Performance Evaluation Of Nigerian Ports' Terminal Operations. Logistics And Transport (1961-2017)


Term Paper, 2020

16 Pages, Grade: 4.5


Excerpt

Abstract

This paper x-rayed the performance of the Nigerian ports at terminal operations vis-a-vis logistics/transport activities from 1961-2017. The data on cargo movement were derived from the Nigerian Port Authority Annual Reports. The study relied on descriptive statistics, trend analysis, regression analysis of ordinary least square estimate and port performance indicators such as awaiting berth, at-berth, berth occupancy and throughput in explaining the trend of port performance for the periods under review. The trend analysis employed to explain the trend of cargo movements in all the ports in Nigeria was the Quarterly Moving Averages. It was revealed that the trend of cargo throughput in Nigeria is determined by the inward cargo movement. The analysis also revealed a fluctuation in cargo movement from 1961 to 2005 while the cargo throughput continues to increase unabated from 2006 to 2017. The concession of the port must have been responsible for this upward movement in cargo trend. There was a remarkable increase in inward and outward cargo movement during the post concession era in comparison to the pre-concession era. Conclusively the performance evaluation has revealed that there is no significant relationship between awaiting berth (as a performance indicator in Nigerian ports) and the real gross domestic products in Nigeria; there is no significant relationship between the at-berth (as a performance indicator in Nigerian ports) and the real gross domestic products in Nigeria, there is no significant relationship between the effect of berth occupancy (as a performance indicator in Nigerian ports) and the real gross domestic products in Nigeria and there is no significant relationship between the throughput (as a performance indicator in Nigerian ports) and the real gross domestic products in Nigeria from 2000 to 2017. This paper recommends that government encourages public ownership and private sector operations of the port infrastructure in Nigeria so that the ports can perform optimally.

Keyword: Performance evaluation, Performance Indicators, Logistics, Transport, Nigerian Ports

1. Introduction

A port is a location on a coast or shore containing one or more harbours where ships can dock and transfer people or cargo to or from land and this involves high level of logistics/transport. Port locations are selected to optimize access to land and navigable water, for commercial demand, and for shelter from wind and waves. The use of the sea as a means of transport in Nigeria dates back to the 15th century (1485) when the Portuguese sailed into Lagos with their vessels basically to trade on artifacts in Benin City. From the pre-independence era till date, the nation's maritime industry is characterized by the domination of foreign vessels and/or carriers from the developed market economies of Western Europe and America. In order to control this scenario, subsequent developments led to the opening of ports at Apapa and Port Harcourt, rolling in the creation of the Nigerian Ports Authority (NPA) by the provision of Ports Act 1954 to load and discharge as well as maintain and develop the ports (Njoku, 2009).

From the commencement of operation of the NPA in 1956, Nigeria had operated a service port model. This was fraught with a lot of challenges which informed the idea of switching over to a landlord port model or port concession. The port concession program was completed in 2006 after an international competitive bidding process. This led to the emergence of 26 terminals which were concessioned to private terminal operators on the Build, Operate and Transfer (BOT) model. The reform brought about ceding of cargo handling operations at the port to private terminal operators, leaving NPA as the landlord.

The raison d'etre of this study is to evaluate the performance of ports' logistics/transport in relation to the terminal operators, appraise the measures/performance indicators adopted by the concessionaires to bring about the change and to make recommendations based on the findings. The scope of this work covers all the exiting ports as at the time of this research. The evaluation parameters were based upon port performance indicators such as awaiting berth, at-berth, berth occupancy and throughput.

