ABSTRACT
With growing international sea traffic and changing technology in the maritime transport industry, sea ports are coping with mounting pressures to upgrade and provide cutting – edge technology. They are also forced to improve terminal efficiency to comparative advantages that attract more traffic. The challenging factors include: providing adequate and performing equipment, reducing berth times and delays, enabling large storage capacity and ensuring multimodal connections to hinterland, management of trucks loading and unloading of goods, missing duties and taxes, holidays ,custom clearance, unexpected and unanticipated closures. Nigeria ports especially Apapa Port has exceeded its designed capacity. It is already operating at maximum capacity for both general and containerized cargo. There are broadly several areas which influence container terminal efficiency: port’s ability to service ships at quayside: yard capacity, cargo handling equipment.
These issues have therefore prompt the study, assessment of port utilization, a case study of the ports in Nigeria.TO Investigate port utilization an ex-post factor design was employed using data set from for twenty-five years culled from the Central Bank of Nigeria, Statistical bullentin for various years, UNCTAD Data Portal, and NPA Annual Report.The study relies on time series data, non probability sampling techniques was used in this study, this study employed the use of secondary data.
The method of data analysis are: Augmented Dickey-Fuller unit , Co-integration test, Ordinary Least Square Regression Analysis and model stability test. The real gross domestic product is the dependent variable while cargo throughput which is proxy to port utilization, port infrastructural development and gross registered tonnage are the independent variables serving as the control variables. The result shows that there exist a long run relationship between the real gross domestic product and the explanatory variables. Gross domestic product and Port infrastructural development showed a significant positive relationship with the dependent variable at 1% increase in GRT and PID will improve the Nigerian economy substantially, Cargo throughput is negative statistically significant at 5% level. Though there was joint significance among the variables at 1% level, hence the Nigerian economy can benefit enormously from port utilization achieved when all the short run distortions are corrected. The study therefore recommends among other things the need for policies that ensures a relatively robust port infrastructures and an efficient utilization of same .More so there is need for policies that can attract investors to the maritime sector in Nigeria.
CHAPTER ONE
INTRODUCTION
1.1. Background of study
It is expedient to say that, over 90 percent of International Trade is executed through sea by ships. It is believed that on a daily basis, these ships pass hundreds of thousands of tons of cargoes comprising items and commodities, fuel, crude oil, uncooked materials, machinery and equipment, foodstuffs, medicaments, around the world. The state of affairs is not different in Nigeria, being a member of the global community. It is estimated that over 90 percentage of her seen worldwide alternate is sea borne. The maritime industry, if properly harnessed, has the ability to be a viable element in the national economy, with revenue at maximum potentials, capable of competing with oil and gas revenue. Maritime income can be an important contributor to the Gross Domestic Product (GDP) of a nation. Gross domestic product (GDP) estimates are often used to measure the economic overall performance of an entire country, however can additionally measure the relative contribution of an industry or sector. The economic growth of a country depends on how the environment is friendly, price effective and the port is operated and managed. Just as the financial boom of a nation demands for port facilities, so also the port facilities have to be run or operated efficaciously to enable in addition economic boom or growth (Emeaghara, 2008). The World Bank’s logistics Performance Index (LPI) and United Nation Conference on trade and Development (UNCTAD’s), Logistics and Supply Chain Index(LSCI) are focused at espousing facts about nations trade competitiveness in the location of transport and logistics (Jean-Francois and Lauri, 2014).
Transportation occupies one-third of the amount in the logistics expenses and transportation structures have an impact on the performance of logistics device vastly (Tseng, Yue and Taylor, 2005). Transportation is required in the complete manufacturing procedures, from manufacturing to shipping to the closing shoppers and returns. Only a top coordination between every factor would deliver the advantages to a maximum.
It is important to note that monetary increase partly depends upon shifting items successfully and safely via the transportation chain. Since the current situation of world exchange goes to mobile vessels, as a consequence the demand for transportation of goods through sea increases tremendously. In view of this, more and extra terminals are increasing in order to cater for reachable demand (Olayinka and Ogundele, 2015). In other words, improved supply chain and logistics (seaport development) will warranty trade expansion and huge foreign direct investment. This means that transportation and logistics improvements are integral to change flows and the competitiveness of an economy’s exports and imports.
Containerization of ship cargo used to be first added in 1956 (Levinson, 2006), aiming to cut down the prices of maritime transport by means of lowering cargo handling costs. Instead offloading/unloading every piece of transport object to or from a ship in a labor-intensive manner, containerization will increase the effectivity and pace of transport by reducing the packing requirements and dealing with strategies at all switch points that is between port, rail and road.
At the stop of 2005, the world container fleet was once anticipated to have elevated to 21.6 million TEUs (Twenty-foot equal units) (UNCTAD, 2006). Thus, nations besides adequate unitized transport amenities will be downside in their worldwide exchange (Castro, 1999).
