On maritime transport value chain (2)

By Adekunle Segun

It has been statistically proven that maritime and shipping cover 90 per cent of world trade in tangible goods. This also implies that 90 per cent of goods traversing the world from one point of origin to another point of destination is carried by one vessel or another. To make this more lucid, commercial goods or tonnages meant for international trade all over the world and carried through various means like air, road, rail and sea transport, have the maritime (sea) arm of merchant shipping taking a mammoth chunk of 90 per cent of this trade. Does this call the attention of most developing economies including Nigeria?

Majority of countries in Africa have a very extensive EEZ (Exclusive Economic Zone). A country’s EEZ is the standard maritime territorial border area of that country. It is the internationally agreed measurement of any country’s exposure to the world’s water and, by extension, seaborne trade. Let’s take Nigeria as a case study. Nigeria currently has an EEZ of 200 nautical miles from the base lines in which the length of the territorial waters is measured. Nigeria’s territorial waters is currently measured 200 nautical; this means from our coastline as a country out to about 200 nautical miles into the Sea belongs to Nigeria. This is to tell us that we have very strong maritime potentials which if not adequately and professionally explored could see Nigeria just dancing in a bubble of its EEZ while other countries, continents and ship owners reap the benefits therein.

The question now is what are the factors required to be in place to get our full potential as a maritime destination and hub? Various factors, though universal, drive all shipping and maritime businesses. Without these factors in place a country with so much comparative advantage like Nigeria will not reap the gains that herald such a lucrative but capital intensive industry.

One very crucial factor in the merchant shipping industry or family is the concept of classification, or what is generally called classification societies. It is very saddening and shame facing that till date Nigeria and other developing economies do not have an indigenous classification society or apparatus to protect her few vessel owners and, by extension, her merchant shipping trade. Classification Societies are licensed by the flagstate or maritime regulatory bodies of various countries to issue and classify ships that are consequently recognized by the government of that country or the flagstate as a subject. These certificates define the vessels that are classified as being in alliance with various codes of the international merchant shipping practice. They define and certify maritime facilities based on their design structure and safety standards. These classification societies or maritime classification societies came on board due to the need to continually ensure the safety, security and turnaround operations of maritime businesses.

A brief, cursory observation of the classification part of maritime business reveals that most developing economies do not have flagstate certified or government recognized classification societies. While owning and running a classification society requires some highly technical and skilled input from the home country, it is not out of the purview or beyond the reach of most countries with very strong maritime potentials in seaborne trade. These days, most if not all developing countries are subjected to the whims and caprices of the shylock approach to maritime business by vessel owners from other developed parts of the world. The main problem is that without making conscious efforts or approach to leave the jaws of these owners, developing economies may never come to their full shipping potentials.

Let us take a look at a vessel sailing into a country’s waters as described earlier and giving conditions on which or what type of facility would be allowed to do business with her? The vessel in question is laden with cargo bound for a specific port or country where she has sailed to but on getting to her disport she suddenly started rolling out conditions on which or what type of vessel or port that will be allowed to do business with her, and when this starts, a lot of facility owners and business persons are the ones that suffer in the process. It puts a lot of strain on indigenous vessel owners. There is also an adverse effect on the overall value chain process of the business. However, if developing economies have their own classification society, amongst other factors, such approach will provide the needed ease of doing business to the ship owners of that country.

One other factor we need to observe closely is the recently promulgated African Continental Free Trade Area (AFCTA), a strategic framework to help Africa deliver on her trade goals for her countries. However, the question we need to ask ourselves is how will this document come to live without a vibrant shipping industry or maritime trade? If a maritime trade or giant is to be erected then there is an urgent need to put up an African type of classification society that will encourage trade with sister countries in Africa. I still find it unimaginable that a vessel trading in Nigeria or West Africa will have to be classified by a classification society in another part of the world; and this means such vessel will be subjected to the dictates of that regulatory authority.

However, if African countries or developing economies can come together and have their own classification society amongst other trade significant regulatory bodies, then business will thrive unhindered. A situation where vessel owners in Nigeria or other parts of West Africa have unfettered access to certain level of businesses due to an unhindered acceptance of their vessels to do the business of transhipping or trans-loading with other vessels owned by fellow Africans, amongst other nationalities, allows an easy flow of raw material and finished goods, moving in a supposed seamless way; as far as all countries in the trading business adhere to the codes of their classification societies.

My parting shot here is very simple. The stronger a country’s maritime fleet, the stronger her ability to have world maritime policies go in her favour. At any maritime roundtable, the population or government of a country is not the major topic; rather it is the extent of facilities ownership and participation that determines the decision to be made. In other words, he that pays the piper calls the tune.

So, a lot of factors determine the strength of the merchant shipping fleet of various countries. Shipping and maritime business extends beyond putting a vessel on the surface of the ocean. Certain factors and regulations need to be on ground to ensure the continuous operation and steady increase of such fleet and trade volume. Other factors I intend to discuss in subsequent articles include publications, waterways protection and crewing.

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•  Adekunle Segun is a maritime professional…He writes from Lagos; Nigeria…