Appraisal of the Performance of Terminal Operators in the Development of Their Host Communities

Appraisal of the Performance of Terminal Operators in the Development of Their Host Communities

CHAPTER ONE

INTRODUCTION

Background to the Study

A port is a site on a coast or coastline that has one or more harbours where ships can dock and unload or load passengers or freight onto or off of the land, requiring a high level of logistics and transportation. Port locations are chosen for their ease of access to land and navigable water, commercial demand, and wind and wave protection. The Portuguese arrived in Lagos with their ships in the 15th century (1485) mostly to trade antiquities in Benin City, which is when the sea was first used as a mode of transportation in Nigeria (Akinwale & Aremo, 2020From before independence, foreign carriers and/or vessels from the advanced market economies of Western Europe and America have dominated the country’s marine business. The Nigerian Ports Authority (NPA) was established following the Ports Act of 1954 to load and discharge as well as maintain and expand the ports as a result of subsequent advancements that led to the opening of ports at Apapa and Port Harcourt (Akinwale & Aremo, 2020).

The modern economy is dependent on container ports and terminals. Since the middle of the 20th century, containerization has significantly decreased the cost of transport for international trade. Before the invention of the container, shipping goods was so expensive that few items were shipped halfway across the nation, much less halfway around the world. However, at present, an American brand car may be designed in Germany, the components may be produced in Japan, Taiwan, and Singapore, it may be assembled in Korea, and the advertising campaign may be delivered from the United States. Because of the significantly lower transportation costs brought about by containerization, handling goods has become highly automated and efficient between most transport modes, making the ability to transfer goods anywhere economically viable for many businesses (Levinson, 2018). Due to their ability to select the cheapest site for production, previously isolated factories have been incorporated into a worldwide network, and more multinational and international enterprises are present in various markets. As a result, the offshoring, outsourcing, and broad usage of global supply chains, to which container handling and transport have greatly contributed, have created the basis of today’s economy. Since the first globally standardised container was introduced in the 1960s, the container trade has expanded quickly, reaching an estimated 143 million TEU and 1.24 billion tonnes in tonnage (UNTCAD, 2018), accounting for more than 70% of the value of global international seaborne trade (Drewry Shipping Consultants, 2017).

The rise in the global GDP is one of the primary causes of this expansion in the container transport and handling sector. In the most recent ten years, from 1998 to 2007, the average annual growth rate for the world’s GDP was 3%. ( Coto-Millan et al., 2018). The average increase of goods and seaborne commerce during the same period was 6% and 5%, respectively, roughly double the growth of the world GDP, and the average growth of container trade was 10%, 13 times the growth of the global GDP. Because of the way that production is now organised, output changes have had a greater than the proportional impact on trade. The supply chain has become more responsive as a result of globalisation; previously local production phases are now far more likely to be carried out elsewhere. We can see that changes in the container trade affect container port traffic more than proportionally, with transhipment traffic generally expanding more quickly (Coto-Millan et al., 2018).

We observe a matching market concentration in the container port sector, which results from the new market structure of the container handling sector when we recognise the market concentration of the container carrier sector. These days, container terminals compete with one another for traffic more so than container ports do. Because of the emergence of international terminal operators, the market share is currently largely controlled by a few groups, including PSA, APM, and P&O. (Olivier et al., 2017). The growth of terminal operators is due to several factors, including (1) A sharp rise in stevedoring costs as a result of vessel size. Improvements are required to the facilities, such as those to the berth length, draught, and ship-shore reach. (2) Since the 1980s, port privatisation has made it possible for private capital with a variety of goals and sources different from public sector funds to enter the capital-intensive port industry and contend with the relentless rivalry. (3) As previously indicated, there is an increase in transhipment traffic, which has altered the geopolitical sensitivity of container ports and terminals as shipping lines and shippers choose to call terminals that offer good service rather than ports in particular areas. (4) The container terminal operator business is undergoing horizontal integration to regain its negotiating leverage with shippers and large shipping companies, which has resulted in the emergence of a select group of influential international terminal operators (Olivier et al., 2017).

