How Nigeria loses $14.2bn to bottlenecks at ports
Port officials paralysing govt’s ease of doing business
African Centre for Supply Chain (ACSC) practitioners has disclosed that congestion at the Nigerian ports is negatively impacting the country’s gross domestic product (GDP) as $14.2 billion is lost to the challenge yearly.
Disclosing this in a communique issued at the end of the maiden roundtable and made available to The Guardian, the ACSC noted that the major bottlenecks at the include cargo diversion, slow cargo delivery, delays, high demurrage charges, burdensome clearance processes and high business failure, which has also led to loss of revenue by the Nigeria Customs Service (NCS).
Other challenges at the port as noted by the group include indiscipline among truckers, congestion of trucks within the ports and cargo congestion at terminals due to trade imbalance, weak technology application, non-implementation of 24-hour port operations, manual cargo examination by Customs officials and low-capacity utilisation by terminals, congestion emanating from public holidays, and short working hours.
The supply chain practitioners said the “hydra-headed” challenges, which seem to be a normal daily occurrence in Nigeria, require a detailed review to proffer multi-faceted solutions or strategies for avoidance.
Speaking on the ‘Port Congestion: Implications for Nigeria’s Competitiveness,’ they said the financial cost of accumulated delays of trucks constituted about 40 per cent of the total cost borne at the ports.
They noted that security officials and port officials called up more trucks than the port capacity, stressing that the Lagos logistics ring, spanning through Apapa-Iganmu-Orile-Mile 2-Tincan-Apapa, had capacity to handle only 2,400 trucks and tankers daily, instead of the 7,000 trucks moving around the ring daily.
Also in the communique, it was observed that the ENDSARS protest of October 20, 2020, led to backlog of trucks and import-laden containers at the Tincan port, which caused truck-pricing to skyrocket, reaching an all-time high of about N1.5 million for movement of one 20-foot equivalent unit of container from Tincan Port to Mile-2.
According to the ACSC, other impediments include congestion of cargoes at storage yards and sheds, vessel congestion as a result of inadequate port facilities, too many customs desks and 100 per cent physical examination of goods as against international best practice, including lack of scanners, corrupt officials, dishonest importers and clearing agents and corrupt port and security officials.
It was also observed that despite the government’s initiatives on ease of doing business, most container owners spend an average of 10 to 20 days to clear a container from Apapa/Tincan ports, and another 20 days to move the container out of the port.
On the implications of the port congestion on the economy and business environment, the supply chain practitioners said, the financial cost of accumulated delays was unfair, noting that the port problems are caused by importers who bear the brunt of inefficiencies, high shipping and terminal charges, high insurance premium on vessels coming to Nigeria and cargo rollover.
They stated further that the higher costs had made the local industries uncompetitive, adding that astronomical increase in transport costs, increased costs of borrowing for import transactions, slowdown in evacuation and delivery of cargoes with implications for storage facilities had paralysed industrial activities around Apapa by lowering capacity utilisation and incessant inventory delays.
The practitioners, however, stressed that the country had lost its investment appeal in the global community due to poor ease of doing business ranking, and loss of boom in the economy to neighbouring countries.
Meanwhile, speakers at the roundtable also raised the alarm on the impact of barging (RORO) operations on the e-call up system, stating that the system would not capture the trucks that come to the port by barge.
Concerns were also raised around the increasing number of accidents from barging (RORO) operations.
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