• Thursday, March 28, 2024
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Corporates’ profit margins dwindle over high logistics cost in Apapa ports

Apapa port

Profit margins of corporate entities using the Apapa Port have gradually dwindled following the significant increase in logistics costs , the 2018 edition of the Nigerian Logistics and Supply Chain report reveals.

The report revealed that in the last quarter of 2018, haulage of a one by 40 foot container transported for N120,000 while one by 20ft container transported for N80,000 to warehouses within Lagos, increased by 400 percent to N600,000 and N550,000, respectively.

Also, the report, which was launched in Lagos last Wednesday, stated that transporting one 20ft container from Apapa or Tin-Can Island port, to Kaduna increased from N500,000 to N900,000 while it cost N1 million to transport a 40ft container from two ports in Lagos to Kano, which used to cost N600,000.

According to the report, transporting a 40ft container from Apapa or Tin-Can Island port to Kano or Yola now stands between N1.4 million and N1.5 million while the cost of transporting a 20ft container to Onitsha, the commercial nerve centre of the southeast, rose from N250,000 to N550,000 and transporting a 20ft container increased to N750,000.

“A review of the financial statements of some publicly quoted firms gives credence this. Honeywell Flour Mills Plc, a major flour milling company in Nigeria, attributed the dip in its profitability in 2017 to the Apapa traffic gridlock, saying that the dilapidated road infrastructure and chaotic traffic situation in and around the nation’s premier port, made it inordinately difficult, and enormously expensive to transport goods out of the factory in Tin-Can island. This challenge resulted in a transport cost increase of about 25 percent,” the report states.

“Flour Mills of Nigeria also stated in its nine months financial statement review in 2018 that the devastating effect of the traffic congestion in Apapa resulted in a 2 percent loss in revenue to N297 billion, compared to N304 billion in the corresponding period. Another firm hugely affected was Dangote Sugar Refinery Plc for rise in haulage cost by 1,615 percent in 2018.

“Small scale businesses, especially those involved in the exportation of agricultural produce are not left out in the crisis. According to estimates by the Lagos Chamber of Commerce and Industry, Nigerian exporters lose $10 billion annually due to Apapa gridlock, as trucks bearing goods meant for export spend upwards of three weeks within the neighbourhood of the port before gaining access to the terminal,” the report added.

Due the protracted delays, the report noted that the quality of most of the goods depreciates before they get to their destinations, adding that it is one reason many Nigerian goods are usually rejected for failing to meet the required standards, as they are usually perishable goods with limited life spans.

Speaking at the launch in Lagos, Obiora Madu, director-general of the African Centre for Supply Chain, who said that the report, which was produced to provide information on Nigeria’s logistics sector, pointed that deficit in logistics infrastructure has serious impact on cost of doing business .

Madu disclosed that it is cheaper to bring a container from China than to take it out of the port to the importer’s warehouse. He added that the road infrastructure depleted as a result of the demise of rail infrastructure.

“To address the Apapa problem, we need to rebuild our road infrastructure. There has to be a way of isolating vehicles which have business in the port and those looking for business. If we have Radio Frequency Identification (RFID) tags on those trucks that have business, it will become easy to isolate them,” Madu said.

Delivering the keynote speech, Uma Obasi, said that without modern transportation systems and infrastructure, a country remains underdeveloped.

Obasi, who pointed to development of modern rail infrastructure as a way of resolving the problem of Nigeria’s logistics infrastructure deficit, said European development economists have argued that the existence of modern transportation networks- such as high-speed rail infrastructure constitutes a significant indicator of a country’s economic advancement.

 

AMAKA ANAGOR-EWUZIE