The Nation Newspaper

Tag: logistics

  • Review of Logistics and Supply Chain Sector Report (Part 1)

    Nigerian economy is at the crossroad of recession, economic meltdown and structural change.  Real GDP has declined significantly by more than 14% in one year, between 2014 to 2015 (CIA Factbook, 2016) in dropping from $573b (2014) to $493b (2015), CIA 2016, although GDP Purchasing Power Parity has actually rises from $1,03trillion (2014) to $1.11trillion.

    Import/export trading activities slowed down as export drops by 32% from ($82.6b, 2014) drops to ($ 50.7b, 2015), and Import drops by 21% from ($61.6b, 2014) to   ($48.4b, 2015)

    Even the Customs revenue has declined while other macroeconomic indicators, at a time of economic recession, are heading in opposite directions,- rising inflation, high cost of borrowing/monetary policy rate, liquidity squeeze, devaluation, high currency risks, strict macro prudential measures and capital controls, delisting of 41 items from forex eligibility, fuel shortages, power shortages, rising electricity bills etc.

    All of these have compounded domestic prices of goods and rise in transport costs thus placing  the logistics and supply chain sector  in the receiving end as the corporate sector face severe loses, production cuts and hence rationalisation of logistics/supply chain activities.

    The national response is an offensive at structural transformation of the economy with industrial diversification, import substitutions and backward integration strategies leading the charge. So, in effect, there could be no better time to take stock and reflect on the future of the industry and articulate it with a National Logistic Strategy. This is why this study is very important and timely.

    Overview, size, potential of Logistics & Supply Chain Sector

    Nigeria is among the lowest cost crude oil producer, and with international oil prices fixed in US dollars, couldn’t care less, until now, that the economy faces total melt down with the steep drop in oil prices.

    To grow a diversified export economy; develop and implement import substitution and backward integration policies around  increased value addition, required an urgent but fundamental review of the transport logistics and supply chain industry and develop our national logistics strategy to achieve greater competitiveness and increased trade facilitation.

    According to WTO, transaction cost of the type amenable to trade facilitation, can be as high as 10-15% of our total trade volumes which considering import and export alone is $15b – $21.6b (Import $61.6b, Export $82.6b, total $144.2b,2014).

    Transportation, warehousing, cargo consolidation and border clearance costs, form a critical component of the price of our commodities, and hence our global competitiveness, creating the urgent need of an effective National Logistics Strategy.

    This industry report therefore is timely and most appropriate and has developed insights and evidence base to support a robust National Logistics Strategy, fully owned by the vast range of regional and international stakeholder that bring macro and micro economic perspectives.

    We welcome this elaborate industry report for conducting detailed study in all the areas of logistics and supply chain that will raise awareness of issues of critical importance in growing our national and regional economy and in providing the evidence base for policy reform agenda.

    Size of the economy and growth potential of the industry

    The logistics sector is estimated at well over N200b and grows at an annual rate of 10%.  Deregulatory pressures and investment have led to increased professionalisation and modernisation of the haulage and logistics companies with most heavy manufacturers outsourcing the transportation of their products and the government concessioning out large maritime (ports) and inland assets.

    Supply Chain  Management Practices

    The performance on Supply Chain Management is above average and largely influenced by outsourcing, sub-contracting, and holding safety stock and supply chain diversity.

    The study further revealed the wide variability in organisations that have logistics department with Supply Chain Management oversight and planning.  Undoubtedly, studies in effective supply chain management (SCM) have shown some correlation between SCM and profitability for large manufacturing companies.

    Supply Chain Risk Management

    I found the piece on supply chain risk management of great interest both in considerably minimising potential vulnerability and in ensuring business continuity. It was interesting to see the spatial distribution as well as the industry distribution of risk management across the geo-political zones but could not see explanations of why the North-east of Nigeria was omitted as its inclusion is important in the formulation of National Logistics Strategy.

    To illustrate the possibility of systemic and unexpected risk, in the review, you identified important risks such as macro-economic, environment risk, extended value chain risk, internal operational risk, and functional support risks. Who could have foreseen that Forex (Foreign Exchange) risk could literally bring the economy to a halt?

