FEDERAL government agencies in Nigeria’s maritime sector are obviously jittery and strategising on managing the drop in their yearly revenue due to the outbreak of the Corona Virus in China.
The contagious deadly virus which has crippled business activities in China and killed thousands of its citizens would deal a devastating blow on the Nigeria Customs Service and its self-imposed N2 trillion 2020 revenue target.
Port sources hinted National Light that the level of imports arriving Nigerian port is drastically dropping, as most importation into Nigerian ports are from China.
Already, port calls to China are becoming less frequent, as fear of catching the corona virus and a slowdown in the Chinese economy have deterred cruise liners, container ships, oil tankers and bulk carriers alike from stopping at the country’s harbours.
Commercial vessels have stopped arriving, with port calls falling by an estimated 30 per cent in February, and container throughput estimated to decline by between 20 and 30 per cent, according to Clarksons – a shipping research company.
Seven of the world’s 10 largest container ports are in China, including Hong Kong.
This will also have a negative effect on Nigerian Ports system with fewer vessels coming into the port, and port revenues are expected to drop.
Also, vessel owners expect delivery to be delayed. Nine of the 19 Chinese shipyards surveyed by Clarksons put their yards on complete suspension on February 14, with none at full production
Chinese shipping lines like Cosco and the financial leasing arms of the country’s biggest banks are collectively the second-largest vessel owners on the planet, which underscores their aggressive leasing activity over the past decade to carry the nation’s share of global commerce
A highly placed customs officer at Nigerian customs confirmed to our Lagos City Editor that “The Customs for now is siting down, trying to access how things would go, you cannot just bring up strategies without studying the situation”
“Importers coming from China are being quarantined. Most imports into Nigeria are coming from China, and we are watching, trying to understand the situation”
“It has not affected our revenue much so far, this is February, the containers sent last year have not finished arriving, so the effect is not going to be immediate, it is going forward, importation takes time. From the time that importers go shopping, then shipment, then before it gets here”
“It is not everywhere in China that is affected, and Wu Han is not even a major trade centre, but global attention is now being given to China”
“We don’t have problems yet because containers coming in right now are those which were ordered since last year and for past two months, they were dated to arrive January, February”
“Most companies in China are shut down for the moment in order to prevent workers getting exposed to the deadly virus” the officer said
Apart from the delivery delay, China’s vessel owners and shipping lines are facing difficulty finding crew, as sailors and officers from mainland China must follow quarantine regulations that apply at every port call, adding complexities and delays.
China is the second-biggest source of maritime crew, behind only the Philippines, and ahead of India, Greece and Eastern Europe, according to data by the Hong Kong Ship Owners Association (HKSOA).
The world’s second-largest economy, China accounted for 14 per cent of all containerised cargo exports last year, 23 per cent of seaborne crude oil, 35 per cent of dry bulk shipped, 18 per cent of liquefied gas and 72 per cent of all seaborne iron ore.
That has taken a drastic turn, as the coronavirus outbreak gathered pace in February. Crude oil tankers have stopped sailing for China since the start of the month, compared with 3.42 billion ton-miles every day on average last year, according to satellite data provided by Vessels Value.
Shipments from the Middle East, China’s largest source of the commodity, were 280 million deadweight tonne cargo miles on February 5, a mere 12 per cent of the 2.32 billion DWT-mile shipped on the same day in 2019, according to shipping analytics firm Drewry, who note that global freight rates dropped 4.1 per cent in the second week of February, declining another 5.8 per cent this week.
That would put significant “stress” on port revenue if the low volume continues beyond March, because most European and Middle East ports have significant exposure to China, according to Fitch Ratings Agency.
Many of the world’s largest container shipping lines, including the Mediterranean Shipping Company (MSC), AP Moller Maersk, CMA-CGM and Hong Kong’s own OOCL have all cancelled their cargo routes from Asia to Europe and North America in recent weeks.
The shipping industry has already struggled with the switch to low sulphur fuels as mandated by IMO 2020, which prohibits sulphur exhaust. Uncertainty about the availability of low sulphur fuels and their cost has led to a number of cargo lines to fit their ships with “scrubbers”, which remove sulphur from ship’s exhaust. Clarksons estimated that 77 per cent of all such refits were being done at Chinese shipyards.