Few weeks ago, Mohammed Bello-Koko, who has been in acting capacity, was confirmed as the Managing Director, Nigerian Ports Authority (NPA). In this report, OLUWAKEMI DAUDA suggests areas Bello-Koko must address to develop the sector.
ON assumption of duties few weeks ago, the newly appointed Managing Director, Nigerian Ports Authority (NPA), Mr Mohammed Bello-Koko, promised to boost revenue generation, ensure rehabilitation of decaying port infrastructure, improve patronage of Eastern ports as well as ensure the timely completion of Lekki Deep Seaport.
Experts said this was a good way by the new managing director to take off because the seaports are the most important gateways to the economy, owing to the fact that about 90 per cent of foreign trade is transported via water. This is why many stakeholders and port users believe that ports are Nigeria’s second largest source of revenue after oil.
Infrastructural deficit
There is no doubt that the ports suffer from inadequate port and shipping infrastructure.
Wanted: Multiple modes of transportation
Bello-Koko, stakeholders said, need to focus on the problem of decaying infrastructure such as ports, terminals, cargo handling equipment, channels and harbours, warehouses, ports access roads, intermodal transport involving rail and roads interfacing with ships and badges, utilities, information communication technology (ICT), deep seaport and scanners.
“Bello-Koko must focus his attention on the pathetic state of port access road from Mile 2 to the second gate of the Tin-Can Island port and the road from Ijora to the Lagos Port Complex (LPC), Apapa.The poor condition of the road based on the unruly activities of the truck drivers and security agents, has put pressure on port users and residents of Apapa and its surrounding. This development has heightened the call on NPA to adopt on multiple modes of transportation.
“There is also the problem of inadequate development of seaports and inefficient supportive logistics infrastructure. This is another challenge for the NPA to address.
“There is the need to increase vessel size, and this has remained a problem for ports and shipping companies. Also, accommodating much larger vessels has proved very problematic in ports, where the capacity for such ships is lacking,” a maritime lawyer, Mohammed Oluwaseyi, said.
Under-valuation and under-declaration
Nigeria, the lawyer said, is losing several billions of Naira to leakages, capital flight and policy inconsistencies.
He said: “Bello-Koko must quickly look into the allegations of malpractices in shipping operations such as alleged under-valuation of imports, under-declaration of goods, concealment and fraudulent transactions on Gross Registered Tonnage (GRT) of vessels by shipping lines.
Aggressive development plans
Nigeria, stakeholders said, needs aggressive development plans for the sea and river ports, including development of new ports, which Bello-Koko is expected to champion.
“The Federal Government must be ready to invest in infrastructure and the NPA must rejuvenate its assets, partly through PPP arrangements. NPA must invest in port upgrades and expansions.
Under-investment in port infrastructure
“The ports have suffered from long years of under-investment in infrastructure. With nearly 90 per cent of international trade being seaborne, it is still not too late to pursue an intensive course of infrastructure development to maintain growth, productivity and competitiveness. In fact, trade and economic growth through the ports has strained port infrastructure to the point where the two Lagos ports cannot accommodate further expansion without serious investments. In short, it is now ‘boom or bust’ a stakeholder, Mr Remi Benson said.
Finance
The question on every stakeholder’s lips is: Where is the money to prosecute these projects and programmes? Government officials and other stakeholders agree that the Federal Government and NPA alone cannot fund the infrastructural development in the ports.
“Port infrastructure is expensive, particularly if significant amounts of dredging and reclamation are necessary; and/or breakwaters are required apart from which the quays, jetties, storage facilities, and the like need to be considered on top of the connecting roads and rail infrastructure. Though the port generates good return, the cost associated with common port requirements such as the channel has been financed by government, semi-government-related port authorities or firms.
“Terminal operators must be compelled to take up the investment in the bespoke infrastructure needed for their operations, ranging from the tanks and cranes to the quays and jetties. Long-term returns of the port assets have, however, been stable and in the market.This means we must be expecting an increasing interest from institutional investors, private infrastructure funds and others in investing in these terminal operations and individual terminals,” said former NPA General Manager, Public Affairs, Chief Michael Kayode Ajayi.
