CHAPTER ONE

GENERAL INTRODUCTION

1.0 Background to the Study

Logistics services have been recognized as the backbone of many sectors. Logistics services encompasses several industries, which include all transportation services, distribution, packaging, and warehousing, among others (Kunaka, et al., 2017). Not only the transport sector, but also the agriculture and manufacturing sectors necessitate logistics to deliver products to the markets. Along the supply chain, several intermediaries, such as truckers, clearing agents, are engaged in services. However, the regulations on logistics services are not well defined in many developing countries; as a result, the regulatory frameworks for this industry are often opaque.

Over recent decades, maritime freight transportation has become increasingly important in the transport of goods. Nowadays, the great part of the goods are transported using the maritime freight transportation. Because it has become very important, due to its increasing importance, it requires the intervention of an organization to manage the safety of the vessels, the goods and environment. This organization is known as “International Maritime Organization” (IMO) that is a specialized agency of the United Nation and it was established in 1948. (Luis Blanco Munuera, 2017)

Port infrastructure development with improvement in maritime transportation as re-requisite for implementing various economic development programs. This is mainly due to the fact that inefficiencies in the entire chain of logistics and major infrastructure such as Ports, will always lead to greater adverse effect on the entire economy. On the other hand, an efficient maritime transportation system plays a significant role on bilateral trade which ultimately support economic development and growth. This is why there have been simultaneous move on growth in GDP, Industrial production especially depicted by total factor productivity, merchandize trade and seaborne shipment. This is why economist insist on the need to improve Port infrastructure and operations to enhance trade, foreign direct investment flows and overall economic growth. The United Nations Conference on Trade and Development UNCTAD has been providing detailed review on the role of maritime transportation on global trade. In its 2016 review, it indicated how the world gross domestic product expanded by 2.5 per cent. The report further revealed how individual country performances unfolded against the background of lower oil and commodity price levels, weak global demand and a slowdown in China. According to the report estimated world seaborne trade volumes surpassed 10 billion tons, the first time in the records of UNCTAD. Shipments expanded by 2.1 per cent, a pace notably slower than the historical average. The tanker trade segment recorded its best performance since 2008, while growth in the dry cargo sector, including bulk commodities and containerized trade in commodities, fell short of expectations. As far as maritime businesses are concerned the report indicated that the world fleet grew by 3.5 per cent in the 12 months to 1 January 2016 (in terms of dead-weight tons (dwt)). This is the lowest growth rate since 2003, yet still higher than the 2.1 per cent growth in demand, leading to a continued situation of global overcapacity. The major point to note here is the fact that implementation of economic growth and sustainable development goals shall lead to increased volumes of trade, and hence cargo that will put more pressure on demand for maritime transportation. This will in turn necessitate need for improved maritime transportation system.

The emergence of freight forwarding is associated with an increase in commodity production and the development of trade and transport. The need for this type of service arises when the buyer ceases to be involved in the process of transporting their goods, entrusting said task to dedicated transport companies. The freight forwarder, with the help of carriers, is to ensure safe transport of the entrusted goods. The first premise that contributed to the emergence of freight forwarding was the separation of the ownership rights of the goods from the physical provision of the distribution service. The second premise concerned the functional issue that spawned several parties such as carriers, market suppliers or shippers, these last ones representing the demand side of the market. Due to the globalization, the logistics sector witnessed a series of structural changes (Marek, 2019).

In the face of challenges in carrying out international transport effectively, global players joined forces with a new, tailored logistics service provider, the freight forwarder. Today, the freight forwarder is an active participant in the transport process, mainly concerned with carriage of goods. The modern approach assumes that freight-forwarding encompasses a number of comprehensive activities and the definitions tend to overlap in many literature sources. At its simplest, freight forwarding is “a service consisting in organizing the movement of goods using appropriately selected roads, means and methods of transport, so that goods can be delivered from the buyer to the recipient, (Petkevičiūtė et al.,, 2018).

In Africa ports are an important part of the logistics network, with many ports having an extensive hinterland often covering a number of countries, which makes them a natural focus for regional development (Price Waterhouse Cooper, 2019). Maritime transport is the lifeblood of Africa, with over 90% of the continent’s trade merchandise transported by sea (African Union 2019; Manduku 2019). Furthermore, Africa is located on one of the busiest global sea routes‚ vital to global maritime logistics‚ and its geographical position offers an enormous chance for investing in a diversified global market. Despite the significance of ports to international trade, the development and integration of ports in Africa’s wider logistics chains and performance remains poor (Shaw 2018; Tralac 2018; Chimbelu 2019; Chelin and Reva 2020; Gicheru 2020; Kahyarara 2020). Africa still makes up just a small percentage of global trade, with problems persisting at its ports from performance concerns to ineffective handling time, poor security and, in some places, corruption (Kingsland 2020).

Africa needs to make use of the economic potential of its ports and maritime sector if it is to achieve its growth ambitions. An analysis by the PwC in 2018 revealed that upgrades in port efficiency might increase growth, demonstrating the close relationship between port effectiveness and trade competitiveness (Booth 2018; Niselow 2018). However, with increasing congestion in several African ports1, Africa faces the risk of foregoing further development through poor or little investment in port infrastructure. Access to effective ports, interconnecting infrastructure and effective operations to deal with current demand and future growth could lead to reduced costs and improved overall freight logistics efficiency and reliability, all of which are essential to the region’s future success (UNCTAD 2019).

