Market News

By Adaku Onyenucheya

Stakeholders in the maritime industry have emphasised the urgent need for government intervention to stabilise the sector amidst a significant decline in import activities.

Concerns have been raised over the drastic reduction in the volume of vehicles and containers passing through Nigerian ports, prompting calls for a predictable customs duty system, a stable exchange rate and incentives to support importers and revitalise the maritime economy, critical to the nation’s overall growth.

Since President Bola Tinubu decided to float the Naira in 2023, the exchange rate has surged by over 300 per cent, with the Naira depreciating from N455/$1 to N1,766/$1 within a year.

The Guardian gathered that the Port and Terminal Multiservices Limited (PTML) handled 10,000 units of cars and 1,500 containers per week between 2015 and 2019.

However, this figure declined to 5,000 cars and 700 containers weekly between 2019 and 2023. By 2024, the numbers had plummeted, with only 1,000 vehicles and 300 containers processed weekly.

Despite the rising cost of shipping, freighting a 40-foot container from China to Nigeria now costs $8,500, compared to $3,500 for Ghana and $3,000 for Lome.

Another worrying trend is the increase in the importation of accident vehicles into Nigeria. A source at PTML, who requested anonymity, revealed that while 80 per cent of vehicles imported in the past were non-accident, the ratio has now shifted to 60 per cent non-accident and 40 per cent accidental.

Additionally, many Roll-On Roll-Off (RORO) shipments for Nigeria now include goods destined for neighbouring countries. An importer, Ikechukwu Clinton, attributed this shift to the cost-saving benefits of accident vehicles.

According to him, a non-accidental vehicle costs around $10,000 in the United States (U.S.), while an accident counterpart can be purchased for as low as $6,000.

Despite similar freight rates, he said customs clearing costs are significantly lower for accident vehicles, approximately N1.3 million compared to N2 million for non-accident ones.

“Importers are opting for accident vehicles to cut costs and boost profits. These vehicles can be repaired and sold at higher margins despite lower import and clearing expenses,” Clinton said. He blamed the situation on unstable customs duty rates and exchange rate volatility, complicating cost projections.
Clinton suggested that the government provide temporary incentives, fix customs duty rates, and stabilise the exchange rate to address these challenges.

These measures, he argued, would give importers the predictability needed to plan for the long term. The National Public Relations Officer of the Association of Registered Freight Forwarders of Nigeria (AREFFN), Taiwo Fatomilola, highlighted the adverse effects of high exchange rates and systemic inefficiencies.

He noted that while vehicles still arrive at PTML, administrative bottlenecks, checkpoint corruption, and unpredictable customs charges discourage importers and buyers.

“The trading process has become so cumbersome that many importers are shifting to other businesses,” Fatomilola said. He added that customs officers frequently impose unofficial charges, further complicating the clearing process.

Fatomilola also pointed to poorly regulated customs systems and volatile exchange rates as major deterrents, making vehicle imports increasingly unaffordable.

“Even with vehicles arriving at ports, the inefficiencies in the system discourage trade,” he stated.He said despite the challenges, some RORO shipments still arrive weekly, though many carry goods destined for neighbouring countries to fill the vessels rather than vehicles.

The Port Manager of Lagos Port Complex, Adebowale Ibrahim, highlighted the underperformance of Nigeria’s ports compared to those in smaller nations. He said that, with a population of about 200 million, Nigeria moves only two million containers yearly, far below its potential.

In contrast, with just 10 million people, Guinea moves more than two million containers and has invested $15 billion in port development. Ibrahim described Nigeria’s port inefficiencies as reflective of broader national complacency.

He called for collective action to address these issues, emphasising the need for modernising ports and fostering public-private partnerships to drive the necessary changes.

“The Nigerian Ports Authority (NPA) is committed to supporting investors willing to improve the nation’s ports and infrastructure. It’s time for forward-thinking solutions to modernise the sector and boost economic growth,” Ibrahim said.

He reiterated the urgency of national priorities shifting towards sustainable development in the maritime industry, stressing that collective efforts are crucial for improving the nation’s economic landscape.