Paper: The Prospect and Challenges of Logistics Services as the Live-wire of Nigeria’s Maritime Sector –Terminal Operator’s Perspective

 

By Mr. Henry Cline, General Manager, Ports and Terminal Operators Nigeria Limited

 WHAT IS LOGISTICS?

It is necessary to start with the dictionary meaning of the word “logistics”. It is defined as the ‘detailed co-ordination of a complex operation involving many people, facilities or supplies’’. The Council of Supply Chain Management Professionals defined “Logistics as the process of planning, implementing and controlling procedures for the efficient and effective transportation and storage of goods including services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements and includes inbound, outbound, internal and external movements”.

So it is evident that logistics is not just physical distribution management of manufactured goods and other products.

Militarily, logistics is concerned with maintaining army supply lines while disrupting those of the enemy, since an armed force without resources and transportation is defenseless. American forces brought logistics to the fore in the Second World War in the movement of resources from the rear to meet the needs of soldiers at the war front.

 

TERMINAL OPERATORS’ PERSPECTIVE AND CHALLENGES IN THE MARITIME SECTOR

Since the adoption of the landlord model of seaport management by the Federal government through the NPA in 2006, allowing for private sector participation in port management, giant steps have been taken in the provision of the following:

  • Infusion of private capital in port development which resulted in the following:
  • Reconstruction of quay walls, stacking areas and overall improvement in the infrastructure of the ports.
  • Procurement of new plants and equipment.
  • Extra revenues have accrued to the government in form of lease fees, throughput fees, etc.
  • Employment of professional hands and training of personnel resulting inefficiency and quick turn round of vessels, reduced cargo dwell time in the ports and security of cargoes.

CHALLENGES IN THE MARITIME SECTOR IMPEDING THE PRACTICE OF LOGISTICS

In the practice of logistics, lead time is given in the delivery of cargoes to a consignee. Certain factors are usuallytaken for granted that they would be in place to facilitate the logistics operation.

  • SECURITY

However, in the Nigerian maritime sector, this is not always the case. For example, lack of security at our fairways and coastal approaches have been a major drawback, as vessels are routinely attacked by pirates and crew hijacked. This has been common place in the past two years at the Eastern Sea boardof the country’s territorial waters.

 

  • SINGLE MODE OF TRANSPORT INFRASTRUCTURE SERVING THE SEAPORT

The major mode of transport when the ports were concessioned was Road transport. This is still the case after about 11 years of concession. The implication of this is that the seaports / terminals as points of inter-modal transfer are saddled with a single mode of transport to exit and receive cargoes.

This is an anathema to logistics practice. The ports / terminals are supposed to be served by multi-mode transport infrastructure, namely – rail, inland waterways, pipelines and even airports.

The consequence of this development is that the logistics of exiting and receiving cargoes are crippled when the only mode of transport is either blocked or dilapidated. The situation in the ports of Apapa and Tincan in Lagos is a typical example. The same was also true of the Eastern Ports of Port Harcourt and Onne when the port access roads were impassable.

 

  • LACK OF CERTAIN INFRASTRUCTURE / SERVICES

Under the concession agreement, NPA is to dredge the channels and the berths to an agreed depth of 10meters. However, these have not been done in the Eastern ports.

Consequently, the channel and the berths cannot accommodate 21st century vessels. This has resulted in the Eastern ports not enjoying the economy of scale as vessels cannot bring the required and optimal tonnages to ports in the Niger Delta. Thus, their throughput is greatly reduced. This has also de-marketed the ports.

 

  • NON PROVISION OF MARINE CRAFTS E.G. TUG BOATS, PILOT CUTTERS, ETC

These are lacking in the ports of the Niger Delta. Consequently, shipping companies operating in these ports have been incurring extra costs to provide these services to berth and sail their vessels.

 

  • OTHER STAKEHOLDERS IN THE LOGISTICS CHAIN IN TERMINALS

These include the CustomsService, Immigration, NAFDAC, SON,Freight Forwarding agents etc. Some of their practices are retrogressive and cause impediments to the movement and timely clearance of goods in the terminals. Freight forwarding operations are not always transparent and usually delay the movement of cargoes. However, freight forwarders are particularly relevant as facilitators of import / export trades. If their logistics functions in themaritime business are impaired, our economic drive may be adversely affected.

PROSPECTS OF LOGISTICS SERVICE AS LIFE-WIRE OF NIGERIA’S MARITIME SECTOR

The prospects of logistics practice in the country are bright if certain fundamental issues are resolved.

