Abstract
For organizations and companies to be competitive in a globalized market, they need to move their products and services around the globe so as to meet customer demands and needs. In the light of this, competitiveness cannot be delinked from efficient infrastructure chief of which a competitive logistics transport system is crucial. Thus, the importance of efficient infrastructure and logistics transport system to economic development cannot be over flogged if countries and organizations want to attain economic prosperity in a now globalized world.
Introduction
Infrastructure is defined as part of a structure; material or economic base of a society or an organization. Therefore, infrastructure can be seen as the basic structure that fosters the good performance of cities’, states’ or countries’ essential services. In this sense, for a country to have a good logistics infrastructure system in the different modes of transportation, constant investments from both public and private sectors are needed.
Organisations, especially in a competitive and globalized world, require infrastructure compatible with their needs and demands, in order to transmit their products and services to different producers and demand centres in different parts of the globe.
Infrastructure as a Competitive Factor
Infrastructure as defined above can be understood as the basic structure directly responsible for the efficient functioning of the transport, education, healthcare, sanitary, security, communication, energy systems and others that support a country’s economic development. Thus, the fundamental factors to competitiveness are established by economic performance, government, business and infrastructure efficiency.
We will look at the different segments of the infrastructural requirement for a virile logistics system.
Transport Infrastructure System
The existing transport infrastructure in Nigeria for obvious reasons is affecting the economic performance and organizations competitiveness. The transport infrastructure in Nigeria consists of the following modes: road, rail, maritime, pipelines and air. From available statistics, the bulk of cargo transported round Nigeria make use of the road system. The pipeline system basically is used to transport oil, gasoline, diesel, natural gas and others, the air system is probably the less used in comparison with rest.
We will discuss them under the following headings:
- Maritime/Shipping;
- Rail transportation;
- Inland Waterways
- Road transportation.
Maritime/Shipping:
One of the major challenges facing Nigeria at present is that it has no meaningful participation in the Shipping Industry on which Nigeria depends, both for Exports and Imports. Practically all Nigerian Exports are shipped “Free on Board” (FOB), while its Imports are shipped ‘Cost Insurance Freight’ (CIF). The Oil rigs in Nigeria waters and the vessel which service them are owned and controlled by foreigners. Even the vessels involved in Coastal trade and Inland Waterways covered by the Cabotage Act are mostly controlled by foreign Shipowners.
Statistics show that Nigeria pays over $2 billion in freight each year to foreign ship owners either to export oil or to import finished goods. Presently Nigeria derives no benefit from the freights incurred. From available records the value of vessels engaged in the three areas of Nigeria’s shipping business namely: Offshore rigs and support vessels, coastal Cabotage trade and import and export trade, amount to well over $20 billion. The consensus is that if Nigeria can gain a foothold in its Shipping Industry, the potential would be enormous:
- Job Creation;
- Foreign Exchange Earning;
- Wealth Creation;
- Indigenous Shipping Capacity.
Rail Transport:
The problems of Nigerian railways are many including insufficient locomotives, rolling stock, poor working capital, obsolete signalling and communication equipment, narrow gauge system, poor financial and managerial support base and lack of political will. The government needs to re-launch the 25-year strategic rail vision for Nigeria, change from narrow to standard gauge, strengthen the curves and gradients of the existing narrow gauge and professionalize the management structure. In spite of the conscious efforts at ensuring prompt and timely maintenance of assets, the main constraint of effective infrastructural assets management in the Nigerian Railway Corporation remains inadequate funding by successive governments resulting in:
- Poor infrastructural assets management
- Delays in accident clearance resulting from non-availability of needed materials and tools.
- Poor mechanization of track maintenance
- Inadequate number of inspection vehicles
- Delay in the rehabilitation of washout sites in the North Eastern section of the NRC (between Bauchi – Gombe)
- Lack of adequate maintenance spare parts for locomotives and rolling stocks
Inland Waterways Transportation
The Nigeria Inland Waterways Network is reputed to be one of the longest in the world spanning over 3000 kilometres. It consists of 50 Rivers, including Rivers Niger, Benue, Cross River, Kaduna, Imo, Ogun, Sokoto and Lakes in Oguta and Chad. However, this great transport resource is still underutilized.
Development and utilization of Inland Waterways in Nigeria will improve logistics to a large extent, which explains recent efforts by the government to dredge the River Niger by the Nigeria Inland Waterways Authority.
The authority says successful conclusion of the dredging project indicate great economic benefits to Nigeria and populations along the waterways.
Road Transportation:
Since 1960, Nigeria’s road transportation infrastructure has enjoyed the largest outlay of foreign investment compared with other modes and remains the preferred option for door to door linkage. Until recently our policy initiative on road infrastructure development, funding, maintenance and even operations have been the sole responsibility of the various tiers of Government. The on-going initiative in encouraging private sector participation in the transport chain and logistics optimization is encouraged.
Generally, a holistic strategy involving the overall improvement of not only the road mode, but also the rail, water, and air modes are developed. In this connection, a blueprint should be evolved instead of the current sub-sectoral and uncoordinated approach.
It is also recommended that the private sector should be involved in the planning and development of transportation as part of the Public-Private Partnership initiative of the present Government.
Other Infrastructure Issues:
Logistics education
The key to corporate growth and profitability in years to come is to provide top customer service at lowest overall logistics costs. This requires logistics professionals, with analytical and technology skills, supply chain knowledge, practical down-to-earth logistics experience and line management leadership. There is a demand for top-quality logistics professionals at all levels, including analysts, line supervisors, sales professionals, managers, directors and vice presidents. Salaries range from entry-level positions in the high twenties / low thirties to senior executives, earning well into the six-figures.