With increasing interest in Public-Private Partnership (PPP) investment, Chief Ajayi said it would seem that capital for development is the lesser problem. But many port developments are taking place in countries with limited experience and legal frameworks for this investment. So, these are areas the NPA to look at.
“No doubt, there seems to be an inter-port competition along the Western African coastline, as well as an increase in private investments in these ports. However, despite being the leaders in the region through sheer market size and the options they bring, the ports continue to suffer from inefficient quality infrastructure.
“The seaports have so much potential to be more regionally, but have infrastructural problems because they are old.There’s a limit to the size of vessels they can accommodate and shipping, especially container shipping, is about economies of scale. So, the larger vessels you use, the lower the cost of importing and exporting, and the lower the freight cost we can deliver,” Ajayi said.
Challenges
Findings have shown that the size of ships that can come through Lome, Togo are more than the size of the vessels that are passing out in Nigeria. Stakeholders believe there is the need to be investment in new water ports. The Lekki Port, which Bello-Koko mentioned, is relevant because Lagos is the market; it’s the manufacturing capital and the consumption hub for the country.
“However, there is plenty of other trail-blazing technology to be excited about—solutions to digitalise, decongest and decarbonise the ocean trade and unlock the potential of the maritime trade. Imagine if airplanes were asked to wait in the air for days because airports were too congested, another stakeholder, Mr Leye Ibidapo said.
Now imagine a ship that carries 18,000 20-foot containers and has an engine-power of 11 Boeing 747-400 jumbo jets is asked to wait for close to a week before being given a berth. For every container that cannot be unloaded at Lagos port, there’s a container that can be loaded somewhere else.
Anchorage time in our ports
Findings have shown that anchorage time in our ports has shot up drastically, with over 40 ships waiting at a time. Larger vessels are the most affected. Ships trading in about 4000 containers on a port call see an average 20 per cent increase in getting berth time. That is more than 83 hours (3.5 days) in waiting. Delays for even smaller ships are up between 7.8 per cent and 9.5 per cent, depending on the call size.
“This has caused a classic demand-supply imbalance and made freight rates skyrocket, which ultimately, will trickle down and be borne by the end-user of these goods – you and me.
“Delays have led freight rates to skyrocket and its effects are trickling down to food and other home appliances prices. Containers bound to Nigeria from the United States and Europe, it was gathered, are more expensive than they used to be in other neighbouring ports.
“To say that the congestion in our port has thrown off the choreography of container movements will be the least. However, the question which Bello-Koko and his management team must answer is: how does such disruption happen in this age of hyper-connectivity and operational efficacy?” asked an importer, Thomas Christopher.
True, Bello-Koko and members of his team are aware that aviation has arrivals and departures nailed down to the nanoseconds. But what is he doing to ensure that maritime follow suit in our country?
Answers to the questions are necessary because there are still many unconnected dots on port digitalisation that the NPA needs to attend to.
Findings have shown that container ships spend over 10 per cent of their time at anchor, waiting for berthing. For a 15-to-30-day trans-pacific voyage, this translates to a minimum of three to four days at anchorage, which has increased to 6.5 days.
“To give you a sense of what these delays mean for the economy, ports in the U.S. West Coast alone account for $1billion (834.79 million euros) worth of cargo per day. The National Bureau of Economic Research estimates that delays cost ships 0.6 per cent to two per cent of the goods’ value daily. So, every 24 hours delay causes a loss of about $20 million (€16.7 million euros). This means the 3.5-day delays roughly equal $70 mn down the drain. And that’s just the U.S. West Coast.
An expert, Mr Solomon Adeola added: “Plus, it’s not just the seaports. A ship at a wrong port at a wrong time has a knock-off effect on the connecting hinterland logistics, too – trucks, trains, Ro-Ro services and other inland transportation – everyone has to bear the cost. So, the losses keep accumulating along the chain.
“More time at anchorage also mean more fuel consumption, adding to the emission and environmental impact. As Marine Traffic estimates, bad planning, early arrivals and the subsequent time spent waiting in ports mean that the industry is unnecessarily burning bunker totalling $18 billion yearly. This results in the emission of 160 million tons of CO2 – that’s the same amount of CO2 The Netherlands produces in a year.”
