The tightened gridlock at the Nigerian Ports has become severe to the point that it allegedly costs more than $4,000 to truck a container 20km to the Nigerian mainland in recent times.
This is according to a News report by Financial Times today tagged, “Nigeria’s port crisis: the $4,000 charge to carry goods across Lagos.”
The report, however, cements previous takes on the recent issues at the Port terminals, as well as the sporadic increase in detention and demurrage costs which were reported by Nairametrics four days ago.
The report revealed that the gridlock at the port terminals has become so devastating to the point that business entities pay more than $4,000 to truck a 40ft container 20km to the Nigerian mainland recently, almost as much as it costs to ship a container about 12,000 kilometres from China.
According to Shanghai Containerized Freight Index data provided by Dutch shipping consultancy, Dynamar,
- The average spot rate this year to ship a 20ft container from Shanghai to Lagos is about $3,000.
- While it costs about $3,750 to $4,000 for a 40ft container. However, the current spot rate is $5,000.
In this same vein, the impact of the gridlock extends beyond monetary costs, as freight companies and operators have to wait more than a month off the coast before they can offload their goods in the port – roughly how long they spend in transit to Lagos from China.
What you should know
The gridlock has become a long-running crisis at the Apapa and Tin Can Island ports, which are the main commercial entry points into Nigeria, Africa’s largest economy.
The issues at the terminals, however, can be attributed to the weak state of the Country’s transport infrastructure as 90 per cent of cargo go by road.
However, the increased sea traffic since the closure of the country’s land borders to combat smuggling last year, the pandemic-induced economic slump and the recent unrest in Nigeria’s commercial capital have exacerbated the current issues at the port, as dozens of ships remain idle at sea, while hundreds of empty trucks sit in traffic for days or weeks, owing to the lack of automation.
It is important to know that the port’s capacity has not increased since 1997, even as Lagos’s population has roughly tripled. Nigeria imports a lot of raw materials and almost all finished goods, and the congestion is causing production delays for multinationals.
With the port area even more crowded at the busy year-end period, the Seaport Terminal Operators Association estimates that the congestion costs the country $55m a day in lost economic activity.
Steps taken to decongest the port terminals
The Managing Director of Nigerian Ports Authority (NPA), Hadiza Bala-Usman, disclosed that Trucks Park had been established in Orile, Lagos, to serve as a call-up centre for truck waiting to evacuate goods at the ports.
This, with the implementation of the electronic call-up system, which had been put in place for the evacuation of goods by the Port Authority for trucks accessing the ports, are expected to play major roles to help decongest the Ports.
- Recently, Nairametrics reported that the Minister of Transportation, Mr Rotimi Amaechi, launched a new operation command centre built by terminal operator, APM Terminals Apapa, to boost efficiency and service delivery in the maritime industry.
However, government has embarked on other projects to beef up the country’s infrastructure in a bid to decongest the port, including Public-Private-Partnership arrangement to build deep seaports.
One of them includes the Akwa-Ibom Deep Seaport, another arrangement of this kind is located 60km east of Lagos, where the Singaporean food company, Tolaram, and China Harbour Engineering Company are building a $1.5bn deep seaport. But it is not expected to be completed until 2022.
On-road infrastructure, one 35km stretch of road from the port is being refurbished by Nigerian billionaire, Aliko Dangote’s construction company, in return for a tax holiday. More companies are also using barges to move containers to bonded warehouses, where they can clear customs away from the port.
Cement prices surge in South East as scarcity, price hike hit North East
Prices of cement have risen by 67% in many Southeastern states and by 40% as observed in northern states including Bauchi, Gombe, Borno, others.
The prices of cement have risen by 67% in the South-East states of Abia, Anambra, Ebonyi, Enugu and Imo.
This is as some residents of the North-Eastern part of the country also complained of price hike of cement, which they attributed to the scarcity of the product and the activities of middlemen who try to capitalize on the situation.
According to a report from the News Agency of Nigeria (NAN), a market survey conducted at various wholesale and retail shops in the eastern zone shows that the price of the product has almost doubled when compared to the price in 2020.
What the cement traders in the eastern states are saying
A cement dealer at Kenyetta Market in Enugu State, Mr Ifeanyi Amadi, said the increase in the price of the product which started last year was due to the Covid-19 pandemic and increase in dollar exchange.
He pointed out that a trailer load of Dangote cement with 600 bags, which sold for N1.5 million in 2020, sold for N2.3 million in the first quarter of 2021.
Another retailer, Samuel Uwakwe, noted that a bag of Dangote Cement now goes for N3,900, Unicem for N3,700; BUA Cement for N3,700 and Kogi Super Cement for N3,600.
While begging the suppliers to reduce the price and make the product available, Uwakwe expressed his reservations at few individuals being given the opportunity to supply the product noting that the prices would likely crash during raining season.
In Abia, a cross-section of residents of Umuahia, the state capital, also decried the high price of cement, which ranges from N4,000 to N4,100 per 50kg bag.
Those who spoke to NAN said the price hike had further dashed the hope of many Nigerians, wishing to own their personal homes.
A businessman, Mr Victor Ugwu, said he had to suspend his building project because of the current development as he could not afford to continue with the current price of the commodity.
