Festive imports falter as FX woes, high costs weigh on maritime business

Shippers and clearing agents in Nigeria’s maritime sector are navigating a subdued festive season as naira volatility, rising freight costs, and port inefficiencies choke import activities.

Traditionally, the festive season heralds a surge in imports, often leading to congestion at ports. This year, however, the usual bustle is noticeably absent, reflecting the country’s economic struggles.

Kayode Farinto, a maritime clearing agent, captures the sombre mood, noting that while fish imports have grown marginally by 5 percent, most other categories remain subdued due to restrictive exchange rates and soaring costs of food and transportation.

“During this season, there is always demand rush and congestion, but we don’t even have it. The volume of imports has been dropping in the last few months,” Farinto said.

“It’s the economy, the dollar has really affected the volume of imports.”

Despite the overall decline, some goods still make their way into Nigeria. Manufacturers are prioritising raw materials to sustain production in sectors like textiles, dairy, and confectionery.

“Some importers bring in fireworks to put in flare to herald in the Christmas watch night,” added Jonathan Nicol, a shipper and trade expert.

When asked if there has been increased activity at the ports, Nicol also pointed out a recent increased demand in cargo activity, not accounting for inflation, noting the urgency among importers. “

There are nominal increases in the influx of cargo in the port. Importers would want to receive their goods before the holidays. It’s normal,” he said.

To tackle bottlenecks, clearing agents are adopting pre-clearance strategie to meet demands from regulatory agencies like the Standards Organisation of Nigeria (SON), the National Agency for Food and Drug Administration and Control (NAFDAC), and Customs.

Yet, the logistical hurdles persist. “Transporters will always hold us to ransom when it comes to seasons like this. Tomorrow if I want to load a cargo of Chivita, they will charge N550,000 for a container,” Farinto lamented.

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Freight costs and port inefficiencies

High freight costs remain a pressing issue for the maritime sector. Nicol attributes the hikes to global factors, including geopolitical tensions.

“Shipping is a regular business with risks of high cost of affreightment, which we are coping with. Regular increases of freight charges are some of our challenges, especially with the global insecurities due to the wars in Ukraine and Russia,” he explained.

Additionally, unsafe shipping routes add to the financial burden. “It is what we have been going through for ages,” Nicol added.

Port inefficiencies further compound the challenges. At APM Terminals in Apapa, capacity constraints lead to significant delays during peak seasons. Farinto explained,

“There’s an increase in the volume of imports on their own area when it comes to seasonal periods like this. APMT controls and determines when they want to do delivery and when they want to do examination.”

Government measures and consumer impact

In July, the federal government announced duty-free imports for essential food items such as maize, brown rice, wheat, and cowpeas for 150 days to curb inflation and make food more affordable.

However, five months later, rising food prices continue to erode purchasing power, dampening the festive spirit.

Farinto warns that the consumers will ultimately bear the brunt. “The overhead cost will be transferred to the final consumer,” he said.

Resilience waters

Despite the mounting difficulties, shippers remain steadfast. Nicol, who is a former president of the Shippers’ Association of Lagos State (SALS), praised their resilience.

“Shippers are very resilient for bringing in cargo regularly, keeping our ports busy. We hope our challenges will come to their aid someday and reduce the local cost of clearing because it is outrageous,” he said.

For now, Nigeria’s maritime sector holds out for clearer tides but continue to weather a festive season defined by high costs and diminished activity.