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By Steve Agbota
Nigeria is losing more than $500 million annually due to the growing crisis of unreturned empty containers clogging its ports, according to the June bulletin published by the Sea Empowerment and Research Centre (SEREC).
The report, titled “Implications and Burden of Unreturned Empty Containers Littering Our Shipping Space,” highlights the complex web of factors driving these losses.
Chief among them are escalating shipping costs, increased storage fees, severe port congestion as well as mounting environmental and public health risks.
The Head Research of SEREC, Eugene Nweke, said estimating the exact volume of losses was a tall order as over 100,000 empty containers currently litter the ports.
On the cost implications, he explained that “the cost of freighting empty containers back to origin ports is substantial,” with rates ranging from $2,000 to $4,000 for a 20-foot container and $3,500 to $6,000 for a 40-foot container, depending on the route and prevailing market conditions.
He further noted that “the accumulation of empty containers at ports and along major roadways leads to congestion, increased storage costs, and potential demurrage fees,” which can reach as high as N60,000 per container per month.
Addressing the environmental and health risks, he warned that “abandoned containers pose serious environmental and public health hazards, particularly when they are rickety or unseaworthy,” a condition that applies to an estimated 45% of the containers currently in circulation.
“Potential annual losses: While exact figures are difficult to quantify, the Importers Association of Nigeria estimates that the country is losing over $500 million annually due to inconsistent exchange rates and other importation challenges related to empty containers,” he added.
He said that to mitigate these losses, there is a need to encourage Nigerian businesses to boost exports, which can help balance the number of empty containers and reduce the financial burden on shipping lines.
“Investing in better port infrastructure and management systems can streamline container handling, reduce congestion, and enhance tracking and return logistics. Establishing effective container return systems can minimise the number of empty containers left in ports and reduce storage costs.
“As it stands today in the industry, shipping companies charge Nigerian shippers an average of N10,000.00 per day for demurrage after the third period. Then, imagine if the government places a demurrage tax on a percentage basis on every unreturned empty container after the official three-month duration in the country. Such additional revenues are enough for the road/environmental maintenance fraction,” he said.
On global best practices, he said interestingly, several countries have implemented taxes or fees on unreturned containers after a specified period.
Some examples of these countries include Germany, France, and the UK, which have implemented container detention fees or demurrage charges for unreturned containers.
He explained that the United States has a similar system, with container shipping lines charging detention fees for containers held beyond the allowed free time, while the Australian government has implemented a container deposit scheme to encourage the return of empty containers.
In light of these global best practices, he said it is reasonable for Nigeria to consider implementing a similar system to encourage the prompt return of empty containers and reduce the financial burden on shipping lines.
“The SEREC has officially written to the Minister of Marine and Blue Economy, proposing the need for the establishment of a strategic container return system, jointly coordinated or administered by the NSC, NPA, and CRFFN,” he added.
