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By Steve Agbota
Nigeria has lost an estimated N112 billion in the last seven years due to a severe underwriter shortage in the maritime industry.
The lack of adequate underwriters has caused frustrating delays and bottlenecks in the processing of container deposit refunds, a critical issue for shippers and clearing agents.
Despite attempts to resolve the situation, the absence of a streamlined system has left many importers and freight forwarders traumatised, with shipping companies continuing to withhold funds even after containers have been returned.
This has not only created financial strain but also hindered the smooth operation of the country’s maritime sector.
A container deposit refund is a reimbursement paid to importers by shipping companies when they return a container to the port. The deposit is a security measure to ensure that the container is returned in good condition and within a specified time frame.
Several clearing agents who spoke to Daily Sun on the issue claimed that shipping companies collect container deposits on behalf of importers but fail to refund the amount, even after the containers have been returned. Daily Sun also discovered that shipping companies demand deposits ranging from N200,000 to N400,000 for 20-foot and 40-foot containers, respectively. In many cases, these amounts are even higher, depending on the charges set by different shipping lines.
In response to mounting complaints from stakeholders about the refusal of shipping companies to refund container deposits to importers, the Nigerian Shippers’ Council (NSC) set a firm deadline of June 2021 to end the practice of shippers paying container deposits to shipping companies. This move came after assurances from the National Insurance Commission (NAICOM) to collaborate with the NSC in abolishing container deposits entirely. The initiative aimed to alleviate the financial burden on shippers and bring much-needed transparency to the refund process, ensuring that importers are no longer disadvantaged by the ongoing delays in refunds.
The former Executive Secretary of the NSC, Hassan Bello, revealed that shippers paid N16 billion as container deposit in 2018, indicating that the country may have lost about N48 billion in container deposits over three years.
Based on these figures, Daily Sun uncovered that Nigeria has lost at least N112 billion in container deposits over the past seven years, spanning from 2018 to 2024.
After setting the deadline in 2021, shippers have accused the shipping companies of not stopping the collection of the funds and allegedly holding on to the money that ought to have been refunded.
Stakeholders said the lack of underwriters in the maritime industry has resulted in bottlenecks in container deposit refunds, even after it was agreed at several meetings to engage underwriters to resolve these issues.
However, at a recent event, the Deputy Director of Monitoring and Enforcement at the Shippers’ Council, Mr. Sarumi Adesina, while speaking on behalf of the current Executive Secretary of the Council, Pius Akutah, said: “We have been inundated with a lot of complaints about container deposit refunds. The industry is full of shady deals, especially involving freight forwarders. They are not helping matters. Shippers who deposit money for containers often fail to have it refunded when they return the containers.
“In recent times, this refunded money does not go back to the owner, and when the money is not refunded, the shipping line claims the container was not returned. Container deposits are not paid back, and consignees are not returning containers. Many containers are even being converted into shops.
“That is not to say the Shippers’ Council is folding its arms. There is an initiative through an insurance company to underwrite the refund of container deposits. The idea is for consignees to pay a small service charge instead of the typical deposit, ensuring containers are returned to shipping companies within a specific timeframe.”
Speaking with Daily Sun, the Managing Director of Sula Marine Global Limited and foremost freight forwarder, Sulaiman Ayokunle, said in Nigeria, the shipping companies seem to position themselves as the lords of the maritime industry, rather than being regulated by the authorities.
“If we had done what was right from the beginning, we wouldn’t be having issues with late refunds of container deposits. What is the right thing? The deposit for holding a shipping company’s container for a short time to return after offloading the consignment should be done by an underwriter, just like the Shippers’ Council is now addressing,” he said.
He added that the Shippers’ Council decided that now is the right time to ensure this regulation is enforced.
“Having said that, I want to emphasise that it should be done by an underwriter, not in a situation where you have to deposit money for someone to roll it through their account before they refund your money for the container deposit. Because you are not buying the container, you are only using it temporarily to take your consignment out of the port and return it.”
“What causes the delay? The causes of the delay vary from shipping company to shipping company. Some, after you return your container, begin to look for ways to deduct from your deposit. Some will say you have damaged the container. Others will claim there was a delay in returning it. Why would there be a delay in returning the container? When it returns to the port, it first goes to the holding bay, which is a third-party franchise of shipping companies. Some containers, especially during tough periods, will stay in the holding bay for more than 72 hours. Others can spend over a week there. While those containers are on the truck outside, you pay, and they start deducting from your deposit, claiming the container has not been returned. This delays the refund process.”
He said that once someone returns an item borrowed to deliver goods, the refund should be processed within 24 hours. “It’s like someone giving you money to borrow their bucket for transporting water, and once the bucket is returned, they should give you back the deposit immediately. It’s not rocket science. It shouldn’t take longer than that,” he said.
However, the immediate past Secretary of the Association of Nigerian Licensed Customs Agents (ANLCA) and MD/CEO of Mikky Excellency Nigeria Limited, Alhaji Abdulazeez Babatunde Mukaila, said that while clearing agents appreciate most of the work done by the present Executive Secretary of the Shippers’ Council, the issue of container deposits has become a recurring problem.
He said the Shippers’ Council needs to do more for transparency and predictability.
“I don’t want to put the blame on the Shippers’ Council or other parties, but it is important to know that the Shippers’ Council needs to do more. They must let the public know what is actually going on. The shipping lines are not ready. They are not willing to comply. It’s like a baby with a milk bottle—they won’t drop it. Therefore, I believe the Shippers’ Council needs to do more without blaming other parties,” he said.
He also noted that container deposit practices are not like this in other countries, and that the Shippers’ Council needs to collaborate more with lead agents and statutory agencies to address the issue of demurrage.
“Container deposits should not exist if we follow the global standard. The content of the container has been examined, and Customs should determine what it is supposed to be and what duty is applicable,” he added.
He stressed that the Shippers’ Council must do more to alleviate the burden on shippers, which is why the department was created in the first place.
Also speaking with Daily Sun, the former President of the Association of Nigerian Licensed Customs Agents (ANLCA), Dr. Kayode Farinto, said the Shippers’ Council’s engagement on container deposits is still unacceptable.
“It is not acceptable to me because I was the acting president of ANLCA, and we have been engaging for the past three years, especially under Hassan Bello’s leadership. We have suggested container insurance, which has been accepted by every stakeholder,” he said.
He added that the continued delay in the suspension of container deposits for insurance is harming the industry.
“There are too many prospects for the maritime industry this year. I just hope they will be able to implement it before the end of the first quarter. I don’t want to be negative, but there are too many prospects for the maritime industry,” he said.