    Logistic Performance

    Nigeria has continued to consistently underperform and remain in the 4th percentile on World Bank’s Logistics Performance Index reflected on poor rankings on:

    – Time delays in international         shipment;

    – Poor tracking and tracing               capabilities

    – Poor logistics quality and                competence

    – Efficiency of customs clearance                            process

    – Quality of trade and transport      related infrastructure

    -Ease of arranging         competitively priced shipment

    – Quality of logistics services

    – Ability to track and trace                 consignments

    – Frequency with which shipment reach the consignee within the scheduled time

    Port development has benefited from increased private sector engagement in post concession which has in turn brought more efficiency and investment with AP Muller investing over $100m in Apapa port concession and targeting 1m containers capacity per year. Equally a large pipeline of deep sea ports – Lekki, Ibaka, Bayelsa, all geared to make Nigeria the regional maritime hub.

    The Logistics Performance Index as presented in the report was only up to 2012. I have taken the liberty to upgrade the LPI to 2015, which nevertheless shows persistent under performance on each parameter well below the average of 3.5 out of 7 (except perhaps aviation). In all cases, all forms of logistical infrastructure (power, road, rails, port) throughout Nigeria is subjected to neglect.

  • Nigerian logistics infrastructure: Challenges & prospects

    Nigerian logistics infrastructure: Challenges & prospects

    Abstract

     

    For organisations and companies to be competitive in a globalised  market, they need to move their products and services around the globe so as to meet customer demands and needs. In the light of this, competitiveness cannot be delinked from efficient infrastructure chief of which a competitive logistics transport system is crucial.  Thus, the importance of efficient infrastructure and logistics transport system to economic development cannot be over flogged if countries and organisations want to attain economic prosperity in a now globalised world.

     

    Introduction

    Infrastructure is defined as part of a structure; material or economic base of a society or an organisation.  Therefore, infrastructure can be seen as the basic structure that fosters the good performance of cities’, states’ or countries’ essential services.  In this sense, for a country to have a good logistics infrastructure system in the different modes of transportation, constant investments from both public and private sectors are needed.

    Organisations, especially in a competitive and globalised world, require infrastructure compatible with their needs and demands, in order to transmit their products and services to different producers and demand centres in different parts of the globe.

     

    Infrastructure as a

    competitive factor

    Infrastructure as defined above can be understood as the basic structure directly responsible for the efficient functioning of the transport, education, healthcare, sanitary, security, communication, energy systems and others that support a country’s economic development. Thus, the fundamental factors to competitiveness are established by economic performance, government, business and infrastructure efficiency.

    We will look at the different segments of infrastructural requirement for a virile logistics system.

     

    Transport infrastructure system

    The existing transport infrastructure in Nigeria for obvious reasons is affecting the economic performance and organisations competitiveness.  The transport infrastructure in Nigeria consists of the following modes: road, rail, maritime, pipelines and air.  From available statistics, the bulk of cargo transported round Nigeria makes use of the road system. The pipeline system basically is used to transport oil, gasoline, diesel, natural gas and others, the air system are probably the less used in comparison with rest.

    We will discuss them under the following headings:

    Maritime/shipping;

    Rail transportation;

    Inland waterways

    Road transportation.

     

    Maritime/shipping:

    One of the major challenges facing Nigeria at present is that it has no meaningful participation in the shipping industry on which Nigeria depends, both for exports and Imports.   Practically all Nigerian Exports are shipped “Free on Board” (FOB), while its Imports are shipped ‘Cost Insurance Freight’ (CIF).  The oil rigs in Nigeria waters and the vessel which service them are owned and controlled by foreigners.  Even the vessels involved in coastal trade and Inland Waterways covered by the Cabotage Act are mostly controlled by foreign Ship owners.

    Statistics show that Nigeria pays over $2 billion in freight each year to foreign ship owners either to export oil or to import finished goods.  Presently Nigeria derives no benefit from the freights incurred.  From available records the value of vessels engaged in the three areas of Nigeria’s shipping business namely: offshore rigs and support vessels, coastal cabotage trade and import and export trade, amount to well over $20 billion.  The consensus is that if Nigeria can gain a foothold in its Shipping Industry, the potential would be enormous:

    Job creation;

    Foreign exchange earning;

    Wealth creation;

    Indigenous shipping capacity.