All this because the systems deployed in most ports and vessels are not compatible, leading to a lag in information relay or complete communication gap, thereby necessitating the new management of NPA under Bello-Koko’s urgent attention.
Bridging communication gap
An ecosystem to receive uplinked updates from the ship to shore, and vice-versa paints the latest and most complete picture for decision-making which the stakeholders said they are looking forward to seeing in NPA.
“As soon as it becomes clear that the port will not be ready to receive a vessel at the original Estimated Time of Arrival (ETA), the NPA Port system must communicate an updated ETA to the ship’s navigation system. So, rather than spending long hauls at anchorage, ships adjust to the new ETA by slowing down their speed. The difference: the extra voyage time at a reduced speed decreases fuel consumption, cuts down congestion at ports and anchorages, and lowers local emissions.
“Communication works both ways. If the ship is behind schedule, NPA system must update the onshore systems so that the port communities can better organise their operations.
“It is only when the ships and the shore have better coordination and vessels arrive as per schedule, the whole hinterland logistics gets automatically streamlined,” he said
What NPA needs to do
NPA needs a vibrant and latest system that will assist in exchanging the required time of arrival digitally with the onboard navigation system and allowed the ship’s speed schedule to be adjusted for a Just-in-Time (JiT) arrival by the clicking of one button, thereby saving fuel and costly waiting time during anchor.
“With such better ship-to-shore coordination, vessels can immediately cut up to 15 per cent of excess fuel consumption that is burnt due to long anchorage, which automatically means a significant reduction in both local and on-route emissions,’’ a stakeholder added.
IMO and Just-In-Time
Investigation has shown that an International Maritime Organisation (IMO)-led Global Industry Alliance simulation study at the Port of Rotterdam shows that Just-In-Time arrivals at Europe’s largest port led to a 23 per cent decrease in fuel consumption, which also translates into a huge emission reduction.
Congestion issues
Congestion in the supply chain in our port goes beyond port calls, which just-in-time sailing alone can’t resolve. One major bottleneck behind this congestion is inefficient intra-port and intra-terminal container movements.
Collaboration with stakeholders
“Even if ship-and-shore is well coordinated as the aviation industry, if the unloading and freight-forwarding channels down the stream are not efficient, eventually the container stack will continue piling up and that is where there is the need for collaboration between the NPA and other stakeholders
Trucks and trains not enough
Along with personnel shortage, overland transport alone isn’t able to absorb the emerging capacity needs for container movement within ports and the hinterlands. This backs up the traffic on the oceans.
Removing infrastructural challenges
Autonomous, zero-emission seaborne cargo movement is the key to removing infrastructural challenges and achieving shipping’s zero-emission ambition. Take, for instance, short sea shipping.
Increase in cargo transportation by short sea
Now is the time for the NPA to ensure the usage of the inland waters for cargo transportation and transshipment. Since 2015 and combined with an effort to reduce ground transportation, the EU has targeted a 25 per cent increase in cargo transportation by short sea shipping before 2030. This also supports the decarbonisation targets as shipping is by far the greenest among mass transportation modes when compared to the energy expends of rail, road, and air.
The former President, Association of Nigerian Licensed Customs Agents, Prince Olayiwola Shittu, said: “Sending a container from Shanghai to Le Havre (France) emits fewer greenhouse gases than the truck that takes the container on to Lyon.
“Some examples of such ongoing projects initiatives can be seen at the Port of Rotterdam (the busiest port in EU); Singapore Port (world’s second busiest); Tianjin Port, China (ninth busiest in the world). These cases show how the unique pairing of next-gen sensor technology with automated navigation systems can resolve congestion issues safely even in the busiest ports and most complex inland waterways.’’
Thus, creating a smart inland logistics network within the next few years seems the logical way forward. With solutions like SmartMove and Smart Sensors, short sea and inland shipping can be turned into a safer, cleaner, and more efficient link in the logistic chain, with greater accessibility to those who need it.
Systematic digitalisation
Lack of systematic digitalisation is receiving more attention from ship owners and port management. Even the smaller ones, who previously may have had some wiggle room to procrastinate the transition, are trying to get in the game.