The terminal operators can either be independent stevedore companies or carrier-related operation companies, and we can see either horizontal integration or vertical integration within these two categories of terminal operators. The acquisition of additional business activity at the same level of the value chain is referred to as horizontal integration. To achieve optimal scale, retain industry competitiveness, and increase their bargaining leverage over suppliers or customers, companies establish horizontal integration. Both the container ocean carrier and container terminal operating sectors use horizontal integration. The development of a company’s business operations into upstream or downstream activities is known as vertical integration. Ocean carriers and terminal operators have vertical integration. Ocean carriers frequently employ carrier-operated terminals, also referred to as dedicated terminals, nowadays as a way to secure and control terminal capacity to improve the dependability of their operation. To ensure the integration of the entire supply chain, vertical integration may also include inland transportation and distribution facilities (Olivier et al., 2017).

The effectiveness of container ports and terminals has therefore become increasingly crucial. Container ports and terminals are essential to the effectiveness of the entire chain since they serve as a connecting point between various kinds of transportation in the global logistics chain. The effectiveness of container ports and terminals is a major concern for operators in addition to their crucial role in the global commerce network due to increased port and terminal competition globally. Transhipment traffic is increasing in proportion, which suggests that container port and terminal traffic will continue to rise faster than container trade, which is already expanding more quickly than goods trade and GDP growth overall(Olivier et al., 2017). The competition is not lessened by the rising demand; on the contrary, ports and terminals engage in more aggressive competition for the business of shipping lines. Several liner corporations dominate the container shipping business, giving them significant negotiating leverage over the port and terminal sectors of the container handling sector. Thus, ports and terminals need to be more competitive to handle the rising container traffic. In this setting, the container handling industry’s primary concern continues to be efficiency (Olivier et al., 2017).

Nigeria had used a service port concept since the NPA’s operations began in 1956. This presented many difficulties, which influenced the decision to transition to a landlord port model or port concession. The port concession scheme was finished in 2006 following an international open call for bids. 26 terminals were created as a result, and they were granted to private terminal operators under the Build, Operate, and Transfer (BOT) model. As a result of the reform, private terminal operators were given control of cargo handling operations at the port, leaving NPA as the landlord (Akinwale & Aremo, 2020).

Ports play a crucial role as logistical and maritime transport hubs on a global scale. For example, delays in cargo handling at the ports could significantly change overall transport and logistics costs. As a result, many maritime nations engaged in global seaborne trade continuously develop strategies and make large financial investments to enhance port terminal performance. Lack of managerial and public funding has hindered port improvement attempts in the majority of developing nations. Due to technological advancements in ship design and cargo handling techniques, globalisation of production and distribution, and other factors, there is a significant demand for port resources (Mohammed, 2018).

Therefore, the port administration of the majority of countries chose to implement reforms in the port sector to give the finance and management philosophy required to reposition ports in line with the new problems. These reforms concentrated on identifying the best finance and management methods for public ports based on national specifics and reform goals. To enable joint public/private, or private engagement in port finance and administration, new port governance models were established. The reference identifies four fundamental port governance models: tool ports, service ports, landlord ports, and private ports. Several countries ports undergoing reforms have adopted particular applications or elaborations of these ideas, and the results thus far documented vary by country (Mohammed, 2018).

Before the 20th century, most people believed that a firm existed to create money for its owners. The modern definition of corporate social responsibility emerged in the 1950s after beginning in the 20th century. Practices from the Industrial Revolution can be linked to business concerns for society. Industrialists began to become increasingly concerned about the productivity and well-being of their workforces in the middle to late 1800s. The corporate world progressively started to take on obligations beyond generating profits between 1900 and 1960. Despite the long history of socially conscious businesses, American economist Howard Bowen first used the term “corporate social responsibility” in his 1953 book Social Duties of the Businessman (Dosunmu, Adepoju, & Somuyiwa, 2016).

CSR in the United States did not, however, start to take off until the 1970s. The Council for Economic Development first proposed the idea of a “social compact” between corporations and society in 1971. This agreement advanced the notion that businesses exist and run well because of public support, and as a result, they owe it to society to help meet its requirements (Abshire, 2021).

