How to reduce chance of custom cargo fines in West African ports: Skuld

Skuld has noted in a web alert that custom fines for discrepancy between quantities manifested and the final stevedores’ figure have been a potential issue for bulk vessels trading in West African countries, especially in countries such as Benin, Togo and the Ivory Coast, which have a high demand for imported bagged commodities like sugar or rice.

Skuld has provide information on fines that can be imposed on vessels calling at Lomé, Cotonou or Abidjan and its recommended best practices to avoid delays upon completion of discharge.

Skuld said that bulk vessels discharging bagged cargo in Lomé, Cotonou or Abidjan often received a message from their agent on arrival stating that the agent would need to provide a copy of the cargo manifest within 24 hours after the vessel’s arrival and that, in case of discrepancy between the quantity manifested and the final stevedore tally’s figure, a custom fine would be imposed.

The vessel’s agent is responsible for the payment of the fine on behalf of the vessel. It is common therefore, before completion of discharge, to receive a request for the issuance of a letter of undertaking (LOU) to cover the amount of the potential fine. The LOU request would be based on the estimation of the potential fine plus a usual uplift.

In Togo, for example, the fine would be calculated based on the local market value estimated by local customs plus the difference accounting for the duties that should have been paid (on average 30% on the market rate) plus a fine.

Before 2013, no amendment could be made by the vessel agent once the quantities manifested were declared to the customs upon vessel’s arrival. If any discrepancy between the quantity manifested and the final stevedore’s figure was found upon completion of discharging operations, a fine was imposed. However, in 2013 the main Togolese vessel agent association and the Togolese Customs reached an agreement allowing the vessel agent to amend the declared cargo manifest up to 48 hours after vessel departure for bulk vessels. This allowed for more flexibility and reduced substantially the number of custom fines.

A similar article in the Benin custom code states that within 24 hours of the vessel’s arrival, a summary declaration of the cargo manifest has to be presented to customs by the vessel’s Master or his agent.

In the absence of an agreement such as that reached between vessel agent and customs in Togo, in Benin, once a declaration has been recorded, no changes are allowed.

In Ivory Coast the Master is liable for any error in cargo manifest declaration and a fine is imposed in case of discrepancy between the quantity manifested and discharged. As in Togo and Benin, the local practice was for the customs to consider the stevedores’ tally as final figure.

Given the short time allowed to amend the information, and given that bulk vessels can spend more than a week discharging bagged cargo and even longer during the rainy season, it was very difficult for the vessel agent to amend the declaration on time, said Skuld.

Since the vessel agent was the sole responsible party towards customs for payment of the fine on behalf of the ship, agents would require a vessel’s P&I or his local representative to set up a letter of undertaking (LOU) for the full amount of the potential fine, plus the usual uplift.

While the agent would need to spend time and costs to lawfully arrest the vessel, the vessel out clearance would usually not be given before the LOU is received, thus causing potential delays and a subsequent potential claim for loss of time between Owners and Charterers.

Skuld said that good practice would still be to:

  • Ask the vessel agent to confirm in writing in advance all latest customs requirements before calling West African ports to discharge bagged cargo.
  • Appoint a protecting agent to double-check the stevedore’s tally. Although the sole final figure taken into account by customs is the stevedore’s tally, appointing a protecting agent to supervise the discharging operations could be helpful to control potential irregularities.
  • Ensure that the Master contacted the vessel’s P&I or the local correspondent immediately when there was a risk of fine: anticipation would be the key to avoid delay in vessel’s departure after completion of discharge.

Skuld said that as the time used by local customs authorities to negotiate the amount of the fine could vary, it was important to liaise with the local correspondent to get updates from the vessel’s agent and the customs authority as to when the final amount had been negotiated, and to request a receipt a release after the fine had been settled.

Owners and Charterers can also negotiate the issuance of LOUs for customs fines related to manifest discrepancies in back-to-back charterparties.

Finally, Skuld noted that, while the vessel agent would first request a LOU from the vessel’s Owners’ P&I club, he or she would usually also agree for the LOU to be issued by a well-established local correspondent instead. The agent can alternatively agree to get a LOU from the Owner or the Charterers.

France P&I assisted Skuld in the writing of this piece.