Not less than 2, 500 merchant vessels or 50 per cent of foreign ships trading in Nigeria have exited the country’s waters in the last 16 months. Nigerian Chamber of Shipping (NCS) said freight rate increase to 70 per cent was responsible for the sudden development in the last one year.
Reports say in order to compensate the increased transit times, carriers are adding additional vessels to selected services, which in turn has led to increase in the operational and cargo transport to West African ports.
Findings revealed that the in- crease in freight rate started in 2021 when Tilbury to Tincan/ Apapa ports was moved from 2,050 pounds to 2,670 pounds for 40 feet container and $5,310. Also, freight rate from Antwerp/Rotterdam port to Tincan/ Apapa was increased from €2,575 to €4,200.
The President of the chamber, Aminu Umar, linked the development to the prevailing challenges in Nigeria’s shipping industry, saying insecurity and unfavorable policies were responsible for exiting foreign vessels from Nigeria waters.
He noted that the development had led to scarcity of ships in West African region, shooting up the freight rate. Umar said in Lagos that there was a more robust market for vessels in Europe than Africa due to the ongoing Russia-Ukraine war. The President noted that between 40 per cent and 50 per cent of vessels plying the Nigerian waters had returned to Europe from 2022 till date, stressing that 40 per cent of the capacity had moved back to Europe.
Umar noted: “The truth is that these are foreign-owned vessels trading within the West African sub-region, which includes Nigeria. “So what it means is that it has created scarcity which will increase the freight rate. So the freight rate has gone up by almost 70 per cent due to this. There is a 70 per cent increase in freight rate, which went up to 100 per cent before but has reduced to 70 per cent.”
It would be recalled that be- tween December 2020 and 2021, United Nations Conference on Trade and Development (UNCTAD) said that spot freight rates surged across routes in developing regions, explaining that on the Shanghai to South Africa (Durban) route, the rate per 20-foot-equivalent unit (TEU) increased from $2,521 to $6,450 , while on the Shanghai to West Africa (Lagos Port) route the freight rate increased from $5,291 to $7,452.
It added that in Africa, between July 2020 and July 2021 average capacity fell by 6.5 per cent, leading to the increase in container freight rates, with one-way China-to-Africa rates increasing from $2,000–$2,500 to $4,000–$5,000 per TEU.
For Asia to Cameroon, the rate for 20-foot containers increased by 340 per cent and for 40-foot containers by 244 per cent. As regards to performance in cargo handling involving Very Large Crude Carriers (VLCC), UNCTAD explained that Nigeria and Ghana had low performances, while other West African economies like Angola, Cameroun, Gabon and Equatorial Guinea showed average or higher performances.
