Impact of Piracy War on Shipping Charges

Maritime

As the nation’s maritime authorities continue to consolidate the gains of relative peace on the nation’s waterways, Francis Ugwoke, in this report, reviews various action plans put in place to stem the tide of piracy and other forms of criminality in the Nigerian maritime sector

For decades, Nigerian shippers and to a large extent, African shippers,  have been blackmailed by multinational shipping lines under the platform of conference liners over security issues in the sub-region.  It could be either general issues of insecurity arising from tension during general elections or piracy, armed robbery on territorial waters and Gulf of Guinea (GoG). It could also be a surcharge over congestions in the ports. 

About four years ago, the shipping service providers were at it with some surcharges on imports destined for Nigeria and other West African sub-region.  Some of the surcharges came under the titles of peak season surcharge (PSS); extra risk insurance (ERI)/carrier security fee (CSF) surcharge; congestion surcharge (CS); freight tax surcharge (FTS); operations cost recovery (OCR); low sulphur surcharge (LSS); B.A.F (bunker adjustment surcharge) and C.A.F. (currency adjustment surcharge).  

As the ports economic regulator, the Nigerian Shippers Council (NSC) had fought against this, describing some of the surcharges as unapplicable in Nigeria. The council had mobilised members of the United African Shippers Council (UASC) against the surcharges. The UASC had, in turn, mobilised other members against the surcharges at an international summit in Abuja. At that global event were key members of the Global Shippers Forum (GSF). After listening to the protests from Nigeria and other West African countries,   the  GSF had invited members of UASC to another meeting in London where members of conference liners were also invited. Nigeria and other UASC members had attended the meeting where the issue was presented. Surprisingly, at the meeting conference liners had denied some of the charges as the handiwork of their shipping agents at resident ports/countries.

 The  NSC  and other African countries had confronted these shipping agents who had to some level retrace their steps on some of the surcharges. But that was not the end of the problem as the multinational shipping agents less than two years later again came up with some of the charges which they blamed on piracy on Nigerian waters and GoG,  among others. 

They had pointed out that most of the ships coming to the sub-region had to engage armed guards on board, an arrangement they argued meant huge costs on the voyage. Sometime in 2020, the peak period charges of between $1000 and $1,500 were collected on   20-foot containers or equivalent units. This was an over 400 per cent rise from the   $200 freight charge per TEU at the peak period.  

Among the multinational agencies then allegedly fingered in the surcharges were   Cosco, Maersk, MSC, CMA CGM, Hapag Lloyd and Evergreen shipping. The ports economic regulator had fought this before the issue was rested.

Suffice it to say that it was at this stage that the OMSL Limited,  a private security outfit providing security for ships coming to Nigeria took advantage of the scenario. The company introduced a security arrangement for ships coming to Nigeria as the issue of piracy heightened. The company was collecting between $2,500  and $1,500.00 from ships on daily basis at Secure Anchorage Area (SAA). This went on until the government intervened and cancelled the contract. During this period, Nigerian shippers were compelled to pay more as the shipowners had to charge more to be able to recover the cost of engaging armed guards on board on payment to stay at SAA.  

Deep Blue Project

Side by side with the controversial SAA security arrangement then was the Deep Blue project by NIMASA. The emphasis on the project, among others,  is to provide security on the nation’s waters as well as the GoG.  Under the deep blue project, the federal government has invested heavily through NIMASA.

 Among the infrastructure provided for the deep blue project include  16 armoured vehicles for coastal patrol, two special mission vessels, 17 fast interceptor boats, two special mission aircraft for surveillance of Nigeria’s exclusive economic zone (EEZ), three special mission helicopters for search and rescue operations and four unmanned aerial vehicles. 

The job of the mission vessels is to monitor shipping activities on the waters. The vessels are expected to remain at sea for 35 days to monitor illegal activities, including the dumping of toxic wastes, illegal fishing, smuggling and oil bunkering. President Muhammadu Buhari had earlier signed the  SPOMO Bill targeted at checking piracy in Nigeria and GoG. 

At the formal launch of the project in Lagos last year Buhari said he was optimistic that the deep blue project will address all forms of maritime crime. He said the issue of piracy in the West African sub-region required synergy among nations of GoG was to safeguard the waterways. According to him, ‘‘I am confident that the project, which provides a robust maritime security architecture, will enhance maritime domain awareness capability and improve law enforcement action, particularly in the prosecution of suspects under the SPOMO   Act which I signed into law in June 2019. ‘‘This flag-off is an important step in the continuing shift in strategic action about regional maritime security. ‘‘It will serve as a benchmark for member states in the Gulf of Guinea and other relevant stakeholders to further develop innovative strategies and align efforts with the subsisting framework to improve maritime security in the region. With shipping accounting for over 80per cent of transport requirements of the global economy, concerted efforts and innovative actions are required to address attendant security challenges”.

