Forex Scarcity: Port terminal operators lament low cargo volumes

Apapa port terminal

Apapa port terminal

17 August 2016, Lagos – Private terminal operators, otherwise known as concessionaires, operating at the nation’s seaports are facing difficulties in their operations as the cargo volumes they handle continue to decline. The hardship is compounded by the inability of most of them to procure dollars to meet their business obligations.

The story is the same for a good number of the operators across the six major seaports in the country. At the port and cargo terminal at the Tin Can Island Port Complex in Lagos, container throughput was said to have dropped by 10% while general cargo volume diminished by 50% in the first half of the year, compare to the corresponding period of 2015.

Nigeria’s local currency, the naira, has depreciated by about 90% in the last 18 months.
Managing Director of Sifax Group – owners of Port & Cargo, John Jenkins, attributed the huge drop in cargo volume at the port to the scarcity of foreign exchange.

“The inability of the government to generate the required foreign exchange to oil the wheel of the economy posed a great challenge,” Jenkins said.
He said apart from the inability of importers to source foreign exchange to import cargo, “power is also a big challenge” at the port.

The situation at neighbouring Joseph Dam, Five Start Logistics and PTML terminals also within the Tin Can Island Port Complex, are even more pathetic.
PTML and Five Start have lost more than 70% of their RORO vessel and cargo traffic due to the dollar scarcity and the ill-conceived National Automotive Policy introduced by the Goodluck Jonathan administration in 2014. The policy, which raised the tariffs on imported vehicles from 20% to 70%, led to the diversion of more than 50% of Nigerian-bound vehicle imports to the Port of Cotonou from where they are smuggled into Nigeria.

A visit to Terminals A and B operated by Apapa Bulk Terminals Limited (ABTL) owed by Flour Mills Nigeria Ltd and Terminals C and D operated by ENL Consortium on Friday, showed that most of the berths were empty as some of the workers were seen idling away. These facilities, which mostly handle break bulk and general cargoes, have reportedly lost about half of their vessel and cargo traffic to the prevailing economic hardship in the country.
Executive Vice Chairman/CEO of ENL Consortium, Princess Vicky Haastrup confirmed that cargoes are fast disappearing from the once boisterous Lagos port.

“The number of ships that I have handled from January till today is actually the number of ships I normally handle in a month,” Haastrup, who is also the Chairman, Seaport Terminal Operators Association of Nigeria (STOAN), said.
“What is responsible is simply not being able to have access to forex. It is a major constraint for everyone and that has affected cargo imports into Nigeria by at least 50 per cent,” she added.

The nation’s major container terminal operators, APM Terminals Apapa and Tin Can Island Complex are also faced with the low volume challenge.
Terminal operators in the ports outside Lagos have not fared any better. For instance, all the three major operators in Calabar Port put their capacity utilisation at a meagre 25%.

The General Manager of Ecomarine Terminals, which is one of the operators at the port, Kingsley Iheanacho said the terminal no longer earned revenue from yard operations as vessels and clearing agents have deserted the port. The terminal, according to him, was just barely managing to remain afloat as it operates “skeletal services”.

“Presently, we are having 25 per cent utilisation and that is what Calabar port is all about,” he told Managing Director of Nigerian Ports Authority (NPA), Hadiza Usman, who visited the facility for the first time last week.

The Calabar Port Manager, Oluseyi Ogunbdele, confirmed the poor volume of cargo at the port.
In addition to the dollar scarcity and low volume, Calabar Port is battling other challenges such as low draft of the channel, the Ikom bridge which crosses over the channel thereby restricting the size of vessels that that navigate through and the severely dilapidated road leading to the port.

Other terminals such as Port and Terminal Operators Limited (PTOL) and BUA at the Rivers Port Complex in Port Harcourt; and Intels at Onne and Warri ports have all been struggling in the face of declining revenue.

In 2015, almost all the terminal operators, for the first time in ten years of their operation, were compelled to reduce their workforce by 20% to 50% to cope with the challenging times. It is projected that more workers might be pushed into the labour market this year if the situation does not improve.

 

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