FX scarcity triggers firms to suspend new trucks importation
Manufacturing firms and logistics operators have suspended the importation of new trucks for their businesses due to foreign exchange scarcity that has hit the local transport/logistics sector hard, as well as the inflated prices of such vehicles and their spare parts.
Manufacturers under the Manufacturers Association of Nigeria (MAN) and logistics operators handling manufacturing firms’ logistics segments, stressed that the non-availability of forex for the sector has made many of them to put on hold new orders and while cancelling existing orders.
They said the FX crisis is limiting their ability to purchase new trucks and their spare parts for the repairs of old trucks in the country for goods movement across the country.
They warned that Nigerians should expect more broken and abandoned trucks on the roads and highways as the impacts of FX and COVID-19 crises take a toll on their operations.
The Guardian learnt that more cargoes would be trapped in the ports without trucks to move them to their destinations. The Managing Director of APG Consults, a logistics firm and member of African Centre for Supply Chain (ACSC), Apollo Goma, explained that the forex situation in the country has disrupted the country’s transport sector holistically since most trucks used for logistics businesses were being imported, including the ones locally assembled, along with their spare parts.
“The FX has totally changed Nigeria completely. It has changed the dynamics of the transport industry. Most of the trucks and trailers we use in Nigeria are imported. Even the ones that are assembled here in Nigeria have their spare parts sourced from abroad. What happened when the FX rate suddenly moved from N360/$ to about N500/$? Also the cost of purchasing new trucks and their parts has become very exorbitant and expensive. It is difficult for many firms to access forex in the market today.
“If you look at the industry today, that is, the transportation industry, you will find out that most of the trucks in use are old trucks. It is very difficult for firms to actually use these old trucks profitably except you are one of those firms that have high value products with very high revenue in returns on investment.
“Because if you evaluate the pricing dynamics for new trucks, especially with our peculiar environment compared to the civilised world, you will see that prices of those trucks go up every day and it becomes very difficult for manufacturing firms to sustain new truck purchases. So, they have to find a way for optimisation in business” he said.
Also, the Executive Director, Strategy Capital Project and Portfolio Development, Dangote Industry Limited, Edwin Devakumar, revealed that Dangote Group invested about a whooping $15 million to purchase 400 new trucks for its new fertiliser plant at Lekki Free Trade Zone.
He said the company has again ordered for new 100 trucks to boost its fleets in its logistics segment for uninterrupted fertiliser distribution nationwide, noting that the amount being spent is telling on the company’s financial status