Surcharges pit shippers against shipping lines
Shippers are demanding a review of surcharges imposed by shipping lines in Western and Central Africa.

Surcharges pit shippers against shipping lines

FOR decades, shippers in Western and Central Africa have been hit hard with a lot of surcharges and fees over several unfounded excuses.

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Some of the surcharges being imposed on shippers by different shipping lines include bunker adjustment factor, currency adjustment factor, war risk surcharge, congestion surcharge, peak season surcharge, extra risk insurance surcharge, freight rates surcharge and port operation recovery surcharge.

While some of the charges could be justified because of the security and infrastructure issues associated with the transportation of goods, industry watchers believe many are just a rip-off. 

Incidentally, this is not the case for shippers in other advanced countries.

However, shippers, including importers and exporters, have to succumb to the dictates of shipping lines to remain in business, a development which puts shipping lines in a better position to make more money off the shippers.

Worried about the negative effect the numerous surcharges are having on the economy of each country, including Ghana, shipper councils from West and Central Africa recently decided to confront the issues head-on.

The meeting 

At a meeting of the Union of African Shippers Council (UASC), hosted by the Ghana Shippers’ Authority (GSA), participants expressed concern that most of the surcharges which are supposed to be temporary measures to address some issues are still being collected even when those problems necessitating the charges have been solved.

The two-day meeting was aimed at finding amicable resolutions to the high cost of cargo transportation imposed by foreign shipping lines on African shippers to help boost their domestic economies.

The participants of the meeting, which is a follow-up to the first meeting held in Nigeria in June 2022, included delegates from Cameron, Congo, Nigeria, Togo, Angola and Ghana.

Participants identified security issues in the Gulf of Guinea (GoG) that have also affected trade but expressed dismay that even when such issues have been taken care of, most shipping lines still impose surcharges on shippers from the continent.

The terms of reference for the committee meant to investigate the high cost of transport is to guide discussions to determine the components of shipping and other logistics costs in the supply chain in West and Central Africa.

It is also to identify all surcharges and tariff headings applicable in West and Central Africa and confirm the justification or otherwise of all surcharges and tariff headings identified in the sub-region.

The committee is also to identify the factors responsible for delays, as well as high cargo clearance cost, detect the factors responsible for the high cost of transportation as well as recommend appropriate measures to address the incidence of high transportation costs.

Intractable problem

An Assistant Director in charge of Trade Services at the Nigerian Shippers Council, Abayome Adewuyi, stated that “Our job has been well cut out from the previous meetings, where our areas of concentration have been identified and we have been able to classify the different cargoes into groups for easy comparison of the cost components in our different ports.”

He said the principal objective of the committee was to address the seemingly intractable problem of the high cost of transport, especially with regard to the region's international trade, and find workable solutions to this important challenge confronting the sub-region.

“We would not continue to watch while the foreign shipping companies continue to exploit our subregion with higher freights and surcharges. We should thoroughly interrogate the reason why the transportation cost component of commodities in the subregion is more than 35 per cent, whereas it is less than 10 per cent in other developing economies and less than five per cent in the developed economies.

“We must all be very open and free to present the positions confronting our various countries and also provide all the measures that have been put in place to address this ugly trend that is injurious to our economy, leading to the high cost of doing business at our ports and limiting the growth of our indigenous shipping companies,” he said.

Negative impact 

The Chief Executive Officer (CEO) of GSA, Benonita Bismarck, observed that the critical role played by international trade in economic development was well known, particularly as a driver of economic growth and prosperity for Africans.

She said, however, that the transportation cost in the shipment of this international cargo in Africa has become prohibitive and forms a significant proportion of the cost of imports and exports.

She said the development was impacting negatively on the competitiveness of African businesses on the global market scene.

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The World Bank estimates that transport costs in Sub-Saharan Africa average 50 per cent higher than other regions of the world, forming a significant proportion of the overall cost of goods. 

Conclusion 

Member countries forming the UASC, including Ghana, should take a bold decision to confront the shipping lines and their agents on ways to reduce sea transport fares. 

The UASC must take the matter to a higher shipping entity such as the Global Shippers Forum (GSF) to address these unfair practices on African shippers.
 

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