Monday, 30 September 2013

The Lilypond mischief-makers

Some of the clearing agents operating at Lilypond container depot, Ijora, are either suffering from crass ignorance or engaging in palpable mischief by claiming that APM Terminals Apapa is deliberately starving the depot of containers in order to run them out of business. So if APM Terminals runs them out of business, is it going to be doing clearing and forwarding?
It is disturbing that chapter leaders of the major freight forwarding associations operating at Lilypond have exhibited such ignorance or mischief when the real reasons why containers are not stemmed or transferred to the depot are glaring and have been repeatedly explained by the management of APM Terminals. These agents have deliberately set out to turn the truth on its head and mislead Nigerians through distorted information and blatant lies.
I think it is necessary to go down memory lane and remind ourselves of the history of Lilypond.
Before that terminal was concessioned in 2006; it was a ghost terminal. It was heavily flooded and the Nigerian Ports Authority (which owned and operated it at the time) had long stopped transferring containers there.
Lilypond was completely water-logged with all the super-structures caving in. I was a regular visitor to terminal at the time and I remember its condition vividly. The then Customs Area Controller, Comptroller Iwuagwu, was my good friend and I remember how he used to lament the inability of the Command to generate revenue to meet its target. The current Acting Controller of the Federal Operations Unit (FOU) Zone ‘C’ of the Nigeria Customs Service, Owerri, DC Victor Dimka was the Public Relations Officer of Lilypond Customs Command at the time and I remember that we produced a radio jingle which we broadcast regularly on our daily radio programme to attract patronage to the container depot.

Even at the height of port congestion in the late 1990s and early 2000s, NPA could not transfer containers to Lilypond because of its parlous state.
Post-Iwuagwu era at Lilypond was even worse as the terminal became completely paralysed. The customs officers and the agents that are now making all sorts of noise and casting aspersions.
became totally redundant. Most of them even stopped going to work.
Then came port reform and the attendant concession of terminals. Lilypond terminal was concessioned for ten years to a separate company belonging to the AP Moller-Maersk Group – the same group that owns APM Terminals.
Despite taking over a terminal with zero throughput, the new operator quickly got down to work and injected a princely sum of over N3 billion to revive and upgrade it. Investment was made on construction work, safety, people, equipment, information technology, administrative building and the general environment of the terminal. Experienced and competent managers were brought in to oversee its operation. All the runaway agents trooped back. Life returned to the once deserted facility.

In no time, APM Terminals – the same APM Terminals the agents are now accusing of starving the facility of business - started transferring containers to the depot. At the time, importation volume was high and about 60 per cent of boxes were moved from the main terminal to inland container depots or bonded terminals. By 2010, cargo throughput had risen from zero to 23,000 Twenty Equivalent Units (TEUs) and this doubled to an unprecedented 47,000 TEUs in 2011.
Unfortunately, as a result of the global economic crisis, the insecurity situation in Nigeria and the fuel subsidy scam; liquidity squeeze was created in the Nigerian economy.
Consequently, importers were unable to dispose off their goods in good time and they accumulated inventory. They were also unable to access capital to finance importation and volumes came tumbling down.
In 2012, volume remained flat while this year has even been worse. As you read this piece, capacity utilisation at most of the terminals at the ports in Lagos is at an all time low. APM Terminals Apapa, for instance, is at 60 per cent capacity utilisation. So it became impossible (and unnecessary) to transfer containers to offdock falilities.

Lilypond terminal, like other bonded terminals in Lagos, were created as overflow facilities. They are meant to take pressure off the main port when additional capacity is required but are bound to remain idle whenever the main port terminals are not congested. And that is the problem Lilypond and other ICDs are facing at present.
But the agents at Lilypond don’t want to hear this. Suddenly, APM Terminals is now a bad company because it will not transfer containers to them.
They will go to any extent, including using arm-twisting tactics garnished with a sizable dose of propaganda, to get containers to the depot. This is not only a morally bankrupt approach; it is a reprehensible act that won’t yield anything good.
I have recently started hearing the bogus claims by these agents that because APM Terminals is not transferring containers to Lilypond, it is sabotaging Customs revenue. What a cheap pack of crappy stuff! Are these guys that naïve or is this to gain the sympathy of Customs or something? Nothing can be farther from the truth than this cheap and ill-advised claim.
Customs revenue is not jeorpadised by any means. It should be noted that revenue collected at all Customs Commands eventually end up into one and the same Customs account. Ultimately, the Nigeria Customs Service is one with one account. The idea of having Commands at various places is purely for administrative convenience.
Let us assume that in a given year, 1,000 containers are handled at APM Terminals and the Customs duty on each box is N100. If all container are cleared from Apapa, the Apapa Area One Customs Command would collect N100,000 into the central Customs account. Now assume that APM Terminals transfers 200 of these containers to Lilypond; Customs duty remains unchanged at N100 on each container but this time, N80,000 will be collected into the Customs account through Apapa Area One Command and N20,000 collected into the same account through Lilypond Area Command – total N100,000 collected into Customs account. Nothing has changed!

So what is the cry about loss of Customs revenue all about?
Truth be told, I think these agents are crying wolf where there isn’t any. What I expect them to do is go out to look for other clients outside Ijora – their comfort zone.
The Lilypond agents had a captive market and they have formed themselves into a cartel. They have seen Lilypond as their birthright where every clearing job must be done by their members. They have also boxed themselves into a corner by thinking that they can’t operate outside Lilypond.
If containers are not coming to Lilypond, then they should move out to other port facilities and compete for business there rather than sit down and lament all the time. Their past-time has now snowballed into casting aspersions on APM Terminals.
Do they really think that this will change anything? Will this disposition transfer containers to the depot or bring them clearing business? 

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