He said, “I think the hike can be attributed to the monopoly being enjoyed by the cement producers in the country. Unfortunately, there may not be any respite until that monopoly is broken.”
However, a cement dealer, Mr James Ogbonna, said the price increase had nothing to do with the manufacturers of the commodity but rather put the blame on the activities of shylock distributors of cement.
He said, “In the first and second week of March, we sold a bag for N3,200, but within the third week we started selling at N3,500. By the end of March, the price moved up to N4,000 and now, we sell between N4,000 and N4100, depending on the brand.”
A cement dealer in Awka, Mr Kenechukwu Okoye, said before the #EndSARS protest in 2020, a 50kg bag of cement was sold at N2,500 bur rose to N3,000 immediately after the protest and from there to the current price of N4,000 and N4,100.
The survey also says that in Owerri, the Imo state capital, the price of cement is between N3,850 and N4300, depending on the brand.
At the building materials Market in Naze, Owerri North Local Government Area, Dangote and BUA cement are sold at N4,000 per bag while BUA and UNICEM are sold for N3,900.
Mr Okechukwu Okonya, a seller, said the cost could be attributed to the high cost of transportation as a result of fuel price increase adding that major dealers sometimes hoard the product in their warehouses to create artificial scarcity.
The survey report says that in Abakaliki, Ebonyi, prices of almost all building materials have gone up, with Dangote and Bua which sold for N2,500 earlier in November and December 2020 now selling for between N4000 and N4500.
Similarly, Unicem cement which also sold at N2,300 within the same period had also gone up to N4,000 and N4,300.
Similar price increase in North East
The survey report in Bauchi, Gombe, Borno, Yobe, Adamawa and Jigawa, shows an average of 40% increase in price.
According to the respondents, this could be attributed to the outbreak of Covid-19 which affected production in factories, while demand kept rising.
Others, however, blamed the hike on the high cost of transportation and other sundry activities associated with the business of procurement and sales of cement in the country.
Malam Ibrahim Sanusi, a cement dealer at the Gombe main market described the hike as outrageous when compared with the price of the same commodity the previous year.
He said that a bag of Dangote brand which he bought for N2,400 and sold for N2, 500, is bought for N4,000 from their depot in Gombe and sold for N4,200.
FG explains why it wants to reduce human contact at the ports, achieves 70% digitalization
This is to help drastically reduce inefficiencies, corruption, diversion of money, revenue leakages and constant delays.
The Federal Government has moved to reduce human traffic into the Nigerian ports as it says that the ports have achieved 70% digitalization.
This is to help drastically reduce inefficiencies, corruption, diversion of money, revenue leakages and constant delays being experienced at the various ports by stakeholders and other ports users.
This disclosure was made by the Executive Secretary of the Nigerian Shippers’ Council (NSC), Mr Hassan Bello, on Friday at a news conference on the first quarter activities of the council in Lagos.
The NSC boss said that the 70% digitalization was lower than the 90% targeted by the council in the first quarter of 2021, which although it did not achieve, it is still pushing to actualise.
What the Nigerian Shippers’ Council Executive Secretary is saying
Bello in his statement said, “Most of the ports in the world are digitized, Nigeria cannot be an exception. We cannot have a multitude of people going into the ports every day, human contact in the ports is very dangerous, it is anti-efficiency and once there is human contact, there will be corruption and then delay.
Some people don’t even have any business to go to the port but you see them there, what are they doing?
We have been working with shipping companies and terminal operators to ensure we make the deadline we set for the first quarter but we saw it was not feasible to attain 90% digitalization. What we were able to do on the average was 70%, but digitization of the ports is a process in the making. We want this to happen as quickly as possible,” he said.
He said that the port was not a place for contact, as one could move millions of tons of cargo with a computer adding that they were happy to announce that the council was on course.
Bello noted that a non-contact port was the solution to many problems in the system such as delay which caused demurrage, diversion of money, corruption and revenue leakages.
He said that digitization would make our ports more competitive, noting that the country had competitors in West and Central Africa sub-regions.
On the level of digitalization of shipping companies, he said that Grimaldi had 88%, Ocean Network Express 76%, and CMA CGM 63%, among others, while for seaport terminals, PTML had 92%, and in Port Harcourt, Intels, BUA and Wact had 70% digitalization each.
He said, “Where we are having problems is on reforms and claims processes which is mostly manual but we have some that scored 50%. Also, the second phase is the integration of systems because anybody can be online but there is a need to integrate with the banks for example and even the Nigeria Customs Services.’’
What this means
The digitalization of operations and reduction of human contact at the ports is going to greatly increase efficiency, reduce corruption and ensure that more revenue comes to government coffers.
This will also help eliminate the illegal activities of louts at the ports, improve on the ease of doing business, promote a clean environment at the ports and tackle the menace of illegal trading activities which also degrades the environment at those facilities.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- UACN Property Development Company Plc appoints Ojo Odunayo as new CEO.
- Unilever Nigeria Plc reports a loss of N492 million in Q1 2021.
- Nigerian Breweries publishes names of over 100,000 shareholders who are yet to claim their dividends.
- 2020 FY Results: Sovereign Trust Insurance Plc records a 37% increase in profit after tax.
- CSCS Plc posts profit after tax of N6.93 billion in FY 2020