For organisations and companies to be competitive in a globalised market, they need effective transportation to move their products and services around the globe so as to meet customer demands and needs.
Nigeria is rapidly advancing and scale of real growth stands second only to government plans. Key supporting factors will be the young and urbanised population, large oil and gas reserves and an increasingly diversified economy.
“Although trading in Africa has its challenges, the opportunity exists to invest in its future with particular emphasis on infrastructure and utilities such as electricity, water and telecommunications. Besides the need to upgrade roads and ports there is an absence of refrigerated space to accommodate agricultural and perishable product.” – Photios Tzellios, Supply Chain Director, Shoprite.
Nigeria’s poor infrastructure has constrained growth in the logistics industry. Time delays, bottlenecks for international shipments, poor tracking and tracing capabilities and poor logistics quality and competence are all industry risks that weigh on growth prospects for logistics and transport industries.
Nigeria ranked poorly on all these factors on the Logistics Performance Index 2015 and has lost significant ground since the 2010 rating. Adding to this are burdensome customs procedures, which are still a major stumbling block in the effective functioning of the Nigerian logistics system and add to business costs and risk for transport and logistics services providers.
The road network is very important in Nigeria because road transport accounts for over 90% of freight and passenger services for inland transportation. With such a high percentage of goods transported by road, the importance of the road network to businesses and investment opportunities cannot be over-emphasized. ThNigerian road network has an estimated length of 200,000km of which 18% is owned by the federal government, 16% owned by the state government and 66% (mostly earth roads) are owned by the local government. The federal roads constitute only 18% of the road network but carry over 70% of the vehicular traffic.
The inability to transport commodities at reasonable cost by means of a bulk transportation system could severely impact the country’s ability to leverage opportunities from bulk products. Often, the food grown in the north ends up rotting in the fields because the cost of driving it to markets is more than its value.
Nigerian customs and port authorities currently make it very difficult for businesses to work effectively. The Lagos port complex in Apapa, Lagos is the biggest port in the country and deciphering the regulatory environment can take time. And bureaucratic red tape can leave executives frustrated even before their products leave the port and hit the famous roads of Nigeria.
And it’s not an understatement to say that the roads in Nigeria are not in very good shape for efficient distribution. Bad roads significantly increase transportation cost for distributors. This cost of transportation is further increased because of a fragmented market that is not always connected to the major road networks. So depending on your product and where your customer is, the distribution challenges are heightened when the consumer is not in a major city and is not connected to the major road networks.
Local delivery vendors are effectively using the possibilities of technology to leverage in a volatile and disjointed business environment for increased value and customer satisfaction. This has positioned some vendors to lay claim to the title of Nigeria’s leading indigenous logistics company, including GIG Logistics, Courier Plus Services Limited, FedEx Nigeria and newest player based in the Northern part of Nigeria ANCAPS. They are all constantly looking for ways to use technology to make processes simpler and friendlier to customers and breaking through the harsh business climate.
In general businesses currently experiencing difficulties in the last mile would do better by aligning with indigenous logistics providers who have more knowledge of the terrain and stronger delivery networks.