Shipping lines charge for services in Ghana cedis – SOAAG refutes claims

The Ship Owners and Agents Association of Ghana (SOAAG) has refuted accusations from freight forwarders and traders that shipping lines were violating the Bank of Ghana’s (BoG) regulations by charging for their services in US dollars.

Adam Imoru Ayarna, an Executive Member of SOAAG, responded to some concerns raised by the freight forwarders, noting that “there is a distinction between pegging something in dollars and charging in dollars.”

Ayarna clarified that such accusations need to be understood in the correct context.

He explained that freight is not the local agency’s income but is collected on behalf of a foreign principal based on their contract with the shipper.

“When it comes to freight, it will be pegged at a certain rate and invoiced in dollars; the containers do not belong to the shipping agents; that revenue is for the principal. I am providing you with this container, and this is what I will charge. It arrives in Ghana, and the law mandates that we charge in Ghana cedis. If it is not pegged to the dollar, how will it be converted to an exchange rate? That is why I say that pegging something in dollars and charging in dollars are two separate things,” he added.

He questioned how the BOG would determine the value of the country’s imports if they did not use an exchange rate to convert it, emphasizing that a certain measure must be used for conversion.

“If I am a trader and I have purchased something and am returning to buy it, will I use the cedi? I must use a specific rate to convert it to determine the amount to buy,” he emphasised.

Regarding compliance with the provisions of Regulations Five of the Ghana Shippers’ Authority Regulations, 2012 (L.I. 2190) on the negotiation of charges, SOAAG noted that the setting of rates is independently done by shipping lines.

The regulation requires the GSA to negotiate on behalf of shippers with associations of shipping service providers, shipowners, shipping lines and agents, port charges, terminal and shore handling charges, charges of freight consolidators, and charges for receipt, among others.

“We have made it clear that when it comes to setting rates by various ship agents, it is done independently because each has a different cost base. So how could the association they belong to, SOAAG, and stakeholders negotiate with GSA on their behalf?” he questioned.

The SOAAG Executive Member stated that just as the GSA does not group shipping lines in negotiating for cocoa freight under ‘Cocoa Freight Negotiation,’ which allows each shipping line to independently dialogue on their cost base, his organization cannot negotiate on behalf of the companies.

Ayarna indicated that the association could discuss the principles of shipping, stating that “if the lines are not adhering to the principles, we can address that; everyone is a legal and private entity, but if there are charges that are excessive, it will be evident. Shipping is a business of integrity, and ultimately, the shipping line also considers the final consumer, so when issues arise, dialogue is necessary.”

He added that from their perspective, when charges were brought up, they would first approach the responsible line and inquire about the reasoning behind the charges, especially if it was a new charge or increase.

He explained that there was an agreement that when shipping lines increased their local incident fee (which occurs in Ghana), they were required to notify the market, their customers, and the GSA simultaneously.

“No shipping line can raise a fee without informing the customers using their service, so in shipping, there is a minimum 30-day window to notify customers in urgent cases, but typically it is a three-month notice.

"Therefore, GSA is informed, and if they have any concerns or disagreements, they should promptly contact the shipping line for clarification, and the shipping line is obligated to respond, and this has been occurring. The shipping lines inform the GSA and customers of any service level increase and provide explanations for the change,” he concluded.