The multinational corporations introduced the idea of corporate social responsibility to Nigeria. Even though businesses in Nigeria were then using a crude version of it, it was not acknowledged because the reporting technique did not adhere to the global reporting agenda. Also, many Nigerians are unaware of CSR, thus whenever a firm does something for the community aside from its usual course of business, the corporation and its management are praised for their compassion and philanthropy (Minette, 2016). The management of CSR has been incorporated into business operations as a result of the growing need to address social concerns, live up to community expectations, and comply with regulatory bodies’ demands that they include CSR activities in their annual reporting. Unfortunately, because there aren’t enough consumer and civil society pressure organisations, businesses continue to view CSR as a financial burden and don’t give it the attention it deserves (Minette, 2016).

CSR is important for the host communities as well as for the existence of the businesses. With volunteer assistance programmes, CSR has an impact on the communities, bringing with it sustainable values and increasing customer loyalty for the business. Kotler and Keller (2016) contend that factors such as increased customer expectations, shifting employee expectations, government laws and pressure, shifting investor interest in social criteria, and changes in business procurement procedures all drive businesses to adopt larger levels of CSR. CSR has thus attracted attention on a global scale because of its effects on businesses and society. According to McWilliam and Crane et al. (2019), CSR refers to a legal requirement as well as an action that seems to advance a social benefit independent of the firm’s interests. This definition is consistent with that of Stoner, Harrison, and Freeman (2017), who defined CSR as the actions a corporation does to change the society in which it operates.

Statement of the Research Problem

Attention should be paid to the state of Nigeria’s maritime industry. Due to this inefficiency, the level of shipping activity in the ports today has been severely hampered in Nigeria. And all of these have been happening as a result of blatant ineptitude and poor management of port operations and activities, as well as issues including a lack of suitable infrastructure to handle shipping operations effectively and on schedule. As is the situation surrounding Nigerian ports, particularly Apapa port, congestion around port areas to and from the port neighbourhood cannot be ignored because it results from the constant maritime activities that take place in the port’s vicinity. Shipping operations are also impacted by port congestion. Such gridlocks in traffic make it difficult to conduct shipping operations properly and efficiently, which causes long turnaround times for ships and longer container stay times. Since most berths appear to be vacant, the average waiting time for ships in Nigerian ports is at its lowest level. However, the average turnaround time for ships is still longer than in developed nations, leading one to the conclusion that operations at the Nigerian port are inefficient. There are more berths available than there are calling ships, which results in a fairly short waiting period but a lengthy turnaround. The situation changes the focus of the issue to the ship’s port services time (Niekerk & Henriette, 2021).

Information on how businesses in Nigeria use CSR initiatives is scarce. Although this is now obliged to be reported in organisations’ statutory reports, few businesses are ready to provide the necessary information, making it difficult to trace the beneficiaries and the impact of such actions. Some businesses, like Dangote Cement, are particular about how and where they conduct CSR operations. The company’s head of external relations was quoted as saying, “Dangote Cement plc, Ibese, has committed about N4.1billion into various infrastructural projects as Corporate Social Responsibility (CSR) for its 14 host communities in Yewa land in Ogun State.” in a Sunday Business Day article from September 21, 2020. He added that money was spent in the previous eight years on a variety of projects, including the construction and repair of roads, the construction and repair of classroom buildings, the construction and repair of healthcare facilities, the provision of boreholes, and the provision of electricity transformers (Niekerk & Henriette, 2021).

Recent times appear to have defined the host communities-company operation by fraught relationships. There are concerns with either community having high expectations of businesses operating in their vicinity or businesses having an outright negative view of their host communities, depending on the situation. Although Nigerian businesses have engaged in a variety of CSR initiatives, little study has been done on how these initiatives have fared in terms of how the communities felt about them (Arisha & Mahfouz, 2019). Nigeria’s population has grown significantly in recent years, placing extreme strain on the country’s meagre and already overstretched economic options. As a result, many businesses struggle to meet the demands of the host communities, who look to corporate organisations to help them provide infrastructure and support the livelihood of their host communities. Without it, there may be increased economic unrest, unrest in the neighbourhood, and violence.

