Ethiopian Freight Forwarders and Shipping Agents Association

EFFSAA Weekly Newsletter, Vol. 02, No. 095

Multimodal Operations Draw Seven Bids as Industry Opens Up

Seven possible participants get drawn to the much awaited deregulation of multimodal operations.

As part of government’s effort to liberalize the logistics sector, in 2020, it scheduled to open up the sector through a multimodal scheme, where other players were invited to compete, alongside the Ethiopian Shipping Logistics, which had monopolized the sector for nearly 12 years.

At that time, two bids were put out by the Ethiopian Maritime Authority (EMA) to choose which businesses would be involved in the multimodal operation; however both bids were later canceled.

Seven organizations were drawn to the third bid, which was recently concluded, about two weeks back, to which sources cite that the number of documents had more than doubled, this time around.

The most recent bidding process is said to conclude in the next few weeks, with the outcome being made public at the start of 2024.

According to sources, majority of the seven businesses that put in their proposal were either directly involved in the logistics industry or had partnered with people who had a lot of expertise in it.

Even though the sources were reluctant to give names of the other firms, it is claimed they are new players in the logistics space, with involvements in different investments.

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Ethiopian Airlines (ET) announced a 55% increase in profits compared with the same time the previous year

Ethiopian Airlines (ET) announced a 55% increase in profits compared with the same time the previous year
Ethiopian Airlines (ET) announced a 55% increase in profits compared with the same time the previous year

In the first quarter of the budget year, Ethiopian Airlines (ET), the continent’s largest airline, announced a 55% increase in profits compared with the same time the previous year.

The airline generated 19.5 billion birr profit before tax, which is 118 percent of the target according to the Ethiopian Investment Holdings first quarter report.

In a similar vein, its revenue increased by 21 percent over the same time in the previous year to about 102 billion birr. Over 4.49 million passengers were transported by ET between July and September, which is 102 percent of the projected number and 36 percent more than it was a year before.

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Maersk to Pause All Container Ship Traffic Through The Red Sea

Danish shipping company A.P. Moller-Maersk (MAERSKb.CO) will pause all container shipments through the Red Sea until further notice, a spokesperson for the company told Reuters on Friday.

“Following the near-miss incident involving Maersk Gibraltar yesterday and yet another attack on a container vessel today, we have instructed all Maersk vessels in the area bound to pass through the Bab al-Mandab Strait to pause their journey until further notice,” the company said in a statement.

Maersk on Thursday said its vessel Maersk Gibraltar was targeted by a missile while travelling from Salalah, Oman, to Jeddah, Saudi Arabia and that the crew and vessel were reported safe.

Earlier on Friday Maersk denied a claim by Yemen’s Iran-aligned Houthi movement that the militia had struck a Maersk vessel sailing towards Israel.

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Remarkable Growth on Ethiopia-Djibouti Link

Remarkable Growth on Ethiopia-Djibouti Link
Remarkable Growth on Ethiopia-Djibouti Link

The Ethio-Djibouti Railway Share Company (EDR) has reported a significant annual growth of close to 40% in its capacity for cargo and passenger transportation.

The company’s CEO, Abdi Zenebe, said the rail service from Addis Abeba to the Port of Djibouti had reached its transport capacity of exceeding two million tons of cargo per annum from the existing 20 stations along the route.

He also mentioned plans to double the capacity of the rail service to four million tons, in addition to efforts to strengthen regional connectivity and stabilise the country’s economy.

The National Bank of Ethiopia is working to address foreign exchange challenges resulting from the rapid growth.

The railway, which is a joint venture between Ethiopia and Djibouti, forms part of China’s Belt and Road Initiative.

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Global Trade at Risk as Shippers Shun Red Sea Over Houthis Attacks

Major shipping companies paused transiting the Middle East’s critical Bab al-Mandeb chokepoint for seaborne trade Dec. 15 after repeated attacks by Yemen’s Houthi militants threatened to upend global trade flows.

Danish shipping giant A.P Moller-Maersk — which accounts for 15% of the global container freight market — suspended voyages passing through the Bab al-Mandeb until further notice. Hapag-Lloyd — which controls 7% of the container market — also paused traffic through the Red Sea until at least Dec. 18 after one of its ships was attacked by Houthis. Hapag-Lloyd’s Liberia-flagged Al Jasrah containership caught fire in the Red Sea on Dec. 15 after being hit by a missile from Houthi rebels in Yemen. The attack came a day after the Houthis attacked the Maersk ship Gibraltar on Dec 14 in a near-miss by a cruise missile.

The suspensions are the latest sign major ship charterers who in recent weeks have deployed armed guards to safeguard transit through Bab al-Mandeb are beginning to reconsider using the narrow strait through which 10% of global seaborne oil flows.

The suspension of the Red Sea route by the two shipping companies followed a notice to their fleets on Dec. 14 to use the longer Cape of Good Hope as an option, a move that adds 40% to the voyage distance.

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How Does the Panama Canal Slowdown Affect Shipping Contracts?

The Panama Canal significantly reduces the time and distance for vessels to travel between the Atlantic and Pacific oceans. It normally operates all year round, 24 hours a day, and statistics show that about 13,000 to 14,000 vessels cross the Canal annually.

However, the region has recently been suffering from its worst drought for over 70 years. As a result, and for the first time ever, the Panama Canal Authority has had to limit the number of vessels crossing the Canal. The usual average is about 36 vessels per day. This was reduced to roughly 32 in June 2023 and, as of November 2023, the number is down to only 25. It is expected that this number will be further reduced to 18 slots a day from February 2024.

As well as this, the Authority has also had to reduce the draft limit from 50ft to 44ft. This imposes a limit on the size of a ship which can pass through the canal, and as a result, the amount of cargo that passes through.

With the situation worsening, vessels are having to wait much longer than normal before they can pass through the Canal. The delays caused have impacted the wider global supply chain and already increased costs as a result.

The delays are pushing shipping rates upwards in other regions, with fewer vessels being available for longer routes. Nonetheless, some shipping companies are opting to avoid the delays by taking those longer routes around the Cape of Good Hope, Cape Horn and the Suez Canal. Or they are spreading cargoes across multiple vessels in order to meet reduced draft limits.

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