• Saturday, April 20, 2024
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High freight shows Nigeria’s huge import-export imbalance

High freight shows Nigeria’s huge import-export imbalance

Nigerian-bound cargo is paying high freight compared to countries in Europe, America, and Asia to cover for one-leg shipping traffic due to a huge trade imbalance as the country’s imports far exceed its exports.

When a ship heads to Nigeria to deliver cargo, it does not expect to have any cargo to return with, due to the country’s low exports. This means the charges of delivering shipments to Nigeria have to be higher, to offset the cost of burning fuel to take the ships back.

However, if ships were able to take containers loaded with cargo back with them from Nigeria, then they would also be making money on their return journeys. But as this is not the case, they must charge as high as possible for whatever they are bringing to Nigeria, to compensate for the empty vessels that would be sent back to the ocean.

Freighting a 20-foot container from China to Nigeria costs an average of $3,990, while a 40-foot container costs $5,100, depending on the port of origin and destination, according to BusinessDay findings.

Comparatively, a 20-foot container shipping cost from China to the United Kingdom is about $1,500-$2,000 while the cost of shipping a 40-foot container from China to the United Kingdom is about $3,000-$3,550.

Apart from adding to the cost of doing business, the failure of Nigeria to grow its exports is also resulting in empty containers littering streets in Lagos, Onne, and other port cities in the country.

Statistics from the Nigerian Ports Authority (NPA) show that a total of 1,000,967 twenty equivalent units (TEUs) of containers were imported into the country in 2018, while a total of 169,653 TEUs were exported; a total of 1,032,253 TEUs were imported in 2019 while 140,116 were exported.

The statistics further showed that a total of 1,073,807 TEUs were brought into the country in 2020, while 181,406 TEUs were taken out; a total of 2,029,823 were imported in 2021, while 1,020,511 TEUs of containers were taken out the same year.

Findings show that the increase in the volume of export containers in 2021 was not due to a sudden increase in the volume of export trade but a result of the NPA’s empty container handling policy that helped to prevent the country from becoming a container dump site.

The policy mandated every shipping line to build holding bays to hold at least 50-65 percent of their monthly landed containers and to remove at least 80 percent equivalent in empties or export in return voyages.

Hassan Bello, immediate past executive secretary of the Nigerian Shippers’ Council, said empty containers litter the country, especially around the port city because the shipping traffic is one way, adding that imports come and go out empty.

According to him, for every container that comes laden with cargo, another container will be taken out laden as export to reduce the cost of freighting into Nigeria.

“The reason we have so many empty containers is because we don’t export. Growing our export trade will grow the economy. Therefore, we need to be export-oriented for the empty containers to disappear,” Bello said.

Steen Knudsen, terminal manager of APM Terminals Apapa, told BusinessDay that sending containers back to their countries of origin empty adds cost to the supply chain.

“Without export, Nigerian shippers will be paying double on one leg of the freight. Therefore, the more balance we can have in imports versus export, the lower the freight cost to enter Nigeria. If a shipping line carries containerised goods in one direction, it will charge a freight that will cover both ways. The only option available for a shipping line that is moving outbound containers empty is to add the freight cost of returning the container to the inbound cargo,” he said.

On why shipping companies find it difficult to remove empty containers that are littering roads and streets in Nigeria, Aminu Umar, a shipowner, said taking back empty containers is like transporting empty vessels, which is of disadvantage to the shipping line.

“No shipping line wants to take an empty container because it means taking an empty vessel or an empty truck with nothing inside it. The shipping companies that are taking empty containers are losing,” he said.

Citing an example, Umar explained that exporting an empty container is the same as a truck taking cargo from Lagos to the North and returning to Lagos empty because there is nothing to bring back.

According to him, shipping lines allow empties to stay longer in search of export cargo to take out instead of going with empty vessels.

Read also: Nigeria’s educational system needs maritime integration – Expert

On export performance at the port, Knudsen said different commodities are now being exported and the port is beginning to see a good plus in that area in the last four months.

“A lot of agencies are involved in export clearing at the port and our hope is that they remain allied in encouraging exports coming from not only the near coast states but also agricultural exports coming from the Central and Northern parts of Nigeria as well as those in some markets that are not yet being explored,” he said.

The shipping expert lamented that it has become unfortunate that a lot of produce goes to waste in Nigeria even for local consumption due to the lack of a cold chain and the ability to distribute these products before they could get spoilt.

He however said that there is a vast potential in gathering more exports in Nigeria.