EFFECT OF PORT REFORM ON CARGO THROUGHPUT LEVEL AT SEAPORT NIGERIA

1.0 Introduction

1.1 Background of the Study

Ports always play a strategic role in the development of domestic and international trade of a country whether it is a developing or developed country. However, in a globalized world where distances are becoming squeezed, ports play an active role in sustaining the economic growth of a country.

In the modern world of a fast growing technological era, ports are playing the role of an industry, not just passive actor in transportation but also in complete supply chain management. This is why it is said that “ports are more than piers” that is, more than just infrastructure or a complex infrastructure (Prakash, 2005). Today in any context and in any country, it is essential that ports provide efficient, adequate and competitive services. If they fail, ship-owners who find them too costly or too slow will go elsewhere.

Hence if ports do not provide cost-effective services, imports will cost more for consumers and exports will not be competitive on world markets, national revenue will decline as well the standard of living of all people. Nigeria has a total of eleven ports and eight oil terminals organized in three zones of Western, Central and Eastern zones. The central zone with its headquarters in Warri, the Western Zones with headquarters in Lagos and the Eastern zone with its headquarters in Port Harcourt are predominantly oil terminals, although Warri, Sapele, Koko, Port Harcourt, Calabar and the Federal ocean terminal are important general cargoes (Chioma, 2011).

Ports not only a chain in transportation for inter-change, but they function as self- sustaining industry that is linked with domestic and international trade. At some places, ports also act as a foreign exchange earner not only in the form of transshipment or hub port but as part of supply chain management by providing logistics services to the industry. That is why a port needs to be treated as an industry. The management of a port should not only be concerned with the demand and supply of throughput but with institutional framework, application of technology, marketing strategy and ultimately economic impact of the development and implementation of projects or programmes (Prakash , 2005).

Ndikom (2006) summarizes that a port is a gateway to the nation's economy and that shipping is a primary logistic service of critical importance. There are 2,814 international ports catering to freight traffic in the world (Trujillo 2005). Port traffic increases at an average rate of 3% per year. Nearly 90% of goods exchanged through international trade in the world rely on maritime transport along the logistics chain that takes them from their origin to their destination. A large share of that trade would not exist without their port infrastructures which are the interface between maritime transport and land transport or Inland navigation (UNTAD, 2002).

Chioma (2011) opines that the seaports are very important to the Nigeria's trade as practically all imports and exports move through the ports. The importance of the seaports is attested to by the fact that approximately, 99% by volume of Nigeria total imports and exports are sea-borne. Nigerian ports control 60% of imports in West and Central Africa. The seaports provide an overwhelming economic advantage over all other modes of transport considering the huge tonnage of goods; it can carry over long distances. The ports have contributed to regional economic integration in the West African sub-region and have served as the major determinant of how economic activities are distributed. The maritime industry is a major long term determinant of national growth.

All these define ports as economic and service units of notable importance in the global economy. That is why ports are at the center of all intermodal policy decisions.

The Nigerian port system is not different. It follows the world trend in the industry adopting new maritime transport technologies as they emerge and searching for organizational forms which allow them to improve on their efficiency and ease their integration in the transport component of the logistics chain.

Global maritime transport has considerably changed in the last decade. Maritime transport is growing at a high pace. Container traffic is the fastest growing segment of maritime transport. Shipping companies have invested in ever growing containerships in order to benefit from economies of scale: the threshold of 10,000 TEU's per vessel was surpassed, whereas, ten years ago, the largest vessels carried 4,400 TEU's (panamax). As a result of increased competition, mergers and takeover have taken place in the recent years to establish “Mega- Carriers”. This trend of larger ships will increase pressure for better port facilities and for significant improvement in port productivity (Harding, et.al, 2007). This has forced many world ports to reform as to place them in position to cater for this global transport trend.

There is multiple government agencies, shippers, transport companies and logistics service providers involved in the activities of the port, all involved in the management of the port in one way or another. Because of the complexity of port business, there is no simple answer to the question of what is the overall best practice in port management. This has brought about an increasing attention being, given to the quality and efficiency of cargo handling and processing services offered with the result that public monopolies have been replaced by competitive private sector providers through concessioning (Onwuegbuchulam, 2012).

