Port Concession and Ship Turnaround Time in Nigerian Ports

Dr. Okeke, Adaora Florence

Marketing Department College of Management Sciences, Odimegwu Ojukwu University, Uli, Anambra State, Nigeria

INTRODUCTION

A port is a location on a coast or shore containing one or more harbours where ships can dock and transfer people or cargo to or from land (Eniola, Njoku, Oluwatosin and Okoko, 2014). Port locations are selected to optimize access to land and navigable water, for commercial demand, and for shelter from wind and waves. The use of the sea as a means of transport in Nigeria dates back to the 15th century (1485) when the Portuguese sailed into Lagos with their vessels basically to trade on artifacts in Benin City. From the pre-independence era till date, the nation’s maritime industry is characterized by the domination of foreign vessels and/or carriers from the developed market economies of Western Europe and America. In order to control this scenario, subsequent developments led to the opening of ports at Apapa and Port Harcourt, as well as the creation of the Nigerian Ports Authority (NPA) by the provision of Ports Act 1954 to load and discharge as well as maintain and develop the ports (Njoku, 2009).

From the commencement of operation of the NPA in 1956, Nigeria had operated a full capacity service port model. This was fraught with lot of challenges which informed the idea of switching over to a landlord port model or port concession. The port concession use British version was completed in 2006 after an international competitive bidding process. This led to the emergence of 26 terminals which were concessioned to private terminal operators on the Build, Operate and Transfer (BOT) model (Eniola, et al., 2014).

The reform brought about ceding of cargo handling operations at the port to private terminal operators, leaving NPA as the facility owner. The Nigerian ports witnessed a rapid transformation as a result of this reform in which Nigerian ports were concessioned to the port operators called concessionaires.

Before the advent of port concession (1956-2005), the Nigerian port system suffered from numerous ills which included the following: the turnaround time for ships was too long and usually calculated in weeks, sometimes months, depending on the cargo being loaded or discharged; cargo-handling plants and equipment owned by the NPA were few and mostly unserviceable leading to shipping companies hiring these machines from private sector sources after having paid NPA; dwell time for goods in ports was prolonged due to poor port management and as a such overtime cargo filled the most active seaports leading to port congestion; labour for ship work was held in the vice-grip of wharf overlords who controlled dockworker unions and supplied less than the manpower paid for. This fraud, which became accepted by the maritime community lasted for years and was usually perpetrated to extract maximum revenue from helpless ship owners and their agents without minding how this impacted on the Nigerian economy and the already dented image of the Nigerian seaports. As a result of the compounded problems, the Nigerian seaports were rated as one of the costliest eaports in the world. Consequently, it adversely affected the patronage of the seaports (Njoku, 2009).

Statement of the Problem

The globalization of the world economy has increased the importance of the role for transportation. In the transportation arena, the sea port plays a key role in the process because of the utilization of economy of scale advantages, as compared to other traditional methods of transportation. Port technology had to change at a faster rate commensurate with the pace of technological changes in shipping, for instance from handling of bulk palletized cargo to containerization. Ships and ports have never so technically advanced, never been so sophisticated, never been more immense, never carried/contained so much cargo, never been safer and never been as environmentally friendly as they are today (Eniola, et al., 2014). In order to support the global and regional trade development, Nigerian ports have increasingly been under pressure to improve on efficiency and productivity by ensuring that port services are provided on an internationally acceptable standard. Empirical studies on port concession and ship turnaround time in Nigerian coastal lines are scanty or fragmented. Therefore, it is against this background that we attempt to investigate the effect of port concession on the ship turnaround time in Nigerian ports.

OBJECTIVES OF THE STUDY

The main objective of the study is to determine how the concessions of Nigeria Ports have affected the quality of service delivery in Nigeria. The specific objectives of the study are to:

1. ascertain the effect of private ownership on the tangibles and super infrastructure of Nigeria ports.

2. ascertain the effect of private ownership on ship turn-around time in Nigeria ports.

Research Questions

The research questions that guide the study are stated below:

1. What is the effect of private ownership on the level of tangibles and super infrastructure in the Nigeria port service delivery?

2. How does private ownership of ports affect ship turn-around time in Nigeria ports?

Hypotheses of the Study

The following hypotheses were formulated to guide the study;

Ho₁: Private ownership does not significantly affect the tangibles and super infrastructure of Port Service delivery in Nigeria.

Ho₂: Private ownership does not significantly affect the ship turn-around time in Nigeria ports.

