COST OPTIMIZATION MODELS OF PORT OPERATIONS IN NIGERIA: A SCENARIO FOR EMERGING RIVER PORTS

AUTHOR: IBEAWUCHI CHIBUEZE NZE (PHD)

AFFILIATION: DEPARTMENT OF TRANSPORT MANAGEMENT                         TECHNOLOGY, FEDERAL UNIVERSITY OF TECHNOLOGY, OWERRI.

This study attempts to optimize 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. A Linear Programming Model for sea port operations; and Integer Linear Programming for River terminals were formulated from the cost components associated with the vessel- port relationships. With the aid of QM for Windows Software, and TORA software respectively, optimal solutions were derived. An optimal cost of 231.38US dollars per ton cargo handled at the seaport is derived, while the optimal integer solution (obtained by TORA) for the River terminals gave a value of 1 for all variables which indicates that all the projects must be selected to attain the optimal Z value of 58256395.62 million naira. The result shows the minimum cost of port operations and as well determines the optimal time frames for the decision variables of port operations; and capacity utilization of the terminal equipment. This provides a basis for future projection to determine the range of values of the constraints and decision variables for which the solutions will continue to be optimal. 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 given as: Y = 1.183X1 – 1.390X2 +0.597X3. Economic and financial analysis is conducted to reveal significant cost savings of 26% by the IWT over road haulage. Furthermore, the analysis reveals a Cost-Benefit ratio of investment in IWT of 1:23 and a positive Net Present Value (NPV) of 176732870 million USD. 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 IWT will conveniently divert traffic from the congested corridors of road transport and that the river ports will yield significant benefits to the economic growth of Nigeria, which is revealed in the comparative scenario analysis that quantified the ratio of the magnitude of economic activities at the sea ports to the river terminals as 293:1, 336:1 and 359636:1 for ware house operations, gang operations and ship turnaround time respectively. The study concludes that Inland waterways transportation has a significant impact to the socio- 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.

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