A broad base of business skills, knowledge of the logistics process, and relevant work experience will give you ample opportunity to begin your career with a manufacturer, retailer, logistics service provider or other organization. One could begin at an operator level e.g. stock controller, fork-lift truck driver or warehouse operative. One might even begin as a management trainee, analyst or first level supervisor, and as one demonstrates management capabilities, one can assume positions in logistics or in other arms of the organization.
One key to success in this field is flexibility. In logistics, you will work closely with people throughout your company – manufacturing, marketing, finance etc. Depending on the size of your company, your initial responsibilities may include one or more of the logistics functions. Some positions will require you to specialize in a specific area of logistics. There are numerous opportunities and career paths in this field it is up to you to seek them out and develop appropriate skills to be successful
Infrastructures are very important to any country in terms of attracting investment and business and to organizations when it is time to decide where to locate an investment, build a factory, establish a regional office, etc.
How easy a country is to travel to and the modernity and efficiency of its air and seaports is always something a company and its executives need to consider.
Logistics in the developed countries is very efficient because they have highly developed infrastructure.
For instance, the United States, Japan, Canada and EU nations all have highly developed national highway systems, port facilities, state of the art airfreight handling, and sophisticated information systems, advanced communication facilities, elaborate rail and multimodal transportation.
Intelligent distribution and logistics aim to change the nature of the trade-offs in supply chain management by:
- Improving the visibility of planning and control information across the supply chain, and hence improving the quality and speed of decision making;
- Improving the robustness of logistics processes, making them less variable and more accurate;
- Creating novel transportation solutions for distributing goods.
Efficient supply chains for private industry are often very dependent on many public infrastructure assets.
The overall logistics infrastructure of a nation can be evaluated on the basis of ten categories of major metropolitan indices including:
- Transportation and distribution industry,
- Transport and distribution workforce,
- Road infrastructure,
- Road congestion,
- Road conditions,
- Interstate highway access,
- Vehicle taxes and fees,
- Railroad access,
- Waterport access
- Air cargo access.
Transportation and Distribution Industry – This category attempts to get a feel for the depth and strength of the metro-wide transportation and distribution industry and includes the number of companies in the metro area engaged in the transportation and warehousing industry sector, along with the annual revenue generated by the transportation and distribution industry sector.
Transportation and distribution workforce – This category attempts to get a feel for the depth and cost of the metro-wide transportation and distribution workforce and includes the total annual payroll of companies in the transportation and distribution industry sector, the total number of employees, the average salary and the transportation and distribution revenue per employee.
Interstate Highway Access – This category focuses on the interstate highway infrastructure and includes the number of interstate highways that pass through the metro area, as well as the number of interstate auxiliary routes such as bypasses, etc.
Road Conditions – This category includes the average roughness of the metro area’s roads, as well as the percentage of bridges that are obsolete or structurally deficient.
Road Congestion – Whether a metro area has adequate roads depends upon the amount of traffic using those roads. This category includes such things as roadway miles per capita, total miles of freeways, average daily freeway traffic and average daily traffic per freeway lane.
Road Infrastructure – This category attempts to look into the future in terms of keeping up with an adequate road infrastructure. It includes public roads mileage, capital outlay for roads and bridges, highway maintenance per mile and spending for highway law enforcement.
Vehicle Taxes and Fees – This category includes highway user taxes and fees, as well as motor fuel excise taxes.
Railroad Access – This category includes the number of railroad carriers that service a metro.
Water Port Access – This category includes total tonnage for all ports located within the confines of the metro area.
Air Cargo Access – This category includes the number of air courier companies, as well as the total air cargo tonnage for the metro.
Due to the rapid advancement of technology such as pervasive or ubiquitous wireless and internet networks, connective product marking technologies like RFID and emerging standards for the use of these defining specific locations using Global Location Number(s), the basic supply chain is rapidly evolving into what is known as a Supply Chain Network.
All organizations have or can purchase the components to build a supply chain network, it is the collection of physical locations, transportation vehicles and supporting systems through which the products and services are managed and ultimately delivered.
Investing in a country’s physical infrastructure can contribute to economic growth, improve human welfare and has considerable potential for directly reducing poverty.
Yet current investment in the poorer developing countries, whether internally or externally sourced, is insufficient to fund infrastructure needs, leaving logistics at unacceptable levels.
Although the public sector will remain the major provider of infrastructure services in most developing countries for the foreseeable future, an increasing number of those countries are now considering ways of attracting increased private sector investment and Nigeria is not left out here.
This article will be followed with another crucial discussion on THE URGENT NEED FOR A NATIONAL LOGISTICS POLICY.
Dr. Obiora Madu, holds a Doctorate degree in Business Administration from SMC University Switzerland; recipient of 2014 National Productivity Order of Merit Award (NPOM), Nigeria; has over 33 years’ experience in international trade, customs and maritime and transport and logistics/supply chain management; adjunct lecturer at the Centre for Logistics and Transport University of Port-Harcourt Nigeria; Certified International Trade Educator, International Import-Export Institute Arizona USA; board member BEST Unit of Lagos Chamber of Commerce and Industry; fellow Chartered Institute of Logistics and Transport, Institute of Export of Nigeria, Chartered Institute of Supply Chain Ghana and Certified Institute of Warehousing; member Institute of Freight Forwarders of Nigeria and Institute of Logistics Management; member Governing Council of NASME; member International Association of Trade Training Organization and Vice President Association of Outsourcing Professionals of Nigeria.
Dr. Madu can be reached at ceo@multimix-academy.com
