Demystifying the claims of rip-offs and arbitrary charges at the ports

The recently passed Shippers Authority Act, now two months old, has ignited a wave of mixed reactions from key players in Ghana’s shipping and trading sectors.

While some local manufacturers and small individual shippers have welcomed the legislation, anticipating significant reductions in port costs and fees which is very debatably due their understanding and appreciation of the real cost drivers, service providers have raised concerns about potential flaws in the law that could undermine its intended objectives.

Some industry stakeholders, who were consulted during the drafting of the legislation, are now sounding alarms over what they describe as “hidden provisions”—clauses they claim were not fully disclosed during initial discussions.

Following the law’s enactment, officials from the Ghana Shippers Authority (GSA) appeared on GPHA’s Eye on Port program on September 1, 2024, creating a perception that the new law is targeted at one player in the industry—Shipping lines/agents—a very unfortunate situation considering Ghana’s drive for foreign direct investment.

This has led to fears that the government may have overlooked the importance of consulting shipping line/agents in understanding their operations. Critics argue that better collaboration could have addressed some of the perceived concerns and avoided sending potentially damaging signals to international investors.

A key issue centers on shipping lines that are legally registered under the Ghana Companies Act and the Ghana Investment Promotion Centre’s (GIPC) Investment Code. Industry observers suggest that engaging these shipping lines/agents in a structured manner would help build confidence among foreign investors, ensuring a more collaborative and prosperous industry for all stakeholders.

Yet, there are loud claims from some quarters that shipping lines/agents are primarily interested in making excessive profits through arbitrary fees. These allegations could be traced in the new law, which aims to regulate the cost of doing business at ports, but failed to adequately consider concerns from certain critical industry players.

At the heart of the new legislation is the intent to regulate fees like freight rates, vessel calling into Ghana ports and shipping charges. However, shipping industry experts note that these charges are globally established, and while their exact amounts can be up for negotiation with shippers who are customers to shipping lines/agents, the charges are not unique to Ghana. These fees, critics argue, are not arbitrary costs imposed on Ghanaian importers and exporters, but standard industry practices worldwide.

In a closer examination of these charges, several key components are discussed, including container administrative fees, container cleaning fees, detention fees, and demurrage. These charges, often described by Ghana shippers Authorities and some Customs House Brokers as arbitrary or unjust, are standard fees in all global shipping jurisdictions.

For example, administrative charges or what is termed in other jurisdiction as release fees for both imports and exports are often questioned. However, industry insiders argue that these are simply standard fees—akin to freight or port charges—and are applied fairly across various shipping jurisdictions.

Similarly, the container cleaning fee compensates shipping lines for the cost of delivering clean containers to shippers, who then have a responsibility to return the containers in good condition after use.

Another controversial fee, the container deposit, is a refundable amount taken by shipping lines to ensure the safe return of rented containers. And while the much-debated demurrage fees have drawn the ire of shippers, experts note that such fees are easily avoidable if containers are returned within the agreed-upon timeframe.

An analysis of port charges from various international shipping hubs confirms the legitimacy of these fees. For example, data from the Port of Felixstowe in England reveals that cleaning fees range from £150 to £425 per container, depending on the cleaning method used. Such charges, although contentious, are common across ports worldwide.

Further complicating the issue is the highly volatile nature of shipping costs, with factors such as ocean freight rates, currency fluctuation and bunker surcharges capable of changing at a moment’s notice. Shippers, however, have access to freight benchmarking tools that allow them to compare rates and ensure charges are in line with global market trends.

In terms of registration, shipping service providers are already licensed by several state agencies, including the Ghana Ports and Harbours Authority (GPHA), Ghana Maritime Authority (GMA), and GIPC.

Furthermore, the GSA’s attempt to introduce a cargo-sharing formula—an outdated practice due to anti-competition laws—has also raised eyebrows. Industry experts argue that this formula, which ceased years ago, is unnecessary in today’s competitive environment. The cargo sharing of 40-40-20 ceased to exist many years ago, and shipping lines today have sales and marketing units to canvas for own cargo, and experts have therefore questioned why such an obsolete practice has been captured in a future-looking bill.

Shippers may not be aware, but currently shipping lines are charged US$2.00 per ton for imports and US$1.50 per ton for export, excluding diplomatic and military cargo. The question is what service GSA provides to levy this charge? Records show that in 2023, nine shipping line/agents alone paid nearly $9.3 million to the Ghana Shippers Authority in the form of levies for no direct service to them.

In the midst of these developments, the Ghana Shippers Authority has moved to impose a two-percent tax on gross freight—without prior consultation with shipping lines. This additional tax, if implemented, will likely be passed on to importers and exporters, further inflating the cost of doing business at Ghana’s ports.

Shipping lines and their agents, many of whom are significant foreign investors, contribute heavily to the Ghanaian economy through taxes, job creation, and corporate social responsibility projects. They have also invested in infrastructure projects, including eco-friendly office buildings aside contributing to the port infrastructural development funds, which are designed to support Ghana’s maritime future, this obviously is a contribution of all players indirectly to maritime development.

Despite these contributions, the industry is battling a perception that shipping lines are solely interested in profit. This narrative, experts argue, overlooks the crucial role these companies play in maintaining the country’s maritime infrastructure and supporting its economic growth through calling of our port on regular basis.

Ultimately, while the new Shippers Authority Act was intended to streamline the cost of doing business at Ghana’s ports, it has opened up a wider debate about the need for more inclusive dialogue between the government, shippers, and shipping lines. Without further engagement, critics warn, the law could inadvertently stifle the growth of a sector vital to Ghana’s international trade ambitions.

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