Why Nigerian Importers Will Abandon Cargoes At Lagos Ports – Uche

By Kenneth Jukpor

Chief Increase Uche is the President of National Association of Government Approved Freight Forwarders (NAGAFF). In this exclusive interview with MMS Plus newspaper, he speaks on the numerous transport sector challenges in the country, recalling some alternatives postulated at a recent National Transportation Summit. Uche also appraises Nigeria’s chances in the African Continental Free Trade Area (AfCFTA).

Read on!

 

Looking at the freight forwarding sector, 2020 ends in a few days and this yuletide season is seen as a peak season for port activities. How would you rate freight forwarding practice in 2020 and what are your projections for 2021?

There are numerous challenges at the ports. We can attest to the fact that the situation has been very hectic since the beginning of 2020. One can only be thankful to be alive despite the global pandemic which led to a lockdown in March. While the nation was struggling with that and adjusting to the new normal, we ventured into a season of protests with EndSARS and the port sector was part of the affected areas. The truth is that the polity is still heated and as freight forwarders, we still remember the difficulties and sacrifices we made to ensure cargo evacuation continued during the period of lockdown.

Nonetheless, the current situation at the ports is a shame and we don’t know how to get out of it. Traffic gridlock and port access roads issues haven’t been easy. The problems associated with empty containers accessing the ports for evacuation are still prevalent. At Tin Can Island Port (TCIP), to take a 40ft container from the port to anywhere within Lagos costs more than N1.5million. This is over 1500 percent increase for a service that cost N100,000 a few years ago.

At TCIP, the roads aren’t available or accessible, everywhere is jam-packed. There is no space as congestion has become the norm and we don’t know how to address this. If things continue this way, before the end of December, it is possible that the ports might shutdown completely.

Vessels are still bringing cargoes for the Christmas season, yet those at the ports can’t discharge the cargoes. It is a very big problem that is already leading to high inflation. Things are getting very difficult for the average Nigerian. As the congestion continues, storage charges and demurrages keep accumulating and the nation is in a dicey and pathetic situation.

Our members aren’t finding this funny and some of us have been affected by several sicknesses especially High Blood Pressure. Several freight forwarders have already died this year as a result of the tough economic environment, yet we don’t know where to go from here.

Next year, most importers would abandon their cargoes because the cost of evacuating the cargoes will be too expensive. Government would end up selling such goods at auction but the effects would be more hardship for Nigerian citizens, especially importers.

Given these numerous challenges, what solutions would you proffer?

Freight forwarders and other port stakeholders have been clamouring for new deep seaports. There is a need to unbundle the ports because they have reached the peak and being stretched further.

The current ports in Nigeria are all river ports and I would advise that they be turned into industrial ports. You can no longer dredge the berth areas of these ports further, hence, the need for deep seaports. Apapa and Tin Can Island Port can’t go beyond 13meters draft and the current shipping trend is to have gigantic ships with over 18meters draft. Nigerian ports can’t be competitive because the economies of scale can’t apply. This is the major reason the productivity of the ports dwindle every day, while the port cost keeps increasing. Local shipping cost and freight charges also keep increasing.

You featured as one of the panelists at the 2020 National Transportation Summit by the Chartered Institute of Transport Administration (CIoTA). What were the recommendations for the conference and how could they address Nigeria’s transport sector woes?

The summit dwelt mainly on the provision of sustainable transport infrastructure, opportunities available in the sector, innovations and funding. There were several paper presentations and panel discussions around these issues. During the summit, most of us were thrilled at the level of seriousness from government agencies, private organizations, as well as other stakeholders in the sector.

For a very long time, the nation’s transportation sector has been in disarray with poor infrastructure at seaports, roads, aviation, pipeline and the railways. At the end of the summit, there was a consensus on the need to provide modern infrastructure via a sustainable approach.

We want a situation in Nigeria where there is topnotch connectivity as the rail would link up the ports and hinterlands, while the inland waterways and pipeline modes of transportation would also be viable.

When you look at Tin Can Island port, Warri, Onne, WACT, you would observe that these ports don’t have the advantage of rail connectivity. Consequently, there are obstructions in the bid to move cargoes from these locations to the hinterlands.

