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Surcharge: Clearing Agents Threaten to Boycott CMA CGM Services

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Seaport
  • Surcharge: Clearing Agents Threaten to Boycott CMA CGM Services

The plans by a foreign shipping line, CMA CGM, to impose congestion surcharge on Lagos ports as a result of what it describes as high operational cost incurred due to the recent strike embarked upon by the Nigeria Labour Congress have attracted threats of a boycott by clearing agents.

On Friday, the shipping line indicated that it planned to impose the congestion surcharge on Lagos ports.

It wrote on its website, “Port congestion at Lagos ports, Nigeria, is currently increasing our operational costs and generating severe service disruption for several weeks.

The firm said with effect from October 15, all importers would prepay $400 for 20-foot container of dry, reefer OOG and bulk cargoes coming to Apapa and Tin Can Island ports.

This, the firm announced, would be in addition to their ocean freight.

The National Publicity Secretary, Association of Nigerian Licensed Customs Agents, Dr Obicee Okonkwo, maintained that the shipping line was not expected to impose arbitrary charges on anybody without due consultation with the authorities involved.

He said, “The people that are going to be directly affected by the charge are the importers, the clearing agents and the final consumers. The charge will make cargo delivery expensive. They can either reverse it or go ahead and risk people boycotting their services.”

In a statement, the Vice president of ANLCA, Kayode Farinto, advised all Nigerian importers to stop shipping their cargoes through the company.

He argued that already, shipping companies were collecting N60,000 administrative charge on all 40-foot containers, despite the contract of affreightment entered into by the importer and the shipping lines abroad and payment of freight.

He said, “We have carefully looked at the proposed congestion surcharge being planned on Nigeria-bound cargo by CMA CGM, which will commence on October 15 and we want to say that, we don’t know why it is being proposed because we don’t have congestion at our ports. There are questions that need to be asked when you talk about placing surcharge on a cargo.

“The first one is contract of affreightment, which has been entered into by the importer and the shipping lines. If you now slam a charge on them called congestion surcharge, the question is: do we have congestion at our ports? The answer is no.”

He said, “Even if there are operational challenges in the port that attract additional cost, does this warrant slamming congestion surcharge on Nigerian-bound cargo? But because they have been doing it and nobody has challenged them, this time around, we are challenging them and we are saying that it is illegal; it negates the Federal Government’s policy on ease of doing business. And we are advising importers not to ship their cargoes through CMA CGM from October 15; they should look for any other shipping line that is not collecting such money.

“This is obtaining money under false pretence, which is a criminal offence, and if CMA CGM goes ahead to collect this charge, we would arrest the managing director of CMA CGM and drag ourselves to the EFCC. Whatever is collected from Nigerian importers would be paid back to them.”

The Coordinator, Save Nigeria Freight Forwarders, Dr Osita Chukwu, also described the surcharge as illegal.

He said, “Any charge without following due process is illegal and people that pay it do not know what they are doing.

“The offence attracts a three-year prison sentence. There is maritime law that regards that as stealing. That is how Ports and Cargo imposed N127,000 royalty on importers but the Nigerian Shippers’ Council directed them to refund the money to people that had paid.

“The process of getting such fee is by applying to government and explaining the reason for the surcharge and until the government approves, they cannot go ahead and charge.”

The NSC has said it is not notified officially of the planned surcharge.

The Executive Secretary of the council, Hassan Bello, said until the council gave a go-ahead, the surcharge remained illegal.

“There is no such charge. There is nothing like that and if there is an intention to do that, it is null and void until they have negotiated with the NSC and until the council gives them the go-ahead, it will be illegal.”

The Director, Monitoring, Enforcement and Compliance, NSC, Mr Cajetan Agu, told our correspondent in a telephone interview that if the charge must be imposed on Nigerians, there was a process for it.

“But we have not received any official correspondent to that effect,” he said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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