Last week, this newspaper published the lamentation of the Association of Bonded Terminal Operators of Nigeria, over what the group described as declining fortunes of indigenous bonded terminal operators.
Its General Secretary, Mr Haruna Omolajomo, in his attempt to play up the current state of things, added that more than 40 bonded terminals in Lagos and environs now operate far below capacity.
He consequently attributed their travails to what he alleged as unfavourable government policies, limited cargo allocation, and the growing dominance of port concessionaires in the cargo logistics chain.
A bonded terminal is a secure facility, typically near a port or airport, where imported goods can be stored under Customs supervision without immediate payment of duties and taxes. These goods remain in the off-dock terminal until they are either re-exported or cleared for domestic use, at which point the necessary duties and taxes are paid. Essentially, it’s a designated area for temporary storage of imported goods, allowing businesses to defer duty payments.
Bonded terminals operate under the strict supervision of the Nigeria Customs Service, and are strategically located near major points of entry and exit for international trade.
Historically, these terminals started operating in Nigeria in the early 1980s, with the federal government establishing the first official container depots in Kano and Kaduna between 1980 and 1982; that is, before wide-scale off-dock operations and private licensing gained massive ground in the 1990s under the Nigeria Customs Service.
While operations of bonded terminal peaked with the port concession of 2006, their upscale emergence can actually be traced to the 1990s, owing to the severe congestion being experienced at the ports at that time.
But, over time, these specialized off-dock facilities have lost their relevance, no thanks to a combination of factors. They have become less useful due to cargo starvation caused by foreign-owned shipping lines bypassing them, coupled with severe infrastructural decay, high operational costs, and regulatory crackdowns.
One of the primary benefits of bonded terminals is the ability to defer duty payments, which can be a significant advantage for businesses with large import volumes or those facing temporary cash flow challenges. But this important and innovative tool for trade facilitation introduced several years ago by the Nigeria Customs Service was turned into a cluster of unwholesome practices by some operators and owners of these terminals.
At a point, it became a daily occurrence that Custom commands were being inundated with reports of sharp practices which tend to undermine the basis of their establishment. It got to a head in 2025 that the Nigeria Customs Service weilded the big stick and shut down three such terminals for serious violations of the extant laws establishing them.
The Customs confirmed at that time that seven containers of fake pharmaceuticals, expired margarine, codeine, second hand clothing, and other unwholesome items were seized at the terminals.
But, outside of this singular case lies several issues – all culminating into a mistrust and disdain for these terminals.
Many bonded terminals are criticized for lacking essential cargo handling equipment, proper infrastructure, and conducive environments for operations.
Some terminals were described as being more like bonded warehouses than terminals, lacking the capacity to handle the volume and complexity of goods.
This deficiency in facilities lead to delays in cargo examination and clearance, increasing costs for importers and freight forwarders.
Bonded terminal operators are also accused of imposing unauthorized demurrage, storage, and transfer charges on importers and freight forwarders.
Some terminals allegedly suspend cargo examination when it rained, further increasing demurrage costs due to delays. There were reports of terminals charging for services they did not provide or for responsibilities that were not theirs.
Bonded terminals have also been criticized for not conducting thorough examinations of goods, particularly pharmaceutical products, which led to the influx of unregistered and expired pharmaceuticals.
This lack of proper examination posed significant risks to public health and safety, as highlighted by the seizure of unregistered drugs and expired food products.
The Nigeria Customs Service (NCS) also expressed concerns about the inadequate examination of goods at bonded terminals.
The inefficiencies of bonded terminals contributed to congestion at the main seaports, as goods were delayed in transit and examination processes.
The lack of capacity and proper handling equipment at bonded terminals meant that they were not effectively serving as off-dock terminals to relieve pressure on the main ports.
Some bonded terminals are accused of operating without proper permits and legal documentation, hiding behind claims of federal approval.
There were also reports of informal arrangements and a lack of standard operating procedures (SOPs) between seaport terminals and bonded terminals.
The inefficiencies of bonded terminals increased the cost of doing business for importers and freight forwarders, impacting the overall economy.
The delays and high costs associated with bonded terminals discouraged investment and made Nigeria a less attractive destination for trade.
In all of these, and judging by the outcry of the scribe of bonded terminal operators, it is obvious that the advent of these off-dock facilities may have been overtaken by circumstances.
It is a fact that foreign shipping lines and port concessionaires have established their own off-dock facilities. These entities stem cargo exclusively to their own facilities, completely cutting independent indigenous bonded terminals out of the supply chain.
It is instructive that the Nigerian Shippers’ Council had echoed the serial complaints of bonded terminals, especially in the area of predatory charging structures, illegal cargo transfers without the shipper’s consent, and poor service delivery.
Why will terminal operators stem containers to bonded terminals that lack basic cargo handling equipment and have become glorified warehouses rather than functional logistics hubs that they were meant to be?
Even with these numerous inadequacies, there are still a handful of bonded terminals that are still above board. But the various factors that we have listed above have almost rendered them unnecessary in the scheme of things.
We sympathise with investors who took advantage of the issues that led to the emergence of bonded terminals. But, the continued relevance of the facilities will depend on competitive they are, especially in the face of less congestion in the ports.