     

    Rail transport:

    The problems of Nigerian railways are many including insufficient locomotives, rolling stock, poor working capital, obsolete signalling and communication equipment, narrow gauge system, poor financial and managerial support base and lack of political will.  Government needs to re-launch the 25year strategic rail vision for Nigeria, change from narrow to standard gauge, strengthen the curves and gradients of the existing narrow gauge and professionalize the management structure.  In spite of the conscious efforts at ensuring prompt and timely maintenance of assets, the main constraint of effective infrastructural assets management in the Nigerian Railway Corporation remains inadequate funding by successive governments resulting in:

    • Poor infrastructural assets management
    • Delays in accident clearance resulting from non-availability of needed materials and tools.
    • Poor mechanization of track maintenance
    • Inadequate number of inspection vehicles
    • Delay in the rehabilitation of washout sites in the North Eastern section of the NRC (between Bauchi – Gombe)
    • Lack of adequate maintenance spare parts for locomotives and rolling stocks

     

    Inland waterways

    transportation

    The Nigeria Inland Waterways Network is reputed to be one of the longest in the world spanning over 3000 kilometres.  It consists of 50 Rivers, including Rivers Niger, Benue, Cross River, Kaduna, Imo, Ogun, Sokoto and Lakes in Oguta and Chad.  However, this great transport resource is still underutilized.

    Development and utilisation of Inland Waterways in Nigeria will improve logistics to a large extent, which explains recent efforts by the government to dredge the River Niger by the Nigeria Inland Waterways Authority.

    The authority says successful conclusion of the dredging project indicate great economic benefits to Nigeria and populations along the waterways.

     

    Road Transportation:

    Since 1960, Nigeria’s road transportation infrastructure has enjoyed the largest outlay of foreign investment compared with other modes and remains the preferred option for door to door linkage.  Until recently our policy initiative on road infrastructure development, funding, maintenance and even operations have been the sole responsibility of the various tiers of government.  The on-going initiative in encouraging private sector participation in the transport chain and logistics optimisation is encouraged.

    Generally, a holistic strategy involving the overall improvement of not only the road mode, but also the rail, water, and air modes are developed.  In this connection a blue print should be evolved instead of the current sub-sectoral and uncoordinated approach.

    It is also recommended that the private sector should be involved in the planning and development of transportation as part of the Public Private Partnership initiative of the present Government.

    Other Infrastructure Issues:

     

    Logistics education

    The key to corporate growth and profitability in years to come is to provide top customer service at lowest overall logistics costs.  This requires logistics professionals, with analytical and technology skills, supply chain knowledge, practical down-to earth logistics experience and line management leadership. There is a demand for top quality logistics professionals at all levels, including analysts, line supervisors, sales professionals, managers, directors and vice presidents. Salaries range from entry-level positions in the high twenties / low thirties to senior executives, earning well into the six-figures.

    A broad base of business skills, knowledge of the logistics process, and relevant work experience will give you ample opportunity to begin your career with a manufacturer, retailer, logistics service provider or other organization. One could begin at an operator level e.g. stock controller, fork-lift truck driver or warehouse operative. One might even begin as a management trainee, analyst or first level supervisor, and as one demonstrates management capabilities, one can assume positions in logistics or in other arms of the organization.

    One key to success in this field is flexibility. In logistics you will work closely with people throughout your company – manufacturing, marketing, finance etc. Depending on the size of your company, your initial responsibilities may include one or more of the logistics functions. Some positions will require you to specialise in a specific area of logistics. There are numerous opportunities and career paths in this field it is up to you to seek them out and develop appropriate skills to be successful

    Infrastructures are very important to any country in terms of attracting investment and business and to organizations when it is time to decide where to locate an investment, build a factory, establish a regional office, etc.

    How easy a country is to travel to and the modernity and efficiency of its air and seaports is always something a company and its executives need to consider.

    Logistics in the developed countries is very efficient because they have highly developed infrastructure.

    For instance, the United States, Japan, Canada and EU nations all have highly developed national highway systems, port facilities, state of the art air freight handling, and sophisticated information systems, advanced communication facilities, elaborate rail and multimodal transportation.

    Intelligent distribution and logistics aims to change the nature of the trade-offs in supply chain management by:

    • Improving the visibility of planning and control information across the supply chain, and hence improving the quality and speed of decision making;
    • Improving the robustness of logistics processes, making them less variable and more accurate;
    • Creating novel transportation solutions for distributing goods.

