Maesrk predicts positive trade growth for Nigeria in 2014
- Projects 8% growth in import container volume
Despite challenges facing the Nigerian economy, the containerized import market to Nigeria for 2013 was strong and is estimated to have ended at approximately 422,000 forty foot equivalent units (FFE) compared with 2012, where volume shipped was approximately 383,000 FFE, according to a Trade Report released by Maersk Nigeria Limited over the weekend.
The volume, the company said, represents a year-on-year growth of 10 per cent and shows healthy increase in Nigerian imports when compared to 2012, which only witnessed a four per cent growth in volume.
“This strong growth in times when we see global demand increases at only around five per cent year-on-year, lends support as to why economist include the country amongst the MINT economies with promise of continued sustained growth in the future. Products coming into the country continue to be dominated by Electronics, Building materials, Chemicals, Used cars and Industrial supplies.
“The trend of import commodities has remained the same for the past years and China continues to be Nigeria’s largest import trading partner, with the USA, Netherlands, India, Germany and Turkey following,” the report signed by Maersk Lines’s Director of Trade and Marketing, Central West Africa Cluster, Joel Rodricks stated.
It said the change in import policy on some goods has had adverse effects on the volume of rice and frozen fish into Nigeria.
“Rice imports, for instance experienced a complete stop due to the increase in tariff by 110 per cent, whilst the government also imposed import quotas on fish to boost local production.
“For the past three years, Tiles and Ceramics which are mainly imported from China have seen significant growth owing to the increase in construction across the country. The import of building material is expected to continue to be buoyant in 2014, along with electronics another segment which will see good growth due to the increasing middle class in Nigeria,” the report stated.
The report also noted that based on previous trends, pre-election spending is expected to generate volume. To this effect, items such as paper, stationery, printing material as well as electronic display units would likely see a sharp increase in import volume.
Logistics in the automobile industry will experience change in 2014, pending increased duties on fully built up units.
“The enactment of new import policies will see increased containerisation of vehicles in knocked down condition shipped to new assembly plants in the country. All of these indications suggest positive volume growth in containerised imports in 2014,” according to Managing Director of Maersk Nigeria Limited and Head of the company’s Central West Africa Cluster, Jan Thorhauge.
Containerized market in Nigeria
Maersk Nigeria stated that containerized market in Nigeria continues to be strongly dominated by imports, and for the last six years, the import/export ratio has remained at around 92 percent import versus eight percent export.
The company said that Nigeria has witnessed a good trend of Fast Moving Consumer Goods (FMCG) multinational companies increasing their presence, and building capacity to cater to domestic demand even as a part of the production from these industries are making their way as exports to other neighbouring African countries increasing regional trade.
“The government’s drive to privatise the power sector will encourage domestic production and industry will grow to create more jobs whilst boosting exports. Maersk Line has started a new service from Apapa, Nigeria to Tema, Ghana to facilitate export of finished goods,” Thorhauge said.
On the export side, Maersk Nigeria Limited said that agricultural commodities such as Cocoa, Charcoal, Sesame seed and Cotton continue to dominate Nigeria’s non-oil export in 2013.
It stated that export of finished goods, mainly foodstuffs grew by over 80 per cent which is an indicator that local manufacturing is increasing while most non-oil agricultural exports out of Nigeria were loaded to Europe, followed closely by exports to the Far East.
Maersk’s provisional data revealed that Nigeria’s export volumes remained small and volatile, depending on agricultural seasonality.
Volumes declined from 11,000 FFE in Q2 2013 to 5,600FFE in Q3 2013. In the last quarter of the year, the export market experienced a 68 per cent leap as compared to previous quarter ending the year at 35,000 FFE which is a nine per cent increase when compared with the full year 2012.
“High oil prices have boosted national revenues in recent years and this has contributed to some of the trade growth and also helped shore up the foreign reserves of the country in the recent past.
“The government has done well to keep the naira valuation in check and this is very important to provide the needed stability for trade to flourish,” Thorhauge said.
He said on a conservative estimate, the import market is expected to grow by around eight per cent in 2014, whilst exports from its relatively small base will grow a bit faster.
Maersk said it was been able to maintain its market leadership ending the year with market shares of 36 per cent and 29 per cent for import and export respectively.
Nigerian ports infrastructure
On port operations, Maersk Nigeria Limited said the performance of Nigerian ports continued to show progress with investments in key container terminals.
According to the leading shipping line, APM Terminals Apapa initiated the final phase of its expansion plans in increasing cargo handling capabilities and yard space to avoid congestion.
“APMT also invested US$30m to improve the terminal capacity and efficiency of their Onne Terminal. This paved way for the passage of the ‘Maersk Copenhagen’ one of our WAFMAX class vessel which has a capacity to carry 4500 teu to call the port in December 2013.
“There is however, still need for further investments in terminal capacity as current Lagos ports are likely to be fully utilized within the next 4-5 years. Planned investments in port projects such as the Lekki and Badagry terminals will be essential to keep pace with Nigeria’s economic growth. Poor road infrastructure outside the terminals remains a concern and impacted flows in and out of the terminals. 2013 saw the resumption of rail movements to the north of the country which was encouraging and shows that potential exist for such means of alternate transport,” it stated.
Maersk Line service offering
The leading shipping company said it has continued to offer a combination of direct services from the Far East, as well as relay products from other parts of the world via its Western Mediterranean hub ports.
It said the introduction of its new Far East deployment to Nigeria will allow it offer clients in Nigeria three direct services from the Far East to Nigeria; stating that all the services will have direct calls from main Chinese ports and shall cover South East Asia countries over our hub port in Malaysia.
“These enhancements along with improvement in our service from Western Mediterranean hub ports shall result in 11 weekly calls into the largest ports in Nigeria,” the Trade Report stated.
The company said it has invested US$2 billion in building 22 new 4,500 TEU capacity WAFMAX ships which are now fully deployed on the West Africa trade. The WAFMAX vessels were specially designed to call West African low draft ports from the Far East.
Thorhauge said Maersk Line now has the WAFMAX vessels calling Apapa and Tin Can ports in Lagos, and by May 2014 the vessels will also be extended to call Onne Port, “giving our Eastern Nigeria customers direct and faster access from main Chinese ports.”
Maersk Line 2013 financial results
Maersk Line reported an impressive result of usd 1,510 million in 2013 despite the industry facing challenging market conditions. This was an improvement of one billion over 2012, and a return on invested capital of 7.4 per cent for the year. The key driver was cost reduction of 8.3 per cent which more than offset the 7.2 per cent drop in freight rates.