2. Literature Review

2.1 Historical Background of Port Development in Nigeria

The history of port development in Nigeria can be dated back to the 19th century. This was after the onset of sea borne trade and transactions which followed the adventure of early exploration on the Africa coasts. Initial efforts towards provision of facilities for ocean going vessels were the attempt to open up the entrance of the Lagos lagoon. Considerable littoral drift occurred along the coast and the constantly shifting channels in the bar at the entrance made entry very difficult. On February 1, 1914, the first mail - steamer Akoko drawing (vessel) 5.64 metres entered the Lagos harbour. Months later, vessels began to use the facilities provided at the customs wharf on Lagos Island. Prior to this time, exploration and trade activities involving European Missionaries and businessmen in Africa made the existence of the port on a wide coastal stretch from Calabar to Lagos imperative. Specifically, in the 15th century the European opened marine contract and discovered the rich natural resources in the west and central region that were needed for their economic and industrial revolution. The first major breakthrough in opening the Lagos lagoon was in 1906 when orders were placed for dredgers to work at the bar. During the same year approval was given for the construction of the first length of the east mole (massive wall).

The construction of railway from Lagos to Ota and then to Abeokuta provided easy transportation of stone needed for the construction of the mole. Depth over the bar increase steadily as the entrance moles were pushed further seawards. The development of water transportation in Nigeria also brought about the development of other modes of transport such as rail and road networks. Decision to develop Apapa port was taken in 1913 and construction of the four deep-water berths of 548.64 metres long at Apapa began in 1921. Twenty-seven years later (1948) an additional 762 metres of berthage were constructed as continuation downstream of the first four berths and around 41 hectares of reclamation behind the warehouses and marshalling yards. The discovery of coal at Enugu motivate the building of ports in the eastern flank of the country; work commenced on the building of Port Harcourt wharf during the first quarter of this century. In 1913, Port Harcourt was opened to shipping by Lord Lugard, the governor general. The railway line to Enugu was completed three years later in 1916. A berth for colliers (coal miners) was dredged out and constructed as a place where loading could be affected (Ogunsanya, 2010).

Within the first eleven years (1955 - 1966) of its existence as a corporate body, the NPA focused on fundamental issues vital to the success of the port industry and equally relevant to the overall development of the national economy. In recognition of the importance of having trained hands on its payroll and in response to the policy of Nigerianization in the year preceding independence in 1960, the NPA embarked on an elaborate manpower development through cadetship training awards. Emphasis was on Marine Engineering, Accountancy, General Management, Civil, Mechanical and Electrical Engineering. By the early sixties, beneficiaries of this training award had begun to graduate and to form the core of Nigerian professionals to shape the future of the ports industry. The authority within this period, continued to sustain the efforts already made towards expansion of port facilities in Lagos and Port Harcourt. In Lagos, six berths of 943m quay length were added to the existing ones, while four berths with a total quay length of 506m were added to the facilities and steps were taken to mechanize the traffic operations in these ports. In this era, port development approach became tailored along declared national objectives. The Authority’s development strategy became programmed to fall in line with the first National Development plan 1962 - 1968. The second Apapa wharf extension was executed and so also were further improvements of port facilities in Port Harcourt.

The Civil War era (1967 - 1970) had tremendous impact on the ports industry in Nigeria. The security aspect of port came into sharp focus. Port Harcourt (Rivers Ports) was closed to foreign traffic. Lagos thus became the only available port serving the country’s maritime transport needs. The Federal Military government enacted a special decree which empowered NPA to acquire port of Warri, Burutu and Calabar, previously operated by private entrepreneurs. Holts transport were former owners of Warri port, UAC owned Burutu port. Calabar port was originally owned by five operators. Lagos port with its comparatively limited capacity was made to bear the weight and burden of the tremendous flow of war time cargoes and other goods coming into the country.