    Efficient supply chains for private industry are often very dependent on many public infrastructure assets.

    The overall logistics infrastructure of a nation can be evaluated on the basis of ten categories of major metropolitan indices including:

    Transportation and distribution industry,

    Transport and distribution work force,

    Road infrastructure,

    Road congestion,

    Road conditions,

    Interstate highway access,

    Vehicle taxes and fees,

    Railroad access,

    Water port access

    Air cargo access.

     

    Transportation and distribution industry – This category attempts to get a feel for the depth and strength of the metro-wide transportation and distribution industry and includes the number of companies in the metro area engaged in the transportation and warehousing  industry sector, along with the annual revenue generated by the transportation and distribution industry sector.

    Transportation and distribution work force –  This category attempts to get a feel for the depth and cost of the metro-wide transportation and distribution work force and includes the total annual payroll of companies in the transportation and distribution industry sector, the total number of employees, the average salary and the transportation and distribution revenue per employee.

    Interstate highway access – This category focuses on the interstate highway infrastructure and includes the number of interstate highways that pass through the metro area, as well as the number of interstate auxiliary routes such as bypasses, etc.

    Road conditions – This category includes the average roughness of the metro area’s roads, as well as the percentage of bridges that are obsolete or structurally deficient.

    Road congestion – Whether a metro area has adequate roads depends upon the amount of traffic using those roads. This category includes such things as roadway miles per capita, total miles of freeways, average daily freeway traffic and average daily traffic per freeway lane.

    Road infrastructure – This category attempts to look into the future in terms of keeping up with an adequate road infrastructure. It includes public roads mileage, capital outlay for roads and bridges, highway maintenance per mile and spending for highway law enforcement.

    Vehicle taxes and fees – This category includes highway user taxes and fees, as well as motor fuel excise taxes.

    Railroad access – This category includes the number of railroad carriers that service a metro.

    Water port access – This category includes total tonnage for all ports located within the confines of the metro area.

    Air cargo access – This category includes the number of air courier companies, as well as the total air cargo tonnage for the metro.

    Due to the rapid advancement of technology such as pervasive or ubiquitous wireless and internet networks, connective product marking technologies like RFID and emerging standards for the use of these defining specific locations using Global Location Number(s), the basic supply chain is rapidly evolving into what is known as a Supply Chain Network.

    All organisations have or can purchase the components to build a supply chain network, it is the collection of physical locations, transportation vehicles and supporting systems through which the products and services are managed and ultimately delivered.

    Investing in a country’s physical infrastructure can contribute to economic growth, improve human welfare and has considerable potential for directly reducing poverty.

    Yet current investment in the poorer developing countries, whether internally or externally sourced, is insufficient to fund infrastructure needs, leaving logistics at unacceptable levels.

    Although the public sector will remain the major provider of infrastructure services in most developing countries for the foreseeable future, an increasing number of those countries are now considering ways of attracting increased private sector investment and Nigeria is not left out here.

    This article will be followed with another crucial one on THE URGENT NEED FOR A NATIONAL LOGISTICS POLICY.

     

    • Dr Madu can be reached on ceo@multimix-academy.com

     

  • Violence, logistics mar Delta LG polls

    Violence, logistics mar Delta LG polls

    IT was tales of violence, thuggery, voter apathy and lapses in logistics delivery during the local government elections held across the 25 local council areas in Delta on Saturday.

    The Nation observed that late arrival of election materials was common across the central and Southern districts of the state, as screening of eligible voters in most places visited did not commence until after 12pm.

    There were also reports of skirmishes and destruction of properties in some parts of the state following alleged snatching of election materials.

    In Ughelli South, Uwvie, Warri South, Udu, Okpe, Sapele, Warri South West, Ughelli North Ethiope West and East, Isoko South and North council areas of the state, materials had not arrived most polling booths when our correspondent visited the areas.

    In Koko, the headquarters of Warri North council area, there were reports of violence between members of the All Progressives Congress (APC) and Peoples Democratic Party (PDP), which left several persons injured, with not less than 12 cars vandalised.

    Our correspondent gathered that trouble started when some persons, suspected to be political thugs working for the PDP, snatched election materials and were resisted by members of the APC.

