Transcript THE BASICS OF CHARTER PARTIES

The case for an African
fleet and Pan-African
cabotage regime
Andre
OVERVIEW
What is cabotage?
What are the drivers for cabotage
How to implement cabotage
Challenges to cabotage and own-ship registration
Why Pan-African?
Case studies and lessons learned:

Nigeria

Australia
Where to next?
WHAT IS CABOTAGE?
Restriction of the operation of sea, air, or other
transport services within or into a particular
country to that country's own transport services

Coastal routes

Port to port
WHAT ARE THE DRIVERS FOR CABOTAGE?
African Maritime Transport Charter and AIM 2050
Development of own shipping fleet
Lower transport costs
Saving on road transport, maintenance
Prevent outflow of foreign currency (FOB / CIF problem)
Create employment
Stimulate economy through ancillary services
HOW TO IMPLEMENT A CABOTAGE REGIME
Legislate for the carriage of coastal cargoes and
maritime services by own ships
Create other incentives for own fleet registration
such as:





Taxation
Preferential berthing
Pilotage exemption
Insist that State-owned cargoes be carried by own
ships
Export cargoes sold on CIF terms and import cargoes
bought on FOB terms
CHALLENGES TO CABOTAGE AND OWN
SHIP REGISTRATION
Insufficient cargoes
Double handling of cargoes
Uncompetitive taxation laws
High start-up and running costs





Ship finance
Bunkers
Management and operations
Taxes
Crew
Mainly outward bound bulk cargoes – own ships must
compete internationally
Restrictive labour laws
Insufficient trained seafarers
WHY PAN-AFRICAN CABOTAGE?
Economies of scale leading to lower transport
costs
Force the pace of infra-structure development
Create employment
Prevent outflows of foreign currency
More cargo to justify a cabotage regime, provided
the cargoes can be traded


Intra-African trade is on average 10 – 12 per cent, BUT
Very significant for some countries
CASE STUDIES AND LESSONS
LEARNED
Nigeria:

Coastal and Inland Shipping (Cabotage) Act 2003

Annual traffic of about 152 million metric tonnes of both oil and nonoil cargo, worth over $5 billion in freight earnings

“…critical piece of legislation has failed woefully in meeting
expectations…” and “There is no political will to implement it…”

Blaming NIMASA

Taxation laws and NIMASA 3% levy

Financing and infra-structure limitations
CASE STUDIES AND LESSONS
LEARNED
Australia:

The Coastal Trading (Revitalising Australian Shipping) Act 2012

Carriage between ports in Australia, but excludes passengers and
transhipment cargo

Permanent cabotage licences for local ships and 12 month
temporary licences for foreign ships
AUSTRALIA RESPONSE
Australian Deputy Prime Minister, Warren Truss:
AUSTRALIA ISSUES
Local wages having to be paid to foreign seafarers pushing
costs high
Too much red tape
Loss of sea freight to road and rail
Suggestion that domestic cargo "incidental" on
international trips be exempt or alternatively that local
wages apply to seafarers carrying local freight for a period
of at least 60 days a year
WAY FORWARD AND CONCLUSIONS
Comprehensive economic study of intra-African trade and
justification for cabotage
Significant ALIGNED incentives for African shipowners –
legislation, taxes, pilot exemption, preferential berthing…
Ensure that we have properly trained seafarers and that
their wages compete internationally
Ensure labour legislation for seafarers not a disincentive
Reduce red tape – user-friendly legislation and easy
registration subject to internationally accepted standards
Reduce waiting times and ensure infrastructure adequacy
Keep costs down!
CO-ORDINATED Pan-African response
Thank you
Andrew Pike
www.vpnlaw.com