Dissecting the new Shippers’ Authority Act

Ghana’s parliament last month passed the new Ghana Shippers’ Act 2024, amending its 50-year old establishment law, the NRCD 254 (1974).

Per this legislation, the state institution is seeking an extension of its mandate to include the regulation of commercial shipping, with the gross aim of managing the cost of doing business in our ports.

The new law has been no stranger to the august house though: twice it was shipped for speedy and covert passage but got thrown out on the grounds of insufficient and non-conclusive stakeholder engagements.

It therefore comes as little surprise that it has finally seen the light of day on its third asking, albeit bereft of the concerns of some stakeholders at the crux of the shipping business: customs agents, freight forwarders, shipping lines and their agents.

Securing ‘biting powers’ to sanitize the country’s shipping, haulage transport and allied services is not a bad idea in itself; however, given the all-encompassing nature of the new legislation and the specified problems it is seeking to put in check, one had expected its enactment to engender cohesion by addressing the real issues on the ground within the value chain, whilst prioritizing the collective interest of all businesses within the space.

Sadly, this is something that proponents of this new legislation have failed to achieve; thereby making the mantra of “serving the interest of all stakeholders [paraphrased]” as the stated object of the law, regrettably flawed.

Trader associations and players in the local production value chains seem unsurprisingly okay with the law, presumably because they have found the right chord to strike to drive down the cost of doing business in the port community.

It is equally expected of them to extend same unfading commitment to their obligations relating to the enforcement of this law; and may the excitement not merely be girded on the assumption that they now have a weapon to fight what they have often described as ‘rip-offs’ and/or ‘arbitrary charges’ from service providers in our ports: specifically shipping lines, freight forwarders and customs house agents.

Pervasive allegations of ‘extortion’ and illegal charges have become so much of a signature tune on the lips of the shipping public, particularly those on the importing side of the business and it is of little wonder that the trading fraternity have largely rallied behind the new law.

Close to a decade ago, complaints of high cost of doing business in our ports were linked to limited port capacity, bureaucracies in customs valuation procedures, and, in most cases, shippers trying to push a trick on the system only to trapped in the process of doing so—incurring excessive costs that were totally avoidable.

Recent investments in terminal infrastructure, streamlined valuation processes and automation of port transactions have hugely reversed the situation.

For example, it is now possible for importers with the right documentation to move their consignment out of the port in less than four working days.

That’s why it is unacceptable for importers and exporters to get entangled with same cost-laden practices, and lay the blame squarely at the feet of shipping lines and allied service providers.

Now away from that, a careful diagnosis of this legislation evokes some germane concerns: for instance, there are provisions that must be clearly defined to all stakeholders in the shipping and maritime trade sector.

Shipping lines and others considered to be the crux of the business are unclear about how some provisions—as espoused in the law—would be applied; begging the question whether the new law considered the holistic interests of all industry players, and whether it does not only serve the interest of a fraction of port actors at the expense of others—the latter is quite obvious.

In the shipping side, for example, clause 3(1d) of the new law underlines the functions of the Shippers’ Authority to “represent the views of shippers on the structure of a freight rate; the availability and adequacy of shipping space, and the frequency of sailing of ships and port charges, etc.

This begs a number of questions: is the authority now going to negotiate freight rates for each shipper in what is purely a transaction between the importer/exporter, the shipping line and the agent?

Are they now also going to negotiate space for cargo on behalf of shippers, when they are not legally included in the contract of carriage? Or it will now dictate the frequency with which these privately-owned vessels call our ports?

Also, regarding port charges, how is the authority in its assumed position as the regulator of the port business, going to determine the cost of the port leading to them negotiating or setting tariffs?

What happens to the existing GPHA law, and to the private concessionaire Meridian Port Holdings? Is GSA going to overrule the return-on-investment calculations used for the investments in MPS Terminal 3?

There is also a conflict of interest situation in (1s) of same clause 3 which tasks the GSA to “resolve disputes in commercial dealings between shippers, shipping service providers and regulatory agencies at the port”.

This provision gives the dual role of facilitator and regulator for all parties on one hand; and an advocate pursuing the sole interest of shippers.

Furthermore, Clause 37 highlights glaring discrimination against specific stakeholders in the industry.

It states “a carrier [shipping line] operating in the country shall pay a levy of two percent of the gross freight value of a shipment to or from the country to the authority [GSA]”.

This levy singles out only carriers—shipping lines—being one of several stakeholders in the business when the enforcer seeks regulatory oversight over all parties in equal measure.

It’s quite baffling that this proposed levy is not tied to any specific services to be rendered.

Let’s now switch attention to the legal overlaps and duplication of functions in the freight forwarding and goods clearance side. Although the new GSA law only repeals the NRCD 254, which obliged the Shippers’ Authority to importers and exporters, it appears to overrule existing legislations that supervise the conduct of business in the entire maritime, shipping and logistics value chain.

The freight forwarding and customs brokerage business, for instance, is supervised by the Customs division of the Ghana Revenue Authority, with the enactment of the Customs Act 2015 (891) and L.I 2248 which are currently being applied in full force. However, section 26 of the proposed law contains requirements for registration of key industry stakeholders, including customs house agents, which is an obvious duplication of functions.

Others are asking why the Shippers’ Authority will need to register all shippers and shipping services providers when it already has access to ready data from ICUMS.

Aside that, most these businesses are tied to similar obligations as stated in the Ghana International Trade Commission Act (926). To them, registering with multiply state agencies—with renewable fees and charges—poses an additional bureaucratic layer to business conduct without any identifiable benefits.

Suffice to say that the Ghana Shippers’ Act, as enacted by parliament last month contains much broader amendments than the abridged version that the sector ministry led the few consulted stakeholders to believe.

And due to the rushed manner, in which the bill was passed, gave no chance for all parties to present their concerns, resulting in the exclusion of views and interests of many important stakeholders from the considerations that undergirded the bill as passed.

The universal language of trade is negotiation; therefore, engaging one faction of the shipping industry to build a collective front against another group that are perceived to be holding the business to ransom will be the all-in-one solution to the malady in the port, is not the way to go.

By Patrick Paintsil, a certified international trade policy analyst, a media consultant and content creator.

Source: Newscenta