The 1% Freight Stabilisation Fee: A Catalyst for Economic Growth and Port Competitiveness

Dr. Bukola LAWAL
By Dr. Bukola LAWAL
Fellow, Institute of Chartered Shipbrokers
Maritime Econometrician
The proposed 1% Freight Stabilisation Fee (FSF) by the Nigerian Shippers’ Council (NSC) presents an opportunity to drive economic growth and enhance port competitiveness.
However, for this initiative to achieve its intended benefits, it is essential to ensure the fee does not burden shippers and end consumers. If there is any risk of cost transfer, it would be better for the government via Nigerian Shippers’ Council and other stakeholders to explore facilitative measures, such as increasing revenue through more trade-friendly approaches, optimizing the I-Cargo Tracking Note system, in order to enhance trade while minimizing disruptions.
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Economic Impact: Unlocking Growth While Avoiding Cost Burden
1. Revenue for Sustainable Regulation
The FSF is designed to provide the NSC with the financial resources needed to improve port operations, ensure effective regulation, and address inefficiencies. With these improvements, Nigeria’s maritime sector can experience sustainable growth without imposing additional costs on shippers.
2. Infrastructure Development to Offset Costs.
Revenue from the FSF can be channeled toward improving port infrastructure and services, such as reducing cargo clearance delays, enhancing automation, and resolving logistical bottlenecks. These improvements will lower operational costs for shipping lines, enabling them to absorb the FSF without passing the burden onto shippers.
3. Collaborative Approach to Cost Absorption.
Stakeholders must work together to ensure that the FSF is absorbed as part of operational budgets. To facilitate this, the NSC should introduce incentives for shipping lines and operators who comply, such as tax reliefs or discounts on other port-related charges.
4. Leveraging Alternate Revenue Streams.
If there is any indication that the FSF could impact shippers or consumers, the NSC should consider boosting revenue through more facilitative measures. One key option is optimizing the already approved I-Cargo Tracking Note (ICTN) system. By leveraging technology to track imports and exports more effectively, Nigeria can generate more significant revenue without adding to the cost of trade when there is more volume of trade.
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Competitiveness in the Regional Port Market*
1. Transparent Use of FSF Revenue.
Transparency will play a crucial role in ensuring the success of the FSF. The NSC must periodically publish detailed reports on how the funds are used to enhance infrastructure, improve operational efficiency, and reduce turnaround times. Clear benefits will justify the fee and increase stakeholder confidence.
2. Regional Competition
Nigerian ports compete with neighboring ports in Ghana, Togo, and Benin Republic, which are often favored due to lower costs and faster service. The FSF must be implemented alongside strategic investments that directly enhance Nigeria’s competitive edge, such as port automation, expanded capacity, and streamlined processes.
3. Incentivizing Compliance
Shipping lines should be incentivized to absorb the FSF, ensuring it doesn’t trickle down to shippers. Discounts on port dues or operational rebates tied to efficiency improvements could encourage compliance and prevent cost transfers.
4. Preventing Trade Diversion
By utilizing FSF revenue to drive tangible improvements in service delivery and trade facilitation, Nigeria can reduce the risk of cargo diversion to neighboring ports, strengthening its market share in the region.
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Facilitative Measures to Complement the FSF
If it becomes clear that the FSF could burden shippers or consumers, alternative approaches to increase revenue and improve trade facilitation should be prioritized:
1. Optimize the I-Cargo Tracking Note (ICTN):
The ICTN system can be enhanced to provide real-time tracking of imports and exports, increasing trade transparency and security.
This system can generate substantial revenue for port authorities while improving trade data accuracy and reducing fraud, without additional costs to shippers.
2. Simplify Port Charges and Levies:
The government can consolidate or reduce overlapping port charges to balance the financial impact of the FSF, ensuring overall cost neutrality for traders.
3. Enhance Digitalization and Automation:
Investing in port automation will reduce inefficiencies, cut operational costs, and increase cargo throughput, allowing ports to remain competitive without transferring fees to shippers.
4. Engage Stakeholders in Revenue Generation Strategies:
Collaborative dialogues with shipping lines, freight forwarders, and other stakeholders can identify innovative revenue sources that don’t affect the cost of trade.
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A Call to Action for Maritime Professionals and Stakeholders
The 1% Freight Stabilisation Fee is a bold initiative with the potential to transform Nigeria’s maritime sector. However, for it to succeed, its implementation must ensure that the fee does not burden shippers or end consumers.
Transparent management, collaborative cost absorption, and the exploration of facilitative revenue streams like the already approved I-Cargo Tracking Note system will be critical to achieving this goal.
By investing in infrastructure, improving efficiency, and adopting trade-friendly measures, Nigeria can position its ports as competitive regional hubs. This will enhance trade, attract investments, and create a more robust maritime economy.
Together, we can ensure that the 1% FSF becomes a cornerstone of progress in Nigeria’s maritime sector—one that drives growth, enhances competitiveness, and facilitates trade without adding to the cost burden of shippers or consumers.*
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By Dr. Bukola LAWAL
Fellow, Institute of Chartered Shipbrokers
Maritime Econometrician