You might wonder if really logistics has as much effects on a nation’s economy as claimed; or perhaps it is merely “overhyped”. Well, we will let you be the judge of that, but not without you exploring some facts. In a world where demand and supply are rarely fulfilled in the same location, logistics bridges the gap.
Hence, transport and logistics (Air, sea, road and rail) is the connecting dot between where raw materials are sourced, produced and to where they are needed.
As revealed in the 2011 World Development Report, the world economy is increasingly being driven by service-based activities of various kinds with Logistics and Transport Service accounting for almost 71% of global GDP in 2010 and is expanding at a faster pace. The United States recorded about 8% contribution from Logistics in 2015.The Nigerian logistics sector in 2016 was reported to have contributed only 1.41% to the GDP, while being capable of delivering an estimate of over 200 billion Naira to the Nigerian economy with an annual growth rate of 10%.
Transportation, warehousing, cargo consolidation and border clearance costs, form a critical component of the price of our commodities, and hence our global competitiveness, creating the urgent need of an effective National Logistics Strategy. Undoubtedly, studies in effective supply chain management (SCM) have shown some correlation between SCM and profitability for large manufacturing companies.
In times past, the logistics industry has enjoyed not so much attention for infrastructural development. From the indices above, it is glaring that there is a huge vacuum between where we are and where our world counterparts are. At this point of our economy, the government should invest massively into the transport and logistics industry. A good starting point would be training for operators and regulators on new global trends in transportation and logistics services; coupled with rehabilitation of road networks and airlines. Paying particular attention to improving the sea and rail system will go a long way in reducing pressure on the road system and invariably boost productivity.
While we anticipate and await the long-term solutions, optimizing the available infrastructure and networks, display of professionalism, quality and cost-effective managements would go a long way in improving the sector. The logistics industry if properly managed and explored, can be a major turnaround point for our economy.