Rise of barge business on Lagos waterways

• Unfriendly Business Policies Stifling Operations, Stakeholders Lament

Of late, Lagos State waterways have become busier, especially the Apapa corridor. As a result, several new jetties have sprouted up apart from the traditional ones that have been in existence over the years.

So, from FESTAC Town to Mazamaza, Mile 2, Kirikiri, Iddo, Adekunle, and Ajegunle, to mention but a few, jetties have sprung up. In some of the spots, there are clusters of jetties within a location.

According to some stakeholders, the setting up of the jetties along these corridors was due to the difficulty in accessing and exiting the Lagos ports.

They said that even though Lagos ports are the most active and busiest among Nigeria’s seven ports, accessing and exiting the ports comes with a lot of hiccups.

The country’s seven ports are Apapa, Tin-Can Island, and Lekki ports in Lagos; Rivers and Onne ports in Rivers State; Calabar Port in Cross River, and Delta port in Delta State.

Apapa Quays, Nigeria’s first port, established in 1923, has been and remains the country’s main seaport. Due to increasing activities at Apapa Quays, an extension in the form of a new port was established seven kilometres North West of Apapa Quays. That is the Tin-Can Port, which is the second largest after Apapa Quays.

Statistics have shown that the two ports in Lagos that are within the same Apapa corridor handle about 80 per cent of cargoes that enter Nigeria. The combined volume of businesses in Calabar Port, Rivers Port, Onne Port, and Delta Port put together is estimated at 20 per cent.

Nigerian Port Statistics released by the Nigerian Bureau of Statistics (NBS) show that in 2017, a total of 43,019,889 metric tons of cargo were handled in six Nigerian ports. Out of the total number, Apapa handled 17,523,313; Tin-Can handled 14,623,239; Rivers handled 2,332,967; Onne handled 1,947,347; Calabar handled 2,078,542, and Delta handled 4,514,481.

But despite this, the World Bank ranked the Lagos Ports 358th out of 370 ports assessed globally, according to the Container Port Performance Index 2021 report. The poor rating of the ports is due to aging and poor infrastructure within and around the ports.

Built to accommodate a maximum of 1,500 trucks daily, Apapa Quays and TinCan are currently over-congested with a daily truckload of 5,000 trucks, more than three times their capacity. This makes it difficult for trucks to clear their goods for import and export on time, leading to a loss of time and perishable goods.

As a result, analysts say that only 10 per cent of cargoes are said to be cleared within the 48-hour stipulated time frame, with about 90 per cent being delayed by five to 20 or more days.

It is, therefore, not surprising that the Lagos Chamber of Commerce and Industry (LCCI) recently revealed that Nigeria loses N7.6 trillion annually to congestion in Apapa and Tin-Can ports in Lagos.

By way of breakdown, Africa’s most populous nation loses N600 billion in customs revenue, $10 billion (N3.6 trillion) in the non-oil export sector, and N2.5 trillion in corporate earnings across various sectors annually due to the state of Nigerian ports, the report by LCCI said.

It was as part of bypassing the pains and bottlenecks that have been synonymous with Lagos ports that some stakeholders devised using barges to move containers and cargoes in and out of the ports through Lagos waterways.

Commenting on barge operations a couple of years later, the Managing Director of the NPA, Mohammed Bello-Koko, said that the business of using barges to move containers from the port to off-dock locations is now worth N10 billion in annual transactions, as more shippers adopt alternative means of moving their containers from the mother port to off-dock locations.

Bello-Koko added that since the introduction of cargo movement using barges, over 500,000 20ft equivalent units of container (TEUs) have been moved through the channels from one location to another.
He said that the container barge industry has also created over 25,000 direct and indirect jobs in the country.

According to him, the NPA in the past relied completely on cargo evacuation by road, until it realised that moving 100 per cent of imports and exports by road was not efficient, or sustainable.

A report by Dentons, a global legal practice, titled “An Overview of Barge Operations in Nigeria,” stated that the congestion experienced in ports and terminals, particularly the ports in Lagos, became a common story in the Nigerian shipping industry, defying several measures that were put in place to combat the trend.

“Dynanmar, a Dutch consultancy firm, stated in its 2020 report that congestion at Nigerian ports costs the nation about $55 million (N20 billion) per day. In a bid to reverse this trend, stakeholders recommended the use of barges for the movement and evacuation of cargo from the ports.

Consequently, the NPA signed a Memorandum of Understanding with AP Moller Capital to adopt barges as a mode of sustainable transportation for the country. The NPA has since issued licenses for barge operations.

