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Posted: February 9th, 2023
Analyzing the impacts of congestion at Nigerian ports on safety, delays and costs
Introduction
Nigeria is the largest economy in Africa and one of the most populous countries in the world. Its ports are vital for its trade and development, as they handle about 80% of the country’s imports and exports (World Bank, 2019). However, Nigeria’s ports are also among the most congested and inefficient in the world, causing significant losses for the economy and the society. According to a report by Dynanmar, a Dutch consultancy firm, Nigeria loses about $55 million per day due to port congestion (The Guardian, 2019). This paper aims to analyze the impacts of congestion at Nigerian ports on safety, delays and costs, and to propose some possible solutions to address this challenge.
Safety
Port congestion poses serious risks for the safety of port workers, truck drivers, cargo owners and the general public. Congestion increases the likelihood of accidents, theft, vandalism, fire and pollution at the port terminals and on the roads leading to the ports. For example, in January 2021, hundreds of heavy duty trucks were stuck on the roads in Lagos, waiting to get access to the Tin Can Island port, one of the busiest ports in Nigeria. The congestion created traffic chaos, environmental hazards and security threats for the drivers and the residents (Africanews, 2021). Moreover, congestion affects the quality and integrity of the cargo, especially perishable goods, which may be damaged or spoiled due to long waiting times, exposure to weather conditions and poor handling.
Delays
Port congestion causes significant delays in the movement of goods in and out of Nigeria. Delays affect not only the port operations, but also the entire supply chain, including customs clearance, inland transportation, warehousing and distribution. Delays increase the uncertainty and unpredictability of trade flows, which negatively affect the planning and performance of businesses and consumers. According to a study by the World Bank (2019), it takes an average of 20 days to clear imports and 22 days to clear exports at Nigerian ports, compared to 10 days and 8 days respectively in Sub-Saharan Africa. Delays also reduce the competitiveness of Nigerian products in the regional and global markets, as they increase the lead time and delivery costs for customers.
Costs
Port congestion imposes significant costs on the Nigerian economy and society. Costs include direct costs, such as higher port charges, demurrage fees, storage fees, transport fees and insurance premiums; and indirect costs, such as lost revenue, lower productivity, higher inventory levels, lower quality standards and customer dissatisfaction. According to a report by WorldCargo News (2020), container vessels were forced to wait for more than 20 days at Lagos ports in January 2020, with some shipping lines diverting Nigeria-bound cargoes to neighboring ports or imposing congestion surcharges. The report estimated that each day of delay costs about $15,000 per vessel. Furthermore, port congestion affects the macroeconomic performance of Nigeria, as it reduces its trade volume, foreign exchange earnings, tax revenue and economic growth.
Conclusion
Port congestion is a major challenge for Nigeria’s trade and development. It has negative impacts on safety, delays and costs for port stakeholders and the society at large. Port congestion is caused by multiple factors that include ageing infrastructure, inadequate rail transport, lack of automation and poor coordination among port agencies. To address this challenge, Nigeria needs to implement comprehensive and collaborative solutions that involve improving port infrastructure, enhancing rail connectivity, adopting digital technologies and streamlining port processes.
References
Africanews (2021). Congestion stalls operations at Nigeria’s busiest ports. Retrieved from https://www.africanews.com/2021/01/20/congestion-stalls-operations-at-nigeria-s-busiest-ports/
Dynanmar (2019). Port Congestion / Delay Status Data – Nigeria. Retrieved from https://www.gocomet.com/real-time-port-congestion/nigeria
The Guardian (2019). Nigeria loses $55 million daily to port congestion. Retrieved from https://guardian.ng/business-services/nigeria-loses-55-million-daily-to-port-congestion/
World Bank (2019). Connecting to Compete 2018: Trade Logistics in the Global Economy. Retrieved from https://openknowledge.worldbank.org/handle/10986/29971
WorldCargo News (2020). Congestion worsening in Lagos ports. Retrieved from https://www.worldcargonews.com/news/congestion-worsening-in-lagos-ports-63680
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