Naira volatility, inflation pushing up freight rates – SAN

Nigeria's shipping sector is experiencing significant cost pressures that threaten to reshape supply chains across West Africa and create both challenges and opportunities for European businesses operating in the region. The Shipping Association of Nigeria (SAN) has identified two primary culprits: the persistent weakness of the Naira against major reserve currencies and the broader inflationary environment gripping Africa's largest economy. This convergence of macroeconomic headwinds carries profound implications for the continent's trade ecosystem. Over the past 18 months, the Naira has depreciated substantially against the US dollar, declining from approximately 411 per dollar in mid-2023 to levels exceeding 1,500 per dollar by early 2024. This currency erosion directly inflates shipping costs because maritime operators must source fuel, spare parts, and vessel maintenance in hard currency while earning revenues in Naira. The gap between these two sides of the ledger has widened considerably, forcing carriers to pass increased costs to shippers. Compounding this currency headwind is Nigeria's inflation rate, which has remained stubbornly elevated above 30% in recent months. This broad-based price acceleration affects every input in the logistics chain—from labor and port services to insurance and administrative fees. Port congestion charges, stevedoring rates, and customs clearance expenses have all risen,