IMPACT OF IN-BOUND LOGISTICS COSTS ON INDUSTRIAL PERFORMANCE IN NIGERIA

Abstract

The Nigerian industrial sector, particularly in manufacturing, has been
characterized by low performance. This paper explores the influence of in-bound logistics
costs from Nigerian firms' importation on industrial performance, using seaport import
clearance cost and manufacturing businesses' turnover, sales cost, and profit as proxy metrics.
A survey was conducted on 23 Nigerian Stock Exchange-listed firms that regularly import
goods via seaports through a questionnaire. The study collected primary data and time-series
data from secondary sources over a ten-year period. This paper utilized the vector error
correction model to reveal that the total import clearance cost significantly and positively
impacts the industrial performance of the sampled firms in the long run. This paper revealed
that throughout a ten-year period (2010-2019), a 10% increase in the total cost of import
clearance resulted in increases of 2.4%, 1.99%, and 1.98% in turnover, sales cost, and profit,
respectively. Additionally, the adjusted R-square shows that the total import clearance cost
explains approximately 86.3%, 84.4% and 83.8% of the total variation in turnover, sales cost
and profit respectively. The study indicates that industrial performance in Nigeria heavily
relies on in-bound logistics from firms' material import, highlighting the significant impact of
the trade logistics environment on industrial development.