Tariff crisis: Shipping firms move to shut down operations, job loss looms

There are indications that the ongoing tariff crisis in the Nigerian shipping sub-sector has escalated, with some shipping firms considering shutting down operations, citing the current charges as unsustainable.

Recall that the Nigerian Shippers’ Council approved the increase in shipping charges after a due process spanning over two years, culminating in final authorisation for carriers to implement the adjustment.

However, the implementation of the approved tariff increase was strongly opposed by customs brokers and freight forwarders, a development that culminated in the picketing of Mediterranean Shipping Company (MSC)’s office in Lagos.

Amid strong opposition to the tariff hike, the leadership of the Nigerian Shippers’ Council directed all shipping companies to suspend implementation of the approved increase.

Reacting to the suspension of the tariff increase, Chairman of the Shipping Association of Nigeria (SAN), Boma Alabi, described the decision to suspend the newly approved tariff as surprising, noting that the Council appeared to have yielded too quickly.
Alabi said:”After their painstaking process which took months of interrogation and demand for information on all aspects of the business from the shipping lines.
“They grudgingly allowed this minor increase which is still below the rate of inflation, meanwhile our wage increases for our workers are always in line with or above inflation, thus squeezing the already thin margins of the shipping companies.
“Please bear in mind that they are Nigerian companies and rely on their locally generated income to cover their local costs. International freight income goes to the international shipping lines and their local representatives rely on their local income to pay their staff and run their operations.
“This can lead to closure of local offices and loss of jobs. Remember the old days when shipping lines didn’t have local offices but operated through an agent company?
“They can easily revert to that model and simply close their offices in Nigeria. It will not interfere with their operations but it will definitely lead to massive job losses in the industry. This is a real possibility in this situation.
“Our minimum wage at N200,000 Per Calendar Month, PCM, is the highest of any sector in Nigeria. These wages are paid from the income generated locally.”