The period before the creation of Nigerian Shippers' Council in 1978 was characterized by deteriorating quality of shipping services and unmitigated increases in Ocean freight rates by foreign ship owners who operated scheduled liner services to Nigerian ports.
Acting under a powerful cartel of Conference Lines arrangement, shipping companies unilaterally imposed freight rate increases, which averaged between twenty five per cent (25%) and thirty per cent (30%) per annum along three notable shipping ranges:
(i) United Kingdom West African Line (UKWAL),
(ii) Continental West African Lines Conference (COWAC),
(iii) American West Africa Freight Conference (AWAFC),
These increases were in addition to stifling port surcharges that the conferences equally imposed on the nation's economy.
This huge foreign exchange outflows arising from the carriage of our sea-borne trade by foreign shipping lines continued to impoverish the Nigerian and other developing countries’ economies, with attendant adverse consequences on balance of payment in favour of developed countries who are also the major maritime nations. The outcry arising from this adverse situation led the United Nations Conference on Trade and Development (UNCTAD) – a specialized agency of the United Nations, to commence actions towards the resolution of the disturbing national economic situation.
Arising from UNCTAD's intervention, there emerged a New World Maritime Order in 1965 encapsulated in a document that came to be popularly known as the UN CODE FOR LINER CONFERENCES. This Code strongly recommended the formation of National Shippers' Councils in developing countries (also referred to as Group of 77) to act as a countervailing force against the excesses of foreign ship owners and other shipping services providers. UNCTAD confirmed this new order by endorsing the formation of Shippers' Councils in its 1968 meeting in New Delhi, India. Thereafter, Shippers' Councils sprang up in various parts of the world including the developed countries. The first Shippers' Council in Africa was set up in 1968 in Cote D'Ivoire.
- ESTABLISHMENT OF NIGERIAN SHIPPERS’ COUNCIL
Nigeria took its turn to implement the UNCTAD recommendation by establishing the Nigerian Shippers’ Council in 1978 through the enactment of Nigerian Shippers’ Council Act Cap. N133 LFN 2004; Two subsidiary legislations on Funding and Local Shipping Charges were later made pursuant to this Act to enable the Council perform its functions.
TRADE SCENARIO: BALANCE HEAVILY TITLED IN FAVOUR OF SERVICE PROVIDERS
The following reasons (among others) informed the acceptance of the UNCTAD recommendation to establish Nigerian Shippers’ Council:
- Nigerian shippers (Importers and Exporters/Cargo Owners) are Weak, Fragmented, unprotected and therefore left at the mercy of the shipping services providers;
- Shipping services providers (Shipping Companies/Agencies etc.) are Organized & Financially strong and therefore have stronger bargaining position vis-à-vis the shippers;
- The need to organise Nigerian shippers in order to strengthen their bargaining position vis-à-vis the carriers (shipping lines/Agencies) and address the imbalance in the bargaining positions of the two parties, and generally provide a level playing field for them;
- The need to protect, generally, Nigeria's Cargo Interest in shipping & international trade from abuse and exploitation;
- The need to ensure Cargo Tariff Structures are fair, equitable & reasonably stable;
- The need to provide Researched Inputs to Federal Government policies on shipping & international trade.
TRADE SCENARIO: BALANCE HEAVILY TITLED IN FAVOUR OF DEVELOPED NATIONS & MULTINATIONAL SERVICE PROVIDERS
Basically, the responsibility of Nigerian Shippers’ Council is to ensure:
(i) Efficient and timely delivery of shipping services to the importers and exporters by the shipping services providers under the most economical arrangements;
(ii) Moderation and Stabilization of costs (freight rates, port charges, local shipping charges, haulage charges etc.);
(iii) Adequate understanding and know-how amongst the various practitioners in international trade both at the macro and the micro levels;
(iv) Regular and reliable advice to the Federal Government on matters affecting the shipment of goods to and from Nigeria.
Initially, Nigerian Shippers’ Council, like its counterparts in the sub-region, was mainly concerned with the representation and protection of the interests of importers and exporters with regards to port-to-port cargo shipment. However, as from 1997, the Cotonou II World Bank Round Table Conference on Maritime Trade in West and Central Africa resolved that Shippers’ Councils in the sub-region should protect importers and exporters throughout the transport chain. This became necessary due to the dynamism of the international trade, as underscored by the Conference. Thus as from 1997, the role of the Nigerian Shippers’ Council and indeed all its counterparts in the sub-region, was expanded to cover the entire transport chain from door to door.
In line with the Federal Government port reform agenda, the Nigerian Shippers' Council was appointed the Port Economic Regulator in February 2014, to create effective regulatory regime at the Nigerian ports for the control of tariff, rates, charges and other economic services and to address the negative impact of port concession activities on the economy due to the absence of an economic regulator and to realize the optimal benefits of the Federal Government of Nigeria's port reform processes.
The appointment was affirmed by a Ministerial Regulation and a Presidential Order as follows:
- Nigerian Shippers’ Council (Port Economic Regulator) Order, 2015; and
- Nigerian Shippers’ Council (Port Economic) Regulations 2015.