Manufacturers battle rising freight, demurrage at seaports

Manufacturers who rely on imported raw materials for their factory processes have had to contend with rising freight and demurrage costs.

According to them , the costs have tripled in the last one month owing to the heavy traffic gridlock along the access road to the country major seaport in Lagos .

To address the deplorable condition of the road , the Federal Government has entered into an agreement with the Dangote Group and FlourMills to rehabilitate the road .

The rehabilitation of the two- kilometre road between Apapa port and Ijora end of the bridge is estimated to cost N 4 . 34 bn, according to the Minister of Power , Works and Housing , Mr. Babatunde Fashola.

The rehabilitation , which will be done using concrete, is expected to put an end to the heavy traffic situation along the axis .

However, the traffic situation along the flagship Apapa port road has been made in recent times due to the ongoing rehabilitation work in the axis.

Part of the road had been prior to the commencement of the work .

Importers told our correspondent on Thursday that the situation had made movement of cargoes in and out of the port nearly impossible .

According to them , the cost of freight and demurrage has gone up significantly as it now takes about five days to exit the port .

Demurrage charges on goods , according to reports , have risen to N6 . 7 bn in 10 days .

The Director – General , Lagos Chamber of Commerce and Industry , Mr. Muda Yusuf , said that the situation had had adverse effects on the real sector .

He noted that business owners were spending thrice the amount they used to spend on clearing good .

As a result , he said this had added to the overall cost of production .

Reports equally quoted a former Commissioner for Transportation in Lagos State , Prof . Bamidele Badejo , as saying that people were parting with more money to get their cargoes out of the ports .

He said , “ A container that takes about N85 , 000 to lift now goes for about N180 , 000 because of the cost implications of having to wait for hours .

The President , Shippers ’ Association , Lagos State, Jonathan Nicol , remarked that demurrages accrued by importers and shippers would be transferred to the final consumers .

The LCCI DG noted that some of the importers , who borrowed money to conduct their businesses , had problems servicing loans because of the delay in cargo movement .

He said , “If the rate at which cargo is evacuated is lagging behind the rate of loading , it leads to congestion .

“ This creates efficiency and cost issues . It will also affect the rate at which shipping companies come to Nigeria because they will be reluctant to come if they know that their goods would be delayed or they would charge for the extra time spent .

“ All these add to cost and if raw materials and normal imports are not coming out , there will be scarcity . This is in addition to theft of goods and problem of security for truck drivers .”

He advised the Federal Government to consider the use of rail in moving cargo while the road construction lasts.