Impact Of Port Infrastructure On Port Efficiency
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
In 1776, Adams Smith noted that “A business working in a country town without links to the outside world can never achieve high levels of efficiency because its small market will limit the degree of specialization”. Because shipping is one of the cheapest and efficient modes of transportation over long distances, it has since the ancient times been at the forefront of opening up of the world, and thus a major driver of the process of globalization.
A consideration of Nigeria’s large coastal water and seaports (predominantly in the Southern region of the country) reveals that the maritime sector has contributed substantially to the economic development of the country. It is not surprising that a large volume of the country’s international trade is in one way or the other connected to the maritime sector; for instance, the distribution of the crude oil and related products from the various oil wells in the country is distributed to the international buyers through the various seaports and maritime routes of the country. This perhaps explains why Ndikom (2006) views a port as a gateway to the nation’s economy, with shipping services being a primary logistic service of critical importance. This impact is not peculiar to Nigeria as there are suggestions of similar impacts in other countries. For instance, the observation by Trujillo (2005) that there are 2,814 international ports catering for freight traffic in the world is an indication of the level of business activities associated with the maritime sector across the world.
There is a notion that because ports serve as vital links in the trading chain (Chin and Tongzon, 1998), a greater participation of the private sector in both the ownership and operation of container ports could not only enhance the operational efficiency of these ports (Tongzon and Heng, 2005), but also the economic wellbeing of the entire country. It is about eight years that the Nigerian port system was concessioned to private investors; and there are observations that this has caused tremendous improvement in port operations culminating in high level of efficiency in the ports. Anagor (2014) notes the transfer of port operations to private organizations has resulted in high level of improvement, with substantial investments in terminal infrastructure and cargo handling equipment, increased cargo throughput (which has grown by about 250% in most terminals over the past eight years), leading to a restoration of importers’ confidence to doing business in Nigerian ports. Consequently, this research will examines “The Impact of Port Infrastructure on Port efficiency (A Case Study of the Lagos Port Complex)
It is estimated that port traffic increases at an average rate of 3% per year, with nearly 90% of goods exchanged through international trade facilitated through the maritime transportation network. The United Nations Conference on Trade and Development believes that a large share of international trade would not have been possible without the infrastructures provided by seaports, regarded generally as the interface between maritime transport and land transport or inland navigation (UNCTAD, 2002).
In contemporary global commerce, seaport or maritime transport play an important role as a nation’s major gateway to international trade, thus becoming a good instrument for measuring the economic health of a nation (Ogunsiji and Ogunsiji, 2010; UNCTAD, 2008). The ports have considerable influence not only on the volume and conditions of trade, and by implication, on the capacity for economic development. In Nigeria, for instance, greater percentage of international trade is routed through the sea, and by virtue of her population, may account for about 70% of all seaborne trade in the West African sub region (Fivestar Logistics, 2008). This may also explain the Federal government of Nigeria’s transformation agenda for the sector through the establishment of agencies such as NIMASA, which has been in working towards building requisite human capacity in the maritime sector.
1.1.1 Historical Background
The history of port development in Nigeria dates back to the middle of 19th century. This was long after the onset of sea borne trade and transactions which followed the adventures of early explorations on the African coasts. Initial efforts towards provision of facilities for ocean going vessels were the attempts to open up the entrance to the Lagos Lagoon. Considerable littoral drift occurred along this coast; and the constantly shifting channels in the bar at the entrance made entry very difficult.On February 1, 1914, the first mail-steamer S/S ‘AKOKO’ drawing 5.64 metres entered the Lagos harbour. Two months later, vessels began to use the facilities provided at the Customs wharf on Lagos Island.
Shipping by cargo delivery has for a log time been recognized as one of the strong catalysts for socio-economic development.
However, Igbokwe (2013) suggests that there has been little improvement over time on the efficiency and productivity of Nigeria port management in meeting the IMO stipulation on cargo clearance.
