Weak naira offers opportunities for exports — APM Terminals CEO

Terminal Manager, APM Terminals Apapa, Mr Steen Knudsen, with ANOZIE EGOLE, speaks on issues affecting port operations and how goods can be cleared faster from the port

How did APM Terminals Apapa perform in terms of volume in 2023?

The AP Moller Maersk Group is currently in a silent period before the release of our Q4 and FY 2023 results. But generally, we can say that volumes in Nigeria were weak in the first half of the year, as expected, due to the effects of the election. We saw this rebound in the second half. Exports have continued to grow in line with the government’s aspiration to enhance revenues from non-oil exports.

Last year APM Terminals received the largest container ship to berth in Apapa. What would you say was the significance of such large vessels calling at Nigerian ports?

Larger vessels accommodate more boxes, which in turn mean a lower cost per container for consignees. This is a great development for international trade in Nigeria. Lower shipping costs for consignees translate to lower prices of goods for consumers when they hit the local markets. The goal is to be able to provide efficient services at lower costs for customers. We hope to continue on this path in collaboration with the Nigerian Ports Authority and other key stakeholders.

What will you consider to be APMT Apapa’s greatest achievement at the port since concession?

Our ability to modernise the ports, makes terminal operations more efficient at a lower cost. Over the years, we have made substantial investments in facility upgrades, training of our employees, equipment, and technology. The Nigerian economy has benefitted greatly from the concession to private operators, likewise the private operators.

Additionally, APM Terminals is widely recognised for its improvements in safety for all our employees, customers, and authorities, who frequent the terminal. It is close to 1,000 days ago we had an injury in the terminal, where a maintenance employee bruised his hand during a routine maintenance activity. It is paramount for us that our employees can come to work and return to their families safely by the end of the day.

The impact on our business and the Nigerian economy has been enormous. By acquiring more equipment, we have improved our capacity to serve our customers better. For instance, in 2022, we set a record for the most cargo moves in a single month. This new record of over 41,000 moves was around two per cent higher than the previous record set in 2014.

Finally, we are proud that our employee benefits are worlds class, where we do not only offer top quartile salary packages for our employees, additionally, we also have several welfare benefits such as schooling support for dependants, housing loans, savings schemes, and maternity benefits, which support our diversity agenda and female employees.

APM Terminals has connectivity to the rail line and we are aware that the Federal Government promised last year that containers would be moved in and out of the port through the new standard rail line to take pressure off the roads. How many containers have been moved out of your terminal by rail?

Last year, we moved 9,150 containers via rail, on both the standard and narrow gauges. More consignees will buy into the rail logistics option if some of the teething problems can be resolved to ensure a more seamless process. We are in a continued dialogue with the Nigerian Railway Corporation to improve the train schedule, as many consignees benefitted from predictable and timely inland container movements.

What would you consider the major hindrances to rail operation at the port?

Some of them involve bottlenecks where many stakeholders are involved in the process, others may be unforeseen. For instance, the availability of cargo. There must be sufficient cargo scheduled for rail transportation if it is going to be efficient. However, the question of multiple handling charges has arisen, especially when the cargo gets to its scheduled destination. Someone must load the containers on the rail and at their destination, then offload the same boxes from the rail and load them onto trucks for evacuation from the depot. These handling services need to be paid for at either end or the consignee would view these as multiple handling charges. So, if consignees are not providing sufficient cargo for rail transportation, it would stall the process and add additional costs.

There have been complaints about the high cost of doing business at Nigerian ports. What is responsible for this?

It is a combination of several factors of which the most important is the volatility of the naira. This is international trade and most transactions were carried out in dollars. The rate at which the naira exchanges to a dollar determines to a large extent the cost of cargo clearance, alongside other shipping charges. Cumulatively, this ultimately determines the volume of cargo moving in and out of the ports. Consignees have severally abandoned their cargo at the port due to the amount they must pay as demurrages or for cargo clearance with the Nigeria Customs Service. Nigeria’s international trade will greatly benefit from a more stable naira as it would encourage consignees to trade in larger volumes.

