ASSESSMENT OF FREIGHT RATE CHARGES ON EXPORT OF NIGERIAN COMMODITY TRADE

Abstract

This study assesses the influence of freight rate charges on Nigeria's export commodity trade, examining 
key determinants including geographic location, infrastructure deficits, limited shipping line competition, 
currency volatility, and security concerns. The research adopts a quantitative analysis of secondary data 
spanning 1983-2023 from the Nigerian Ports Authority, Central Bank of Nigeria, UNCTAD, and World 
Bank. A multiple regression model and Autoregressive Distributed Lag (ARDL) bounds testing approach 
were employed to estimate relationships between freight rates and independent variables including export 
volume, import volume, port infrastructure, foreign exchange rates, and economic growth (RGDP). The 
Ordinary Least Squares regression results (R² = 45.04%, Adj. R² = 34.86%) reveal that commodity exports 
(EXPGDP) have a positive and significant effect on economic growth (β = 0.217, p = 0.048), while 
commodity imports (IMGDP) exhibit a negative and significant relationship (β = -0.506, p = 0.005). 
Critically, freight rates (FRET) demonstrate a negative but significant influence on economic growth (β = 
0.007, p = 0.003), indicating that rising freight costs diminish export competitiveness and profitability. The 
ARDL bounds test confirms long-run relationships at the 5% confidence level. The Durbin-Watson statistic 
(2.088) and Breusch-Godfrey test (p = 0.619) confirm the absence of autocorrelation, while the Breusch
Pagan test (p = 0.161) validates homoskedasticity. This study contributes to the empirical literature by 
incorporating freight rate as an independent variable alongside commodity trade in the Nigerian context, 
addressing the scarcity of research examining the nexus between maritime transport costs and economic 
growth in developing economies. The findings underscore the critical need for infrastructure investment 
and trade policy reforms to mitigate the adverse effects of high freight rates on export competitiveness. The 
study admonishes the Federal Government of Nigeria and other stake holders to diversify Nigeria export 
portfolio from majorly oil, to other products such as gas, other solid minerals, cash grows like Cocoa etc.