Performance of PAAR regime at Customs Service

I just finished going through two stories online about the performance of the new PAAR process affecting the importation in Nigeria. Can somebody help me decide whom to believe?

The first one is a news report pasted below: 

Paar Has Eliminated Delay, Demurrage

— BY GEORGE.UMUNNAKWE ON MARCH 11, 2014 9:11 AM

National Association of Government Approved Freight Forwarders (Nagaff) said the recently introduced Pre-Arrival Assessment Report (Paar) has eliminated delay and demurrage in goods’ clearance at the ports.

Mr. Sani Usman, chairman of the Federal Capital Territory chapter of the association who spoke with newsmen said the assignment of the destination inspection to the Nigeria Customs Service, which introduced Paar, was a welcomed development which had boosted economic activities in the country.

He noted that Paar had eradicated the delays associated with Risk Assessment Report (Rar), the old system, which made importers to wait for long periods before clearing their goods.

According to him, the importers are always waiting for the service providers to issue RAR which often caused delays in securing their goods. “The only unforeseen cost that an importer can incur in importation business is demurrage. This is so because every item would have been predetermined and you know the duty and other charges to be paid. But demurrage is something you don’t envisage and it was rampant during Rar era. But with Paar, the importers do not incur demurrage. Now your goods can come into the country before you open ‘Form M’ and this does not take more than 24 hours in a serious bank and it is done online,” he said.

Usman explained that the initial challenges the association members experienced at the inception of Paar were normal issues associated with every new policy, adding that the Customs had surmounted the challenges. “Paar is a welcomed development; it is a good one and it is working for us especially in Abuja Airport,” he stressed.

He, however, said that the volume of cargoes coming to the Nnamdi Azikiwe International Airport, Abuja, was very minimal compared to other airports in the country.

Usman attributed the situation to the absence of designated cargo flights for the airport, adding that the airport was originally designed as a ‘protocol airport’.

and the second is a video from cnbcafrica.com:

 

PRE ARRIVAL ASSESSMENT REPORT SYSTEM TRIGGERS DELAYS AT NIGERIAN PORTS

on Tue, 11 Mar 2014 11:28:27 GMT
Clearing goods at the Lagos ports remains a herculean task for cargo owners. According to the Lagos Chamber Of Commerce & Industry (LCCI) the Pre Arrival Assessment Report system handled by the Nigeria Customs Service is causing long delays in the release of cargos at the Lagos ports. Joining CNBC Africa to put all this in perspective is Muda Yusuf, the DG at LCCI.

Two days earlier, the http://www.theguardianmobile.com reported:

LCCI bemoans delays at ports

CITING high demurrage charges imposed by shipping companies and terminal operators, the Lagos Chamber of Commerce and Industry (LCCI), Tuesday, expressed concern over the ‘long delays’ in the release of cargoes in the Lagos Ports following the introduction of Pre-Arrival Assessment Report (PAAR) by the Nigeria Customs Service (NCS).
The scheme, which was originally programmed to be issued within six hours, according to LCCI, “now takes weeks to be released”.According to LCCI, capacity issues need to be urgently addressed by the NCS in conjunction with the Federal Ministry of Finance.LCCI also argued that new arrangement being managed by the NCS is “evidently fraught with capacity challenges”.

While calling for the pre-release of cargoes pending the resolution of the transitional problems, LCCI argued that without the issuance of PAAR, other cargo clearance procedures cannot progress.

A statement issued by LCCI’s President, Remi Bello explained that the delay in processing PAAR has the following consequences for importers including manufacturers:

*High demurrage charges imposed by the shipping companies and the terminal operator;

*High interest charges on funds used to finance the imports;

*Delays in the delivery of raw materials to various factories, which disrupts production time lines;

*Inability to meet contractual time lines by logistics providers; and

*High Premium charges by shipping lines on Nigeria bound vessels because of expectations of delay in the discharge of cargo.

Bello explained that the situation has become increasingly unbearable for importers, adding, “This also has numerous negative outcomes for the economy”.

The LCCI President added: “These capacity issues need to be urgently addressed by the Nigerian Customs Service in conjunction with the Federal Ministry of Finance.

“In the meantime, the Pre-Release of cargo pending the resolution of the transitional problems should be restored.

“Speedy processing of import documents is an important element in the trade facilitation process; it is also a major variable in the 2014 World Bank Ease of Doing Business ranking which is currently at a lowly 147 out of 189 countries profiled”.

The Deputy Comptroller of Customs in charge of Information and Communication Technology, Yusuf Bashar, recently explained in Lagos that over 800 import documents, each of which contains information on about 200 containers, are being processed daily under the recently introduced PAAR.

He described the development was a marked improvement over about 230 applications, which it started with shortly after taking over the destination inspection of imported goods from three service providers recently.

He said: “Our target is to do up to 1,000 daily. We are pushing the bar every day to reach the target. If we are able to generate 839 PAARS daily, it means the compliance rate is improving. We can only generate the PAAR if they are sending in good documentation and everyone is doing its own bit.”

The federal government had in December 2013, directed the three contracted scanning service providers, Cotecna, SGS and Global Scan, to transfer the responsibility of providing destination inspection service at the nation’s ports to the customs.

