Sunday, June 23, 2024
BusinessCritical shortage of empty containers chokes exporters

Critical shortage of empty containers chokes exporters

-Ethiopia’s import volume declines    -Container lease price doubles in three months

A steep decline in container availability is haunting Ethiopia’s foreign trade, with the number of containers coming to Ethiopia dropping by more than half. Ethiopia’s import volume also dropped due to foreign currency shortages.

Exporters get containers from international shipping companies who have agents in Ethiopia, including Maersk, MSC, CMA-CGM, COSCO and others. After it is unpacked at dry ports in Ethiopia, the containers carry back exports to Djibouti port. However, these shipping company’s agents could not provide the containers because imports to Ethiopia declined.

“I have been waiting for containers for twenty days to export six containers of coffee worth around USD one million. All the shipping companies in Ethiopia could not provide us with containers. In the meantime, our export permit phases out in 30 days,” Tameru Tadese, a coffee exporter, told The Reporter.

The lease price of a 20 feet container to transport between Ethiopia and Djibouti port jumped from 28,000 birr to 48,000 birr in the past three months, according to Tameru.

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 “The number of container flow to Ethiopia sharply dropped because import declined. Before, over 200 Maersk containers arrived at Modjo daily. But recently, less than 12 containers of Maersk are arriving at Modjo dry port,” Zemichael Daniel, deputy general manager of Freighters International (PABOMI), Maersk’s agent in Ethiopia, told The Reporter.

“Each day, we are receiving calls from exporters whose export permit is phasing out. But we have no containers to provide them with. Maersk never faced such problem before,” Zemichael added.

Ethiopia’s import is declining as banks fail to disburse foreign currency and face LC backlogs. Ethiopia’s forex reserve dropped to covering only the import bill of 1.3 months, according to the National Bank of Ethiopia’s report last seen in December 2021, six months ago.

Zemichael lists various reasons why Ethiopia’s import is declining.

The first is the astronomical increment in freight prices since last year. Freight costs to bring goods from major trading partners to Djibouti, jumped from just USD 500 to 6,000, on average. The major reason for the price escalation came COVID-19 inflicted global container congestion. The imbalance created by the pandemic, is yet to be reversed.

The other reason is that most international shipping lines are busy allocating the scarce containers to priority markets like China.

“Most of them are not interested to come to Africa, at this point,” added Zemicahel.

Currently, the chronic container shortage in Ethiopia comes as coffee exporters are in the peak season and need containers.

“June and July are always the peak time for coffee exporters. Most exporters also scramble to export all of their commodities and clear their bank loans before July 7, which is the end of the fiscal year. We faced container shortages last year too. But this year is madness,” said Tameru.

In June, officials at the Ethiopian Shipping and Logistics Service Enterprise, Customs Commission, Maritime Affairs, Ministry of Transport, importers, exporters, shipping companies and other stakeholders held a meeting to discuss the problems faced in accessing empty containers. But solutions remain out of sight.

 “The shortage is a big headache now. It is caused by decline of imports due to different reasons, coupled with a surge in export demand by three-folds, especially from coffee exporters. The shortage reached the lowest point now because it has been continually declining since the last six months,” said an official at the ESLSE, who spoke to The Reporter based on anonymity.

“At times, up to 18,000 containers are available at Modjo dry port. Currently, there are less than 7,000 containers. We are working with the Customs Commission to ensure the scarce containers are made available,” added the official.

Girma Buta, shipping services head at Akakas Logistics, a leading logistics firm in Ethiopia, says the problem needs a long and short-term solution.

“In the short-run, all containers at Djibouti port and at dry ports in Ethiopia, must unload and immediately deploy to carry export goods to Djibouti port. There are tens of thousands of containers sitting at Djibouti port and Modjo dry port. But they are sitting idle for over fifteen days because importers are not taking their goods,” said Girma.

“The government must allow exporters to send un-containerized goods to Djibouti port. This was banned two years ago but now it is an emergency time for Ethiopian exporters. It needs to allow them to use secured trucks to carry the un-containerized goods to Djibouti port. The railway wagons should also have wagons able to carry bagged goods, which only carry containers and vehicles rather than being multipurpose,” added Girma.

For the long term, Girma advises Ethiopia to start manufacturing containers locally.

The shipping enterprise recently announced it is preparing to purchase 5,000 containers shortly and an additional 10,000 containers in the near future.

“We are not the reason for the container shortage. We are unloading imported goods as fast as possible and ready them for exporters,” Azezew Chane, deputy commissioner for operation at the Ethiopian Customs Commission told The Reporter.

But Zemichael hopes to solve the problem by bringing empty containers from Djibouti and providing it for his export clients.

“Some exporters are already importing empty containers from Djibouti, not to default on their export contracts. PABOMI also ordered 150 containers and we are waiting. Once they arrive in Ethiopia, we will provide them to exporters in dire need.”

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