Aviation Featured Transport

Nigeria loses over $17bn freight annually to dearth of national shipping line

  • Earns zero dollars in freight

***COVID-19: Shippers lose N5trn in 1 month

Despite its rich history in global maritime trade, Nigeria has continued losing billions of dollars in freight to foreign shipping lines over the inability of the Nigerian government to successfully operate a vibrant national carrier to lift its crude oil.

 At the moment, the country is losing over $17 billion annually in freight due the lack of indigenous vessels, considered  critical and essential to trade facilitation worldwide.

This is particularly worrisome as sea trade is the country’s second-largest contributor to gross domestic product (GDP). In 1959 for instance, the Nigerian National Shipping Line (NNSL) was established by the Nigerian government to facilitate seaborne trade for the country. But despite some heavy investment and subsidies, the state-owned company was unable to compete with European shipping lines. Much of the investment went to enriching the political eliteleading to the liquidation of heavily indebted NNSL in 1995 with all 21 its vessels sold.

 Since the liquidation of NNSL, Nigeria has not been able to re-establish another shipping line 26 years after. Over these years, several committees have been set up to work out modalities to establish a sustainable shipping line, but to no avail as none of the committee has been able to come up with anything tangible.

 However, maritime stakeholders have frowned at the uncoordinated efforts by current and past governments to revive the NNSL or establish a new national carrier which according to them, has cost the country huge losses.

 For instance, despite Nigeria’s strong influence in  crude oil market, is cargoes are still being lifted by foreign shipping lines on Free on Board (FOB) freight term instead Cost Insurance and Freight (CIF), which invariably, all the freight incomes going into the foreigners’ coffers while Nigeria continues to earn zero revenue.

 Speaking with Daily Sun, Advisory Head/CEO, Kamany Marine Services Limited, Charles Okorefe, said the issue is a very straightforward one. He lamented that in over 50 years, Nigeria has been exporting crude oil without any strong indigenous and Nigerian tankers (vessels)to carry its  crude worth over $17 billion, without it gaining $1 on freight.

He added: “Freight means the cost of moving that product from wherever in Nigeria to the destination port because we are operating an abnormal system of Free on Board (FOB) instead of Cost Insurance and Freight (CIF) in which case Nigeria carriers ought to be nominating the vessels coming to carry its crude oil.

 “But in this case, it is the buyer that nominates; it is the buyer that has all the prerogatives. All Nigeria does is just to pump the oil inside the vessel and go to sleep.

 Then, whoever brings the vessel earns the freight as well.” “If you want to calculate how much Nigeria export per month, lets conservatively say per vessel, for instance, lets say the freight is $100,000, multiply that by 12 and times over 50 something years, then you will have an idea of what we have lost in not freighting our own product,” he said.

“We are not talking about import now; this is export. Nigerian mainstay is crude oil and gas. We don’t have any say in the export of our major commodities. In other words, we do not earn freight from it,” he said.

 Speaking on the way forward, he said the earlier the system is changes in which case, Nigerian indigenous players are need to carry crude oil and earn freights from the country. He said if Nigerian indigenous players in the shipping line fail to lift the nation’s crude oil, Nigeria would continue to lose homogously on that account.

“I heard recently that they are trying to do something about that but is has always been like that for the past 20 something years that I know that this issue has been on the top burner.

“There is a clause in the Nigerian National Petroleum Corporation (NNPC) Act that makes it impossible for Nigerians to carry crude oil and that is the CIF and FOB clause I’m talking about, is trade terms. Unless, that trade term is changed to CIF in favour of Nigerian operators to enable them to carry the crude oil, we will continue to remain in lot position throughout,” he said.

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