‘Bonded Terminal Operators Need to Remodel their Business’

18 Jan 2013

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Bonded terminal

A Lagos-based maritime consultant, Mr. Bolaji Akinola, has stressed the need for bonded terminal operators to remodel their business in the light of the present state of things in the maritime sector of the economy.

In a position paper obtained by THISDAY, Akinola, who is also the Managing Director and chief executive officer of Ships and Ports Communication Company Limited, hinged his argument on the fact that the operations of most Lagos-based bonded terminals are no longer sustainable.

He argued that the earlier their operators start reworking their business models, the better for them.

On what informed his position, Akinola said: “I am fully aware that I am walking into a war zone. I, therefore, neither desire nor deserve anybody’s sympathy if I get hit in the crossfire but I will say it as it is. Before I adduce reasons for my argument, I crave your indulgence to cast our minds back to how these facilities came into existence.

“Bonded terminal operations actually gained ground in Nigeria, especially in the Lagos area, in the 1990s. They were set up to take pressure off the main ports and reduce congestion caused by the inefficiency of the Nigerian Ports Authority in cargo handling operation. Cargo and Customs related activities were shifted from the main ports to the off dock facilities.

“At the height of port congestion in the 1990s up till 2006 when terminal handling operations were passed on to private companies, government – through the Nigeria Customs Service – licensed the bonded terminals to serve as the palliative. It was the inefficiency at the ports that gave rise to bonded terminals and the same inefficiency that nurtured their existence.

“And like many initiatives in Nigeria, their operations were abused. Serving Customs officers used their privileged positions to secure licences using some clearing agents as fronts. The facilities became enclaves of corruption. There was no standard for licensing them neither were there standards for their operation. It was free for all”.

According to him, “containers that were supposedly under Customs escort grew wings while transiting from the main port to the bonded terminal. Government was short-changed of huge revenue as Customs officers colluded with agents to perpetrate all manners of fraud. However, the story took a different turn in April 2006 as private firms emerged as port terminal operators.
“I have heard all sorts of arguments from bonded terminal operators as they try to whip up public sentiment and emotions aimed at blackmailing terminal operators to send containers to their facilities.

“I disagree with many of their arguments because such arguments lacked business merit and I believe strongly that such desperation will not help their case. Except for those very few off dock facilities owned by two terminal operators at Tin Can Island Port, Apapa, I am very much convinced that the end is near for these businesses.”

Akinola gave reasons why the end is near for bonded terminals, pointing out that the circumstances that gave rise to bonded terminals no longer exist.

“Private terminal operators came along with efficiency. No more congestion; no more waiting time for container ships so no need to send boxes to facilities outside the ports. Secondly, most of the off dock terminals have not upped their games. They have not invested in modern container handling facilities and processes. They still rely largely on the same kabukabu equipment they used in their early days.

“Even in those days, the equipment was a source of frustration to many customers as they broke down too often. I know of a couple of bonded terminals that operated with only one tokunbo fork-lift. My third reason is that volumes are low. Some off dock facilities stand the chance of receiving containers if the main port facilities get filled up but that did not happen last year and analysts have informed us that the situation might remain so for a substantial part of this year”, he said.

According to him, the final death knell for bonded terminals is the emergence of deep seaports in the Lagos area. “If all the reasons I adduced earlier do not perturb bonded terminal operators, then they should really be concerned that a deep seaport and a mega deep seaport will soon become operational in Lagos.

Tags: Business, Nigeria, Featured, Bonded terminal

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