Ethiopian Freight Forwarders and Shipping Agents Association

EFFSAA Weekly Newsletter, Vol. 01, No. 051

Ethiopian Airlines and Boeing have Signed Strategic MoU to Position Ethiopia as Africa’s Aviation Hub

Ethiopian Airlines and Boeing have Signed Strategic MoU to Position Ethiopia as Africa’s Aviation Hub

Ethiopian Airlines Group and the Boeing company have signed a strategic Memorandum of Understanding (MoU) on positioning Ethiopia as an aviation hub for Africa. Building on the two parties’ seventy years of shared history in aviation, the MoU aims at positioning Ethiopia as Africa’s aviation hub – “Ethiopia for Africa”.

Boeing has recognized Ethiopian as a global aviation leader in the continent. The MoU is indicative of Boeing and Ethiopian Airlines interest to establish a mutually beneficial world class aviation partnership. To realize their shared vision, Ethiopian and Boeing have agreed to work in partnership in four areas of strategic collaboration namely: Industrial Development, Advanced Aviation Training, Educational Partnership, and Leadership Development in a span of three years. To this effect, joint multidisciplinary teams have been established to implement the strategic partnership and important milestones have already been registered.

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Global Shipping Crisis Pushes Container Procurement

The state-owned Ethiopian Shipping & Logistics Services Enterprise (ESLSE) is to spend 19 million dollars to procure 2,958 containers, up by two million dollars from a similar acquisition it undertook earlier this year.

A global shipping disruption led to a drastic surge in the cost of containers and rising prices of commodities across the world. The cost of transporting a 40ft container from China to the United States has escalated from less than 5,000 dollars in August 2020 to over 17,000 dollars a year later this month.

The global shortage of containers began at the end of last year, caused by a slump in production by manufacturers in China, which account for over 90pc of the market share. The companies cut production after experiencing a surplus earlier in March 2020, when an equivalent of more than three million empty 20-foot containers was awaiting buyers at Chinese ports, and another 1.2 million sat in storage.

Despite the shortfall, the Enterprises’s call for the supply of 1,101 40ft and 1,857 20ft containers had attracted the attention of 19 bidders. However, only six participated, and four made it to the financial evaluation, including Guangdong Pi Power Co. Ltd, CCCC Tianjin, and CXIC Group Container Co. Ltd,. The Emirati Almeriyan International FZE was the only non-Chinese bidder shortlisted.

The Enterprise has been forced to make the procurements in the wake of an outcry from many importers, who have reported their goods are stranded, particularly in Chinese ports, due to a lack of shipping containers. The Enterprise has also quadrupled its rates to compensate for similar increases in global shipping prices, now charging 4,838 dollars and 9,223 dollars to ship 20ft and 40ft containers, respectively.

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Gov’t prepares protocol to harmonize border trade

Gov’t prepares protocol to harmonize border trade

The small-scale business community in Moyale, Ethio-Kenya border urges the government to come up with an initiative to back their activity from both sides. The Ethiopian side said that it is in the final stages to introduce a protocol that will allow the community in the two border countries’ area to trade and move goods easily.

Ethiopian Customs Commission disclosed that it is getting a lesson from Nairobi, which has more experience on One-Stop Border Post (OSBP) with its East African Community peers like Tanzania and Uganda, in order to make effective the Moyale OSBP.

On the discussion held between small scale traders at the two Moyales and the customs officers of Kenya and Ethiopia, traders appreciated the improvement of activities at the boarder since Moyale OSBP became operational starting from the first week of June.

OSBP aims to see seamless flow of cargo traffic through the OSBP in both directions, without any hindrance, where it had taken days for clearing in the past.

Traders do not have to undergo the same procedures multiple times with different border agencies, by making border crossing clearance processes easier and faster.

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Freight costs go up as container shortage persists

Freight costs go up as container shortage persists

Sea freight charges have doubled in the past one month due to a global shortage of containers as players in the logistic sector urge ports management in East Africa to increase empty container limitations at their facilities to allow more containers to be shipped back.

