1.1 Introduction
The logistics industry, which exhibited great development during recent years globally, is the lifeblood of economies. Logistic activities are extensively important for production and trade sectors. Manufacturing corporations procure raw materials, process these raw materials in the production operations and ship their products to the end users all thanks to logistic activities. Logistics is a rather comprehensive concept. Although the concept is considered with an emphasis on transportation, its use has widened during the recent years. Generally, logistics reflects the processes of the flow of information from the origin of the raw material to the end point where the product is consumed, planning and controlling this process both in a productive and low-cost manner via storage and inventory facilities.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
In the 21st century, logistics industry is considered as one of the 3 most important industries along with microbiology and gene technology. Due to the increasing distance between the procurement and consumption points of the commodities in the global scale, logistics industry started to be considered as a significant tool for competition, which in turn increased the interest for the industry especially in developed countries. The industry has a considerable share in GDP of the US and Europe. Furthermore, as Asia became a global trade center and as the world trade volume increased beyond 27 trillion dollars, the logistics industry is in a rapid growth trend.
It is expedient to note that, over 90 percent of International Trade is done by sea or carried by ships. It is believed that on daily basis, these ships move millions of tons of cargoes comprising goods and commodities, fuel, crude oil, raw materials, machinery and equipment, foodstuffs, medicaments, around the world. The situation is not different in Nigeria, being a member of international community. It is estimated that well over 90 percent of her visible international trade is sea borne. The maritime industry, if effectively harnessed, has the capacity to be a big factor in the national economy; with revenue at maximum potentials, capable of competing with oil and gas revenue. Maritime revenue can be a major contributor to the Gross Domestic Product (GDP) of a nation. Gross domestic product (GDP) estimates are commonly used to measure the economic performance of a whole country, but can also measure the relative contribution of an industry or sector.
The economic growth of a nation depends on how efficient and cost effective, the port is operated and managed. Just as the economic growth of a nation demands for port facilities, also the port facilities must be run or operated efficiently to enable further economic growth or expansion (Emeaghara, 2008). The World Bank’s logistics Performance Index (LPI) and United Nation Conference on trade and Development (UNCTAD’s) Logistics and Supply Chain Index( LSCI) are targeted at espousing information about countries trade competitiveness in the area of transport and logistics (Jean-Francois and Lauri, 2014).
Due to the trend of nationalization and globalization in recent decades, the importance of logistics management has been growing in various areas. For industries, logistics helps to optimize the existing production and distribution processes based on the same resources through management techniques for promoting the efficiency and competitiveness of enterprises. The key element in a logistics chain is the transportation system, which connects the separated activities. Transportation occupies one-third of the amount in the logistics costs and transportation systems influence the performance of logistics system hugely (Tseng, Yue and Taylor, 2005). Transportation is required in the whole production procedures, from manufacturing to delivery to the final consumers and returns. Only a good coordination between each component would bring the benefits to a maximum.
Maritime industry plays an important role in international freight; it can provides a cheap and high carrying capacity conveyance for consumers. Therefore, it has a vital position in the transportation of particular goods, such as crude oil and grains. Its disadvantage is that it needs longer transport time and its schedule is strongly affected by the weather factors. To save costs and enhance competitiveness, current maritime logistics firms tend to use large scaled ships that incorporate operation techniques. Moreover, current maritime customers care about service quality more than the delivery price. Thus, it is necessary to build new logistics concepts in order to increase service satisfaction, for example real-time information, accurate time windows and goods tracking systems.
It is important to note that economic growth partly depends upon moving goods efficiently and safely through the transportation chain. Since the current scenario of world trade goes to cellular vessels, thus the demand for transportation of goods via sea increases tremendously. In view of this, more and more terminals are expanding in order to cater for available demand (Olayinka and Ogundele, 2015).
In other words, improved supply chain and logistics (seaport development) will guarantee trade expansion and larger foreign direct investment. This means that transportation and logistics improvements are critical to trade flows and the competitiveness of an economy’s exports and imports. Logistics management is very critical for the performance of maritime industry in Nigeria because of its complex nature. Logistics management is needed more than ever before in order to facilitate movement of cargoes from one location to another in efficient and effective manner.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the effect of logistics industry on economic growth in Nigeria.