In Cameroon, the Douala seaport has been used as a trading port for Cameroon and its neighboring landlocked countries since the mid-19th century, and due to increases in cargo volume, various kinds of improvements have been carried out to its port facilities, mainly through assistance from the World Bank. All through the first half of the 1980s, Cameroon showed favorable economic development at an annual rate of 7.5%, and the volume of cargo handled at Douala Port reached to 3.92 million tons in 1983. Given this situation and the background in which ports were increasingly moving toward containerization with their significant economic and safety advantages, there was a growing need for Douala Port to upgrade its container facilities, in order to be prepared for increases in cargo volume. Although the volume of container cargo handled at Douala Port reached 70,857 TEU in 1982, due to the fact that cargo handling operations were carried out with only ship gear and fork-lift trucks, handling capacity was expected to reach its limit (160,000 TEU) by 1999, even when taking into account the effect of the World Bank’s Port upgrading project.

Taking in to consideration the operational and distinct features of maritime transportation, the location of ports is constrained to a limited array of sites in Cameroon, mostly defined by the topography of a given area. Since ports are bound by the need to serve ships, access to navigable water has been historically the most important site consideration. All the main port constraints have significant effects on their operations which are part of the port performance continuum. In view of the construction of larger ships, namely tankers and containerships, many port sites found themselves unable to provide maritime access to modern cargo operations. Since container terminals were constructed much more recently, they have a better nautical profile as depth and available space were the main criterion in site selection. There is thus a pressure in increase channel depth where possible in the port of Douala, but this is a costly and environmentally controversial endeavor. Berths and access channel depth have become important constraints for maritime operations in light of growing ship size.

Freight forwarding is one of the most widely used methods of international transport for both business and personal use. Freight forwarding companies, Like international logistics centres, coordinate the shipment of goods from one destination to another using a range of carriers including air freight, ocean freight, road freight and in some cases railway freight. The process of freight forwarding might seem daunting, especially if you are not familiar with the process of freight shipping, but the facts you need to know about freight forwarding will help you through the process.  The port infrastructures of the Port Authority of Douala have a strong influence on the activities of the freight forwarders.  Ports along rivers are continuously facing dredging problems and the width of rivers is strongly limiting their capacity since it provides constraints to navigation. Rarely a port along a river has the capacity to handle to new generation of giant ships, namely Post Panamax containerships, which have put additional pressures on port infrastructures to accommodate the transshipment generated by these ships. Ports next to the sea are commonly facing a lateral spread of their infrastructures. Several ports have growth problems that force them to spread their infrastructures far from the original port sites Freight forwarding companies specialize in arranging the whole process for their shippers from storage to the shipping of their merchandise and these activities are associated with many challenges so, the researcher sees the need to carry out an investigation on the role of freight forwarders in maritime transport chain.

1.1. Statement of the Research Problem

Despite the great importance played by the Douala seaport to the country’s development, economic growth and trade, there is still low rate of growth of trade due to inadequate roles of freight forwarders employed at the port, and this become a daily songs to port users. Such situations have a direct impact on government revenue and hinder growth of trade due to poor transaction and collection that could be earned from selling services and products.

The global economy is shifting drastically, and freight forwarders must take precautions to work around inflation, rising shipping costs trade and environmental factors. They still rely heavily on the tracking industry to move cargo between intermodal drayage shipping reduce the need for long-haul truck drivers; there is still quite a shortage of drivers. Most of the companies does not have trained personnel which is a major obstacle towards achieving its full economics growth potential. The effectiveness of freight forwarding activities have a greater impact on the growth of the Port Authority of Douala and the economy of Cameroon whole.

 There is a need for well-trained personells to handle the activities of freight forwarding. The country launched a reform of the maritime sector in 1998, which led to the creation of the Cameroon national port authority, which is in charge of defining the strategic policy of the maritime sector and planning the development of the port activities in the country (Camilla, 2018). In order to clearly understand the challenges associated with freight forwarding activities and propose sustainable recommendations, the researcher sees the need to carry out an investigation on the role of freight forwarding on maritime transport chain with specific reference to the Port Authority of Douala.

1.2. Research Questions

The research questions will be divided into two parts; the main research questions and the specific research questions.

1.2.1. Main Research Question

The main research question is, what is the role of freight forwarding in maritime transport chain with specific reference to the Port Authority of Douala.

1.2.2. Specific Research Questions

1. What barriers obstruct the development of freight forwarding activities in maritime transport chain in the Douala sea port?
2. How freight forwarders affect government revenue and how it hinders growth of trade in the Douala sea port?
3. What are the possible solutions for freight forwarding in maritime transport chain in the Douala sea port?

1.3. Research Objectives

The objectives of the study will be divided into two parts; the main objectives and the specific objectives.

1.3.1. Main Research Objective

The main objectives of the study is to identify the role of freight forwarding in maritime transport chain in the Port Authority of Douala.

1.3.2. Specific Research Objectives

1. To identify the challenges which hinder the development of freight forwarders in maritime transport chain in the Douala sea port.
2. To investigate how freight forwarders affect government revenue and how it hinders growth of trade in the Douala sea port.
3. To investigate the current management strategies and suggest possible solutions to the challenges being faced by freight forwarders in maritime transport chain in the Douala sea port.