The Federal government drew up its second National Development plan (1970 - 1974) which was the first major policy thrust in reconstructing and rehabilitating the civil war damaged economy. The sum of N4.1million was initially made available for the rehabilitation of port infrastructures and necessary mechanical handling equipment. The rehabilitated and reconstructed ports include Port Harcourt, Bonny, Calabar, Koko and Lagos. Thereafter the civil war, port congestion was experienced in two different dimensions: ship congestion and cargo congestion. One of the adverse effects of the port congestion was on the nation’s external reserves. A demurrage estimated at $4, 120 per day for each cement vessel for delay in excess of ten days was paid by the Federal government. The period can rightly be described as a major turning point in the history of ports development as the port’s management ceased to be just an NPA affairs, it became a national issue. The nation also witnessed enormous growth and development in port owing to the oil boom days of 1970s and 1980s. On October 14, 1977, the ultra-modern Tin Can Island port was commissioned. Two years later (16th June 1979) the new Warri port was commissioned together with the new Calabar port (19th June 1979) bringing the number to eight (8) with a total annual capacity of 25 metric tons. The Federal Ocean Terminals at Onne with a maximum draught of 13 metres was constructed to cater for sub-regional transshipment trade and also the old Apapa Port was upgraded to cater for more than general cargo trade (Ogunsanya, 2010).

2.2 Comparative Analysis of Nigerian Ports Performance during the Pre- Concession and Post Concession Periods

It is worthy of note that average cargo throughput from 1956 to 2005 is 14,467,024 metric tons while the average cargo throughput from 2006 to 2012 is 67,240,231.86 metric tons. The yearly average cargo throughput of 67,240,231.86 metric tons of cargo from 2006 to 2012 over the yearly average of 14,467,024 metric tons from 1956 to 2005 shows a percentage increase of 456.69%. This shows the remarkable progress made in our port developmental efforts since the port concession era. In a nutshell, the pattern in Nigerian port traffic during the pre-concession era is sinusoidal while the post concession experienced a sharp progressive rise. The statistics on Table 2 shows that the cargo throughput increased from 46,150,518metric tons in 2006 to 77,104,738metric tons in 2012. This means that between 2006 and 2017, cargo throughput at the nation's ports increased by over 67 per cent. This was as a result of the landlord model of port management which was adopted in 2006 that led to the concession of sections of the ports to private terminal operators, otherwise called concessionaires, and has led to the consistent improvement in cargo throughput.

Table 1: Cargo Throughput at Nigerian Ports (Pre & Post Concession)

Abbildung in dieser Leseprobe nicht enthalten

Table 1 shows the inward cargo trend from 1961 to 2017. It follows the same pattern like the cargo throughput trend. The trend of cargo throughput follows the same pattern as import trend. It means then that the trend of cargo throughput is greatly determined by the trend of import or inward cargo movement. In a nutshell, the pattern in Nigerian port traffic during the pre­concession era is sinusoidal while the post concession experienced a stable and continuous growth as indicated with the blue line. The trend concurs with that witnessed in total cargo throughput which is clear evidence that the pattern of Nigeria's port traffic is controlled by imports. During the period 1961-2017 import traffic overwhelmed exports. Table 1 also, shows the outward cargo trend from 1961-2017 the export trend was analogous which means there was no improvement in export activities. However, small improvement was recorded from 1971-1974 with a slight upward tilt of the trend line. The situation reversed to the parallel trend from 1975-1987. This means that there was a downward tilt of the trend line. The period 1988­1999 witnessed a slight improvement in export activities with a slight upward tilt of the trend line while the trend line experienced a sharp upward movement from 2000-2017.

Abbildung in dieser Leseprobe nicht enthalten

Table 2 shows the volume of cargo throughput handled at the Nigerian ports from 1956 to 2012. Cargo throughput is the sum of both the inward and the outward cargo processed by the ports in the given period. There was a slow growth in cargo traffic from 1956 to 1974; and the fall noticeable in-between 1966 and 1970, as a result of the civil war, was not enough to utterly obscure the growth trend. The rise in traffic between 1975 and 1979 was significant although the rise began in 1970. The abrupt rise was not preceded by port development sufficient enough to handle the traffic. The result was the 1975-1978 congestion problems which stemmed from the massive importation of cement called ‘cement armada' and other construction material for the rehabilitation of infrastructure destroyed by the civil war. Traffic dropped from 20,075,237 metric tons in 1979 to 17,957,195 metric tons in 1980, peaked again in 1981 and then suffered serious decline that coincided with the global economic recession. This downward trend can be ascribed to the austerity measures introduced by the then government with the view to revamping the ailing economy. The downward trend continued for about nine years with the total cargo throughput in 1989 falling to 13,376,187metric tons. The traffic picked up again in 1990 only for a brief period as it fell during the county's political uncertainty of 1992 and 1993. Since 1996 there has been a rapid rise in cargo throughput culminating in an unprecedented volume in 2016 with a slight decline in 2017.

