Purchase of additional 5,000 containers in pipeline
The Ethiopian Shipping and Logistics Service Enterprise (ESLSE) is undertaking a feasibility study to develop two dry ports in Jima and Jigjiga, each costing around one billion birr, The Reporter learnt.
The study is being conducted in collaboration with the Ethiopian Maritime Affairs Authority (EMAA).
Roba Megersa, CEO of ESLSE told The Reporter “We need our own dry ports, if we are to cut the skyrocketing demurrage cost, especially since we own more containers now. The need for a dry port at Jigjiga arose after Berbera port was commissioned. We could not use Dire Dawa dry port because it is far away and basically built to serve the Dire Dawa Industrial Park and the railway. Similarly, a new dry port is needed in Jima because there is no such facility to serve the substantial volume of agricultural commodities and inputs processed in that corridor.”
According to a study conducted a few years back, Ethiopia needs 35 dry ports. Nonetheless, currently, only eight are operational, after Mekelle Dry Port went out of service following the conflict that broke out in the region in November 2020.
Dire Dawa, Modjo, Hawassa (under-construction), Kombolcha, Woreta (became operational recently), Mekelle (currently defunct), and Semera are the operational dry ports developed by the government. However, Modjo handles the lion’s share of shipments targeting the central market.
Currently, the Logistics Transformation Office (LTO) formed under the Ethiopian Maritime Affairs Authority (EMAA), is finalizing a comprehensive logistics master plan indicating where dry ports, logistics centers, consolidation-deconsolidation areas, warehouse and other facilities should be located.
The comprehensive master plan will include road, railway, water, aviation and facilities that link them and aims to elevate Dire Dawa, Hawassa, and Jima dry ports into big dry ports similar to Modjo. The plan also includes various nodes to integrate with neighboring countries.
For instance, the plan to trade with Sudan using water transport over Baro and Gilo rivers that cross Gambella regional state, also needs dry ports, warehouses, small ships, and riverside ports, which has been dealt with in the master plan.
The master plan studied how neighboring countries want to trade with Ethiopia through water logistics, road, railway, airway or other means.
“This year, we are conducting the phase one studies for the master plan input. The second phase will be finalized next year. Then the comprehensive master plan will be finalized, but the time depends on fund availability. The master plan study is taking huge finances,” said Ewnetu Taye, deputy director of LTO.
The dry ports development aligns with port routes, which Ethiopia is currently diversifying from the sole Djibouti port, to Berbera, Lamu, Mombasa, Assab, Sudan and alternative ports within Djibouti.
Apart from embarking on dry port development, the ESLSE is also preparing to float a fresh bid to acquire 5,000 new containers, months after it bought 2,000 containers of 40 feet in size and 1,000 containers of 20 feet in size.
According to Roba, the total cost for the 3,000 containers purchased recently was USD 14 million. The price of containers doubled from USD 2,000 after Europe and America also began purchasing in bulk, as global logistics activities resumed post-covid19.
Containers are manufactured mainly by China, Vietnam, Indonesia, Korea and Malaysia, which have been affected by iron ore price escalation.
“The demand for containers is skyrocketing in Ethiopia, as well as globally. If ESLSE did not have its own containers, Ethiopia’s imports from China could have totally stopped since the pandemic. Global carriers now have much more attractive businesses and they do not want to stop at Djibouti port just for the tiny import of Ethiopia,” said Roba.
Last year, ESLSE transported 160,000 containers, using its own containers as well as renting from other carriers. Out of Ethiopia’s total international trade, which stands at 17.1 million metric tons per annum, ESLSE solely imported fertilizer, coal, and 80 percent of rebar, which it has now halted.