria route from various parts of the world “are watching developments with regards to the new policy of the Nigerian government”.

“One thing I can tell you immediately is that it’ll certainly lead to a hike in freight rate. We also estimate a volume increase due to customers changing from 20ft to 40ft containers or shippers using more containers due to limited space in utilization of a container because of the pallets. This space could lead to an additional cost of about USD150 million (N46.5 billion) annually. 

“In addition, we estimate a 40% increase in freight cost into Nigeria – this could reach the level of USD450 million (N139.5 billion),” the shipping line representative told SHIPS & PORTS DAILY. 

At a Town Hall Meeting organised by leading maritime consulting firm, Ships & Ports in Lagos on Tuesday, maritime sector stakeholders expressed concerns over the Federal Government’s policy on cargo palletization.

The stakeholders were also unanimous in their resolution that the controversial policy will increase the diversion of Nigeria-bound cargoes to the ports of neighbouring countries where the policy is not implemented.

According to the communiqué issued at the end of the Town Hall Meeting, the maritime stakeholders also raised issues on the importation of strange organisms into the country through wooden pallets and the management of the pallet waste after use.

Speaking at the meeting, National President of the Association of Nigerian Licensed Customs Agents (ANLCA), Prince Olayiwola Shittu said the palletization policy holds no benefit for the country and “will also further breed corruption” at the port.

“The policy will be difficult for shippers because we are an import dependent nation. Palletization will enhance corruption in the ports, as a good chunk of the internally generated revenue in the port go into private pockets. Palletization should not be our priority, rather let us look at how we can improve services at the ports,” he said.

General Manager Shipping of SIFAX Group, Mr. Henry Ajoh who represented the Executive Vice Chairman of SIFAX Group, Dr. Taiwo Afolabi, expressed fears over the implementation of the new policy stating that “it cannot work in Nigeria”.

According to Ajoh, what the ports need urgently is enhanced cargo examination system to facilitate ease of doing business.

He said, “We need scanners. Government needs to deploy technology at the port for Customs examination and release processes. That is the way to go. Palletization takes us backward and cannot work in Nigeria.”

The Managing Director of CMA CGM – a leading container carrier operating in Nigeria, Mr. Todd Rives said that the policy would lead to the loss of substantial revenue by the country, warning that the policy must be thoroughly thought through by government.

The Town Hall Meeting, which had the theme, “Whither the Palletization Policy”, was attended by an array of maritime industry stakeholders including the representatives of the Nigerian Shippers’ Council, Nigeria Customs Service, Nigerian Maritime Administration and Safety Agency (NIMASA), SIFAX Group, Standards Organization of Nigeria (SON), Maersk Line, Manufacturers Association of Nigeria (MAN), Lagos Chamber of Commerce and Industry (LCCI), Association of Nigeria Licensed Customs Agents (ANLCA), Association of Maritime Truck Owners (AMATO), Ports Consultative Council (PCC), shipping companies and terminal operators, among others.