Investigation Uncovers Job Threat for 40,000 Due to Port Operation Slump Amid Economic Crisis

The maritime sector in Nigeria is facing a severe crisis due to a significant drop in vessel calls at the nation’s ports. This downturn has had a domino effect on various businesses, exacerbating the ongoing forex crisis and inflation that are plaguing the economy.

Impact on Maritime Sector Stakeholders

The drastic reduction in vessel calls has hit terminal operators, shipping companies, truckers, licensed Customs agents, and freight forwarders particularly hard. These stakeholders are struggling to stay afloat as the volume of incoming vessels continues to plummet.

According to recent checks, the number of vessel calls into Nigerian ports has dropped by 4.5%, from 3,957 in 2022 to 3,778 in 2023. The Nigerian Ports Consultative Council (NPCC) reported a 6.8% decline in container traffic, dropping to 1.56 million Twenty-Foot Equivalent Units (TEUs) from 1.68 million TEUs in the previous year. Additionally, cargo imports have decreased by 20%, containerized goods by 30%, and vehicle imports by a staggering 55%.

Alarming Decline in Cargo Traffic

The gravity of the situation is evident as vessels that previously arrived with 4,000 containers now come with just 300. The Comptroller-General of the Nigeria Customs Service (NCS), Mr. Adewale Adeniyi, acknowledged this drastic drop in cargo traffic and urged Nigerians to increase exports to support the naira. During his visit to various terminals in Lagos, Adeniyi noted the stark emptiness of most terminals, highlighting the significant drop in import trade.

The President of the Association of Nigerian Licensed Customs Agents (ANLCA), Mr. Emenike Nwokeji, echoed these concerns, pointing out the broader economic implications. He mentioned the recent closure of a Shoprite outlet in Abuja as a symptom of the wider economic crisis.

“If any terminal operator is making plans to reduce staff strength, do not blame such operator because the bottom line of any business is profit,” Nwokeji stated, highlighting the dire financial pressures faced by businesses in the sector.

Exchange Rate Instability

Mr. Kayode Farinto, former Vice President of ANLCA, attributed the decline in cargo volume to the unstable exchange rate set by the Central Bank of Nigeria (CBN) for import duty payments. He warned that without prompt government action, cargo volumes at the nation’s seaports would continue to drop.

Farinto explained that many importers and clearing agents are struggling to cope with the fluctuating exchange rate. This unpredictability has resulted in a significant drop in imports, with bulk cargo imports decreasing by 20%, containerized goods by 30%, and vehicle imports by 55%.

The Human Toll

The crisis has also taken a toll on freight forwarders, many of whom have lost their jobs or, tragically, their lives. “The situation has not been very rosy for us in the industry, particularly the freight forwarders,” Farinto lamented, predicting that import volumes would continue to decline if the exchange rate issues were not resolved.

Calls for Predictive Exchange Rates

Farinto criticized the CBN governor for ignoring stakeholder concerns and called for a predictive exchange rate specifically for Customs purposes. He suggested that a tripartite meeting between CBN, Customs, and the Ministry of Finance, including freight forwarders, could help address these issues.

Terminal Operators Struggle

Asconio Russo, Managing Director of Port and Multi-Purpose Terminal Limited (PTML), confirmed that the last two years have been extremely challenging. He cited the devaluation of the naira and high inflation rates as major factors contributing to the decline in port activities. The volume of vehicle imports has dropped by 80%, putting a significant strain on finances.

Job Losses Loom

An investigation revealed that over 40,000 jobs could be at risk if the high exchange rate issue is not addressed. This includes both direct and indirect jobs, comprising employees of terminal operators, shipping companies, dockworkers, truckers, and clearing and forwarding agents.

The President-General of the Maritime Workers Union of Nigeria (MWUN), Prince Adewale Adeyanju, highlighted the tough economic conditions since the new government took office. He noted that redundancies have already begun, with nearly 200 to 300 workers at Tin-Can Island Container Terminal (TICT) facing potential job losses.

A Mixed Bag for Nigerian Ports Authority (NPA)

Despite the private sector’s struggles, the Nigerian Ports Authority (NPA) reported a 15.04% increase in cargo throughput in the first quarter of 2024, totaling 20.1 million metric tons compared to 17.4 million metric tons in the last quarter of 2023. This increase, however, does not reflect the broader economic challenges faced by the maritime sector.

Conclusion

The slump in port operations due to economic instability poses a severe threat to Nigeria’s maritime sector, with over 40,000 jobs at risk. Stakeholders are calling for urgent government intervention to stabilize the exchange rate and support the struggling industry. Without immediate action, the economic crisis will continue to deepen, jeopardizing the livelihoods of thousands of Nigerians.