Chinese construction giant China Civil Engineering Construction Corporation (CCECC) has launched its self-operated rail freight service connecting Lagos to Ibadan.
The company flagged off the service in late March, marking “the official commencement of commercial freight operations,” wrote John Zhao, chief representative and executive director of CCECC, on X.
Utilising a cross-border rail transport model, the train departed from the Ajuba Bonded Terminal and transported cargo to Apapa Port in Lagos. After unloading, it loaded import containers for the return journey and arrived at the Ajuba Terminal, establishing a seamless full-cycle bidirectional logistics chain for both import and export goods.
“The more cargo that can be moved by rail, the better for the country’s productivity, efficiency, and overall cost reduction,” said Frank Ojadi, professor of operations management at the Lagos Business School.
Nigeria has long grappled with high logistics costs, largely due to an over-reliance on road freight. With trucks congesting port access roads and often causing delays, experts say rail offers a better option. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), told BusinessDay that the news is a step towards improving efficiency and reducing operational costs.
“The cheapest form of cargo movement, at least within the country, is actually by rail. One of the reasons we are having high costs of logistics in Nigeria is because we move too many things, too much cargo on the road,” he told BusinessDay.
This reliance on road transport, he explained, is exacerbating logistics challenges, inflating production costs, and ultimately “fueling inflation.”
Yusuf, who sees the new freight line as a form of Foreign Direct Investment (FDI), said, “The more of this cargo that you can move by rail, the better for the country’s productivity, the better for our efficiency, and the better for cost.”
However, the service currently terminates in Ibadan, a limitation that experts say could blunt its full potential. “Many of the cargo that are leaving the ports are going beyond Ibadan. Some of them are going to the east, and many of them are going to the north,” Yusuf said.
He also stressed that moving fuel by rail was just as crucial. “Practically all the fuel we consume in the country is being moved from Lagos ports.” He added that encouraging more of this cargo to be moved by rail could further alleviate the country’s logistics challenges, making it a “very good development.”
But some experts warn that the benefits could be diluted if operational bottlenecks are not addressed. Ojadi, a learned expert in logistics, said the success of the freight service will hinge on demand and consistency.
“Rail is the right mode of transport when you’re moving large-volume cargo of low value, which describes most of our current exports, like agro commodities. It also works well for bulk items like cement and petroleum,” he said, but noted that for CCECC’s rail service to be profitable and truly reduce logistics costs, it must operate at full capacity, meaning containers must be moved in batches, not singly.
“They can’t afford to run a train for one or two containers. It must carry at least 17 to 20 to make economic sense,” he said.
That, however, comes with trade-offs. “If it takes time to gather that batch, then companies are forced to hold inventory longer, which raises their costs. So any savings from using rail can quickly be wiped out if there are delays,” he added.
Ojadi also flagged the risk of hidden terminal costs that could frustrate adoption. “There’s a fee for loading containers onto the train at Apapa and another for offloading at Ibadan. If cargo isn’t cleared quickly, shippers also pay storage fees. So unless these charges are kept low, rail might not be cheaper after all,” he said.
Despite these concerns, he believes the service could be a step in the right direction, especially if there’s sufficient coordination to reduce wait times and streamline intermodal processes.
SOURCE: BUSINESSDAY
