Ethiopian Freight Forwarders and Shipping Agents Association

EFFSAA Weekly Newsletter, Vol. 01, No. 037

Ministry of Transport of Ethiopia and DP World sign MoU for the development of the Ethiopian side of the Berbera Corridor

DP World, a leading global provider of end-to-end logistics solutions, and the Ministry of Transport, have signed a Memorandum of Understanding (MoU) with the aim of developing the Ethiopian side of the road linking Ethiopia to Berbera into one of the major trade and logistics corridors of the Country’s international trade routes. MoU paves way for formal discussions on potentials to develop the corridor to unlock economic benefits

In terms of the MoU, it is proposed that the Parties would establish a joint venture logistics company to perform logistic operations from origin to destination. It is intended that for export, DP World will offer services from origin in Ethiopia up to Berbera Port, while for imports, it will offer from the port of loading to the delivery of shipments in one of the dry ports in the hinterlands or the final destination of the consignees.

DP World and its partners envisage investing up to US$1bn over the next ten years in developing the supply chain infrastructure along the corridor. This will include dry ports, silos, warehouses, container yards, cool and cold chain depots, freight forwarding and clearing activities.

DP World has committed to investing up to US$442 million to develop and expand Berbera port, with the first phase nearly completed. Further work is already underway on expansion of the quay to 1000 metres which will increase capacity to two million TEUs, operated by 10 quay cranes.

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Blue Economy Strategy

A television discussion program organized by Ethiopian Maritime Affairs Authority and Fana Broadcasting Corporate was held on April 27, 2021. On the session it was said that, Ethiopia, which exports more than 90 percent of its imports and exports through maritime, is not benefiting from the maritime sector as much as it should due to many reasons.

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Djibouti looks to Ethiopia to gauge its economic future

Djibouti’s economy and 85% of its gross domestic product rely on the service sector, which includes port, logistics and related services. This sector revolves around the country’s strategic location as a Red Sea transit point on the world’s busiest shipping lanes connecting Europe, the Middle East and Asia. Its geopolitical location coupled with the global war on terror and piracy in the waters off Somalia’s coast have also made Djibouti a desirable location for foreign military bases.

A country of 112 million people, Ethiopia relies on Djibouti’s port and transport-related infrastructure for 95% of its maritime trade. According to the World Bank, in 2013 85% of Djibouti’s port activities derived from Ethiopia’s import and export transactions. Not much has changed since, with Ethiopia contributing substantially to Djibouti’s overall economic growth. Any disruption in Ethiopia’s economy will hurt Djibouti. At the same time, Djibouti’s stability is critical to Ethiopia’s economic well-being, indicating the interdependence of the two Horn of Africa countries, both economically and regarding security.

The first potential problem is political instability in Ethiopia. Beyond the adverse effects of COVID-19 on Ethiopia’s trade in 2020, the political disruption associated with recent social unrest will weaken its economy, at least in the short term.

The second regional development that could affect Djibouti relates to Ethiopia’s policy of diversifying its port connections. Ethiopia is aware of the danger of relying on one outlet, as exemplified in the 1990s when it went to war with its neighbor Eritrea – then Ethiopia’s main route to the sea. This 1998–2000 war led to Djibouti emerging as Ethiopia’s primary outlet for its trade. The Ethiopian government has bought a 19% stake in Berbera Port in Somaliland to diversify its maritime outlets. Developments are also underway to use the Ports of Massawa and Assab in Eritrea. And Ethiopia has expressed interest in Port Sudan in Sudan.

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Ethiopian won the 2021 customer service recognition of cargo service

Ethiopian won the 2021 customer service recognition of cargo service

Ethiopian Airlines won the World Air Cargo Customer Care Award 2021. The award was given during the virtual Air Cargo Weeks Award program held on 05 May 2021.

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Port of Durban to be repositioned as a hub for the continent

Port of Durban to be repositioned as a hub for the continent

The recent blockage of the Suez Canal by a major vessel presented a significant moment for South African trade.

The blockage, which saw some of the world’s largest shipping container companies redirect their vessels to the route around South Africa, disrupted trade activity and global supply chains for nearly a week, costing more than an estimated $9 billion (R128 billion) per day according to the World Trade Organisation.

The blockage also exposed the vulnerabilities of global trade flows, bringing to the fore the critical role of efficient ports that are able to respond to the needs of the current global trade ecosystem.

For South Africa, this has reignited the urgent need to expand capacity and improve efficiencies at ports in order to boost the competitiveness of our economy and the broader South Africa Development Community (SADC) region.

The ability to accommodate larger vessels has the potential to transform shipping patterns to position Durban and South Africa as an attractive trade destination.

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