Terminal operators’ revenue erodes 58% over low import volume, naira devaluation

Currency devaluation, which has taken its toll on the volume of cargo imported into the country through the seaports, has resulted to significant drop in the value of income in-flow of the private investors in charge of cargo handling operations, BusinessDay has learnt.

The slide in revenue value of terminal operators, which was put at 58 percent, was worsened by the drop in the volume of cargo imported into the country owing to the current importation apathy in the nation’s economic atmosphere.

Vicky Haastrup, chairman, Seaport Terminal Operators Association of Nigeria (STOAN), who said over the weekend that the current exchange rate of the naira to the US dollar had eroded the value of Terminal Handling Charges (THC) by 58 percent, said the situation had been compounded by drop in cargo volume at the port since the beginning of the year.

“Most of our commitments are in dollars whereas we charge in naira, but due to the devaluation of the naira, you’ll see that what we charge today is effectively 42 percent of its value in 2006, when you convert to the dollar. This is significant for us because we now need more naira to fulfill our dollar commitments,” Haastrup said.

Continuing, she said: “Vessel calls at the port, dropped by half in the first month of this year. Volume also dropped significantly by an average of 27 percent across the various terminals. Some terminals suffered more drop in volume than this.”

According to her, only 29 vessels were declared between the last week of February and the first week of March 2015, for the Lagos Pilotage District (LPD), which is the nation’s busiest port that handles over 50 percent of the entire Nigerian billed cargo. This depicts drop in volume as about 60 vessels would have been declared within the same period in the past, she said.

This number of vessels includes tankers, container vessels, general cargo vessels, among others.

“Recall that in 2006, one US dollar exchanged for about N130 but today it is more than N220 to the dollar, which implies a significant decline of about 65 percent in the value of the national currency since port concession,” Haastrup said.

Some policies of government on importation are also affecting volume of cargo handled at the port, the STOAN chairman further said, saying “for instance, due to the new automotive policy, the number of cars/vans discharged in Lagos dropped from 27,000 units in January 2014 to 8,000 units in January 2015, this represents more than 60 percent drop in volume.”

Findings have shown that in the first half of 2014, the volume of vehicles imported was extremely high in anticipation of the introduction of the new duty regime on vehicles. This is such that average number of cars/vans for previous years was in the range of 20,000 units per month.

For trucks, the volume dropped from 2,700 units in January 2014 to 1,700 units in 2015. The number of trucks discharged in 2014 was in line with the figures recorded in the previous years.

When compared with the neighbouring port of Cotonou, Benin Republic, it was discovered that the total number of cars/vans discharged in January 2015 was 30,000 units against 20,000 units discharged in January 2014. This represents a 50 percent growth while similar trends have been registered also for trucks.

“This means Cotonou is gaining from Nigeria’s loss due to the auto policy as more importers are discharging there to avoid paying the 70 percent duty and levy in Nigeria. These vehicles will eventually find their way into the Nigerian market,” Haastrup said.

For her, the same fate has befallen general cargo terminal operators, especially those handling rice and fish. “Terminal operators generally are facing a tough time here. This certainly is not the best of time for our operations.”

She assured Nigerians that STOAN members remain committed to deepening reforms at the ports, despite challenging business environment. We have achieved tremendous success in the ports and at our various terminals with well over $1 billion invested collectively by terminal operators and this has resulted in a more efficient port operation and we will continue with the success story.

Listing some the notable achievement, she noted port congestion and vessel queue, which we successfully eliminated upon takeover in 2006, upgrading of port facilities and the continuous transformation of our ports in line with the vision of President Goodluck Jonathan were major milestones in the history of the seaports.

UZOAMAKA ANAGOR