THE ROLES OF NIGERIA CUSTOMS SERVICE IN THE EVACUATION OF CARGOES FROM THE SEAPORT TO THE HINTERLAND
A Paper presented by the Customs Area Comptroller, Onne Area II Command, Comptroller Mohammed Babandede represented by Chief Superintendent of Customs Akinwale Fatoki.
At a One-Day sensitization seminar on Limitations to Rail Transportation of Cargoes in Nigeria
Organized by the Nigeria Shippers Council
INTRODUCTION
1. The movement of goods from Nigerian seaports to the hinterland is a critical component of Nigeria’s trade and economic activities. With over 80 per cent Nigeria’s imports arriving by sea, efficient cargo evacuation is essential for maintaining economic stability, ensuring timely delivery of goods and supporting industries across the country. An efficient cargo evacuation facilitates trade, supports industrialization, and strengthens economic integration. However, cargo evacuation in Nigeria faces numerous challenges, particularly regarding infrastructure, bureaucracy, and security concerns. The limitations of rail transportation further worsen these challenges, increasing reliance on road networks, which are often congested and deteriorating. A Business Day Newspaper report indicates that over 95 per cent of liquid and dry cargoes imported into Nigeria are moved by road with little or no utilization of other modes of transport that include the railway and waterways. This over reliance on road transport leads to heavy congestions on routes leading to the country’s seaports, forcing shippers to incur high costs not only for transporting their cargo but also for demurrage fees resulting from delivery delays.
2. At the heart of this complex system is the Nigeria Customs Service (NCS), an agency entrusted with the mandate of trade facilitation and enforcing compliance with national and international trade regulations. As a frontline agency in Nigeria’s trade and logistics ecosystem, the NCS plays a major role in ensuring that goods move seamlessly through the Nigerian ports while safeguarding the economy from smuggling, un-declaration, under invoicing and other illicit activities.
3. It is against this backdrop that this paper explores the significant roles of the NCS in cargo evacuation, the challenges involved particularly in light of the limitations to rail transportation, and potential solutions to improve efficiency. It highlights the benefits of decongesting seaports and the collaborative efforts required among terminal operators, stakeholders and logistics partners to optimize the evacuation of cargo with the aim of decongesting Seaport and improve overall operational efficiency.
SCOPE
This paper shall cover:
Overview of cargo evacuation in Nigeria.
The roles of NCS in cargo evacuation.
Port congestion as a challenge to cargo evacuation.
Recommendations for improving cargo evacuation
OVERVIEW OF CARGO EVACUATION IN NIGERIA
4 Cargo evacuation refers to the process of moving imported goods from ports to inland locations using different modes of transport, including road, rail, and inland waterways. The Nigeria Customs Service is a key stakeholder in this process, as we oversee clearance procedures, enforce customs regulations, and ensure that trade is conducted within legal frameworks.
5. Despite efforts to enhance the ease of doing business in Nigeria, cargo evacuation still faces challenges, particularly with rail transportation. The limitations of the rail system have placed excessive pressure on road transport, leading to congestion, delays, and increased costs.
6. The Nigeria Customs Service (NCS) plays a vital role in this process, ensuring efficient cargo clearance, enforcing regulatory compliance, preventing smuggling, and collecting government revenue.
THE ROLES OF NIGERIA CUSTOMS SERVICE IN CARGO EVACUATION
7. The NCS performs several essential functions to facilitate the seamless movement of cargo from ports to inland destinations. These roles include customs clearance, revenue collection, anti-smuggling activities, trade facilitation, and security enforcement.
CUSTOMS CLEARANCE AND DOCUMENTATION
8. One of the primary responsibilities of the NCS is to oversee the Customs clearance process for imported and exported goods. The clearance process involves the verification of documents, assessment of duties and taxes, and compliance with import regulations. In a concerted effort to decongest the ports, the Nigeria Customs Service Act (NCSA) 2023 sections 31, 121, 122 and 153 allows for the licensing and operations of Bonded Warehouses, evacuation of cargo and admission of goods into such warehouses for the purpose of Customs clearance and laws guiding transires. These cargoes are evacuated by road or by barge through the waterways and sometimes by rail and are escorted by officers who obtain landing certificate. Officers ensure compliance with regulatory requirements, collect duties and taxes, and facilitate the timely release of goods thereafter.
9. Pre-Arrival Processing: The NCS operates an advanced clearance system that allows importers to process their cargo documentation before the shipment arrives at the port. The Pre-Arrival Assessment Report (PAAR) is a vital tool that speeds up clearance by ensuring accurate classification and valuation of goods.