REVIEW OF RELATED LITERATURES

THE Concept OF PORT CONCESSION

There are two major variables understudy in this topic (port concession in Nigeria and Port system service delivery). The study independent variable is port concession while the dependent variable is the quality of service delivery in the Nigeria port system. It is pertinent to note that the major focus of the study as stated in the objectives is to ascertain how the port concession implementation has transformed the nature of port services delivery in Nigeria. To achieve this, the researcher intend to use port concession as a single independent variable to measure the significant effect on five indicators of quality service delivery as stated in the GAP model by Parasunaman, et al (1985). The quality of port service delivery in Nigeria will be measured with the level of responsiveness of the port system after the port concession. The degree of empathy accorded to the port users since the implementation of the port concession. The assurance of efficient and effective port service by the port system since the port concession will be reviewed. The reliability of the port service and the degree in which modern facilities and technology have been introduced which enhances efficient port or cargo management since the port concession in Nigeria. In line with this, the researcher conceptualized this framework (below) to guide the study.

Ports are the gateway to Nations economy but Nigerian ports were performing poorly due to congestions, pilfering, insecurity, delays in cargo clearance, high tariffs, corruption etc; hence making most port users to patronize ports of Neighboring Countries leading to loss of revenue by Government. Reforms have brought about opening up of the ports operations to market forces. Reforming the Nigerian ports has brought about private partnership participation in the ports, leading to injection of funds for infrastructural and super structural developments of the ports This brought about efficiency and increased productivity, expansion of port operation, utilization of economy of scale, increased service quality, use of modern equipment, reduced fiscal burden of loss-making state enterprise etc.

A concession from an economic perspective is in the form of a public-private sector partnership arrangement, used to engage the private sector in the port business. Brooks and Pallis (2008) describe a concession contract as a legal instrument used to assign roles and responsibilities between the private and the public. Concession can be described as; an arrangement whereby a private party – the concessionaire – leases assets from a public authority for a given, usually extended, period and has responsibility for new fixed investments during the period and for providing services associated with the assets. In return, the concessionaire receives specified revenues from the operation of the assets. At the end of the contracted period, the assets revert to the public sector or a new concession is awarded (Aronietis, Monteiro, Van de Voorde, & Vanelslander, 2012).

Prospects and Problems of the Nigerian Ports concession

Concession of Nigeria Port especially to foreign investors reflects the fact of re-colonization of Nigeria and imperialism. It is another form of handing over strategic economic point to the foreign hand for exploitation. In spite of the fact that they will add expertise and technical efficiency to port operation, wholly concessionaire/released to foreign firms is not wise. This has led to changes in unemployment relations in the Nigeria maritime industry (jobs security, wages and recognition of trade unions). Many workers lost their jobs, jobs security and motivation were not considered in the new port systems.

Benefits of the NPA concession;

1. It attracts direct foreign investment (DFI).

2. Reposition NPA as the hub of Africa trade with the world.

3. Enhance better service delivery system facilities and port users’ service experience (Okeke and Kalu, 2019).

4. Reduces the investment of public funds in an area that private sector can come in. thus the Federal Government port system indebtedness from $34million in 1994 to zero in 2008.

5. It permits a healthy competition among the port operators and zones (Eniola, et al., 2014).

Ship Turn-around Time

Ship turn-around time is the time frame that it takes a ship to dock and offload it cargos and exits the terminal. Barnabas (2015) expressed that, vessels now dock easily and discharge rapidly compare to what used to happen in the past at Nigerian seaports. Tongzon and Heng (2005) and Nwaogbe, Diugwu and Muhammed (2016) all confirmed that, concessioning of ports leads to operational efficiency of ports and economic well-being of the country. Anagor (2014) reiterated that, importers and exporters now have confidence in carrying out their businesses through Nigerian ports. Somuyiwa (2008) noted that, most developed cities in Nigeria can be found to be areas where there are seaports. Ndikom (2006) listed the significant impact of maritime transport in the development of Nigeria from the point of employment, exploration and production of goods and services. According to Notteboom, (2007), the flexibility, efficiency and customer satisfaction are the benefits of port concession and the reason it is been adopted globally. It is expected that, concessioning will facilitate technical expertise as foreigners will come and enhance our local knowledge in the industry. Somuyiwa (2008) expressed the changes that occurred at the terminals after concessions of Roro Port to Five Star Logistics and Grimaldi Group respectively. Similarly, it cited Colombia and Argentina as two out of several countries that adopted port concessioning measures for improvements at the ports. Waiting time for vessels has reduced greatly and number of containers moved per hour improved from 7 to 32.

The SERQUAL Model is relevance to this study in the sense that it tries to guide the understanding of how port concession influence the service quality of the Nigeria Port Authority. Hence, it will be adopted as the theoretical underpin for the study.

Review of empirical literature

Moses, Dotun and Matthew (2017), carried out a study on Post Effects Evaluation of Port Concession on Dockworkers in Nigeria. The study evaluated the post effect of port concession on Nigerian dockworkers. Three hypotheses were formulated and tested using Chi square with the help of computer based software known as SPSS version 21. The Chi square analysis revealed that there was significant increase in the level of employment, improved working conditions and that dockworkers are well trained and equipped in the post concession era.

