Home Maritime Drop in import volume: Shipping lines, Agents to lose job

Drop in import volume: Shipping lines, Agents to lose job

There is serious lull in  the activities of the nation’s shipping sector following geometric drop in imports barely two months running, findings  by experts have revealed.
Business and economy analysts interviewed attributed the development to the restriction of 41 items from foreign exchange allocation by the Central Bank of Nigeria (CBN) effective fourth quarter of 2015,
The drop in cargo volume at the ports seems to have hit clearing agents badly as many are now scouting for other means of livelihood.
While some have turned their cars to commercial transport service popularly known as ‘kabu kabu,’ some others have resorted to doing menial jobs far away from where people would recognise them, in a bid to survive the prevailing economic hardship.
On the side of shipping lines, investigation also show that volume of imports have forced many of the firms to start considering imminent reduction of their respective workforce.
Reviewing the job loss in an interview, President of the National Council of Managing Directors of Licensed Customs Agents, Lucky Amiwero, said recently that many customs agents had lost their jobs and relocated to their hometowns.
According to him, many offices have been closed down while those who have not relocated cannot even afford the transport fares to come down to the ports anymore.
“This is an import-dependent country; so, the restriction of forex for the importation of 41 items by CBN has really affected port activities. We hope the government eventually reviews the restriction. This last quarter has not been impressive”, he lamented.
Apapa Chapter spokesman of Association National Licensed Custom Agents (ANCLA) also harped on fears that some agents may turn to crime if something is not done fast by the government.
Already, Danish shipping and offshore energy conglomerate Maersk Group recently delivered a profit of USD 118 million in the second quarter of 2016, compared to USD 1.1 billion seen in the same period a year earlier, negatively influenced by the average container freight rates and oil price.
Maersk’s underlying profit was at USD 134 million for the quarter, down from USD 1.1 billion reported in the same period last year.
The company added that the underlying profit was “significantly lower” for all businesses except Damco.
The group’s revenue decreased by USD 1.7 billion or 16 percent compared to the second quarter of 2015, predominantly due to 24 percent lower average container freight rates and 26 percent lower oil price. This was partly offset by 6.9 percent higher container volumes and 8.2 percent higher oil entitlement production.
“The result is unsatisfactory. Cost reductions and operational optimizations, however, made a significant contribution to mitigating the impact of the negative market conditions,” Maersk Group CEO Søren Skou said.
He added that the group’s expectation for 2016 of an underlying result “significantly below last year is unchanged.”
Due to its low growth and returns the group’s Board of Directors has during the second quarter initiated a process to develop and consider the strategic and structural options for Maersk to further increase agility and synergies.
“Until the ongoing strategic review is finalised, the group strategy remains unchanged as previously communicated with a strategic direction of targeting profitable growth through business optimisation and value-enhancing acquisitions, cost efficiency programmes and a strong customer focus to maintain top-quartile performance in all business units,” Maersk said.
Due to challenging market conditions, the group’s subsidiary Maersk Line reported a loss of USD 151 million for the period, compared to a profit of USD 507 million seen in the same quarter of 2015.
Revenue of USD 5.1 billion was 19 percent lower than in the second quarter of 2015, driven by the decline in average freight rates to 1,716 USD/FFE from 2,261 USD/FFE, partially offset by a 6.9 percent increase in volumes to 2,655k FFE.
The company said that the freight rate decline was mainly attributable to lower bunker prices and weak market conditions, as container freight rates declined across all trades. North America and West Central Asia declined the most but African, Oceanic and European trades were also notably lower, the company added. The decline in North American average rates reflect increased competition, but is also impacted by increased backhaul volumes at lower rates in the second quarter of 2016. West Central Asian, Oceanic and European trades were impacted by market imbalance whereas African trades were mainly impacted by weak demand.
Recognised freight revenue dropped to USD 4.5 billion in the period from USD 5.6 billion reported in the same quarter in 2015.
The group’s APM Terminals also experienced a decrease in its profit from USD 161 million to USD 112 million. APM Terminals’ profits remain under pressure, as terminals in oil dependent markets face declining volumes and commercially challenged terminals in Latin America, North-West Europe and Egypt have not regained business to compensate earlier lost services, the company said.
APM Terminals’ operating businesses generated a profit of USD 123 million, compared to USD 169 million seen in the same period a year earlier.

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