    At Effunrun, the headquarters of Uvwie council area of the state, the campaign office of an APC governorship aspirant, Olorogun O’tega Emerhor, was set on fire by those suspected to PDP thugs.

    In some other parts of Uvwie, there were reports of attacks on members of the APC, who were reportedly beaten and tied up by thugs allegedly working on the instructions of some PDP members.

    In Okpe-Olomu, Ughelli South council area, materials were still not available as at 11:23am, even as people were seen going about their normal businesses. At a community market, people who spoke with The Nation said they were not voting because there was no reason for it.

    Materials arrived Ughelli North council area for distribution at about 11:44am in Olomoro Wards 4, 6 and 7, as people were seen in groups waiting for materials to arrive as at 12:40pm.

    At Olomoro and Irri, both in Isoko South council area of the state, angry electorate reportedly seized materials and destroyed them.

    There had been allegations at Irri that despite the arrival of materials at about 1:30pm, election process could not commence because of the absence of security agents to supervise the distribution process and to prevent possible hijack of materials.

    In Aviara, Ward 3, unit six of Isoko South, voting was yet to start at about 1:45pm. Meanwhile, just a few metres away, from unit 6, the collation centre was still packed with electoral officers, who were collecting materials for their units.

    At Oyede, Ward 1 of Isoko North, the collation centre was still packed with expectant electoral officers and party agents waiting for their materials to be distributed to them at about 2:06pm.

    At Ivrogbor-Irri, Isoko South, electoral officers were still screening eligible voters at about 2:30pm.

    Late arrival of sensitive materials and voter apathy yesterday marred local government polls in some parts of Delta State.

    In Asaba, the state capital, many voters shunned voting centres and opted to stay indoors during the period of election.

    Although voting took place in many polling centres in Oshimili South/North local government areas, there was a low turnout of voters.

    But at a polling centre located at Ozoigwe Primary School in Asaba, there was a huge turnout of voters, while voting and accreditation of voters went on peacefully.

    Voting at the Anglican Girls Grammar School also in the state capital took place without hitches, although accreditation stretched till about 1.30 p.m when actual voting should have started.

    In Aniocha South council area, sensitive materials arrived at about 12.30 p.m. when accreditation should have ended, with many eligible voters having waited in vain for election to commence left in disgust as election materials failed to arrive on time.

    However, there was violence at Okpe council area after some unidentified thugs reportedly set fire on a bus filled with election materials.

    Violence also characterised the conduct of the polls in Delta South and Delta central senatorial districts areas.

    The Nation gathered that there were protests in Delta South and Central senatorial districts over the alleged disappearance of result sheets from the election materials.

    In Koko, Warri North LGA of Delta South, over 10 ten persons were said to have sustained injuries, while no fewer than 20 vehicles of various brands were vandalised when fighting broke out.

    Trouble started when a prominent chief allegedly led thugs to unleash mayhem on members of the community who had insisted on inspecting election materials before being distributed to the various units.

    According to a source, there was anxiety that the materials might have been tampered with in favour of a particular political party.

    A voter in the area, Anunu Esimaje, described the election as a sham, saying that he was a victim of the violence.

    He said, “This is no election; some people used security men to intimidate and molest voters. Even thugs came here to harass and molest our people in the presence of security operatives. Now they have taken the materials away.”

    But in a swift reaction, a chieftain of the Peoples Democratic Party (PDP) in the community, Mike Diden, said the election was peaceful despite the initial hiccups. He praised the security agencies for living up to expectation.

    Diden exonerated PDP loyalists from the violence, saying that one of the opposition parties had imported thugs into the town to cause confusion and ensure that the exercise did not hold.

    Meanwhile, thousands of passengers were left seething with anger as military men and police shut down the state while the election lasted.

    The lockdown followed a directive by the state governor, Dr Emmanuel Uduaghan, that movement of people should be restricted from 8am to 3pm.

    The governor said the move was part of security measures taken to ensure a hitch-free exercise.

    Findings, however, revealed that the lockdown led to endless wait at border towns to the annoyance of passengers and motorists.

    The Nation gathered that major points in and out of the state were effectively closed by stern-faced police and military personnel who said they were under instruction not to allow anybody in or out of the state.