Shipping agents and Container Freight Stations (CFSs) officials said the cost of importing a 20ft container from China to East African ports has risen from $1,500 to $2,500 while that of 40ft container doubled from $2,000 to $4,000.

According to a United Nations Conference on Trade and Development (UNCTAD) policy brief, carriers, ports and shippers were all taken aback after empty boxes were left in places they were not needed, plus repositioning had not been planned for during the Covid-19 pandemic peak.

The UNCTAD reported that maritime trade flows increased after governments eased lockdowns and approved national stimulus packages for businesses thereby causing a container shortage.

Most shippers find it uneconomical to ferry empty containers back to Asia from Africa and South America due to the distance involved.

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Why the world supply chain crunch keeps getting worse

A supply chain crunch that was meant to be temporary now looks like it will last well into next year as the surging delta variant upends factory production in Asia and disrupts shipping, posing more shocks to the world economy.

Manufacturers reeling from shortages of key components and higher raw material and energy costs are being forced into bidding wars to get space on vessels, pushing freight rates to records and prompting some exporters to raise prices or simply cancel shipments altogether.

China’s determination to stamp out Covid has meant even a small number of cases can cause major disruptions to trade. This month the government temporarily closed part of the world’s third-busiest container port at Ningbo for two weeks after a single dockworker was found to have the delta variant. Earlier this year, wharves in Shenzhen were idled after the discovery of a handful of coronavirus cases.

“Port congestion and a shortage of container shipping capacity may last into the fourth quarter or even mid-2022,” said Hsieh Huey-chuan, president of Taiwan-based Evergreen Marine Corp., the world’s seventh-biggest container liner, at an investor briefing on Aug. 20. “If the pandemic cannot be effectively contained, port congestion may become a new normal.”

The cost of sending a container from Asia to Europe is about 10 times higher than in May 2020, while the cost from Shanghai to Los Angeles has grown more than sixfold, according to the Drewry World Container Index. The global supply chain has become so fragile that a single, small accident “could easily have its effects compounded,” HSBC Holdings Plc. said in a note.

Big retailers tend to have long-term contracts with container lines, but Asian production relies on networks of tens of thousands of small and medium-sized producers who often arrange shipping through logistics firms and freight forwarders. They in turn have been struggling to secure space for clients as vessel owners sell to the highest bidders.

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The shipping crisis is getting worse. Here’s what that means for holiday shopping

The vast network of ports, container vessels and trucking companies that moves goods around the world is badly tangled, and the cost of shipping is skyrocketing. That’s troubling news for retailers and holiday shoppers.

More than 18 months into the pandemic, the disruption to global supply chains is getting worse, spurring shortages of consumer products and making it more expensive for companies to ship goods where they’re needed.

Unresolved snags, and the emergence of new problems including the Delta variant, mean shoppers are likely to face higher prices and fewer choices this holiday season.

“The pressures on global supply chains have not eased, and we do not expect them to any time soon,” said Bob Biesterfeld, the CEO of C.H. Robinson, one of the world’s largest logistics firms.

The partial closure of the world’s third busiest container port is disrupting other ports in China, stretching supply chains that were already suffering from recent problems at Yantian port, ongoing container shortages, coronavirus-related factory shutdowns in Vietnam and the lingering effects of the Suez Canal blockage in March.

Shipping companies expect the global crunch to continue. That’s massively increasing the cost of moving cargo and could add to the upward pressure on consumer prices.

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This Dubai-based company wants to revolutionize how ports operate

In Dubai’s Jebel Ali port, a new technology is being tested that aims to speed up, improve and automate the way shipping containers are stored, moved and shipped.

Typically, at major ports, shipping containers awaiting transport are simply piled up on top of each other six or seven high, waiting to be moved onto ships by cranes. As well as taking up a huge amount of space, this approach means locating and picking up the right box can be time consuming.

Dubai-based port operator DP World has developed an innovation that it says saves time and space.

“BoxBay” is a storage system that stacks containers 11 stories high in a steel frame. Usually, when containers are stacked on top of each other at ports, reaching a container lower down in the stacks means moving those piled above it. DP World says BoxBay, developed in partnership with German company SMS group, allows cranes to pick up containers without needing to reshuffle the ones above.

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