The promising warehousing sub-sector in Nigeria, which stakeholders estimate would be worth over N500 billion annually, would need legislative backing to achieve its full potential.

According to analysts, the warehousing sub-sector, which is mainly private sector driven, is still evolving in Nigeria and piqued by economic, technical and legislative factors.

With technology, the trend, globally, is that warehousing injects live into the supply chain (management).

Speaking at a two-day workshop on ‘Warehousing in Logistics’ organized by the Courier Regulatory Department of NIPOST for stakeholders in the industry, Dr. Simon Emeje, senior assistant postmaster general of the Federation and head of CRD, said that the workshop was motivated by the quest to unleash warehousing potentials in the Nigeria and redirect the business ideas of come courier operators.

Emeje told Nigeria CommunicationsWeek that, CRD has “a philosophy to look for areas, through our surveillance and research, of development. It was as a result we felt that warehousing is a very good are for courier operators to expand their business towards it and have a better horizon in terms of better grasp of the business perspective. We have found out that majority of the operators deemed courier as just delivery of annual general meeting reports or notice of meetings.

“We know there are so many things involved in courier; logistics is a critical area, which many of them are not looking at. We have had similar workshop on leveraging e-commerce to boost the operators’ business portfolios and fortunes”.

Viability Of The Market
On his part, Obiora Madu, director general, Africa Centre for Supply Chain, said that shared visibility of the trading partners in the contemporary business climate has made third party platforms (warehouses) critical part of the distribution chain.

Hinting on the supply chain strategic importance to the economy, he identified SCM as the integration of the activities that procure materials and services, transform them into intermediate goods and final products, and deliver them through a distribution system.

He added that, invariably, competition has shifted from companies to supply chain managers.

Madu said, “Supply chain is a network of partners who through the process of adding value, collectively transform inputs, material and information, into a finished products outputs, that is, goods and services, that is valued and gives satisfaction to end users. No business can survive; much less thrive, without satisfied customers”.

While reeling out principles operators must adopt to deliver satisfactory services, the DG said that, the enabling factors include being customer friendly, process integration such as de-emphasizing functions and departments as no function is more or less important; transparency at all levels; clear, quantifiable performance management system and ultimately, the use of information technology.

He added that practitioners must be willing and capable to embrace momentous paradigm shift, the critical part emphasized by CRD too.

The Place of Technology
Also speaking, Fidel Anyanna, a logistics consultant, told Nigeria CommunicationsWeek that Warehouse has evolved over the years, especially with the help technology.

Anyanna said, “It has ditched in the background, the era when some people, presumed to be ‘never-do-well’, are pushed to work as store-keepers. Today, technology has transformed it into professional inclined. A lot of people are making a living from warehousing today. In UK, for instance, third party logistics providers provide warehouse services and companies do not see the need to have warehouses, as they rely on those third party platforms.

“The future of warehousing is bright, even in Nigeria. For the distributive system, it is a new frontier that the managerial achievements have not even gone half-way. So, anybody who is taking up warehousing services now is making a right decision.

On regulating the sector, he said, “Right now, the industry is not officially regulated. Meanwhile, the only regulation I think should come into play, will force on condition of practice and the environmental preservation. How it is operated has to do, more with business indices, which might not really need government’s regulations”.

Toyin Adeoju, managing director, Cross-Country Courier, also described technology as interventional tools to overhaul the courier industry.

He said, “There are new technologies in logistics and new ideas springing up, almost on daily basis. However, there is an improvement in our operations too as courier operators. From this workshop too, we are taking away the important message that, there are sophisticated technology that can be deployed to make logistics much easier.

“As globalization keeps evolving due to the dynamism of the technology, it also plays important role in rediscovering various measures to lift the courier industry. For example, before now, our parents engaged labourers to lift items to load lorries, but with just the click of buttons, items of different weights and sizes are lifted with ease. Through the help of scanners, barcodes, infrared, among others, items can easily be discovered in a warehouse without physically searching for them.

