The planned introduction of Cargo Tracking Note (CTN) which will expose decades of trade malpractices at the ports and bring other economic benefits appears to have created apprehension among some shipping lines and big time shippers who are now at daggers-drawn against the scheme.
The advanced cargo information system, otherwise known as the Cargo Tracking Note (CTN) has in recent time become a subject of industry discourse. It is one issue that has attracted the attention of major players in the ports industry, including multinational shipping agencies, shippers, manufacturers association and trade groups. CTN is being introduced by the Nigerian Shippers’ Council (NSC) as the Ports Economic Regulator. For the Council, it is a bold attempt to end decades of trade malpractices in which the federal government loses billions of Naira revenue annually.
Some multinational shipping lines have been accused of involvement in under-declaration of gross registered tonnage (GRT) of vessels since the amount they pay as charges is tied to it. Others are some shippers (importers) who are also being accused of under-declaration and outright concealment of real quantities of their imports since the amount they pay as duties to government is equally tied to true value of imports. But beyond the economic benefits is also the security benefit as it will expose dangerous imports in advance.
CTN has the backing of the International Maritime Organization under International Ships and Ports Security (ISPS) Code as a follow-up to the September 11 terrorist attack in the United States of America. CTN has the backing of the Maritime Organisations of West and Central Africa (MOWCA) and has been introduced in many West and Central African countries. It was introduced in Nigeria in 2009 but later suspended because of some high charges imposed on shippers. This time, these charges have been removed in line with what obtains in other countries that introduced the scheme. But despite this, some multinational agencies and some manufacturers are kicking against it.
MAN, Others on CTN
The Manufacturers Association of Nigeria (MAN) and few industry operators have kicked against the introduction of CTN on the allegation that it will attract additional cost to importers. The Director General, Remi Ogunmefun, in a statement said that its reintroduction will increase the cost of cargo clearance at the ports. He had called on the government to forget about the project. Similarly, the Chairman, Shipping Association of Nigeria (SAN), Mr. Val Usifoh also claimed that CTN costs will be borne by the owners of the cargoes.
However, the National President of Importers Association of Nigeria (IMAN), Chief Osita Okeke dismissed the reasons given by the MAN and others for opposing CTN. In a letter to President Muhammadu Buhari on the issue, he said certain unreasonable charges, such as war risk, terrorism and Boko Haram, congestion, Ebola, etc, have been listed in the components of ocean freight for Nigeria bound cargo by multinational shipping lines. He said this problem is “what the Shippers’ Council is aggressively pursuing to reverse”. Industry stakeholders said this was one of the reasons why some people are against the introduction of CTN.
Ports Regulator on CTN and Benefits
In its reaction to claims that CTN will attract additional cost to importers, the Ports Regulator said that the scheme will not attract any additional cost to shippers. Executive Secretary, NSC, Hassan Bello, while assuring that the scheme will not attract more cost to shippers explained that it has a lot of economic and security benefits for the nation. Bello said that first, CTN will check trade malpractices in the ports system by strengthening the compliance level by Nigerian importers. He said, “they (importers) under-declare the goods they want to import. This is tax evasion. CTN will block that. Even the ships, sometimes, they cut their gross registered tonnage (GRT) because the amount they are to pay is tied to it. With CTN, they cannot do that…it is very transparent. Shippers’ Council will be able to see everything, including other agencies. This is the beginning of the new port order”.
The Director, Commercial Shipping Services of the Council, Mrs. Dabney Shall-Holma, in an interview with newsmen explained that the charges published as additional cost on imports and exports have nothing to do with the shippers or importers but shipping lines.
Shall-Holma said that rather than attract additional cost to shippers that are importing or exporting goods at the moment, “CTN comes from payments that are already payable per consignment”.
According to her, “the charges as published was a notice to guide shipping companies, lines and agencies in their 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 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”.
She further explained that whether the NSC introduces CTN or not, shipping companies will continue to collect these freight taxations.
She added, “The 25 dollars per container and indeed all the other fees listed are expected to come from the already existing taxation on Nigerian freight. And the major outcome of the cargo tracking note is one, it must give us the important component of freight cost, so that subsequently we can even address where there are wastages in the system. And 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. They will be other shipping companies that will be willing once the information is made transparent to say that surcharge ABCD is no longer necessary, so that 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 fuel has nose-dived to $47 dollars from 115 dollars, has any shipper benefitted from the nose-diving? 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 there have been going up instead of reducing even while we don’t have piracy, insurance premium goes up”
She told the Organized Private Sector (OPS) not to “allow itself to be lured into taking on a fight that is needless, not adding value to the nation’s economy as major players in the country”.
Shall-Holma said what the shipping lines were doing is to truncate the scheme for what it stands to check. She explained, “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 34euro 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 then know that once the Nigerian trade is made transparent they are in trouble because they have too many padded and 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 GRI, which means a General Rate Increase, which shipping companies do from time to time and they hide it and people don’t really know”.