In order to attain economies of scales, new ships are constructed with larger capacity. To date, the greatest container vessel can only lift 11,000 TEUs. However, the deployment of larger ships needs big funding in supplying increased depth alongside the berths of the calling ports as properly as greater effective quay cranes with lengthy outreach and elevate height. For efficient operation, ports additionally require a massive storage yard and a higher street and rail infrastructure. To satisfy the developing demand of container berths, ESCAP (2005) estimates that US27 billion is needed from 2002 to 2015 for 569 new container berths in Asia and pacific location (ESCAP, 2005). With regards to the developing worldwide sea traffic and altering science in the maritime transport industry, seaports are coping with mounting pressures to improve and provide state-of-the-art technology. They are additionally being pressured to extend container terminals efficiency to supply comparative blessings that will induce greater traffic. Some of the key challenging elements terminal operators are surmounting is the impenetrable traffic flows and prevent diversion to close by ports such as managing containers and cargoes are increasing rapidly, providing sufficient and performing equipment, lowering berth instances and delays, enabling large storage capability and making sure multi-model connections to hinterland (Castro, 1999).
However, container terminals effectivity is frequently related with productiveness and performance; also extra elements that are related with the extra organizational facet of manufacturing such as how efficaciously ports use inputs to produce present day output stages and whether or not the technologies adopted via container terminal operators are most efficient, that are imperative to determining container terminals efficiency (Chin & Tongzon, 1998). Efficiency frequently means speed and reliability of container terminal services. In a survey carried out by using UNCTAD (2011), ‘on-time delivery’ used to be noted to be a foremost issue by means of most shippers (UNCTAD, 2006). In fast-paced industries merchandise ought to be moved to the markets on time, terminal operators are vital nodes in logistics chain and as such should make delivery traces very reliable. These encompasses on-time berthing of vessels, quick turnaround time for vessels and assured connection of containers. That is the complete turnaround time it takes to wait for a pilot to berth, terminal time, un-berthing and ultimate departure from port place (Tongzonand & Ganesalingam, 2009).
Terminal effectivity can be mirrored in the freight costs charged through transport companies, turnaround time of ships and cargo residing time. The longer a ship stays at berth, the higher is the value that a ship will have to pay. This can be exceeded on to shippers in phrases of higher freight costs and longer cargo lay time, consequently lowering the splendor for them to hub at a port. Tongeon & Ganesalingam (2009), recognized a number of indications of terminal efficiency and classified them into two groups, namely: operational efficiency measures and customer-oriented measures. The first set of measure offers with capital and labor productivity as nicely as asset utilization rates. The second set consists of direct charges, ship waiting time, minimization of delays in inland transport and reliability (Tongzon and Ganesalingam, 2009).
A Survey carried out by the West African Logistics Performance displays significant improvement in port and hull efficiency. Ongoing reforms and infrastructure improvements at the port have yielded great outcomes as cargo dwell time has dropped from a common 6.5 days in 2011 to 5 days in 2012. Despite these improvements, the efficiency at the port is nonetheless beneath the internationally desirable requirements of a maximum three days dwell time (West African Logistics Performance Survey, 2012). Compared to 2011, hull effectivity has barely increased ensuing from concerted efforts with the aid of ECOWAS governments to improve regional street infrastructure and put off non-tariff barriers. Despite these initiatives, truck turnaround instances stay low as a common truck document much less than 5,000KMs per month in opposition to an enterprise exercise of 9,000 to 12,000KMs per months (West African Logistics Performance Survey, 2012). The effectivity of container terminal is still affected by the excessive regulatory burden of the avenue transport area with several checkpoints (weight bridges, customs and police checks) alongside the transport corridor. This state of affairs is compounded with the aid of congestion in urban areas alongside the transport hull and much less than adequateinvestment in the rail mode of transportation to correctly complement the avenue transport gadget (West African Logistics Performance Survey, 2012).
Apapa Port is the biggest in West Africa and a quintessential gateway for imports and exports to Nigeria and its neighboring countries. The imports and exports that skip via the Apapa port are quintessential to Nigeria’s monetary growth, and to the financial well-being of its neighbors as well. Liquid bulk items, typically petroleum, oil and lubricants are the single greatest import shipment through weight. Nigeria’s economic system (and most other countries of the ECOWAS) which rely on imports for all of its petroleum needs, would grind to a halt. The subsequent shipment by way of weight; grain, coal, iron ore, bauxite, phosphate are fundamental in meeting the country’s aids.
Conversely, Apapa port has handled its capacity, but it is predicted to handle growing imports and exports. The port is already working at utmost capacity for both general and containerized cargo, and will go through innovative declines in operational effectiveness until each ability and terminal effectivity problems are urgently addressed. In phrases of capacity, container imports at the port have risen on common 10 percentage each year considering 2005, in spite of extraordinarily low GDP boom fees in 2007 to 2008. In term of efficiency, quite a few key problems want to be addressed for each import and exports that relate to motion of items through the port, and inefficiencies triggered by means of the administration of trucks loading and unloading goods, stowage, series of customized duties, inspection, etc.
The operational capability for container cargo is especially acute with the developing demand in containerized cargo; the Apapa port is going through serious potential issues.