10. Nigeria Customs Integrated System (NICIS II): The adoption of NICIS II has significantly improved cargo clearance efficiency. This electronic system integrates various trade agencies, reduces paperwork, and enhances transparency. However, NCS has launched a new Unified Customs Management System (UCMS) called “B’Odogwu” to enhance trade efficiency and modernize customs processes, aiming to replace the current NICIS clearance system.
11. Unified Customs Management System (B’Odogwu): The B’Odogwu is an indigenous digital trade facilitation and cargo processing platform designed to modernize Customs operations, enhance trade facilitation and improve cargo processing efficiency. It unifies various Customs processes such as risk profiling, real time cargo monitoring and valuation intelligence into a centralized digital hub. The N CS initiated the pilot implementation of B’Odogwu at the Port Terminal Multi-services Limited (PTML) Area Command on October 25, 2024 and is set to expand the platform to the Apapa, Tincan Island and Onne seaports.
12. Single Window Initiative: The implementation of the Single Window Trade Platform aims to harmonize all regulatory agencies involved in cargo clearance, minimizing delays and improving coordination.
13. By implementing streamlined procedures and expediting the clearance process using Inland Container Depots (ICDs), the NCS plays a crucial role in reducing port congestion and demurrage costs for importers which in turn improves the overall efficiency of port operations
REVENUE COLLECTION AND ECONOMIC CONTRIBUTIONS
14. The NCS is a significant revenue-generating agency of the Nigerian government. It collects duties, taxes, and levies on imported goods, contributing a substantial percentage to the national budget. These duties include import duties, excise duties, Value Added Tax (VAT) and other special levies and tariffs
15. Import Duties: These are taxes levied on imported goods, varying based on the nature of the product and its classification under the Harmonized System (HS) Code.
16. Excise Duties: Imposed on specific goods produced or sold within Nigeria, such as tobacco and alcohol.
17. Value-Added Tax (VAT) on Imports: Collected on goods entering the country, adding to government revenue.
18. Special Levies and Tariffs: Includes levies on luxury items, environmental charges, and other government-imposed taxes.
19. By ensuring proper assessment and collection of these revenues, the NCS supports national development, infrastructure projects, and public services.
ANTI-SMUGGLING AND ENFORCEMENT OF TRADE REGULATIONS
20. Smuggling poses a significant threat to Nigeria’s economy, security, and local industries. The NCS actively combats illegal trade by preventing the importation of prohibited goods and ensuring compliance with trade regulations. This is done by border and seaport surveillance, cargo inspection and scanning, collaboration with other government agencies as well as seizures and prosecutions. By enforcing trade regulations, the NCS protects local industries, ensures consumer safety, and prevents loss of government revenue.
FACILITATION OF TRADE AND LOGISTICS OPERATIONS
21. Trade facilitation is one of the core mandates of the NCS, ensuring that legitimate trade is conducted efficiently and without unnecessary hindrances. Efficient cargo evaluation is essential for reducing costs, improving supply chain efficiency and enhancing Nigeria’s global trade competitiveness. NCS achieves this through efforts like the Authorized Economic Operator (AEO) Program, Time Release Studies (TRS) and Customs-to-Business Partnerships.
22. Authorized Economic Operators Program: NCS is at the forefront of implementing the AEO. This program is a World Customs Organization (WCO) initiative designed to enhance trade facilitation, security and compliance in the global supply chain. Business entities that are involved in internation trade and have demonstrated proven high level of compliance to Customs regulations enjoy faster clearances, fewer inspections and priority treatment at the ports.
23. Time Release Studies: Another WCO initiative is the TRS that identifies bottlenecks in clearance process in line with Section 32 of the NCSA 2023 and Article 7 of the Trade Facilitation Agreement. This involves adopting modern trends like the Non-Intrusive Inspections Technology and tracking shipments, fast track and Authorized Economic Operator Programs which helps in streamlining the process and reducing delays.
24.Customs-to-Business Partnerships: The NCS engages private sector stakeholders to streamline logistics and promote efficient port operations. An efficient customs system enhances Nigeria’s position in global trade rankings and attracts more foreign direct investment.
SECURITY AND SAFETY OF CARGO MOVEMENT
25. Cargo evacuation from seaports to the hinterland is critical to Nigeria’s logistics and trade ecosystem. Given the reliance on road transport, with over 95 per cent of cargo moved by road, the process faces a significant challenge including theft, tampering during transit and insurgency. The security of these goods in transit is a priority for the NCS and they play several pivotal roles in ensuring cargo security during evacuation. This is done by real time cargo tracking, provision of escort services, facilitating the use of dry ports and bonded warehouses with security measures and regulations of transport companies. NCS also collaborates with national and international security agencies to counter criminal networks involved in cargo theft.