Impact

The impact of the deep blue project has been tremendous going by the global reports on piracy. The International Maritime Bureau (IMB) in its report for last year released early this year pointed to an  “overall reduction in reported incidents in 2021 in other countries and GoG. The report said there was a decrease from 81 reported incidents in 2020 to 34 in 2021. 

Part of the report reads, “The IMB commends the robust actions of the international navies and regional authorities in the Gulf of Guinea which appears to have positively contributed to the drop in reported incidents and ensuring continued safety to crews and trade,”, according to   IMB Director, Michael Howlett.  He added,  “While the IMB applauds these actions it further calls on the coastal states of the Gulf of Guinea to increase their collaboration and physical presence in their waters to ensure a long term and sustainable solution to address the crime of piracy and armed robbery in the region”

The Director-General of NIMASA, Dr Bashir  Jamoh had in reaction to the impact of the measures against piracy and other forms of armed robbery on waters said, “NIMASA has put in tremendous efforts to mitigate the tide of maritime insecurity in Nigeria and the Gulf of Guinea through several maritime domain awareness interventions and collaborative efforts.

“The implementation of the International Ship and Port Facility Security (ISPS) Code has steadily impacted on the level of security in the nation’s port areas and facilities.”

Global Commendations

With the good results coming from the efforts of Nigeria in fighting piracy within and in the GoG, the international maritime community has been happy about this development and also full of commendation for Nigeria. Both the United Nations and the International Maritime Organisation (IMO) have not hidden their job over this development even as they call for sustained efforts. In January this year, the Executive Director of the United Nations Office on Drugs and Crime (UNODC), Ghada Fathi Wali, commended Nigeria for this effort.  

Speaking in New York, he pointed out that the collaboration between Nigeria and UNODC has been very positive, adding that this has been shown by the Global Maritime Crime Programme and the Strategic Vision for Africa launched in 2021. This, Wali said has made other international organisations extend helping hands in the war against piracy instead of leaving it for the regional organisations alone. The apex global maritime regulatory body, the International Maritime Organisation (IMO) had also in June last year commended Nigeria for the Deep Blue project. IMO said it was pleased with Nigeria’s leading role in securing the GoG.  The agency said it will continue to support Nigeria and the region in respect of this effort. The Secretary-General of IMO, Kitack Lim said Nigeria has indeed made important contributions in the fight against piracy both within and in the GoG.

 Why War Against Piracy is Succeeding

In February this year, the  NIMASA DG, Jamoh, explained why the war against piracy has been a huge success. He pointed out collaborative efforts between his agency and other security agencies. As of February statistics released by the  IMB  showed a further drop in piracy incidents in the GoG by 58 per cent from 81 in 2020 to 34 in 2021. He said this was because of deliberate collaborative efforts involving NIMASA, Nigerian Navy and other stakeholders in the West African sub-region. He said his agency will remain unrelenting in the war against piracy.

Effect on Shipping Charges

 For Nigerian shippers, it is indeed good news that the war against piracy is succeeding. To shippers, this no doubt has its positive side on international trade as it affects Nigerians and the rest of the West African sub-region. A shipper and maritime lawyer, Mr Emmanuel Ofomata while expressing delight that the deep blue project has hit pirates hard said the war should be sustained for a more far-reaching effect. Ofomata pointed out the negative effect of the menace of pirates on Nigerian waters and GoG, adding that Nigeria stands to gain with the deep blue project successes. “Continued reduction in the activities of sea robbers or pirates will promote Nigeria’s international trade as well as those of the West African sub-region. It will be good news for the international trading community, particularly the conference liners who have over the years spent so much providing armed guards on ships for each voyage. It would also mean that multinational shipping agents will have no reason to raise all sorts of shipping surcharges. But above all is that Nigeria can challenge effectively shipping lines introducing arbitrary charges who would always blame it on either piracy or for other reasons”.

 Ofomata while commending the  NIMASA DG for all the efforts so far advised that he should continue to partner with all the relevant stakeholders for a sustained fight against piracy. He said, “piracy is a global issue and Nigeria should continue to reach out to all international stakeholders for collaboration in the fight. What we have witnessed in the GoG is not something that Nigeria and other West African sub-region should handle alone,  the cooperation of other friendly countries should be sought so that pirates are completely driven out of business in the GoG. The positive impact to international shipping cannot be over-emphasised”.