…As Cost of Moving Container from Lagos Ports to the North Rises by 233.3% in two Years
‘Railways are not working. It is only when they come alive that we will get some relief. The roads too are in bad shape, and it costs a lot to fuel our vehicles. Price of diesel is high. Spare parts are expensive. And wears and tears must be taken care of.’
Supply chain business in Nigeria is receiving hard knocks from poor infrastructure in the country, what with the transportation cost of a container cargo rising from N600,000 in the last 2/3 years to the current N2,000,000 rate.
High transportation cost
Ismail Yusuf, CEO of Inland Containers Limited (ICNL), in an exclusive interview with us in Lagos, said “We are faced with the challenge of poor road infrastructure. Cost of moving containers to the North – Lagos to Kano for instance – has increased from N600, 000 in the last 2/3 years to N2, 000,000 today.”
Ismail Yusuf spoke to us at the Nigerian-Indonesian Chamber of Commerce Breakfast Meeting which held in Lagos on Friday.
Poor rail and road infrastructure
He lamented:” The railways are not working. The story would have been different if they were working. This would have brought the cost of transportation down. It is only when the railways come alive that we will get some relief. The roads too are in poor shape, and it costs a lot to fuel our vehicles. Price of diesel is high. Spare parts are expensive too. And wears and tears must be taken care of.
Forex
“Moreover. Forex rate has hit the roof. Our customers’ businesses are affected negatively. This translates to less business for us.”
The Federal Government should ensure that rail services come back to life speedily and should mend all bad roads and construct new ones, he advised.
Competition
On how his company is coping with competition he said “If you are in business you should expect competition. Because competition allows for strive for excellence. If there is no competition, you will make no effort to improve on your services and customers will not get the best.”
For Yusuf, ICNL does not see competition as a challenge “because we are known for safe delivery of cargo and we render our service at affordable cost.” “We, therefore, have an edge over our competitors.”
ICNL has been in business for 43 years. It is involved in the business of freight forwarding – air-freight, shipping; warehousing; logistics and terminal services.
Hindsight
The cry about poor transport infrastructure is not new. It would be recalled that the National Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA), in the past, cried out against the incessant congestion at the nation’s ports access roads which it said forced some of its members to shut down businesses.
According to the Chamber’s Export Group, members were forced to shut down operations as a result of this worrisome challenge. The Group’s chairman then – Oluyenuwo Olabisi, said members containers were sometimes turned back and most of the time missed their ships ,“and this lead to huge losses by members”.
It has also been argued in the past that the solution to our poor road infrastructure problem is adoption of concrete road infrastructure. Late Joseph Makoju, chairman Cement Manufacturers Association of Nigeria and special adviser to Dangote Group’s president and CEO, argued in an interview in 2012 in BusinessDay (with Siaka Momoh and Chuka Uroko): “Constructing a road with cement is between 25 and 50 per cent cheaper than making it with asphalt, a method that is currently popularly with Nigeria. And this is when you take the life cycle of the road into consideration. But the concrete road is 10 per cent more expensive to construct than asphalt road, which is the initial capital cost when you are constructing it”.
Makoju argued somebody who is just looking at the immediate cost would be attracted to asphalt. “But one thing we definitely know, even the asphalt road construction engineers will admit, the life cycle of the road is what matters. Once you have completed the road, take the life cycle of the road over 20- 30 years and more, the concrete becomes extremely much cheaper because less maintenance is required. And in a country like Nigeria where we know we have poor maintenance culture, it makes sense then that the choice should be concrete road.”
He argued, “What we are now advising is what is happening worldwide. In most advanced countries like the U.S., Germany, etc, about 50 percent of their roads are concrete. While the emerging economies like India and Brazil have 5 to 10 percent in concrete, Nigeria’s is a fraction of 1 percent. So we have a lot of catching up to do.”
Siaka Momoh, www.enterprisenow.ng
