Nigerian ports: Adopting port-centric logistics strategy to drive efficiency

Seaports and maritime transportation have existed for thousands of years and they play a fundamental role in supporting e-commerce and international trade globally which has shaped world economies today.

It is estimated that about six billion tonnes of freight move through maritime transport globally, consisting mostly of liquid and general cargo. While Global trade has been growing since the 1950s, it is important to point out that the sector is very significant to the World Trade Organization and other organizations promoting trade competition globally, and this has led to the growth of the maritime transport sector.

It is important to also point out that over the past half-century, most countries have seen an increase in the GDP of their maritime transport sector. This dominance has also led to the growth of containerised trade, which has helped reduce the cost of transporting bulk cargoes when compared to other modes of transportation.

Seaports play fundamental roles in the transportation of goods and services as well as the growth of world trade and the maritime industry. They are also very strategic to economic growth, connecting global economies as well as facilitating trade and production.

There are several factors that can accelerate the growth of our Ports, if we can adopt and implement strategies that can stimulate growth, especially in areas of achieving greater efficiency, productivity, and profitability. If this is done it will help improve cargo handling facilities in our Ports.

With Lekki Deep Sea Port still under construction and projected to become operational in 2023, Apapa Port remains Nigeria’s main port. Therefore, we need to put in more effort to improve our Ports management system for it to be more competitive.

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If this is done, it will support the good job done by the Minister of transportation and his team, especially in areas of deploying electronic call-up systems for cargo trucks (known as “Eto”) to reduce vehicular gridlock in our Ports as well as attract more patronage from local and international stakeholders.

Also, with Apapa port handling larger vessels than other Ports in Nigeria, the growth of other Ports seems dependent on it, and this is supposed not to be, if well managed.

A particular feature of this system is that there is uneven growth and this has led to directional imbalances resulting in large numbers of empty containers flowing in one direction, while high freight rates exist in the opposite direction. This trend of rising cost of transport is why most developed nations have adopted strategies such as Port Centric Logistics (PCL) driven by modern digital technology to help upgrade their Ports’ level of competition as the days of Ports being mere berthing space has long gone.

Even vessels and shipping businesses are constantly tweaking strategies to upgrade their strategies, and we now have commercial ships, military ships, tourism ships fully equipped with modern technology and management system to help maximise growth. Adopting modern strategies also helps facilitate logistics and distribution services.

This model is also a good alternative to inland depots and centrally located national distribution centres. It also helps reduce the number of storage and distribution handling stages in the value chain thereby saving both time, energy, and resources.

PCL strategy is recommended by some of the world’s largest supply chain and distribution companies as businesses and economies are always looking for better solutions to improve supply chains as well as reduce the sector impact on the environment. It also helps remove unnecessary freight miles.

For example, if goods arrive at a port in the Southern part, then travel to the distribution centre in the North, the goods essentially retrace their steps if they are distributed to a customer based in the South. Meanwhile, if the goods remain at the port they arrive in and gets distributed from that same location then you would have avoided unnecessarily wasted freight miles, which gives the Port a competitive advantage, and this is very important for the port bottom line as well as helping it reduce environmental impact.

In summary, PCL helps reduce costs, streamline operations, and improve customer service as a result, shippers benefit from lower costs, shorter lead times, reduced congestion in the ports, having a more efficient supply chain, reduced carbon footprint as well as cost-effective logistics and distribution. It also helps make the management of the supply chain process simple.

Ports and companies using this model utilise innovative warehousing management systems to ensure seamless handling of goods from start to finish, from unloading and storage to pick and pack for onward distribution to help guarantee safe handling of customers goods and traceability of stock in real-time.

The important role Seaports play in the development of trade and economies of nations cannot be over-emphasised because they are the gateway and transit points through which imports and exports flow, as such seaports are critical elements of the global supply chain systems.

While Global trade enhances economic development, many countries including Nigeria needs to take advantage of this strategy to reduce and eliminate congestion in our Ports because it slows the movement of cargoes in our seaports causing idle times as well as reducing efficiency. It also negatively impacts the cost of trade and competitiveness.

The Chinese government has benefitted a lot from this strategy because they placed more emphasis on building their economy through international trade and exports and this is responsible for it having the largest shipping ports in the world as well as being a global leader in the production and export of goods.

Nigeria Ports can tailor its growth strategies just like that of China. Interestingly, the Port of Shanghai in China is the largest and busiest port in the world in terms of cargo tonnage consisting of a deep seaport and river port.

No wonder the Chinese economy is considered as the world’s fastest-growing economy, as well as Asia emerging as the continent with the most significant port growth globally, resulting in a steady growth of both international trade transactions and economic growth.

In summary, if our Ports can adopt and implement the PCL strategy, it will help us achieve increased market share, higher growth rate as well as increased profitability.