    Our checks revealed that the bridges across the Niger River at Patani and Asaba were blocked by soldiers, forcing hundreds of travellers passing through the state to Edo, Lagos and Northern states to remain in Onitsha and Bayelsa.

    Also, travellers going to Port Harcourt and other South-South states through Benin City, the Edo State capital, were stopped at Koko-Ugbenu junction.

    Among those stranded in Effurun, Uvwie Local Government Area of the state, were members of the Eyeta family who were on their way to Benin City to attend the wedding ceremony of their brother, Monday.

    One of the disappointed travellers told our reporter, “I was hurrying to Benin but when I got to Effurun Roundabout at about 8 am, some wicked soldiers refused to let us pass. But they allowed politicians using military men as escort to pass but they would not allow ordinary civilians to go through.”

  • Poor logistics mar Kaduna council poll

    LATE arrival of electoral materials and officials of the Kaduna State Independent Electoral Commission as well as poor logistic arrangement yesterday marred the conduct of the local government election in the state.

    Accreditation did not start in most of the polling units within Kaduna metropolis until around 11 am, about four hours behind schedule as most of the places visited by The Nation were empty with only party agents, security officials and a handful of voters present.

    As at 11.30am, electoral materials were yet to arrive the polling unit close to the private residence of Vice President Mohammed Namadi Sambo which is located about 10 minutes drive from the headquarters of SIECOM, while the closest polling units to the SIECOM office were also without voting materials.

    The first sign of what looked like a semblance of voting was at the Queen Amina College polling unit in the Kakuri area of the metropolis where The Nation discovered that voting had already commenced at about 11.45 am, while the process was also going on peacefully in Makera, Kakuri Hausa and Kakuri Gwari.

    One of those spoken to in Kakuri Hausa said that the electoral materials arrived there at about 11.00am.

    However, at the Barnawa Shopping comply and the Government Girls Secondary School, Barnawa both in Kaduna south local government which houses about five polling units each, materials were yet to arrive at about 2.30pm.

    As to what caused the delay in the arrival of electoral materials at the Barnawa Shopping Complex, the Chairperson of SIECOM, Mrs. Hanatu Biniyat, said on phone that she would send officials of the State Security Service (SSS) to verify the claims and promptly switched off her phone.

    In Narayi area of the metropolis, voting did not start at the estimated time due to the late arrival of officials who were said to have arrived at 12.00 noon, while in some of the units, officials were just beginning to set up the polling unit as at 12.32pm for the commencement of the exercise.

    Despite the delay, there were willing voters who had to wait for hours for the officials and voting materials to arrive, while those who could not endure the long wait left.

    A 75-year-old man who identified himself as Samaila Dankande told The Nation at the Barnawa Shopping complex at about 10.30 that he got to the polling unit as early as 8.00am to exercise his franchise, but lamented that as at that time, the electoral officials were yet to arrive the venue.

    “I have been here since morning. They told us that the election would start as early as 8.00am, but right now, you can see that there is nobody here. Many people have come and gone because they are discouraged.”

    He advised people to be patient and see if there will be an improvement in the system, especially the administration of local government.

    The Ward Head of Barnawa Lowcost North, Alhaji Jibril Ibrahim also told The Nation that several people had called his residence wanting to know when the accreditation and voting would start.

    He said, “many people have been to my house this morning demanding to know when the accreditation would start. So, I drove out of my house to go and see what was happening so that I could report back to my people. But I have gone round and I cannot see anything. I don’t know what is happening.”

    A highly placed government official who would not want his name in print told The Nation that there could be sabotage by those who would want the SIECOM Chairperson to fail in conducting a smooth, free and fair election.

    Echoing similar sentiments, Independent Election Monitoring Group led by Barrister Festus Okoye told The Nation that poor logistic arrangement by the State Independent Electoral Commission was responsible for the hitches being witnessed during the election.

    Okoye said: “one of the hallmarks of a good election is proper organisation. If you don’t organise and plan well, you will definitely fail. For me, the Chairperson of SIECOM was in Kwara State during their local government election. She monitored the election and saw the way the elections went.”

    However, despite the late commencement of the exercise, The Nation saw some officials of the SIECOM being escorted by the police carrying electoral materials to the collation centre in Kaduna north local government at about 1.30pm, an indication that the exercise was over in such polling units.