While businesses are becoming more aware of the need to engage in community relations and put programmes in place to better the lives of the people who live in their host communities, little has been recorded regarding an evaluation of the impact or relevance of such programmes from the perspective of the community. There have been few studies conducted by corporate companies in Nigeria on community relations tactics, with the majority of studies concentrating on environmental degradation in the Niger Delta region and the best CSR model for the oil industry (Orji, 2019). As a result, more research is required on corporate organisations’ community interactions in Nigeria, specifically how beneficiaries see the activities of corporations not just in the oil business but also in other sectors like manufacturing and brewing. This work seeks to close this gap. To do this, the study chose a youth empowerment programme run as a community relations project by Nigerian Breweries Plc in its host community in Awo-Omma, in Oru-East Local Government Area in Imo State, Nigeria, for impact assessment (Fentiman, 2016).

 Objectives of the study

The main objective of this study is the appraisal of the performance of terminal operators in the development of their host communities. Specific objectives of the study include to:

1. To assess the adequacy and accessibility of health services provided by terminal operators to improve the well-being of the host community members.
2. To evaluate the establishment and maintenance of educational facilities by terminal operators that cater to the educational needs of the host community members, with the aim of improving their literacy and educational attainment.
3. To examine the engagement of terminal operators in economic empowerment initiatives such as skills acquisition programs, job creation schemes, and entrepreneurship development to reduce poverty and improve the standard of living of the host community members.
4. To analyze the encouragement of sports engagement by terminal operators through the provision of sports facilities and support for sports development programs, with the aim of promoting physical fitness, social interaction, and talent development.
5. To investigate the provision of transportation facilities by terminal operators that are safe, reliable, and accessible to facilitate the movement of people and goods within and outside the host community.
6. To assess the provision of security by terminal operators to protect lives and properties of the host community members, and foster peaceful coexistence within the community.

Research Questions

1. What is the current level of adequacy and accessibility of health services provided by terminal operators in the host communities?
2. How effective are the educational facilities established and maintained by terminal operators in catering to the educational needs of the host community members, and improving their literacy and educational attainment?
3. To what extent do terminal operators engage in economic empowerment initiatives such as skills acquisition programs, job creation schemes, and entrepreneurship development, and how effective are these initiatives in reducing poverty and improving the standard of living of the host community members?
4. How do terminal operators encourage sports engagement through the provision of sports facilities and support for sports development programs, and what is the impact of these efforts on physical fitness, social interaction, and talent development?
5. What is the current state of transportation facilities provided by terminal operators, and how safe, reliable, and accessible are these facilities for the movement of people and goods within and outside the host community?
6. How effective are the security measures put in place by terminal operators in protecting the lives and properties of the host community members, and fostering peaceful coexistence within the community?

 Research Hypotheses

Null Hypotheses(H₀):

1. The current level of adequacy and accessibility of health services provided by terminal operators in the host communities is not significantly different from the minimum acceptable standard.
2. The educational facilities established and maintained by terminal operators in the host communities are not significantly effective in catering to the educational needs of the host community members, and improving their literacy and educational attainment.
3. Terminal operators do not engage significantly in economic empowerment initiatives such as skills acquisition programs, job creation schemes, and entrepreneurship development, and these initiatives are not significantly effective in reducing poverty and improving the standard of living of the host community members.
4. Terminal operators do not significantly encourage sports engagement through the provision of sports facilities and support for sports development programs, and these efforts do not significantly impact physical fitness, social interaction, and talent development.
5. The transportation facilities provided by terminal operators are not significantly safe, reliable, and accessible for the movement of people and goods within and outside the host community.
6. The security measures put in place by terminal operators are not significantly effective in protecting the lives and properties of the host community members, and fostering peaceful coexistence within the community.

Alternative Hypotheses(H₁):

1. The current level of adequacy and accessibility of health services provided by terminal operators in the host communities is significantly higher than the minimum acceptable standard.
2. The educational facilities established and maintained by terminal operators in the host communities are significantly effective in catering to the educational needs of the host community members, and improving their literacy and educational attainment..
3. Terminal operators engage significantly in economic empowerment initiatives such as skills acquisition programs, job creation schemes, and entrepreneurship development, and these initiatives are significantly effective in reducing poverty and improving the standard of living of the host community members.
4. Terminal operators significantly encourage sports engagement through the provision of sports facilities and support for sports development programs, and these efforts significantly impact physical fitness, social interaction, and talent development.
5. The transportation facilities provided by terminal operators are significantly safe, reliable, and accessible for the movement of people and goods within and outside the host community.
6. The security measures put in place by terminal operators are significantly effective in protecting the lives and properties of the host community members, and fostering peaceful coexistence within the community.

