Expensive and difficult business

DOING business in PNG is becoming more costly and difficult because of the time it takes to clear cargo at the wharf.
Port Moresby Chamber of Commerce and Industry chief executive officer David Conn, a former chairman of the Port Moresby Port Users’ Group, estimates it is now taking 10 days on average to clear goods, and was even told of  cases which had taken four to six weeks.
In other countries, it took only two days at most, he says.
Several companies say their experience is that the clearance time has doubled from two weeks to anything from four weeks or more.
This is a matter which affects everyone, as costs associated with the prolonged port clearance, are passed on to consumers.
It adds more problems to an already-difficult and costly country to do business such as PNG.
The flow-on effect is that it affects the grassroots people most with the cost of food going up massively.
A high-cost society puts more low-income consumers under increased pressure.
This is clearly reflected in Port Moresby and Lae in the high incidences of opportunistic, petty crime and social issues such as alcohol abuse, violence in settlements and general lawlessness and unaccountability among our citizenry and youth.
Freight companies are losing time with loaded trucks sitting at the wharf, waiting for storage cheques to be written up and delivered back to the wharf. Otherwise, the container remains at the wharf.
The three main government agencies involved in clearance of cargo – PNG Ports, Customs and National Agriculture and Quarantine Inspection Authority (NA­QIA) – maintain a code of silence at the ports.
Companies in Port Moresby and Lae – the biggest port in the country which handle the most cargo – are wary of speaking out for fear of being blacklisted.
Conn says there is no such thing as pre-clearance for sea cargo anymore with Customs – this creates delays of up to a week just on that.
He adds that PNG Ports, like all state-owned entities, is forced into a cost-recovery mode. But there are serious maintenance issues on Port Moresby’s main wharf, and if a user-pay logic is to be followed, prices can only skyrocket.
Surely the government has to kick in somewhere, as these are essential services that keep the cogs of the economy trickling over.
Last year, PNG Ports urged consignees and the importers of goods into PNG to adopt modern clearance procedures to reduce their storage charges.
“The procedures for the clearance of cargo used by many importers have not been changed or reviewed for many years and PNG Ports Corporation Ltd (PNGPCL) is expressing that this is long overdue,” it said then.
“PNGPCL does assist importers by providing five days’ free storage at the port while the consignee or clearing agent carries out formal clearance procedures on cargoes before they are authorised for release from the temporary storage area by PNG Customs Services.
“PNG Ports is not a party to any of the cargo clearance processes done by the consignee and, therefore, cannot assist to mitigate any delay in the release of cargoes from its ports.
“The management of PNGPCL will be embarking on a wider awareness programme with the objective of ensuring that all consignees are educated on the procedures that take place in the release of cargoes at its ports and would like to demonstrate that there are certain aspects of the clearance process that consignees have to be ‘on the ball’ with when it comes to the import and export of cargoes.”
In February this year, PNG Ports Corporation paid a K15 million dividend – the first time since 2007 – to the Independent Public and Business Corporation (IPBC).
We note the dividend payment and it should be expected that port costs would drop as the current IPBC regulatory contract pricing requires them to lower the costs to users.
We have not noticed this happening as yet.
Conn estimates that about 2,500 containers enter the Fairfax port every month, with “a sharp increase expected this year”, and rules out the possibility of government agencies being prepared to meet the onslaught.
Customs and NAQIA do not have the manpower.
Last week, PNG Ports took out newspaper advertisements about giving importers five days’ free storage.
This is nothing new as there has been five days free storages for the last three years.
Unfortunately, for some time now, it takes much longer than that to get the cargo off the wharf. After that, users will be charged certain rates per day. This will ultimately be passed onto consumers – you and I.