Tuesday, May 21, 2024
BusinessFreights, bulk shipment entail more economic value than commuters: study finds

Freights, bulk shipment entail more economic value than commuters: study finds

A study conducted on the Addis Ababa-Djibouti Railway line has found out the broader economic significance of the line prevails in freight and bulk shipments rather than passenger transportation, The Reporter has learnt.   

The Addis-Djibouti Railway remains to be a center of attention in terms of both its achievements and challenges. In this regard, a study: “Sino-Ethiopia evolving partnership along with Addis Ababa-Djibouti Railway economic belt,” done by the Center of Excellence International Consult (CEIC), unpacks the pros and cons of the electrified cross-border railway line.  

The report revealed opportunities for the development of the railway and according to Gedion G. Jalata, Chief Executive Officer of the consulting firm, the railroad needs interactions with dry ports, customs services, and most notably, industrial parks.

Furthermore, he said considerable misconceptions have been spotted in the study. “Many speak ill of the passenger service of the railway, suggesting there is limited communication with the public, and the revenue is not as optimistic as expected,” Gedion said.

In fact, “A certain number of commuters enjoy the passenger service. However, this service is not profitable even in China than the freight service is,” the CEO noted. The freight service is generating revenue but the economic effects should be measured in a more comprehensive way – a combination of the benefits from more industrial parks, higher employment, better management of the economic zones, larger volumes of export, industrial legislation, and in its enabling factor for improved capacity to handle the high-end technologies.

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The Addis-Djibouti Railway has created a suitable transportation corridor for Ethiopia’s import and exports, with nine industrial parks out of 15 situated along the railway line. The Addis-Djibouti railway has reduced the travel time for freight and passengers. For freight transport, it has reduced the journey time between Djibouti and the Ethiopian dry port of Modjo from 84 hours to 10 to 15 hours. Citing the Ethiopian Railway Corporation (ERC), the study indicated that previously it took 100 trucks and three days to move 212 containers. However, through the railway, a one way 11-hour trip with two freight trains can handle these shipments from Djibouti or Addis Ababa.

In addition, the railway line is playing a positive role in the Ethiopian agriculture sector development with agricultural production increasing with port connectivity. For instance, figures from the Ethiopia-Djibouti Railway Company shows that with the main harvesting season approaching, about 70,000 tons of fertilizers were transported from Djibouti to Ethiopia through the new railway line. According to Gedion, 26 round trips were needed with a capacity of transporting 2,590 tons at one time. Transporting similar amount of fertilizer would require the services of 75 trucks per single shipment, Gedion said.

Between 2015 and 2017, nearly 200,000 tons of emergency food grain was moved via the use of the railways to drought affected regions of Ethiopia.

Furthermore, the Addis-Djibouti Railway line has created more jobs in both countries. During the construction of the lines, around 60,000 local jobs had been created and currently, some 3,900 jobs have been created. Some 25,000 to 30,000 indirect jobs have also been made possible in retailing, short-distance freight transport, passenger transport, bulk cargo undertakings, and real estate development activities.

The study, however, was not shy of indicating challenging factors that arise from a lack of proper legal system, recurrent power outages, shortages of financings and the like, hindering the smooth operations of the railway line. 

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