Listen: Inland Dry Port: “Operational costs have deflated cargo handling volumes, profit”
Thank you for joining us on Maritime Reality Check. I am your host, Hope Orivri. On this edition of the programme, Managing Director of Inland Containers Nigeria Ltd, Mr. Ismail Yusuf, talks on how much the rising price of diesel, the non-available of FOREX and other factors have caused a crunch on the volume of cargos they handle, and of course, its toll on profit, and what government should do to salvage the situation.
The Interview Report
The inland dry ports are designed to ease supply chain challenges and support trade to the hinterland, but latest developments are changing the face of the business, particularly in Nigeria.
The Managing Director of the Inland Containers Nigeria Limited (ICNL), operators of the Kaduna Inland Dry Port (KIDP), Ismail Yusuf, in this exclusive interview, bemoaned the reality following the steady rising costs in the daily operations of the company in the handling of cargo from a place as Lagos to Kano or Kaduna.
Yusuf, however, used the occasion to call on the Hon. Minister of Transportation, Mu’Azu Jaji Sambo, to consider the development of freight train services for easy movement of cargoes from Lagos ports to at least up to Ibadan, for onward movement by road to the hinterland. Of course, he believes that the best would be for a freight train service from the ports in Lagos to the hinterland; Kano, Kaduna and others.
The ICNL MD, however, tasks relevant agencies of government on addressing some challenges immediately, to avoid business operations running down.
Latest economic indicators have been shaping operations of your dry ports; we know that the cost, price of diesel has skyrocketed and we know that that would definitely impact on movement, which is the key thing that you do; movement of cargo from Lagos to Kaduna, and to be able to help people in the hinterlands to get their goods at good time. Just share with us what has changed in the last five, six months till now?
ICNL MD: Ok. Thank you for this question. I will like to categorically state that it has not been easy for any businessman in Nigeria, not even in the last six months, but in the last two years, because things are going higher in terms of costs. Take for instance; you are talking about transfer of cargo from the seaport to the hinterland, most especially Kaduna Inland Dry Port, ICNL Bonded Terminal in Kano, and some other bonded terminals of other operators.
The cost of diesel alone which we know as AGO has gone double, if not even triple times. We buy diesel at the rate ofN360 before, now it is about N820. So, the trucking we are doing, moving cargo from Lagos to Kano at a cost of N600, 000, N700,000, is now at N1,600,000. Then, you can see that it is not easy for the people who are doing this business.
Ok, if you want to use that to measure the volume of cargo that you are moving, how has it impacted on the business?
ICNL MD: It has impacted on the volume of cargo we are getting. When cost of everything goes up, it is not only diesel that is affecting the people who are importing; don’t forget about FOREX. The dollar is no way to be found. Even if you are doing genuine business, you have your Form M’, Letter of Credit, everything, you will still not get the money from the CBN.
I thought preference was given to people like you who are notable for the business of cargo handling that you? I thought there was a structure?
ICNL MD: I don’t think CBN has done that, because, through my bank, I applied for certain amount of dollars to buy cargo handling equipment for my operation in Kano. It is almost a year now; we could not get USD 200,000.
What are your greatest concerns now, with regards to this FOREX difficult to come by, and price of diesel has skyrocketed?
ICNL MD: It has impacted on the bottom-line; the profit has gone down, the revenue has gone down, the cost remains the same, because you have fixed cost and you have variable cost. There are certain costs that you cannot reduce further, otherwise you will close shop. And there are costs that are fixed that you must incur on monthly basis. So, if you add up these, you will discover that at the end of a particular period or the end of the year what you are supposed to even give to the stakeholders, the shareholders of the business has gone down as well. So the impact is very high, negatively.
In this case, what should government attend to immediately, at least from the point of your operation?
ICNL MD: The government should address the challenges we are facing in terms of FOREX, in terms of cost of AGO to run the vehicles. Otherwise, I won’t blame the transporters, because they bought at exorbitant prices as well. And they have to also do repairs, servicing, pay the drivers. Then, what is left? Some of them borrow money from the bank to buy these trucks and the bank is charging them and they have to pay the money back with high interest. So, a lot of things that government needs to do; they should work on how people can easily get loan at a very lower rate. Then, they should address the cost of diesel going up, and they should make FOREX available, so that people that that are doing legitimate business can have access to them and do their business. And this is only when people in the country would feel the impact.
I know that seven, eight years ago, you were able to move cargo from the port in Apapa to Kaduna. How well are you still doing that?
ICNL MD: By road or by rail?
ICNL MD: That was when rail was functioning.
That is why I advise the present minister of transportation to ensure that even the one that is ready for use; Lagos to Ibadan, they should make work both for passengers and the freight. So that cargo can move from here to Ibadan and people would take their delivery at Ibadan, instead of congesting and making this place gridlock.