You need to active Javascript on your
BusinessDay
Nigeria's leading finance and market intelligence news report.

Nigeria’s imports trapped overseas over container scarcity

… as freight rate rises 400% per 40-foot container

The global container shortage is beginning to take its toll on imports into Nigeria as a large volume of imports is now trapped in Asian countries, particularly India and China.

Foreign vessel owners are currently allocating their available scarce containers to commercially viable trade routes, such as India-United States and China-United States, rather than releasing them to load goods heading to African ports.

With this development, the volume of Twenty-foot Equivalent Units (TEUs) of containers coming into Nigeria and other West African countries may decline significantly, especially now that the festive season is around the corner.

The global shortage of containers, caused by the COVID-19-induced global port congestion, has also resulted in a rise in the prices of freight such that importers who used to pay $28 per metric ton now pay between $38 and $39 per ton from the United States to Nigeria.

Also, moving a 40-foot container from India to Nigeria now costs about $15,000 instead of $3,000, plus charges by shipping companies in the past.

Giving insight into the development, Tony Anakebe, managing director of Gold-Link Investment Limited, a Lagos-based clearing and forwarding firm, says no shipping company is willing to send vessels to ply either China-Africa or India-Africa routes except for cargo owners that are willing to pay the exorbitant costs for freight.

Read Also: More cost for importers, exporters as foreign shipping firms slam surcharges on cargoes

“There is serious congestion in ports around the globe due to the outbreak of COVID-19. There is a long wait to get containers overseas to freight goods into Nigeria, and the cost of freight has now become extremely high,” Anakebe explains on phone.

According to Anakebe, the development would seriously affect the prices of goods, especially now that the Nigerian economy is dealing with a high inflation rate.

He says no shipping line is ready to invest in the production of new containers, especially now that there is a global economic downturn where many businesses are running at loss.

The development has become a source of concern to Nigerian shippers due to the fact that it has become a huge risk to invest in importation at a time like this where the table may turn, and the freight crashes, he states.

“The development is being compounded by the fact that empty containers of these shipping companies are trapped in African countries and the United States. And the presence of these containers has become a menace in countries like Nigeria due to the low volume of export cargoes to move out with these containers,” he explains.

He however states that shipping companies now divert their limited containers to service China-United States routes because freighting a 20-foot container from China to the United States is now as high as $23,000 due to the congestion in US ports.

“We are not experiencing container shortage locally but it is affecting exporters as it has distorted a lot of transactions,” says Victor Iyama, president, Federation of Agricultural Commodity Association of Nigeria (FACAN).

Iyama says that it is the ships that bring in imports into Nigeria that take out exports, noting that if the import is being delayed, exporters will be unable to meet up their deadlines.

Iyama however expresses optimism that the situation will improve very soon, as port congestion has remained the major challenge Nigerian exporters are facing at the moment.

Whatsapp mobile

Get real time updates directly on you device, subscribe now.