Shipping by cargo delivery, especially container shipping, has been both a cause and effect of globalization. Container shipping could lay claim to being the world’s first truly global industry. In fact, container shipping could claim to be the industry which, more than any other, makes it possible for a truly global economy to work. It connects countries, markets, businesses and people, allowing them to buy and sell goods on a scale not previously possible. It is now impossible to imagine world trade, and ultimately our lives as consumers, without container shipping.
According to Kummi (2007), shipping has emerged as one of the most powerful socio-economic and political forces shaping the world today. The phenomenon of shipping is moving the world towards increasing and irreversible integration of economic, social, cultural and political systems. Globalization through shipping trade has “decoupled time and space” resulting in the “death of distance”. Thanks to globalization, the once big world has been transformed into “one little village.
Shipping has been one of the main causes and effects of globalization. The impact of globalization on shipping, especially container shipping, has been most phenomenal. Indeed, shipping connects countries, markets, businesses and people, allowing them to produce, buy and sell goods on a scale not previously possible. It therefore becomes necessary, if not imperative for countries to try to evaluate impact of improved infrastructure and efficient cargo delivery in Nigeria port.
1.2 Statement of the problem
There are observations that seaports are key logistic elements of supply chains (Photis et.al, 2007; Robinson, 2007 and Wouter, 2007), serving as the interface between maritime and land transportation systems. However, this role (especially the volume of trade would have occurred) cannot be efficiently carried out without sufficient ports infrastructure. Therefore, it is expected that seaports move from the traditional port functions of loading and discharging, to more advanced activities that would add value and enhance efficient management of internal port operations.
Several factors impact on maritime port administration, especially those managed by public authorities. For instance, it has been suggested that port reformation process and the overlap between public and private ownerships are critical elements that influence seaport performance (Everett, 2007; Robinson, 2007). There are also views that the level of investment is critical in ports management. Due to the complex nature of ports, analysts suggest that any analysis of investment made in ports should take into consideration in ports infrastructure, superstructure, as well as hinterland connections (Hilda, 2005; Paixao, 2005). Other elements to be considered include port capacity and landside limitations (Bassan, 2007); port competitive structure, and port regulations changes (Goss, 1990); port networks (Zeng, 2002); port efficiency (Clark et al., 2004), among others.
1.3 Objectives of the Study
The main objective of this study will to examine the Impact of Port Infrastructure on Port efficiency. Specifically, the following objectives will guide the study.
- To examine the impact of improved port infrastructure on Port efficiency
- To identify and assess the effects of bad port infrastructure in Port efficiency.
- To investigate the major category of port infrastructure.
1.4 Research Questions
- What is the impact of improved port infrastructure on Port efficiency?
- What are the major causes of poor port infrastructure in Nigerian Ports?
- What are the effects of bad port infrastructure on Port efficiency?
- What is the major category of port infrastructure?
1.5 Research Hypothesis
The following hypotheses will be tested by the study
Hypothesis one
Ho: There is no significant relationship between improved infrastructures and Port efficiency.
H1: There is significant relationship between improved infrastructures and Port efficiency.
Hypothesis two
Ho: Poor maintenance culture and inadequate finance is not the major causes of poor infrastructure in Nigerian ports.
H1: Poor maintenance and inadequate finance is the major causes of poor infrastructures in Nigerian ports.
Hypothesis three
Ho: Bad infrastructure does not have negative effect in efficient cargo delivery in Nigerian ports.
H1: Bad infrastructure have negative effect in efficient cargo delivery in Nigerian ports.
1.6 Significance of the Study
The study will give insight on the impact of infrastructure on cargo delivery in Nigeria ports. The agencies of government will find the recommendations of the research useful on how to ensure efficient cargo delivery through improved infrastructure. It is also believed that the study will help investors knowing where they can safely invest their money in port infrastructures. The study will serve as a guide to more competent researchers to carry out further investigation. In summary, those to benefit from this research on completion include; government agencies, investors, general public, researcher/cadets, banks, maritime regulators and experts, marine insurance companies.
1.7 Scope of study
This study will be carried out on the impact of port infrastructure and Port efficiency of ports in Nigeria. This study will therefore be limited to Apapa Port Complex.
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