As growth in the country’s maritime trade business gathers momentum, stakeholders in the sector will have to devise strategic solutions for the inherent challenges or risk limiting growth in the sector, writes Maxwell Adombila Akalaare
THERE is growing concern among stakeholders in the country’s maritime business that the lack of adequate port infrastructure and space constraints at the ports could limit the volumes of businesses recorded at the ports in the near future.
The constraints are consequently raising the cost of shipping and clearing of cargoes at the ports to the frustrations of the shippers and port authorities.
Statistics from the Ghana Shippers’ Authority (GSA) show an annual average growth rate of 25 per cent in the sector, a trend the Head of Freight and Logistics at the authority, Mr E K Arku, said could pose a challenge to port authorities gauging from the various infrastructural challenges currently facing the ports.
“There is increased business activity at the ports and that is good news to the government and the economy since more revenue will be generated and more businesses created for freight forwarders.
“The challenge, however, is the capacity of the ports to contain those volumes,” he said noting that lack of space at the Tema Port has so far limited expansionary works there even though it continues to record higher volumes of trade.
The country’s maritime trade business has been witnessing tremendous growth after recording a sharp dip in 2009 as a result of the global recession at the time.
The dip in growth of maritime businesses, however, recovered in 2010 as the global economy rebounded from the recession and is now recording an average growth rate of 25 per cent per annum.
The first three quarters of 2011 for instance saw total throughput (the total amount of cargo imported and exported) rising by 29 per cent to 12.78 million metric tons from the 9.88 million metric tons recorded within that same period in 2010. Total exports for the period amounted to 3.35 million metric tons with the remaining 9.43 metric tons coming from imports. Transit trade (using the country’s corridors to transport cargo to neighbouring countries) also grew by 46 per cent during the period under review.
In terms of monetary value, the statistics show that export businesses in the first three quarters of 2011 amounted to US$11.8 billion as against the US$14.4 billion raked in by imports within the same period.
Although the shippers’ authority is estimating cargo throughput to end 2011 at 14.5 million metric tons using a projected increase in quarterly tonnage of 23 per cent, officials at GSA said the figure could even jump beyond 16 million tons “base on information we are getting from the Tema and Takoradi Ports.”
But as oil inflows begin to gain momentum and production of gold and cocoa firm up, port authorities will have to brace themselves and the ports up for greater volumes of business in the years ahead.
The challenge, therefore, is the ability of the ports to handle these increments as growing throughput and transit trades will mean more infrastructure expansion, personnel and adequate regulations to address the various challenges that arise as a result.
“Increasing volumes is good but the challenge has always been space constraints which end up making it frustrating and costly to ship and clear goods at the ports,” Mr Arku observed. Despite the said constraints, Mr Arku said “the volumes keep coming thereby causing congestions at the individual ports.”
Shippers, he said, have consequently been confronted with the challenge of having to pay higher amounts as demurrage (the price paid for delayed clearance of goods at the port), rent fees and other associated prices and penalties.
According to Mr Arku, about 85 per cent of all the imports that pass through the ports attract demurrage, a trend that confirms the various frustrations that the issue of space constraints at the ports is causing shippers.
An average of US$45 million, he said has been spent yearly to pay demurrage fees with an extra US$13.5 million also going to shipping agents as rent fees due to the lack of space to house cargoes that are yet to be cleared.
The Head of Freight and Logistics at GSA also blamed the apparent disorganised nature of some shipping and clearing agents and complex clearing procedures at the ports which he said was unnecessarily causing some shippers to incur high costs by way of rent and demurrage fees.
He also mentioned shipping agents’ resort to charging for shipment in addition to the fees already charged on the cargo by the main shipping company.
Such double charges, he said were costing shippers as much as US$45 million a year, an amount Mr Arku said is siphoned out of the economy for no service rendered.
“All these high costs of shipping cargo translate into frequent increases in prices and that greatly hurts the national economy,” he observed.
In a bid to tame some of these challenges, Mr Arku said the GSA as an advocacy institution for shippers in the country will introduce a cargo tracking information “to enable shippers track their vessels. Once the vessel arrives, then we quickly notify them to clear and avoid these fees associated with delayed clearance.”
In addition, Mr Arku said the authority was also seeking Parliamentary approval for a new regulation, the Ghana Shipper Authority Regulation 2011, to mandate freight forwarders, shipping and clearing agents to negotiate with their respective shippers over the implementation of standards for the industry and the charging of fees for the various services rendered.
While admitting that services rendered by freight forwarders and agents ought to be paid for by the shippers, Mr Arku said “the forwarders and agents need not hide under that to take undeserving monies which intend hurt the economy in diverse ways.”
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