Freight Forwarding Reform: Testing The Limits/By Chigozie Chikere



At the opening of the Nigerian Maritime Expo (NIMAREX 2013) on March 12, President Goodluck Jonathan spoke of an urgent need to professionalise Freight Forwarding practice in Nigeria. Industry stakeholders were thrilled. Freight Forwarding practice in Nigeria is broadly thought to be an all-comers affair, with an ever-rising number of touts and miscreants making in-roads into the industry on a daily basis, advancing corruption and sharp practices, depreciating the quality of service, and eroding the confidence of Importers and sundry other port users on the efficiency of Nigerian ports. Earlier in 2007, the Federal Government in a strategic move aimed at increasing efficiencies, improving transparencies, and adding value to the economy of the nation through a reformed Freight Forwarding sub-sector, had established the Council for Regulation of Freight Forwarding in Nigeria (CRFFN). At inception, considering the council’s mandate to promote the highest standards of competence, practice and conduct among Freight Forwarding practitioners, the question in the minds of stakeholders was whether or not the reform would limit the number of practitioners by establishing a ceiling for the maximum number of Freight Forwarders required at the ports. It turned out that the council did not, although its initial exercise pruned down the number of Freight Forwarding companies, individual practitioners, and associations that sought for recognition. Nonetheless, the council has plenty of radical plans that would include training, testing, certification, and overall industry transformation.

The case for training and certification is strong. By international standards, Freight Forwarding practice in Nigeria has lagged even as the number of practitioners has risen. In 2010, when CRFFN compiled the first register of Freight Forwarders in Nigeria, over 5000 persons applied for registration under the individual members’ category, only 2042 made the provisional register. Over 1000 companies applied for corporate membership out of which 650 were offered provisional registration. And out of 5 Associations that applied, 4 scaled the hurdle while 1 was dropped. No record exists of the other thousands who simply shunned the exercise, having assessed themselves as incompetent, at least for the period under review. The lack of professionalism of this army of touts that has invaded Nigeria’s Freight Forwarding sub-sector is contributing largely to the congestion at the ports which, according to President Jonathan, is impacting negatively on the clearing and movement of cargoes in our ports. But foreign companies engaged in the Freight Forwarding business in Nigeria are pulling ahead alarmingly.

It is from Europe, specifically Switzerland, the base of the International Federation of Freight Forwarders (FIATA), that we got the FIATA shorthand description of a Freight Forwarder. By that description, the Freight Forwarder is the ‘Architect of transport’ and that illustrates the commercial position of a Freight Forwarder in relation to his client and to the industry at large. It is pertinent to note here that FIATA runs a training programme that prepares Freight Forwarders for a Diploma in Freight Forwarding, and this programme runs for several months. Moreover, successful applicants obtain a unique distinction of the industry because the FIATA Diploma has an excellent industry reputation, and Europeans, no doubt, avail themselves more of this wonderful opportunity. In the U.S.A, Freight Forwarding practice is highly specialised in accordance to specific modal requirements. Companies that handle domestic U.S freight must be registered with the Federal Motor Carrier Safety Administration under the U.S Department of Transportation. International Ocean Freight Forwarders arranging for shipments to and from the U.S must be licensed by the Federal Maritime Commission as Ocean Transportation Intermediaries. Similar to other countries, Freight Forwarders that handle international air freight frequently obtain accreditation with the International Air Transport Association (IATA) as Cargo Agents; however, they must obtain an Indirect Air Carrier (IAC) certification from the Department of Homeland Security (DHS). Little wonder then why Europeans, Americans, and Asians are gradually taking over Nigeria’s Freight Forwarding business. The regulatory machineries in their home countries have equipped them with relevant technical-know-how.

There will be no limit to the number of applications for CRFFN registration, training, and certification as long as the applicants are eligible and are ready to go through the whole process of training. Practitioners who are among the disqualified lot are loudly opposing the council’s procedure. While asking for a grace period to enable all Freight Forwarders upgrade, build up to peak performance, and then register, these unregistered agents who by far outnumber those registered, are determined to resist any attempt by the council to dislodge them from the system. The council is however bent on raising standards of practice to deliver on its mandate by maintaining strict regulation and control of the activities of Freight Forwarders to sanitise the profession. Incidentally, Nigeria generates about 70% of ship traffic, cargo throughput, and volume of trade in the West and Central African sub-region. The country’s volume of trade has steadily risen from 82 million metric tonnes of cargo in 2008, 93.7 million metric tonnes in 2009 and 100 million metric tonnes in 2012. These figures show the Nigerian maritime industry is growing and will in no distant time position Nigeria as the maritime hub for Africa. The industry, therefore, provides a holistic business and investment platform for Shippers, Carriers, Freight Forwarders, and numerous other ancillary industry professionals. By this professionalisation initiative, the Federal Government intends to create more job opportunities for genuine Freight Forwarders, as Nigerian ports become efficient like those of advanced countries.

The new goal is a world-class industry qualification, modeled on the FIATA requirements for vocational training. CRFFN aims at determining the standards of knowledge and skill to be obtained by persons seeking to be registered as freight Forwarders and raising those standards from time to time in accordance with international industry best practice. This provision encourages Freight Forwarders to strive for high levels of career achievement and to gain a broader understanding of the principles of cargo movement in the interest of the public, clients, and employees. Practitioners with less education will have no preference. Rather, the council will ensure uniform standards of education, training, and professional conduct of practitioners.

The energy behind this attack on mediocrity is admirable, but contradictions remain. The government, which has liberated the freight Forwarding sub-sector to run their own affairs is increasingly dirigiste about how things should be done. Following the recent face-off between CRFFN and leading Freight Forwarders’ associations; Association of Nigerian Licensed Customs Agents (ANLCA) and National Association of Government Approved Freight Forwarders (NAGAFF), over the sharing formula for the proposed transaction fee which is supposed to be the main source of funding for the council, leaders of these associations reported the Transport Ministry as having hijacked the regulatory body, pitted it against them, and at the same time expecting them  to provide the needed funds for the council’s running. The report goes further to say the ministry, in running the council as one of its parastatals, has overstepped its statutory limits and should therefore be held responsible for the friction in the sub-sector. The ministry, no doubt, runs the danger of prescribing too tightly what Freight Forwarders should do, as well as the standards they should attain.

Plans for adequate funding of the regulatory body remain vague. In March 2012, a Federal High Court sitting in Lagos pronounced CRFFN a statutory professional agency of the Government of Nigeria, and not a mere association or a private practitioners’ regulatory agency. It is on this premise that Experts favour a system where the CRFFN fund should include a government subvention, preferably, a levy on certain imports handled by Nigerian Ports. Considering the grievances of Freight Forwarders who see this reform as some albatross on their neck, one should expect nothing short of a widespread apathy towards the payment of the transaction fee. Presently, the council complains bitterly about poor funding and if the situation should persist, quality compromise, corner cutting, and full-blown corruption may creep in, pervade the regulatory organ, and ultimately truncate the ongoing as well as the much envisaged reform.

Nonetheless, something important is changing in the sub-sector. Plans to reform and professionalise Freight Forwarding practice have been found to be less drastic than had been rumoured, but will still mean an upheaval in the industry. Put more simply, there is a time when com plaints about unskilled agents touting for business at the ports and the excuses for international underperformance have to stop. It might as well be now.

Chigozie Chikere Is A Member, The Chartered Institute of Logistics & Transport (CILT), Nigeria





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