The operating environment was quite challenging in 2023 due to government reforms, including the removal of fuel subsidy and devaluation of the naira. How did this affect operation at the port, especially as it concerns your terminal?

The fuel price hike because of the subsidy removal had a general effect on the economy. Of course, this means businesses like us that depend on fuel to operate would spend more money. What we have done was to look inward and discover ways to be more efficient even with the current realities. For instance, whenever a container handling equipment is operating, we ensure it is moving boxes and not staying idle. So, if the equipment should work for like 10 hours, for those numbers of hours, we ensure it is moving boxes through. That way, we maximise their operating hours and reduce their idle times, cutting down on the volume of fuel they use.

What has been the impact of the electronic call-up system introduced by the Nigerian Ports Authority for the movement of trucks at the terminal?

The goal was to reduce the number of trucks on the road by only releasing trucks from the pre-gate to the ports based on truck requests from the seaport terminals. To a large extent, this has been achieved. That is not to say there is no room for improvement in the process. Whatever issues the primary stakeholders have with the electronic call-up system can be sorted out as long as the channels for feedback and continuous dialogue remain open. It is equally important that all stakeholders ensure compliance with the call-up process. Oftentimes, when congestion does happen, it boils down to trucks being allowed access to the port without having obtained the right call-up ticket.

The Federal Government recently hinted that it would embrace public-private partnerships in operating and maintenance of scanners for customs inspection of containers at the ports. Will APM Terminals be interested in supporting the government to acquire, operate, and maintain scanners to reduce the high rate of physical inspection?

We have always supported positive initiatives that would improve the efficiency of the ports and ultimately, reduce the cost of doing business at the ports for the end user. Globally, APM Terminals has grown its brand based on its experience in port handling operations. That was why our public-private partnerships with different governments have always been successful because port operation is what we do. In some of our operated terminals around the world, we have invested in and are operating and maintaining scanners in collaboration with local authorities. We would welcome such an opportunity in Nigeria, which would benefit the clearance process greatly, and help reduce the time containers stay in the port before delivery.

How has APM Terminals Apapa been giving back to society in terms of corporate social responsibility?

Since our entrance into the Nigerian market, we have continuously engaged in several CSR projects both in our immediate host community of Apapa, the state, and the country at large. We have donated desktop computers to both Randle Secondary School and Sacred Heart College in Apapa. We have also sponsored employability skills training for Apapa youths, and renovated the Lagos State University Teaching Hospital Cancer Centre, among many others.

During the COVID-19 outbreak, we donated N150m to the Federal Government’s COVID-19 Relief Fund account and provided 1,000 units of nose masks, 500 disposable protective coveralls, 400 litres of hand sanitisers; protective goggles, and hand gloves to the Lagos Port Complex of the Nigerian Ports Authority towards curtailing the pandemic.

During our 2021 Safety Week, we presented over 1,000 pieces of Personal Protective Equipment to truckers. This included 800 reflective vests, 800 packets of nose masks, 40 hard hats, 40 pieces of rain gear, 40 pairs of safety boots, 40 pairs of rain boots, and 1000 key rings.

We are supportive of the community we do our business and continually look for ways to show this.

You are the first port operator to employ female crane operators. How are they faring?

They are doing good jobs as well as their male colleagues. Women tend to bring a different perspective to work; they can be more perceptive in spotting problems early on and proffering solutions. It is not only in equipment operations that we have women; we also have employed women as bankmen. This was previously a solely male job role. But now we have women in this field, and they are doing well.

What is your business outlook and projection for this year?

The impact of inflation and the weakening of the naira will continue to challenge both companies as well as all citizens in Nigeria. This will undoubtedly put pressure on the containerised import markets, but it will also offer further opportunities for Nigerian export commodities. Our focus in APM Terminals is to continue our cost improvement and efficiency drives, so we can continue to offer effective vessel and container turnaround times, as well as flexible products such as barging to inland container depots, rail operations, digital container release process, and other value-added services that will help all port users drive cost and efficiency of their own business.

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