Cost Optimization Models Of Port Operations in Nigeria: A Scenario For Emerging River Ports

Abstract

This study attempts to model the cost of port operations in Nigeria. The quantitative estimates are concerned with the activities associated with the operations of Nigerian seaports and especially river ports, the costs and the benefits derived to users of these ports. More so, a structural equation model(SEM) of the river port operations is derived and estimated by the application of LISREL software to generate reduced form of equations and parameter estimates of the form: Y₁ = -0.307X₁ -0.403X₂ – 0.496X₃, Y₂ = -0.507X₂– 0.443X₃, Y₃ = -0.640X₂ – 0.301X₃ and Y₅ = 1.183X₁ - 1.390X₂ + 0.597X₃.  The results of the SEM technique shows that available time for port operations is significant to handling cost, ship turnaround time and warehouse time. It further reveals that the demand for port services is significantly related to vessel supplies cost. It is proven that the SEM met the order and rank conditions and as such is structurally unique. Hence, Inland Waterways Transport (IWT) will conveniently divert traffic from the congested corridors of road transport by the optimization of handling costs and utilization of available time for port operations. Therefore, river ports will yield significant benefits to the economic growth of Nigeria, which is revealed in the models by the reduced form parameters that quantified the magnitude of economic activities at the river terminals considering key variables- ware house operations, gang operations and ship turnaround time. The study concludes that Inland waterways transportation has a significant contribution to economic development of Nigeria, if the potentials are fully harnessed. Therefore, it is recommended that government should enforce sustainable legislation to make IWT operations attractive to private organizations for optimal benefits.