Nigerian manufacturers and importers are paying heavily for the newly introduced Palletisation policy, which was borne out of the Federal Government’s inefficiency in port examination.
Palletisation is the use of pallets (flat structures that support goods in the container) to achieve handling and storage efficiencies.
The FG started palletisation of cargoes this month due to, in its own admission, lack of functional scanners at the ports. The government says palletisation is a best global practice, reducing time spent on processing of export and import documents while ensuring 24-hour clearance of cargoes.
However, due to lack of functional scanners by government examination bodies, struggling manufacturers who import raw materials in a 20-feet container will now have to go for a 40-foot container or two 20-foot containers, translating into higher handling and production costs.
Shippers worry that some products such as tyres, chemicals in drums, plastic raw materials, and powdered milk in bags will naturally not be suitable for pallets and will attract the use of many containers, which will mean additional costs.
Considering the state of Apapa roads, which is attracting more dwell time costs, manufacturers and importers say this policy is bound to add more problems than they are meant to solve.
“Manufacturers complain because of the cost implications,” said Frank Jacobs, president of Manufacturers Association of Nigeria (MAN), in a telephone interview.
“In our engagement with the Presidential Enabling Business Environment Council (PEBEC), we were told it was the best global practice. But our members pay additional costs and there are products that are not suitable for palletisation,” Jacobs said.
Ambrose Oruche, director, corporate affairs, MAN, said the policy may hurt the wins recorded so far in the ease of doing business.
“If wooden pallets are used, treatment costs will be incurred. Meanwhile, steel and plastic pallets are expensive. Who then bears the cost of the pallets from the exporting country?” Oruche asked.
Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), said not all containerised cargoes are amenable to palletisation.
“Palletisation of these products will be clumsy, aggravate the cost of freights, cause gross underutilisation of container space, create risk of damage to cargo, among other unintentional negative consequences,” Yusuf said, in a statement sent to BusinessDay.
Jonathan Nicole, president, Shippers Association of Lagos State, said in a telephone interview that the new import guideline on palletisation will increase the cost freighting cargo for importers as a consignment that originally requires one container for shipment would be needing two or more due to the space occupied by pallets.
Nicole predicted that many shippers and manufacturers, who bring in their raw materials through the ports, will face serious challenges this year due to the cost implication such policy would have on their businesses.
“I see many manufacturing companies and industries closing shops due to lack of excess resources to fund freighting additional containers and paying for terminal charges. Shippers are already using high amount of naira to get dollars for their imports due to the high cost of foreign exchange and naira devaluation. The new policy would add to the existing problems,” Nicole said.
Continuing, he said: “The new policy is a subtle plan to increase the number of containers that come in and the financial status of shipping companies and terminals owners. It also exposes government’s failure to deliver on their responsibility of providing the needed infrastructure such as scanners to facilitate port business. Given the attendant problems associated with the use of pallets, the volume of import into Nigerian ports this year would reduce drastically because more shippers would be routing their cargo through the neighbouring port of Cotonou where it would be cheaper and faster to import and bring into Nigerian markets.
Lucky Amiwero, national president of National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), said putting every containerised cargo in pallets would reduce the volume of consignment that can be accommodated in one container, thereby requiring more containers to bring in goods that ordinary could be contained in one or two containers.
Speaking in a position paper presented to Federal Government on the implications of the revised guideline on palletisation of every imported containerised goods, Amiwero said that the implementation of the new guideline will introduce extra cost to shippers especially those who ordinary do not requires pallets for their shipment.
“The mandatory enforcement of palletised goods in containers will reduce the volume of cargo in the container and increase the number of containers for each shipment due to the space the pallet will occupy, which will also lead to increase number of containers required for a shipment,” he said.
The new guideline, he said, will discourage shipment into Nigerian ports due to cost the new procedures will introduce on importers.
Amiwero, who pointed to the fact that the new guideline will increase the number of empty containers in the country, called for the repair of the broken down scanners at the ports to remove the mandatory use of pallets for goods in containers on Nigeria shipment.
ODINAKA ANUDU& AMAKA ANAGOR-EWUZIE