Dealing with empty container returns and Demurrage

We often use independent truckers to handle container haulage and delivery. Sometimes, after delivery, the client does not offload the container on time thereby having the truckers staying overtime. Sometimes, the container is dropped at the clients site for later retrieval.

The shipping company charges by the day for container rentals and do not mind very much about late returns as they are very happy to collect the rental on the containers. But for us, the fees are expensive and very unnecessary. So, we hasten to return the containers as soon as we can. but here’s is where it gets annoying. The trucker returns the containers but does not get the container card. even when they do, they do not return the cards to us.

Some of our clients have arrangements with shipping companies for demurrage free days which allows them a generous amount of time to offload their cargo. Now, these companies have to return the cards themselves as proof so they can collect their deposits. If they do not get these back, they do not accept your invoice. If they do not accept your invoice, you cannot blame them for being late with payments. If your business is financed, you keep on paying interests to the bank as well.

So what do you do?

You may bill the trucker for the cost of the container demurrage as we used to do. But in most cases, the trucker is not aware of the implications of this and assumes that since they returned the container on time, there is no problem. They are, however, ignorant of the whole story and no matter what you do, you are just making a mountain of a molehill.

Perhaps you have a system that helps you track the status of container returns. You may have a computerised ERP system, or you could be using a spreadsheet with fancy programing that alerts you to overtimes and demurage costs (as i did) with the container details such as ETA, date of berth, date it left the port (gate out) date it was returned, date container card was returned, columns calculating the days at the port, day outside the port, days in clients premises, grace period, trucker details… everything. This only serves to reflect my true status and on chances of paying rent/demurage to the shipping company. It helps me in following up with the trucker.

In the end, the best thing I did, was to assign someone go directly to the truckers to collect the cards and return these to the clients. Perhaps in future, I will have more professional truckers who understand the implications, but those who do now, are competitors and would charge me higher thereby eroding my profit.

Of course, its a volume business. The margins are small, but the volume makes up for it.

What do you think? do you have another method that worked for you?

 

 

Fuel – N 5.00

Ok. So the government has decided to reduce the cost of fuel.

Big deal. Or is it.

How does this impact your bottom line? Have you ever thought how much you spend in getting from one place to another? Oh yes if you do look at the manufcturerr details for fuel comsulption mer kilometer you have a vague idea. how about how much you spend per minute?

This info gives you a more complete picture of how much fuel is consumed in getting from point A to point B. That way, you know if your vehicle is consuming more fuel than is normal, therefore determining if the vehicle needs to be checked if it is consuming more fuel. The more fuel consumed, the more it affects your bottom line.

Monitoring your fuel budget consists of this and much more. Get a very comprehensive tracking service which give you enough amunition to know when your drivers are off the specified routes and how much time is wasted on the road may be the best chance you have at besting the competetion.

Transport Crises

The situation in Nigeria has not really changed regarding the delivery of petroleum products after all.

Granted this time its not really due to a scarcity in the traditional sense, but that the tanker drivers will not deliver the fuel. So they have parked their tankers on the outskirts of Lagos and threatening to continue to do so unless they are allowed to continue being a menace to other road users especially in the Apapa area.

Traveling by road to the eastern regions of the country is worse now due to the poor condition of the road between Lagos and Benin. Specifically the Ondo-Benin section of the road, then from Onitsha onwards. The Governments of those areas should do something or face loosing lots of Man-Hours to traffic.

It could be that they generate adequate revenue from the people selling ‘pure water’ and other items along the road at such bad spots.

Someone should please check this out and advise in the interest and safety of the road users.

Lagos Delivery

Cargo delivery is a major hassle in many metropolitan areas of Lagos, and is usually a painful process.

Hoodlums known as “AREA BOYS” extort money from delivery crews and can take up an inordinate amount of time before negotiating “fees“. Areas Like Ijora and Lagos Island are particularly difficult as the “boys” can ask for up to 50k Naira before permitting any delivery in their area.

The Police are not necessarily a major harrasment.

Traffic in Lagos add a significant time overhead to operations, so make allowances for road delays.

Nigeria’s Import And Export Destinations

According to details were published in the Daily Independent of March 8th

Nigerian imported 26 million tonnes of cargo in year 2005  from 114 different countries,  a large percentage of which from the United States of America,  followed by Taiwan, and the Brazil. Cote D’ Ivoire was the highest source from Africa.

Meanwhile, non crude oil export was 13.5 million tonnes for the same period, shipped to 9 the United States of America, the United Kingdom, France and Germany primarily. It is noted that there were no significant exports to the West African Sub-region, however. Angola is the most to an African Nation.

Commodity analysis of the non crude oil exports handled by Nigerian Ports shows that Liquefied Natural Gas made up 83 per cent and Redefined Petroleum Product 10 per cent. General Cargo is 5 per cent of the total while Dry Bulk Cargo (Animal feed, Cocoa Beans) etc made up the remaining 2 per cent.

What does the Law say?

Human activity is usually governed by one or more sets of law. the supply chain is subject to a lot of laws from different fields as the activities here cover a lot of discipline.