In the last 10 years, measurement of port efficiency using Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) has been symbolic. For instance, Tongzon (2001) investigated port efficiency of selected Australian ports and benchmarked them with other international ports based on DEA estimates. Lee et al. (2005) examined efficiency of ports in the

Asia Pacific region applying Recursive DEA, while Cullinane and Wang (2006) studied the efficiency of European container ports by using DEA and Ablanedo-Rosas et al. (2010) evaluated the relative efficiency of 11 major Chinese ports using adopted version of DEA.

Service system design and establishment of organizational structure in Nigeria ports should make provisions for the applications of these new technologies in the management of cargo handling, processing of import and export duties and online tracking of containers and cargoes, keeping in view the critical comment of Karmakar and Apte (2007:119), that “technological changes, drive process changes”. The current IT-driven services revolution manifesting in automation, self-service, out-sourcing, and off-shoring, constitute challenges and opportunities for port management authorities in Nigeria (Okeke and Kalu, 2019).

NPA (2014) reports that giving the record rise in shipping and cargo traffic over the last six years, one can give the port concessioning reforms some “pat on the back”. Apart from the huge infrastructure rehabilitation and investment of about 200 billion since the reform, there has been a tremendous improvement in the way business is done at the ports than what it used to be prior to concession (Okeke and Kalu, 2019).

Nwanosike et al (2013) in the study revealed that the driver of the improved efficiency after concession, is scale of efficiency (increased throughput levels), rather than technical efficiency. Therefore, the post-concession Nigeria ports performance is influenced by the scale of production and change of ownership. The delineation of the ports into terminals has not ushered in the expected competition among and within the ports.

The SERVQUAL scale was developed following procedures recommended for developing valid and reliable measures of marketing constructs (Asubonteng, McCleary & Swan, 1996; Brown, Churchill & Peter, 1993). The article in 1985 that set the scene for SERVQUAL, conceptualized service quality as a gap between customers’ expectations and perceptions (Parasuraman et al., 1985). They conducted an exploratory study to investigate the concept of service quality. SERVQUAL model was adopted as the theoretical underpin for the study.

Review of empirical literature

Moses, Dotun and Matthew (2017), carried out a study on Post Effects Evaluation of Port Concession on Dockworkers in Nigeria. The study evaluated the post effect of port concession on Nigerian dockworkers. Three hypotheses were formulated and tested using Chi square with the help of computer based software known as SPSS version 21. The Chi square analysis revealed that there was significant increase in the level of employment, improved working conditions and that dockworkers are well trained and equipped in the post concession era.

Service system design and establishment of organizational structure in Nigeria ports should make provisions for the applications of these new technologies in the management of cargo handling, processing of import and export duties and online tracking of containers and cargoes, keeping in view the critical comment of Karmakar and Apte (2007:119), that “technological changes, drive process changes”. The current IT-driven services revolution manifesting in automation, self-service, out-sourcing, and off-shoring, constitute challenges and opportunities for port management authorities in Nigeria.

NPA (2014) reports that giving the record rise in shipping and cargo traffic over the last six years, one can give the port concessioning reforms some “pat on the back”. Apart from the huge infrastructure rehabilitation and investment of about 200 billion since the reform, there has been a tremendous improvement in the way business is done at the ports than what it used to be prior to concession.

Nwanosike et al (2013) in the study revealed that the driver of the improved efficiency after concession, is scale of efficiency (increased throughput levels), rather than technical efficiency. Therefore, the post-concession Nigeria ports performance is influenced by the scale of production and change of ownership. The delineation of the ports into terminals has not ushered in the expected competition among and within the ports.

Methodology

The researcher employed survey design in the study. The researcher adopted stratified random sampling technique because the port users (Importers and Exporters) in these four locations in the Nigeria coastal cities of Port Harcourt and Lagos were singled out. Thus, the sample size for this study is 400 respondents. The quantitative data generated were tested using multiple regression analysis.

4.1 Collation of Data

Response rate (From the Importers and Exporters)

Table 4.1 Distribution and retrieval of copies of questionnaire

Sources: Field Survey 2021

Table 4.1 shows that 400 copies of questionnaire were distributed to the target customers (Importers and exporters). Out of the 400 questionnaires distributed among the customers of the ports studied in Rivers state and Lagos State, a total of 313 copies was returned. This produced a response rate of 78.3 per cent. Out of this, 26 questionnaires were discounted based on serious omissions in some of the scale items.

Therefore, to avoid obtaining misleading information in this research, the researchers concluded that it would be appropriate to exclude such data in favor of more genuine and standard questionnaires. Consequently, the usable questionnaire extracted were 287 which produced a response output of 71.8 per cent. However, it was clearly supported in literature that response rate above 50 per cent is good and acceptable level when the research uses survey questionnaire (Creswell & Creswell, 2018).

4.2 Data Presentation

4.2.2 Analysis of Questionnaire Responses from the Port Users (Importer and Exporters)

This section comprises question by question analyses of all items from which questions were drawn and posed to 287 customers covered in this study. The use of percentages was applied to determine the majority opinion in each case.