Short-term immediately have an effect on accelerated vessel delays, port congestion surcharges, and slower throughput of the port (when congested) for this reason inflicting sizeable cargo delays and higher prices on importers.
Exporters additionally accelerate expenses due to feasible unscheduled delays at the port, disappointing clients who have primarily based their personal commercial enterprise choices on constant delivery schedules. It is against the background of the afementioned that this research is undertaken to carry out an assessment of port utilization on the Nigerian economy.
1.2. Statement of the Problem
With growing international sea traffic and changing technology in the maritime transport industry, sea ports are coping with mounting pressures to upgrade and provide cutting-edge technology. They are also being forced to improve terminals efficiency to provide comparative advantages that will attract more traffic. Some challenging factors include: providing adequate and performing equipment, reducing berth times and delays, enabling large storage capacity and ensuring multi-modal connections to hinterland (UNCTAD, 2006); as well as improving infrastructures (Haralambides 2002). Terminal operations are affected not only by the larger number of vessels that call at the port, but also by the increased variability of call sizes. Vessels of over 15000 TEU are becoming increasingly common (Cullinane and Khanna 1999). This will concentrate container flows on a few mega ports, in turn influencing berth and crane efficiency of the terminal and adding pressure on hinterland links, often with adverse effects on congestion and the environment (Yap and Lam 2013).
Nigerian ports especially Apapa Port has exceeded its designed capacity. It is already operating at maximum capacity for both general and containerized cargo, and will suffer progressive declines in operational effectiveness unless both capacity and terminal efficiency issues are adequately addressed (NPA, 2010). Container imports at the port have risen on average 10 percent each year since 2005. Some key problems associated with the inefficiency of the port are: dwell time, management of trucks loading and unloading goods, custom clearance, custom examination, missing documents, missing duties and taxes, holidays, unexpected and unanticipated closures etc. There are broadly several areas which influence container terminal efficiency: port’s ability to service ships at the quayside (or at berth); yard capacity (to store goods before collection), cargo handling equipment, infrastructure etc. These issues have therefore prompted the study, assessment of port utilization, a case study of Apapa port.
Igbokwe (2013) is of the opinion that there has been little improvement in the efficiency and productivity of the port management in meeting the International Maritime Organization (IMO) stipulation of 48 hours cargo clearance. The situation in Nigerian Ports is that handling equipment and plant are either obsolete, malfunctioning, insufficient. Thus, slowing down cargo handling operations, stacking and onward transfer of cargos to consignee. Consequently, leading to low port productivity, longer ship turnaround time, inefficiency, damage of cargo, detention, demurrage and high corruption level at shippers expenses, port operators and consignees. These factors summed up, tends to make the port users unfriendly and unattractive to some shipping lines. Thus, shippers and importers to transit their cargo to neigbouring ports of Contonou in Benin Republic (Kareem, 2000). Nigerian ports are characterized by the problem of predominant use of road transportation for movement of cargoes. Road transport has been relied upon to move cargoes from the port to other parts of Nigeria. The concept of intermodals has been neglected in Nigeria, inter modalism which is the synergistic interrelation of all model of transport working together as a complete system for the purpose of transporting passengers and cargoes is not given proper attention by stakeholders. Port infrastructures enhances port operation which includes stowage of cargoes, schedule of arriving vessels, allocation of wharf space and cranes for loading and discharging cargoes from the vessels. In addition, port operations such as yard operation, gate operations scheduling and income generation into the economy are all indices of port productivity measurement. This in turn necessitated the enquiry about the relationship between port productivity components and port productivity. Hence this research work is predicated on the hypothetical statement of no relationship between port utilization components and Nigerian economy.
1.3. Aim and Objectives of the Study
The main aim of this research is to carry out an assessment of port utilization on the Nigerian economy.
The objectives of this research include:
- To ascertain how the quality of port infrastructure has affect the economy.
- Determine role of cargo throughput on the economy.
- To determine if there is co -integrating relationship among port utilization and the economy.
1.4. Research Questions
i Is there any significant relationship between the quality of port infrastructure and the economy?
- Does cargo throughput have any effect on the economy?
iii. Is there a co -integrating relationship among port utilization and the economy?
1.5. Significance of the study
This study is certainly substantial due to the fact that Maritime Industry performs a principal function towards the economic boom and improvement of a country. The ports has a strategic importance a long way past the borders of Nigeria. As the dominant port in West Africa, it is the main gateway for the import and export of cargoes in the economy, additionally to international locations of the West African Community.
Moreover, these findings seek to be advantageous to all stakeholders and gamers inside the maritime enterprise especially container terminal operators and coverage makers due to the fact that these findings from the research will provide an in-depth understanding of the realistic implications on container terminal utilization. The findings will additionally be a source for future lookup and practical implications as well, in particular to those who choose to do comparable lookup with the aid of assessing the factors that influence the container terminal effectivity in the maritime industry.
1.6. Scope of the study
The study is focused on an evaluation of seaport capacity utilization in Nigeria, the ports in Nigeria will be used as a case study.
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