This connectivity also aids in the split of cargoes from the seaports to various modes. At soon as the cargoes get to the ports, there should be a split to have some cargoes evacuated by the roads, rail and barges.

With the challenge of limited finances of the Nigerian government, did the summit deliberate on other alternative modes of funding crucial transport infrastructure?

At CIoTA, we have taken the responsibility to support the government under Public Private Partnerships (PPP). We also analyzed the contract terms being utilized around the world and we discovered that the Build Own Operate Transfer (BOOT) has been one of the most effective model. There are also several other models but BOOT remains the most popular and most beneficial for the investors and the countries. Nigerian government should be encouraged to explore this in order to address the massive infrastructure deficits in the transport sector.

Irrespective of the challenges, most stakeholders agree that the federal government made a good decision by concessioning the seaport terminals. This approach has been beneficial and ushered in massive investments, enhanced efficiency and improved service delivery. We expect the government to replicate this strategy for railway development to enhance connectivity and logistics operations in the country.

There would be a need for legislative reforms because primitive laws don’t afford the flexibility for infrastructure development through PPP and other new approaches.

Meanwhile, we can’t discount the fact that one of the biggest risks limiting infrastructure development in Nigeria is political interference. The uncertainty following changes in administration and fears that one government could revoke previous agreements has been a major hindrance to private sector investments and Foreign Direct Investments (FDIs) in infrastructure.

CIoTA developed a communique from that summit and sent it to the appropriate government channels. If the report is taken seriously, it could spark a positive transformation in Nigeria’s transport system.

The rapporteurs were told to prioritize the points in the communique in the order of significance so that as soon as it is picked up, it’s easy to see where to start from.

Nigerian Shippers’ Council (NSC) has been sourcing concessionaires for projects like Truck Transit Parks (TTPs) and Inland Dry Ports (IDPs); can CIoTA take a step beyond advocacy for PPPs for rail and road infrastructure to shop for investors?

CIoTA is a Chartered Institute and not a government agency. We have the required manpower and trained personnel to proffer quality advice. As an Institute that boasts membership of lots of Professors, the government should respect the position of such a group.

The Institute can provide topnotch consultancy services for all modes of transportation and possibly analyze infrastructural investments but not necessarily arranging for the concessionaires that would take part in the PPPs. CIoTA has the human resource required for advisory services or consultancy.

The implementation of the African Continental Free Trade Area (AfCFTA) takes effect on January 1st, 2021. Where is Nigeria’s transport sector in terms of preparedness for AfCFTA?

One of the biggest challenges in Nigeria’s transport sector is the infrastructure deficits across all modes and there is an urgent need to address it. When you look at the Logistics Performance Index (LPI) of countries like South Africa, Liberia, Cote d’Ivoire, Ghana and Benin Republic; they are better because they have enhanced their environments. Their customs operations, cargo evacuation, transport infrastructure, among others, are better than Nigeria.

At the moment, we are looking at a situation where Nigeria has to measure up to the competition so that we aren’t left behind. As the nation prepares for AfCFTA, it is important to realize that LPI is the joker and Nigeria’s bid to enhance this should stem from addressing the factors which would invariably make the transport sector better.

Besides transport infrastructure, there should be simplification of Customs processes, a friendly environment that enhances Ease of Doing Business, among other factors.

Do you think government agencies in the port sector are doing enough to address the numerous port related challenges?

I would like to commend the efforts of Nigerian Shippers’ Council (NSC) because they have been the only succour to freight forwarders. They are the only agency that we can run to when shipping companies, terminals and other service providers exploit us. Nevertheless, most freight forwarders are aware of this and have flooded Shippers’ Council with queries even on matters that don’t concern the Council.

We have to duff our caps for the Executive Secretary of NSC, Mr. Hassan Bello. He is really trying and providing the kind of leadership that is needed in the industry. He fully understands the sector and doesn’t even pretend. Most times, he leaves his office and goes to inspect things physically at terminals and shipping companies. He is unassuming and very passionate about the industry.