Former Chief Executive Officer of the Ghana Shippers’ Authority (GSA), Dr. Kofi Mbiah, has urged government to enforce service level agreements (SLAs) with the various service providers involved in the valuation processes at the ports as it will get them to operate at their optimum level to reduce delays in the cargo clearance process at the ports.
This, he said, is one way of avoiding the high demurrage that importers and exporters have to pay to shipping lines for failing to release containers to them on time after the free seven days and part of which is caused by system breakdowns.
“We see Customs officers and clearing agents sitting idly just because the system of a service provider has run down; all of these add to the delays in the clearance process and contributes to demurrage.
Even though we enter into agreements with service providers, there are no service level arrangements and subsequently we don’t insist on compliance.
How much downtime, for example, can the system of a service provider have? Can we hold them to it and make them suffer pecuniary damage non-conformity?” he asked at a one-day seminar on container demurrage organised by the Institute of Chartered Shipbrokers (ICS) in Accra.
Dr. Mbiah believes that if the system of a service provider goes down and they could be held accountable for it by way of pecuniary damages, then they will ensure that a certain level of efficiency is achieved at all times.
The comments of the former GSA boss sides with that of importers and exporters who have often lamented how delays in the release of cargo documentation, inconsistencies in the Pre-Arrival Assessment Reporting System (PAARS) and frequent system downtimes are tolling on their business, with specific reference to demurrage.
Shippers pay between US$22 to US$48 and US$44 to US$96 per day on demurrages for the 20-foot and 40-foot container respectively.
Shipping lines raked in a total of US$40 million in demurrages in 2010, US$85 million in 2013 and US$100 million in 2016.
These huge sums of monies, according to Dr. Mbiah, are avoidable if the fundamentals of the valuation process are corrected and further proposed a cargo pre-arrival documentation system where Customs could get an accurate description of consignments and begin risk assessments to determine the amount of physical examination that those goods should be taken through.
He said the removal of the burden of demurrage off the shoulders of shippers in the country requires an all hands on deck approach from the various actors within the shipping value chain—shipping lines, shippers, service providers and port authorities.
According to Dr. Mbiah, the high congestion at the ports defeats the very essence of containerisation, worsens port efficiency based on cargo dwell time and affects port rent.
He added: “We have to reach out to importers and exporters and make them understand that that huge sum of monies that goes in demurrages is avoidable.
Consignees will also have to submit genuine documents that will win the trust of the government to reduce the stiff interventions that seek to block revenue leakages at the ports—which usually add to the delays in the cargo movement process.”
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