This is extremely important when it is realized that over 90% Nigeria’s international trade is catered for by the maritime sector, especially when the oil sector is added. The efficient practice of logistics is therefore vital to the success of our international trade and the economic well-being of the country.

  • PROVISON OF MULTI-MODAL TRANSPORT INFRASTRUCTURE AT THE SEAPORTS

When logistics practitioners have the advantage of choosing the best mode of transport for their operations, efficiency and profitability will be enhanced. The cost of transport will also reduce thereby improving the quality of life of our citizens. The gridlock being currently experienced in some ports will be non-extent.

  • ENTHRONEMENT OF HOLISTIC TRANSPORT POLICY IN THE COUNTRY

The National transport policy of the Federal Government should be holistic to provide and implement for all modes of transport serving the ports and the country at large. These include, rail, inland water ways, air, pipelines etc. When this is done, the nation’s seaports will not be at the mercy of one mode of transport (Road). The ports could still operate efficiently by making use of other modes of transport for the movement of goods and services.

  • CURRENT TRENDS

The establishment of Inland container Depots (ICDs) in the country is in the right direction. Their completion should be expedited and should have rail sidings.

  • Rail lines should be extended to all seaports and the existing ones resuscitated.
  • The dredging of River Niger will make it navigable all year round.

The Nigerian Inland Waterways Authority should be given the wherewithal to undertake their functions. Self -propelled and dump barges, tugs, etc. should be provided to enable them make the necessary impact. Also, the completion of the various river ports at Baro and Onitsha should be expedited.

  • Road Transport providers should modernize their fleet to meet specialized and modern day demands.
  • The NNPC has the largest and most extensive pipeline network in the country. This should be made to function so that tanker trucks would not all be loading their products from the tank farms and refineries at the coast.
  • Training and enlightment should regularly be given to all major stakeholders in the logistic chain so that the significance of unimpeded flow of goods and services would be understood. The much touted “Ease of doing Business” by the Federal Government should be sustained.
  • Freight forwarding agents should make their professional practice transparent to enable their clients plan their operations with them.There should be no hidden costs.
  • Freight brokers who are also important part of the logistics chain should advertise their service for possible users to patronize them.
  • The reporting of maritime activities is also important to draw the attention of governments to their responsibilities.

LOGISTICS AND EXPORT TRADE

Export trade especially commodities, are operated at an international level. For example, Nigerian exporters of commodities such as cocoa and palm kernel cake etc. could be uncompetitive and priced out of the market because of poor logistics when compared with other countries in West African.

The trade in palm kernel cake isacurrent example. The export business has been lost to the ports of Tema and Abidjan in Ghana and Ivory Coast respectively in the last two years because of logistics of discharge, warehousing and loading of the commodity. Nigerian exporters cannot compete in the international market because of the high cost of handling the commodity in Nigerian Ports and lack of warehousing and automated method of loading.

For example, in Ghana and Ivory Coast, it is estimated that the cost of handling a palm kernel cake vessel of Gross registered Tonnage( GRT)of 2,861, Length Over All(LOA) of 97, Cargoes: 2727.5m/t is $23.64 per tonne (covering stevedoring , trimming, haulage, warehousing, and shifting from warehouse to the shipside.

Comparatively in Nigeria, exporters pay as much as $30-35 per tonne for the same services. Furthermore, in the Ivory Coast and Ghana, it takes 3 days with 2 hooks to load 2,277m/t of palm kernel cake, while in Nigeria it takes 7-10days excluding waiting time for berth.

The systems and logistics in our ports should be critically examined for improvement to reduce cost of shipment and make our exporters competitive. Otherwise, high costs coupled with other factors could make Nigerian exporters of palm kernel cake to loose the market permanently to other West African countries.

It is important to note that a country that does not export but only imports is doomed to suffer economically and not make progress.

CONCLUSION:

It is fair to say that the provision of logistics is indispensable to efficient maritime services in the country.

The imperative of holistic national transport policy approach in the provision of transport infrastructure and their timely implementation is paramount.

Most of the palliatives being suggested are already known and some of them have been on the drawing board since the first national development plan.

Government should provide enabling environment in the security of our territorial waters for logistics practitioners to undertake their profession. It will be better for smooth and efficient maritime operations and better for our economy. This will unleash the benefits of efficient logistics services for the benefit of the economy.

As the country advances economically, the indispensability of logistics practice will become more pronounced and play its rightful role in the economic progress of the country.

Being a paper presented by Mr. Henry .I. Cline on behalf of Mrs. Lizzie Ovbude, Managing Director, Ports and Terminal Operators Nigeria Limited (PTOL) at a talk shop in Lagos organised by the Maritime Reporters Association of Nigeria

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