2.3 Nigerian Ports and Performance of Terminal Operations

Before the advent of port concession (1956-2005), the Nigerian port system suffered from numerous ills which included the following: The turnaround time for ships was too long and usually calculated in weeks, sometimes months, depending on the cargo being loaded or discharged; Cargo-handling plants and equipment owned by the NPA were few and mostly unserviceable leading to shipping companies hiring these machines from private sector sources after having paid NPA; Dwell time for goods in ports was prolonged due to poor port management and as a such overtime cargo filled the most active seaports leading to port congestion; Labour for ship work was held in the vice-grip of wharf overlords who controlled dockworker unions and supplied less than the manpower paid for. This fraud, which became accepted by the maritime community lasted for years and was usually perpetrated to extract maximum revenue from helpless ship owners and their agents without minding how this impacted on the Nigerian economy and the already dented image of the Nigerian seaports. As a result of the compounded problems, the Nigerian seaports were rated as one of the costliest seaports in the world. Consequently, it adversely affected the patronage of our seaports (Njoku, 2009). The Nigerian ports witnessed a rapid transformation as a result of this reform in which Nigerian ports were concession to the port operators called concessionaires. The ports as well as the terminal operators are under-listed as follows:

Table 2: Ports Terminals and Operators

Abbildung in dieser Leseprobe nicht enthalten

Bert Kruk (2008) also opined that the ills that bedeviled Nigerian ports before port concession in 2006 includes long turnaround time for ships, insecurity of cargo, unproductive labour force in NPA, multiple government agencies in the port, corrupt practices and excessive charges. Alan Harding et. al. (2007) held that Africa accounts for less than one percent of world container traffic. An extra 2,200 TEU vessel service from Europe to a small country in the West and Central Africa sub-region would have a 27 percent market share whereas a 5,500 TEU vessel from the Far East to Europe would potentially generate a 3.6 percent market share taking into account market size. For shipping lines, port turnaround time has become an increasingly important factor to decide which port to call in the world. One extra day at a port costs more than US$35,000 to a shipping line for a 2,200 TEU vessel. He therefore suggested the need for reform.

Ndikom (2006) stated that many port premises and quay aprons had fallen to disuse and failed road sections inside the ports made movement of goods within port grounds cumbersome and very slow. Following the seaport congestion, complaints of untraceable or missing cargoes were being regularly lodged against the NPA, all to no avail. Security inside Nigerian seaports was compromised by the relentless ingress of multitudes of all shades of persons into the seaports. As a result, miscreants called wharf rats easily gained access into the ports and pilfered goods in storage or vehicle parts. In fact, security within port grounds was at the mercy of an elusive racket.

[...]

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Details

Title
Performance Evaluation Of Nigerian Ports' Terminal Operations. Logistics And Transport (1961-2017)
Course
Maritime Science // Maritime Transport
Grade
4.5
Author
Year
2020
Pages
16
Catalog Number
V978320
ISBN (eBook)
9783346333148
Language
English
Tags
performance, evaluation, nigerian, ports, terminal, operations, logistics, transport
Quote paper
Dr. Newman Enyioko (Author), 2020, Performance Evaluation Of Nigerian Ports' Terminal Operations. Logistics And Transport (1961-2017), Munich, GRIN Verlag, https://www.grin.com/document/978320

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