INVESTIGATING CHALLENGES THAT AFFECT LOGISTICS COMPANIES IN NIGERIA (A CASE STUDY OF AGM LOGISTICS, LAGOS)

CHAPTER ONE

INTRODUCTION

 

1.1   Background to the Study

1 The trade sector has experienced a recent transformation with the advent of

2 logistics management and online distribution of goods and services. This

3 evolution has revolutionized the way products are sourced, transported, and

4 delivered, enhancing efficiency and global connectivity.

The trade sector has undergone a recent revolution with the introduction of logistics in the management of trade, and the Internet’s role in merchandising of products and service. This evolution has changed the way products are procured, transported and delivered making supply chains faster and more integrated differently. Logistics includes all the information and material flows within an organization. It spans a range from the transportation of a product or from a service that has to be delivered to the receipt of raw materials needed for the production process, stockage of the finished product, its distribution to the consumer and other services, such as after sale service (Ijirshar et al., 2023).

Information communication technology (ICT) has continued to advance over the years and has penetrated almost all areas of human interaction including but not limited to social relations, learning (Kizgin et al., 2019), medicine and health (Beteng, 2020), law, and business. of course, commerce. This influence can be felt in a global context where people are seeking to perform business activities in a more efficient, secure and cost-effective manner. The e-commerce giants such as amazon have created a spur above the other entrepreneurs in the world including Nigeria. Other leading big e-commerce companies around the world are Amazon, Alibaba, eBay, Walmart, and JD.com. A number of prominent logistics management enterprises in Nigeria have been highlighted by Adeniran et al. (2022). Notable among these are Jumia, Konga, Kobo360, Breath2Wealth, Okrikah, DeliveryBros, Cartehub, STYLISTAA, and DayDone Limited, giving credence to the huge contribution of e-commerce to the nascent growth of Nigeria’s business landscape. Collectively, these organizations are referred to as e-commerce logistics firms.

Logistics services are a key part in supply chain management, as they involve the transportation, storage, and distribution of goods from the point of production to the point of consumption (Ju et al., 2019). The role of logistics in the economic development of a nation cannot be over emphasized, as it is the backbone of trade and commerce. As a developing nation with over 218 million population estimated, there are huge market potential for manufacturing and logistics operations in Nigeria. However, similar to other industries, the logistics sector faces a range of problems that create limitations to its development and effectiveness (Ijirshar et al., 2023).

Logistics services play a crucial role in supply chain

management, as they involve the transportation, storage,

and distribution of goods from the point of origin to

the point of consumption (Ju et al., 2019))

These challenges encompass infrastructural deficits, regulatory issues, and security concerns, which collectively impede the seamless movement of goods across the country. Understanding these challenges is vital for stakeholders aiming to enhance the logistics framework and contribute to Nigeria's economic growth (Adeyemi & Waha, 2020).

One of the most pressing challenges for logistics companies in Nigeria is the state of infrastructure. Poor road networks, insufficient transportation facilities, and inadequate warehousing options significantly affect operational efficiency. A report by the Nigerian Institute of Transport Technology (NITT, 2021) shows that not only is Nigeria’s road quality one of the lowest in the region, it leads to delays and ballooning logistics provider costs. The infrastructural shortcoming does not only affect the local operations but also disincentivizes foreign investment, and more importantly, constrains logistics companies. Nigerian logistics landscape is also replete with regulatory issues.

Additionally, clearance of goods at ports and borders have often been slowed by the multiple of regulatory agencies and bureaucratic procedures. According to Obi and Chukwu (2022), the cost of compliances often outweighs the benefits leading to inefficiencies. What’s more, because of the absence of a streamlined regulatory framework, the existence of corruption makes logistics operations complicated (Adeola, 2021).

However, creating a more conducive environment for logistics companies to do business in goes through addressing these regulatory challenges. Beyond, security issues have risen as a big obstacle to the proliferation of the logistics sector in Nigeria. Transport of goods has become less safe with the increase in criminal activities such as theft and vandalism. Losses caused by insecurity have been found by Okoro and Ndukwe (2023) to be a frequent challenge with logistics companies, which leads logistics companies to heavily invest in security measures, resulting in increased operational costs. The intricate web of these issues highlights the necessity of a panoramic outlook on how to help Nigeria’s logistics sector become to be able to support the country’s fast developing economy. This therefore calls for this study to probe into the challenges affecting logistics companies in Nigeria.

 

1.2   Statement of the Problem

Logistics companies in Nigeria are currently grappling with a multitude of challenges that severely hinder their operational efficiency and effectiveness. Chief among these challenges are inadequate infrastructure and a convoluted regulatory environment. The poor state of road networks and insufficient transportation facilities lead to delays and increased operational costs, making it difficult for logistics providers to maintain competitive service levels (Adeyemi & Waha, 2020). Additionally, the presence of multiple regulatory agencies, each with overlapping jurisdictions, results in bureaucratic inefficiencies that further complicate logistics operations. As noted by Obi and Chukwu (2022), these regulatory hurdles often lead to costly delays in the clearance of goods, exacerbating logistical inefficiencies and negatively impacting the overall supply chain.