Efforts to improve port performance require a co-operative action by both the public and private sector. Most required is private sector involvement to ensure an improvement in the quality of services offered. The private sector should take the lead where there are sufficient infrastructure and appropriate regulatory environment. Unlike the case of Ports in Asia and Western Europe, Nigerian Ports are unattractive to Shippers as a result of several crises such as corruption, congestion of cargoes, insecurity of cargoes and excessive charges (Akinwale, and Aremo, 2010). It has been reported that Nigerian Ports are among the slowest and most expensive ports in the World by the end of the 1990's (Leighland and Palsson, 2007).In the modern world of a fast growing technological era, ports are playing the role of an industry, not just passive actor in transportation but also in complete supply chain management. This is why it is said that “ports are more than piers” that is, more than just infrastructure or a complex infrastructure (Prakash, 2005).

Today in any context and in any country, it is essential that ports provide efficient, adequate and competitive services. If they fail, ship-owners who find them too costly or too slow will go elsewhere. Hence if ports do not provide cost-effective services, imports will cost more for consumers and exports will not be competitive on world markets, national revenue will decline as well the standard of living of all people. Nigeria has a total of eleven ports and eight oil terminals organised in three zones of Western, Central and Eastern zones. The central zone with its headquarters in Warri and the Eastern zone with its headquarters in Port Harcourt are predominantly oil terminals, although Warri, Sample, Koko, Port Harcourt, Calabar and the Federal ocean terminal are important general cargoes. (Chioma, 2011)

Ports not only a chain in transportation for inter-change, but they function as self-sustaining industry that is linked with domestic and international trade. At some places, ports also act as a foreign exchange earner not only in the form of transshipment or hub port but as part of supply chain management by providing logistics services to the industry. That is why a port needs to be treated as an industry. The management of a port should not only be concerned with the demand and supply of throughput but with institutional framework, application of technology, marketing strategy and ultimately economic impact of the development and implementation of projects or programmes (Prakash , 2005).

Ndikom (2006) summarized that a port is a gateway to the nation's economy and that shipping is a primary logistic service of critical importance. There are 2,814 international ports catering to freight traffic in the world (Trujillo 2005). Port traffic increases at an average rate of 3% per year. Nearly 90% of goods exchanged through international trade in the world rely on maritime transport along the logistics chain that takes them from their origin to their destination. A large share of that trade would not exist without their port infrastructures which are the interface between maritime transport and land transport or Inland navigation (UNTAD, 2002).

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1.2 Statement of Problem

The globalization of the world economy has ever increased the importance of the role for transportation. in the transportation arena, the port plays a key role in the process because of the utilization of economy of scale advantages, as compared with other traditional methods of transportation.

Port technology had to change at a faster rate to commensurate with the pace of technological changes in shipping, for instance from handling of bulk palletized cargo to containerization. Ships and ports have never so technically advanced, never been so sophisticated, never been more immense, never carried/contained so much cargo, never been safer and never been as environmentally friendly as they are today. In order to support the global and regional trade development, Nigerian ports have increasingly been under pressure to improve on efficiency and productivity by ensuring that port services are provided on an internationally competitive basis.

Recognizing the importance of adequate port facilities and efficient shipping service in facilitating domestic and international trade in Nigeria, the port reform has focused on:

1. Rehabilitation, expanding and improving existing port facilities.
2. Developing new port if need be to stimulate regional socioeconomic development.
3. Acquiring a wide range of cargo handling equipments and port facilities including infrastructure and superstructure.
4. Institutional strengthening and capacity building.

In addition, the port reform seeks to rehabilitate and improve the inland waterways, landing stages, navigational aids and ship building and repair facilities.

The performance of a port can be evaluated by observing both its utilization and the speed and reliability of movement of cargo; and services through the port. While there are a number of activities involved from entry to departure of a cargo into/out of the port, it is important to measure the performance of the ports or the total movement of cargo. This includes the throughput of the port, ship traffic, berth occupancy, ship turnaround time etc. Efforts to improve performance will require identifying activities that introduce excessive costs or time on operations.

The pertinent question is to ask if the port reforms have succeeded in easing the bottlenecks to the port development thereby attracting more cargo to Nigeria ports, reduce congestion and generally enhance the productivity and efficiency in port operation. So far, how has the port reforms fared, judging from the annual throughput/quantity of cargo that has passed through the ports since the inception of the reform programme? An answer to this question will also give a clue to the level of efficiency in the operations in the ports.

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1.3 Aims and Objectives

The research aims at assessing how port reform has fared in attaining its major goals of increasing efficiency and raising throughput in Nigeria with reference to Onne Ports.

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1.4 Research Question

Has there been any significant improvement in the cargo throughput level since the inception of the Port Reform?

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1.5 Research Hypothesis.

Ho: There is no statistically significant difference between the mean of cargo throughput before the reform era and after the reform era at Onne Port.