Lack Of Funds And Dearth Of Infrastructure
The practitioners also picked holes in government’s attitude towards the industry and banks’ inability to project into the future by giving long term loans to help liberate the market.

Also speaking to Nigeria CommunicationsWeek, Mrs. Grace Igwe, managing director and chief executive officer of Cysanthel Chihill Ventures, said that in as much as the regulators are focusing on the need for operators to leverage the warehousing sub-sector, there is need to evaluate the operating environment.

She said, “For instance, just the least, how many trailer drivers will like to ply the kind of roads we have in Nigeria, in traffic congestion and to interiors areas-where there will be space to erect warehouses we can be proud of.

“I am talking about constructing a warehouse in Ikorodu or Badagry, where you still have large expanse of land. At the same time, the manufacturers would prefer the warehouse is close to their factory, because that will give them confidence about delivering goods to the customers on time and as need may rise. Are we considering the way Apapa port is congested? These are economic indices that courier operators put into considerations and most time get overwhelmed.

Aside that, how buoyant is our manufacturing sector? The power supply, has it become stabilized? Now, does the government have warehouses? They do not have; this could be part of the reasons they see no reason in proper regulations or to care for the postal or courier sector. Apart from NAHCO, SAHCOL and other small shades, does NIPOST have a warehouse, it doesn’t. It is capital intensive.

To Lara Okuneye, managing director and chief executive officer of PTL Courier, “NIPOST should help in talking to banks to give long term loans that will support this industry. If I had resources, there are so many ‘empty’ warehouses in Nigeria, some are not been used properly. That is why they are turned to churches. The churches are buying the warehouses. If the courier companies have the money, we would have invested on the sub-sector”.

Shye also suggested two ways to raise the capital, “through the commercial banks or directly from the government. I learnt that Sure-P is giving grants to some people, but will they recognize the right places to invest on? I doubt that. That is the unfortunate thing about what the government is doing and the lukewarm attitude towards the courier industry.

Nodding in agreement, Igwe said that to invest in a warehouse costs hundreds of millions. 

“To support, government can build warehouses and sublet them to the professionals to handle. Emphatically, it should be for the indigenous courier companies through the associations. The truth is that we have licences that cover so many areas of courier, but they are not been exploited due to funds. If they should do that, as you are renewing your licence, you pay government certain amount accruable from the warehouse. That will go a long way to help us.

These factors also worry Adeoju, who said, “Warehousing has been neglected in Nigeria due to obvious reasons. I can tell you that it’s not like we (the courier operators) shy away from that multi-billion naira worth of sub-sector, the funds are not readily available. The funds required to revolutionaries the market is huge.

“Painfully, banks are not interested in this kind of business, but they can afford to sponsor music shows in schools where students can download music and the returns comes in per seconds. Even the roads are not motorable.  In warehousing you have to include the freight, probably, for the manufacturers who wouldn’t want to hear about delays in the distributions of their products. Both the government and the banks are looking elsewhere. As the market is capital intensive, the banks and the governments do not care, it hurts.

But, Emeje shared some pieces of advice with the industry.

On funding he said, “Actually, it is part of the things we are looking at. In one of our trainings, we brought up the issue of entrepreneurship financing. Through that way we tried to introduce the operators to the banks; we went as far as bringing people from financial institutions; as a way of creating atmosphere for them to network.

“Secondly, we have emphasized on the issue of synergy. Warehousing could be expensive, but some companies can team together and say, ‘look, let’s make some contributions, get a warehouse’, and develop it for other operators that may even want to use.

Regulations
Emeje said that, “The best way to enforce regulations is by exposing the operators to the best approach to practice. However, we intend that as the operators get into the practice of logistics, as an aftermath of this workshop, through our monitoring we will get to know their challenges, and what recommendations to give them.

“Definitely, there could be challenges between the operators and their clients. Even where there are synergies. So, the only way we have designed to come in on the regulatory point is to oversee them, and monitor their activities as they play in the field”.