Businesses that depend on importation for critical production inputs in Nigeria stand to benefit as the global shipping costs begin to decline after three years of hitting record highs during the pandemic.
The development brings some measures of relief to businesses in Nigeria that have been paying dearly to ship imports from seaports in Europe, the United States, China and India to Nigerian ports.
BusinessDay discovered that the cost of shipping a 40-foot container from China to Nigeria has dropped to about $4,000 from as high as $11,000 at the peak of the COVID-19 pandemic, while that of shipping a 20-foot container dropped from $7,000 to about $2,990.
Statistics from BR Logistics International, a logistics platform, put container shipping rates from China to Nigeria between $2,990 and $4,000, depending on the size, the schedule, the pick-up address, and the port of destination.
The logistics platform said the cheapest rate for 20-foot and 40-foot containers loads of furniture, medical equipment construction materials, panels, clothing, electronics, motorcycles, bikes, toys, agricultural stuff and personal effects from China to Nigeria can be from a minimum of $2,990 to $4,000.
According to icontainers.com, it now costs between $1,960 and $2,087 to move a 20-foot container from Europe to Nigeria, while 40-foot container costs between $3,542 and $5,494.
This represents a decline in rates compared to as much as $5,000 and $10,000 for a 20-foot and a 40-foot container respectively at the height of the pandemic.
Shipping from the US to Nigeria costs about $2,441 for a 20-foot container, while a 40-foot container costs between $5,332 and $9,233. Giving insight on shipment into Nigeria, Felix Odogwo, a Nigerian importer based in Milan, Italy, told BusinessDay on the phone that importers based in Europe are beginning to heave a sigh of relief as shipping costs continue to decline globally.
Citing an example, he said some shipping companies now charge between €6,000 and €7,500 to move a 40-foot container from Italy to Nigeria, depending on the city and the shipping company.
According to him, shipping companies charge between €4,000 and €5,000 to move a 20-foot container from Italy to Nigeria.
He said shipping charges depend on the particular city where the container will be moved from before getting to the port city.
Odogwo said the shipping cost changes depending on the city due to the inbuilt haulage cost of moving the container from the hinterland to the port city.
“The shipping companies will factor in the cost of transporting the container from the city where the goods were supplied and packed to the city where the port of origin is located. If the container originates from cities that are accessible by train and the container can be moved via train to the port, the shipping cost will be cheaper but if it will be delivered by truck, the distance will determine the cost,” said Odogwo.
Emma Nwabunwanne, a Lagos-based importer, who brings in goods from China to Nigeria attributed the decline in global shipping costs to high inflation rates that now eat into the purchasing power of consumers.
Read also: The Nigerian consumers and naira depreciation
He said inflation and other microeconomic indices, especially issues around the high exchange rates, have reduced the demand for household goods and slowed shipping activities into Nigeria.
According to him, businesses hardly stock up inventories like they did during the height of the pandemic that triggered difficulty in securing space onboard vessels, heightened the ocean shipping demand and doubled shipping costs.
On his part, Tony Anakebe, managing director of Gold-Link Investment Ltd, a Lagos-based clearing and forwarding firm, told BusinessDay that shipping companies are beginning to feel the impact of the lull in Nigeria’s port business.
He said volume and freight have continued to drop, and terminal operators are no longer receiving sufficient volume.
“Though there is a decline in freight rate globally, Nigeria’s case is due to the high exchange rate, which made a lot of importers lose their money. The exchange moved from a little above N400/$ at the beginning of 2022 to over N800/$ before it dropped to above N700/$. This reduced the purchasing power of importers,” he said.
He said the drop in the volume of imports also contributed to the decline in freight cost on containers coming from China and India, which skyrocketed in 2021 to over 200 percent after the COVID-19 crisis disrupted the world’s supply chain.
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