Stakeholders and different regulatory bodies have continuously encouraged the use of barges while monitoring operators to ensure that international best practices and local regulations are fully complied with.”

One of the barge operators is Mr. Daniel Eze, and he provided insight into the upsurge witnessed in barge activities on Lagos waterways.

Eze disclosed that barge operations started around 2018, even though it was officially inaugurated by the former Managing Director of NPA, Hadiza Bala Usman, in 2019.

He acknowledged that it came as a result of the congestion on the Apapa corridor because it was difficult for trucks to go into, and come out of Apapa ports.

He revealed that a terminal operator, like APMTho, was the first to bring in barges to move cargoes, but was constrained because their terminal was getting too congested and it started affecting vessels coming to berth.

“A lot of vessels would be at the anchorage for a long while, and it was affecting the ship owners, as well because they were going to pay for demurrage. They were looking for a way to evacuate already packed containers that had been cleared inside the port because trucks cannot do that due to the clogged roads.”

Eze said this led to the NPA inviting interested stakeholders, especially those in logistics to discuss setting up barge operations to move containers.

“And some of us came in. Even now, some people are doing something related to barge operations at Port Harcourt and Warri.”

Eze revealed that some of these people brought in their barges for container movement.

“We started moving containers from Apapa Port to places like Ikorodu. We introduced the Kirikiri lighter terminal as well, and then before you knew it, some other jetties sprang up because you need a waterfront to load and offload. So, that was how we started, and it was good at the initial time when we started.

“After COVID, the economy worldwide dropped, and it equally affected inland waterways, so moving containers through barges dropped, principally because the volume of imports dropped. At the initial stage, we took over the business of haulage from the truckers because bringing in barges helped reduce the cost of moving containers and cargo.

“When Apapa Port access roads were congested, and there was no barge, cargo owners were paying more than N1 million to move a container from Apapa or Tincan ports to Ikeja, or any part of Alaba. So, with barge operations, it helped reduce the high cost of haulage. A lot of people bought into the idea, and we saw an influx of investors, who moved from Port Harcourt, Warri, and other areas to come into the business.

Eze also noted that when the government improved vehicular movement on access roads, it equally affected the use of barges to move containers and cargo.

He, however, insisted that the business is still viable, especially in the movement of bulk cargoes, and the return of empty containers.

The President of the Barge Operators Association of Nigeria (BOAN), Mr. Olubunmi Olumekun, also said that increased barge operations on Lagos waterways were due to the congestion of port access roads.

He added that around 2017 and 2018, the ports became congested, and the movement of containers became pretty difficult.

According to him, then, moving cargo from Kano to Lagos could take three to four days, but it could take one month to move a container from Lagos to inside the port. “It was as bad as that,” he observed.

“But within one year after barge operation was introduced, it changed everything. This has helped. At present, the Badagry Expressway is under construction, but with the help of barges, we have been moving cargo along that corridor and Agbara. We have jetties there.”

Olumekun maintained that there is a huge market for the barge business, and the government can make huge revenue from it, even though it comes from nothing.

He added that barge operators have employed over 5,000 people, directly or indirectly, adding that that despite the huge potential in their sub-sector of the transport industry, the government has been focusing on rail, though not limited to Lagos State.

“The state needs to do more for the operators,” he insisted.

He disclosed that barge operators are challenged by the activities of dredgers and abandoned wrecks on waterways, stating that some of the accidents at the initial stage of their operations were due to wrecks on the waterways, which the NPA and NIMASA have helped to remove.

“We are not saying that the waterways are wreck-free, but about 80 per cent are….We are also hoping the government at the federal and state levels can collaborate to help us procure sophisticated barges because the push barges that we are using at present are outdated.”

Olumekun also observed that policy somersaults as they relate to barge operations, including policies that are not business-friendly, stifle opportunities in the sector.

“There is multiple taxation from when you start building your barge till the point of operation. There are multiple registration processes because there are many government agencies controlling barge operations. And all of them are doing the same job. Sometimes, it is not even the monetary aspect of the registration process that causes delays, because it takes months to get barge operations registered.

“Sometimes, it is bureaucracy. But in Singapore and China, you can build a barge and start operations fully registered within six months.

“So the government should look into the multiple registration processes and bureaucracy. The pirates are there, and just as you have touts on the roads, pirates are on the waterways. The pirates are more deadly. When we started the operation, it was hell, but things are a lot better now.