Significance of the Study

In Nigeria, this study has significant importance given the challenges faced by many host communities in the country. Many of these communities are located in resource-rich areas, such as oil-producing regions, but have not benefitted from the development activities of terminal operators operating in their midst. The study sheds light on the reasons for this, and identifies ways in which the performance of terminal operators can be improved to better serve the needs of these communities.

One of the key areas where the study is significant is in the provision of health services. Many host communities in Nigeria lack access to basic health facilities, and those that are available are often poorly equipped and staffed. By examining the extent to which terminal operators are providing adequate and accessible health services to host communities, the study highlights areas where improvements can be made.

Similarly, the study’s focus on educational facilities is important for Nigeria, where education levels are low, particularly in rural areas. By examining the efforts of terminal operators to establish and maintain educational facilities in host communities, the study identifies ways in which literacy and educational attainment levels can be improved. This is important for the overall development of these communities, as education is a key driver of economic growth and social progress.

In addition, the study’s exploration of economic empowerment initiatives, such as skills acquisition programs, job creation schemes, and entrepreneurship development, is crucial for Nigeria’s efforts to reduce poverty and improve the standard of living of its citizens. By examining the efforts of terminal operators in this area, the study provides valuable insights into how such initiatives can be implemented effectively.

Moreover, the study’s focus on sports engagement, transportation facilities, and provision of security is critical for fostering peaceful coexistence and promoting physical fitness, social interaction, and talent development in host communities in Nigeria. By identifying ways in which terminal operators can improve their performance in these areas, the study provides recommendations that can help to improve the overall well-being and development of these communities.

Scope of the Study

This study was focused on the appraisal of the performance of terminal operators in the development of their host communities. The impact of community education on the host communities of terminal operators in Nigeria, the ways relevant stakeholders can engage the host community through the skills programmes offered by terminal operators in Nigeria, the value created for the community through the skills programmes offered by terminal operators in Nigeria, as well as the challenges were also covered in this research.

 Limitations of the Study

Several factors had a substantial impact on the study’s scope. The lack of prior literature on the topic of this study greatly influenced the quantity and quality of the current literature. The majority of the published journals and publications, both online and offline, that were available contained pieces of the information covered by this study. Also, the amount of time allotted to finish this study had a significant impact on how well the researcher was able to cover the necessary themes.  Last but not least, some respondents declined to fill out certain sections of the administered questionnaire in this study, and in some cases, they failed to respond to the majority of the questionnaire’s items for reasons that some of the research participants of this study best understand. The scope of this research was limited by this.

References

• Robertson, D. C. (2019). Corporate social responsibility and different stages of economic development: Singapore, Turkey, and Ethiopia. Journal of Business Ethics, 88(SUPPL.4), 617–633. https://doi.org/10.1007/s10551-009-0311-x .
• Russo, A & Perrini, F (2020): Investigating Stakeholder Theory and Social Capital: CSR in Large Firms and SMEs. Journal of Business Ethics Vol. 91, (Iss.2), pp 207-221.
• Russo, A., & Perrini, F. (2020). Investigating stakeholder theory and social capital: CSR in large firms and SMEs. Journal of Business Ethics, 91(2), 207–221. https://doi.org/10.1007/s10551-009-0079-z.
• Saiia, D. H., Carroll, A. B., & Buchholtz, A. K. (2019). Philanthropy as Strategy. Business & Society, 42(2), 169–201.
• Saleh, F.I.M., Sweis, R.J, Abdelqader, B.Y., Abdallah, B. &Arafeh, M. (2017). The effect of TQM dimensions on the performance of international non-governmental organizations operating in Jordan. International Journal of Productivity and Quality Management, 21(4), 443-459.

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