1.3 Statement of Problems
Investigation revealed that policy inconsistency has been one of the problems encountered in maritime sector in Nigeria, the issue of inadequate policy formulation and implementation; hence the contribution of the maritime sector to economic growth has been a subject of debate. Concessionaires in Nigeria’s seaports situated at Warri, Port Harcourt, Lagos, Calabar, Onne, and Sapele have recently listed obstacles to efficient operation. Inadequate power supply and incessant removal of management of government agencies in the nation’s maritime industry are some of the factors impeding the efficient running of the ports.
The concessionaires, who spoke under the aegis of the Seaport Terminal Operators Association of Nigeria (STOAN) in commemoration of eight years of port reforms, cited the aforementioned glitches to be affecting the effective and efficient running of the nation’s seaport. Other hitches are the arbitrary arrest of vessels at berth and attendant consequences, poor power generating system, friction among maritime statutory agencies due to overlapping functions and lack of national carrier capacity for the United Nation Conference on Trade and Development (UNCTAD) 40:40:20 carriage rights. The concessionaires that spoke through the, stressed that since they took over the running of the ports nearly a decade ago, they have been contending with these constraints.
The poor implementation of the nation’s Cabotage Act 2003 was one of the factors militating against the growth and development of the Nigerian Maritime sector. It combines with poor implementation of the international port state control policy to encourage the visit to the Nigerian port by aged vessels with archaic handling facilities. In addition, the concessionaires condemned the proliferation of tank farms around the port locations, especially in Lagos, saying that they are constituting security risk to the ports and their users.
1.4 Aim and Objectives of Study
The aim of the study is to investigate the effect of logistics industry on economic growth in Nigeria using Van and Truck Rental Logistics as a case study. In achieving this aim, the following specific objectives were laid out as follows:
- To ascertain the nature of relationship between container traffic and GDP maritime sector contribution;
- To evaluate the extent to which transportation influences cargo throughput of Nigerian ports;
- To determine the effect of warehousing on revenue of Nigerian ports;
- To determine the extent to which material handling affects service quality; and
- To ascertain the extent of the relationship between customer ordering processing and customer satisfaction.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- To what extent does material handling affect service quality?
- What is the extent of the relationship between customer ordering processing and customer satisfaction?
- What is the effect of warehousing on revenue of Nigerian ports?
- What is the nature of the relationship between container traffic and GDP maritime industry contribution?
- To what extent does transportation influences the cargo throughput of Nigerian ports?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: There is no significant relationship between customer ordering processing and customer satisfaction
- H0: There is a significant relationship between customer ordering processing and customer satisfaction
Hypothesis Two
- H0: There is no significant effect of logistic industry on Performance of Nigerian economy with focus on Maritime Industry
- H1: There is a significant effect of logistic industry on Performance of Nigerian economy with focus on Maritime Industry
1.7 Significance of Study
The study has a good number of components that would be beneficial to the operators of Nigeria maritime industry, scholars, students, corporate organizations and individuals. Logistics which is the main concept this study dwells on is needed by every organization to effectively facilitate its operations. Logistics management is critical to Nigerian ports because of number of activities that would be executed before importers receive their consignments. The key driver of logistics management is transportation which helps to create value along the supply chain.
The findings that will be established in the study will make important information available to the operators of maritime industry in Nigeria as well as other stakeholders.
Nigerian ports are crucial to Nigerian economy because maritime industry is one of the sectors that contribute greatly to internally generated revenue (IGR) of the country. Apart from oil and gas sector, maritime sector is one of the main focuses of the government. Hence, a work in this sector would be welcome by the government, the operators of maritime sector and other stakeholders.
1.8 Scope of Study
The scope of the research is focused on the effect of logistics industry on economic growth in Nigeria using Van and Truck Rental Logistics as a case study.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this establishment to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Definition of Terms
Logistics: Logistics is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics is the management of the flow of things between the point of origin and the point of consumption in order to meet requirements of customers or corporations.