In addition to infrastructure and regulatory issues, security concerns pose a significant threat to the logistics sector in Nigeria. Rising incidents of theft, vandalism, and attacks on transport vehicles create an environment of uncertainty, leading logistics companies to invest heavily in security measures. This not only raises operational costs but also diverts resources away from core business functions (Okoro & Ndukwe, 2023). The interplay of these challenges ultimately hampers the growth of logistics firms and the broader economic development of Nigeria, highlighting the urgent need for comprehensive strategies to address these issues effectively.Top of Form

 

 

1.3   Objectives of the Study

 

The main objective of the study is to examine the challenges that affect logistics companies in Nigeria. Specific objectives of the study are:

1. To assess the impact of infrastructure on logistics operations in Nigeria.
2. To examine the regulatory environment and its influence on logistics companies.
3. To evaluate the impact of security concerns on logistics activities in Nigeria.

 

1.4   Research Questions

To guide the study and achieve the objectives of the study, the following research questions were formulated:

1. What are the specific infrastructure challenges faced by logistics companies in Nigeria?
2. What are the key regulatory frameworks governing logistics operations in Nigeria, and how effective are they in promoting efficiency and competitiveness?
3. What are the major security threats faced by logistics companies in Nigeria?

 

1.5   Research Hypothesis

 

The following research hypothesis was developed and tested for the study:

Ho: There are no significant challenges affecting logistics companies in Nigeria that impact their operational efficiency and overall performance.

 

1.6   Significance of the Study

 

The study is important for many reasons. The following are the major stakeholders this paper through its practical and theoretical implications and findings will be of great significance:

Firstly, the paper will benefit major stakeholders and policy makers in the Logistics sector. The various analysis, findings and discussions outlined in this paper will serve as a guide in enabling major positive changes in the industry and sub-sectors.

Secondly, the paper is also beneficial to the organizations used for the research. Since first hand data was gotten and analyzed from the organization, they stand a chance to benefit directly from the findings of the study in respect to their various organizations. These findings will fast track growth and enable productivity in the organizations used as a case study.

Finally, the paper will serve as a guide to other researchers willing to research further into the subject matter. Through the conclusions, limitations and gaps identified in the subject matter, other student and independent researchers can have a well laid foundation to conduct further studies.

 

1.7   Scope of the Study

 

The study is delimited to AGM Logistics, Lagos. Findings and recommendations from the study reflects the views and opinions of respondents sampled in the area. It may not reflect the entire picture in the population.

 

1.8   Limitations of the Study

 

The major limitations of the research study are time, financial constraints and delays from respondents. The researcher had difficulties combining lectures with field work. Financial constraints in form of getting adequate funds and sponsors to print questionnaires, hold Focus group discussions and logistics was recorded. Finally, respondents were a bit reluctant in filling questionnaires and submitting them on time. This delayed the project work a bit.

 

1.9   Organization of the Study

 

The study is made up of five (5) Chapters. Chapter one of the study gives a general introduction to the subject matter, background to the problem as well as a detailed problem statement of the research. This chapter also sets the objectives of the paper in motion detailing out the significance and scope of the paper.

Chapter Two of the paper entails the review of related literature with regards to corporate governance and integrated reporting. This chapter outlines the conceptual reviews, theoretical reviews and empirical reviews of the study.

Chapter Three centers on the methodologies applied in the study. A more detailed explanation of the research design, population of the study, sample size and technique, data collection method and analysis is discussed in this chapter.

Chapter Four highlights data analysis and interpretation giving the readers a thorough room for the discussion of the practical and theoretical implications of data analyzed in the study.

Chapter Five outlines the findings, conclusions and recommendations of the study. Based on objectives set out, the researcher concludes the paper by answering all research questions set out in the study.

 

1.10         Definition of Terms

1.  Logistics

 The process of planning, implementing, and controlling the efficient movement and storage of goods, services, and information from the point of origin to the point of consumption.

2.  Supply Chain Management

 The management of the flow of goods and services, including all processes that transform raw materials into final products, often involving multiple logistics companies.

3.  Infrastructure

 The physical systems and facilities (such as roads, ports, and warehouses) that are essential for the operation of logistics and transportation activities.

4.  Regulatory Environment

The framework of laws, regulations, and policies governing logistics operations, including customs procedures, trade policies, and safety standards that impact logistics efficiency.

5.  Freight Forwarding

 The coordination and shipment of goods from one destination to another via a single or multiple carriers, often involving logistics companies that manage these processes on behalf of clients.

6.  Last-Mile Delivery

The final step in the logistics process where goods are transported from a distribution center to the end consumer, often facing unique challenges in urban areas.

7. E-commerce Logistics

 The specialized logistics processes and strategies designed to facilitate online retail operations, including order fulfillment, inventory management, and return handling.

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