Clearing your cargo from the Nigerian ports involve traversing a legal minefield where ignorance of the law is no excuse as they say. It does get very costly when one is very unaware of the implications.

Luckily, the set of laws governing the Nigerian ports is available for all to see online. The Nigerian Ports Authority Decree of 1999 is available among other laws from http://www.nigeria-law.org.

There are several law enforcement bodies represented at the Nigerian ports and this is part of the reasons why customs clearance takes a lot of time. These enforcement agencies are not all available to examine the goods at the same time and it takes one who is knowledgeable about the procedures to get things done in good time.

Some of the enforcement agencies are:

1. NCS – The Nigerian Customs Service
2. NPA – The Nigerian Ports Authority
3. NDLEA – The National Drug Law Enforcement Agency
4. FEPA – The Federal Environmental Protection Agency
5. NMA – National Maritime Authority
6. JOMALIC – Joint Maritime Labour Industrial Council
7. NAFDAC – The Nigeria Authority for Food and Drug Administration and Control
8. NSC – Nigerian Shippers Council
9. NPF – The Nigeria Police Force
10. SON – Standards Organisation of Nigeria
11. SSS – State Security Service
12. DMI – Directorate of Military Intelligence
13. Nigerian Navy

Please note that as at the time of this writing, NMA and JOMALIC have been merged to form a new organisation called NAMASA – National Maritime Administration and Safety Agency.

Technorati Tags: Supply Chain, Logistics, Law, Decree, Enforcement, Police, Ignorance, Nigeria, Ports, Authority, Customs, Import, Export,

Get in on the Nigerian Export Game

In a bid to boost presence in the international market, the Nigerian government has approved what it calls The Commerce 44 initiative. The policy involves the tax-free export of 11 categories each of solid minerals, agricultural products and groups of locally-manufactured items to 11 international markets.

The categories are as follows:

Agricultural Category
Cocoa, cotton, cassava, gum Arabic, sesame seeds, cashew, sheanuts, ginger, vegetable, fruits and other Nigerian food items.

Solid Minerals Category
Kaolin, coal, bauxite, barite, tin, zinc, tantalite, columbite, iron ore, clay products (pottery), gems and precious stones.

Manufactured Products Category
Textiles, films and music, vegetable oil, rubber products, foot-wears, shrimps, pharmaceutical products, leather, beverages and soft-drinks as well as bottled water.

And the markets:

International markets
Japan, North America, India, China, ECOWAS, European Union, Turkey, Iran, Thailand, the Caribbean and Latin America.

Abolished duties and taxes:

·        N25, 000 levy by the National Agency for Food and Drug Administration and Control (NAFDAC) per container

·        One per cent export duty

·        N1, 000 sales tax

·        Cocoa development duty, and

·        Several other charges levied at state levels.

To further sweeten the deal, Government will also reduce delays in the processing of exports at the ports and accelerate the refund of Export Expansion Grant (EEG) to businessmen, which currently take up to 14 weeks.

 

A few Links:
FG initiates ‘Commerce 44’ for agricultural export

Doing Business

The World Bank provides plenty of statistics for economics in different countries. They even have a website for doing business in various countries.

This report is one such report. Here, you can see the economies of Nigeria by different criteria: income per capita, the informal sector, and population, and this report summarizes the procedures, time, and costs to build a warehouse in Nigeria.

You may find it interesting to compare the figures with those of other countries. Including the OECD countries and neighbours.

This page provides a snapshot of each country’s aggregate ranking on the ease of doing business and on each of the ten topics that comprise the overall ranking. Data is also provided for each country for all the 10 topics covered in the database.

Nigeria Region: Sub-Saharan Africa Income category: Low income Population: 131,529,669 GNI per capita (US$): 560.00 Nigerian Laws

Ease of…	2006 rank	2005 rank	Change in rank
Doing Business	108	109	+1
Starting a Business	118	115	-3
Dealing with Licenses	129	134	+5
Employing Workers	56	56	0
Registering Property	170	171	+1
Getting Credit	83	76	-7
Protecting Investors	46	43	-3
Paying Taxes	105	99	-6
Trading Across Borders	137	141	+4
Enforcing Contracts	66	105	+39
Closing a Business	72	72	0

Outsourcing Logistics

As most large businesses move towards lean operating methods, outsourcing logistics requirements can help to reduce your company’s costs, improve your customer service quality, and increase the synchronization of activities throughout your supply chain. It can also help to identify opportunities to generate savings in your transportation, warehousing, and private truck fleet operations.

Sometimes a mix can be a better deal. By determining where your strengths lie, a Third Party Logistics company, – acting as consultants – can help you choose which part of the supply chain to outsource. Therefore you need only outsource parts for which your current solution is deficient. Thereby improving your competitiveness with much larger companies with seemingly boundless resources.

These third party logistics services can be as simple as brokering out and managing freight flows for the customer to more complex and difficult set-up and operation of major warehouse or distribution center operations.

Some 3PLs are internet based, and they offer load brokerage and freight matching services, or act as a hub to present to users a whole host of companies and services need by logistics and supply chain professionals as well as the information they need to do their jobs.