Market Trends of nigeria freight and logistics Industry
The transportation sector contribution to nominal GDP dropped to 1.35% in Q2 2023 due to petrol subsidy removal
- In the second quarter of 2023, the transportation sector's contribution to nominal GDP in Nigeria stood at 1.35%, marking a notable decline from the 2.79% recorded during the same period in 2022 and below the 1.71% recorded in the first quarter of 2023. This decrease in the significance of transportation activities can be primarily attributed to the government's removal of the petrol subsidy, resulting in a considerable hike in pump prices, reaching as high as N640, depending on the state.
- The transportation and storage sector saw a significant contraction in the second quarter of 2023, with a growth rate of -50.64%. This decline was notably lower than the same quarter in the previous year, dropping by 102.30 percentage points, and it marked a substantial decrease of 60.01 percentage points compared to the previous quarter. The sector's growth rate was -25.00% on a QoQ basis. Regarding its contribution to real GDP for the second quarter of 2023, the transportation and storage sector accounted for 0.89%, showing a decline from 1.84% in the same period the previous year and falling below 1.18% in the first quarter of 2023.
- The Nigerian logistics industry has grown slowly due to persistent infrastructure challenges. In 2023, the Nigerian e-commerce market generated USD 6.7 billion in revenue. Its revenue is expected to register a 10.79% CAGR between 2023 and 2027, resulting in a market volume of around USD 10.1 billion by 2027 due to infrastructure improvements in railways and roads and enhanced relations with other nations.
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Fuel prices have witnessed a steep rise as fuel subsidies have been terminated, citing budgetary concerns
- Nigeria has the eighth-lowest gasoline prices in the world. Due to the government's significant subsidies for imported goods, it was ranked eighth in the world index, with the price of gasoline being USD 0.40 per liter or USD 1.82 per gallon in April 2022. As of September 2022, the average price of gasoline in Nigeria was NGN 191.65 (USD 0.46) per liter. Nigeria's average oil production dropped by 14.69% YoY to 1.22 million barrels per day in the second quarter of 2023 from 1.43 bpd recorded in 2022. The cost of fuel imports is rising in response to the recent rises in the price of crude oil in the international market.
- The price of petrol, arguably Nigeria's most consumed fuel, increased by a whopping 47.18% on a YoY basis between April 2022 and April 2023. Due to its dilapidated local refineries, Nigeria currently imports over 90% of its liquid products. The average retail price paid by consumers for Premium Motor Spirit (PMS) or petrol in April 2023 was NGN 254.06 (USD 0.56), indicating an increase of 47.18% relative to the value recorded in April 2022 of NGN 172.61 (USD 0.385). Since June 2023, Nigeria's fuel subsidies have been terminated, citing budgetary concerns. This led to a steep rise in fuel prices.
- Nigeria's crude oil production has increased, and the country's oil reserves are estimated to be 36.89 billion barrels, consisting of 31.418 billion barrels of crude oil and 5.476 billion barrels of condensate. Nigeria aims to have a reserve of around 40 billion barrels by 2025. The country's national gas reserve is 203.16 trillion cubic feet (TCF), with a target of 210 TCF by 2025 and 220 TCF by 2030.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- Consumer spending boosted to USD 241.88 billion due to tourism and impulsive buying
- GDP contribution driven by a growing economy, construction projects, and domestic manufacturing volumes
- The number of online shoppers is expected to reach 122.5 million by 2025 from 76.7 million in 2021
- Nigeria launches Export774 campaign to boost non-oil exports to diversify economy
- The cost of operating a haulage business tripled in 2022 due to rising fuel and battery costs
- Nigeria ranks 88th in LPI investing more USD 1.3 trillion in infrastructure and energy for economic boost
- Declining oil production and exports significantly impacting capacity in the country
- Nigeria’s first deep seaport, Lekki, started operations in 2023 and is expected to become a major cargo hub
- Under the National Development Plan (2021-2025), USD 18.7 billion is budgeted for maritime industry development in Nigeria
- Nigeria aims to strengthen the agriculture sector under the National Agricultural Technology and Innovation Policy (NATIP), 2022-2027
- Global inflationary pressures, supply chain disruptions, and high customs tariffs, coupled with high foreign exchange rates, caused prices to rise significantly
- Manufacturing contributed around 15% to the GDP and grew by 6.93% YoY in 2022
- Nigeria strives to reduce import reliance under the 100-for-100 Policy on Production and Productivity
- Nigeria has been heavily dependent on imported commercial vehicles since 2021, with a rising focus on electric vehicles since 2022
- Nigeria is developing its freight transportation network with a USD 845.8 billion budget under the National Development Plan (2021-25)
- Nigeria seaport needs major connectivity enhancements as bilateral trade between Nigeria and China has been at an all-time high
- With rising price of imported petrol, the freight pricing for all modes of transport witnessed a rise in 2022
- Nigeria ranked 114th Globally in 2022 GII, struggles with inefficient logistics, and insufficient funds for infrastructure upgrades