PORT CONGESTION AS A CHALLENGE TO CARGO EVACUATION IN NIGERIA
26. Port congestion is one of the major challenges affecting the efficient evacuation of cargoes from Nigerian seaports to the hinterland. It occurs when the volume of cargo exceeds the capacity of port infrastructure, leading to delays in loading, unloading, and transporting goods. The consequences include prolonged cargo dwell times, high demurrage charges and logistics inefficiencies. This issue negatively impacts trade efficiency, increases costs for businesses, and slows down economic growth.
CAUSES OF PORT CONGESTION
27. Factors that have been identified to cause port congestion includes but not limited to inadequate infrastructure, inefficient port operations, regulatory and Customs delays, limited hinterland connectivity and high volume of cargo.
a. Inadequate Infrastructure: Many ports suffer from outdated and insufficient infrastructure, which cannot handle the increasing volume of cargo efficiently. This includes limited berthing spaces, inadequate cargo handling equipment, and insufficient storage facilities.
b. Inefficient Port Operations: Poor management practices, lack of automation, and inefficient handling processes contribute to longer turnaround times for ships and cargo. This inefficiency can be due to bureaucratic delays, lack of coordination among port operators, and insufficient workforce training.
c. Limited Hinterland Connectivity: Poor transportation networks connecting ports to the hinterland, including roads, railways, and inland waterways, can cause significant delays in the evacuation of cargo. This issue is often compounded by inadequate logistics infrastructure and services.
d. High Volume of Cargo: Surges in cargo volumes, especially during peak seasons, can overwhelm port facilities and lead to congestion. This is particularly challenging for ports that have not planned for capacity expansions to accommodate growing trade volumes.
RECOMMENDATIONS FOR IMPROVING CARGO EVACUATION
28. To address these challenges, the following solutions are proposed:
a. Expansion and Modernization of Port Infrastructure: One of the most fundamental solutions to improving cargo evacuation is investing in expansion and modernization of port infrastructure. Many of the country’s major ports were not built to handle the current volume of trade. Over the years, these ports have experienced a surge in cargo traffic due to economic growth and increased import activities, yet infrastructure upgrade have not kept pace with demand. There must be significant investment is modern cargo handling equipment, and expanding storage facilities to accommodate larger volumes of cargo. This will speed up cargo processing and improve operational efficiency.
b. Development of Alternative Transport System: One of the major reasons for port congestion in Nigeria is the overwhelming dependence on road transport for cargo evacuation. As noted in this paper, about 95 per cent of goods leaving the ports are transported by trucks, causing massive gridlock on port access roads. This heavy reliance on roads not only leads to traffic congestion but also increases transportation costs and extends cargo delivery times. A comprehensive solution to this problem involves expanding and modernizing rail and inland waterway transport systems. Reviving and expanding Nigeria’s railway network is a critical step in decongesting the ports. Rail transport provides a cost-effective and high-capacity alternative to road transport, enabling cargo to be moved in bulk over long distances. In recent years, the government has made strides in this area, with the commissioning of the Lagos-Ibadan railway that connects the Apapa port. However, this progress must be sustained by extending railway lines to other parts of the country, particularly industrial hubs in Kano, Kaduna, Onitsha, Aba, and Port Harcourt. Establishing dedicated freight rail services that operate on fixed schedules will ensure a seamless and predictable cargo evacuation process. Another underutilized alternative is inland waterway transport. Nigeria has an extensive network of navigable rivers that can serve as an efficient cargo evacuation route. The use of barges to transport containers from Lagos ports to inland locations like Onitsha, Lokoja, and Warri will drastically reduce road congestion. However, for this system to work efficiently, the government must invest in dredging river channels, modernizing inland ports, and regulating barge operations to maintain safety and efficiency.
c. Port Automation and Digitalization: to address inefficient port operations is full automation and digitalization of port processes. By integrating smart technologies automated cargo handling equipment and a centralized digital platform, port operations can be streamlined to ensure faster, more transparent and efficient cargo evacuation. The impact of automation and digitalization of ports would be transformative for Nigeria’s economy significantly reducing cargo clearance time and drive economic growth.
d. Improved Stakeholder Collaboration: Encouraging collaborations between the public and private sectors can bring in much-needed investment and expertise. Strengthening partnerships between private logistics firms and NCS, Nigeria Port Authority, Nigeria Shippers Council and other regulatory agencies can lead to more efficient port operations and management practices.
CONCLUSION
29. The Nigeria Customs Service remains committed to facilitating seamless cargo evacuation from ports to the hinterland while ensuring compliance with trade regulations. While challenges persist, particularly in rail transportation, strategic investments, policy reforms, and stakeholder collaboration can enhance efficiency. We encourage all stakeholders, including government agencies, private investors, and transport operators, to work together in revitalizing the rail sector for cargo movement. A well-functioning rail system will not only decongest roads but also promote economic growth and regional trade competitiveness.
Thank you for listening.
