Ethiopian Freight Forwarders and Shipping Agents Association

EFFSAA Weekly Newsletter, Vol. 02, No. 096

Red Sea Rapture

The usually steady flow of global shipping has been disrupted, sending shockwaves through Ethiopia’s import and export sectors. As armed militias target international shipping vessels in the Red Sea, a critical maritime route, the trading community here is gripped by worries about unforeseen logistical hurdles.

The recent surge of attacks by the Houthi militias from Yemen has caused significant disruptions in shipping routes through the Red Sea. The route, which includes the critical passage of Bab al-Mendeb, spanning a mere 30km between Djibouti and Yemen, is now a hotspot of geopolitical tension. In one day on December 18, 2023, the Houthi militias attacked vessels, pledging support to Palestinians under siege in Gaza.

Rerouting vessels to Cape of Good Hope, South Africa, adds 10 days to the arrival time of shipments, adding cost to the 1,500 dollars fee for a container. The crisis comes at a time when the shipping industry was beginning to recover from the impacts of the global pandemic. A surge in demand and a spike in container fees of up to 10,000 dollars led to a robust profit of 215 billion Br last year, a pleasant turnaround from a cumulative loss of 8.5 billion dollars over the three years beginning in 2016. Despite the industry’s recent growth, the situation in the Red Sea demands a rethink of operational strategies.

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Logistics Pundits Eager for AfCFTA Implementation

The Ethiopian logistics sector is waiting with baited breath for Ethiopia’s full accession to the African Continental Free Trade Area (AfCFTA) in hopes the trade deal will catalyze domestic logistics and shipping.

Professionals and officials in the logistics and transportation sector expressed their enthusiasm for Ethiopia’s full commitment to the AfCFTA during a consultative meeting convened by the Ethiopian Logistics Sectoral Association (ELSA) on December 22, 2023.

Several experts and officials involved in the ELSA discussions expressed their hopes that the logistics sector will make better use of the free trade agreement than other sectors.

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Flowerport PLC- Perishable Goods Exporter Eyes European Financing

The logistic company, a major player in handling inland transport for flower export, has entered into a 30-year lease agreement with Oromia Industrial Parks Development Corporation to use the Meki Rural Transformation Center (RTC), an existing facility, as a hub for preparing fruit for export.

One problem identified in the experiment was the absence of an adequate and well-functioning supply network, such as reefer containers and trucks, pack houses, and processing facilities.

Despite the country’s volatility presenting an issue, exporting avocados has been noted to have the potential to bring in a substantial quantity of foreign exchange. As data shows, 60 percent of the function in the perishable business is played by logistics.

Ethiopia is making progress toward its goal of increasing the production and export of fruits and vegetables, thanks to the support of sea freight.

Because it offers a competitive advantage in the worldwide market, shipping perishable cargoes via boats has strongly been advised. Ethiopian fresh produce exporters and producers, together with other players in the fruit and vegetable sector, have repeatedly brought up this crucial problem over the years.

The government has been conducting several pilot programs and attempts to export perishable goods using boats that are packed in reefer containers in an effort to address the issue. Avocados from Ethiopia have been shipped as part of the project to the European market, which is anticipated to grow in the upcoming seasons.

The perishable logistics firm already has 20 reefer trucks, but it also plans to add another 20 trucks of various sizes, including compact cars that will gather high-quality items down to the farm cluster.

The firm, which is well-known for being the industry leader in cold trucks, also plans to purchase ten reefer containers in order to speed the export of a new commodity that the nation has planned to replace hard money with in the upcoming years.

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Gabon-Flagged Vessel With 25 Indians On Board Suffers Drone Attack In Red Sea: Navy

A crude oil tanker, with 25 Indian crew members on board, suffered a drone attack in the Red Sea. According to the US military, the attack drone was fired by Huthi militants. Upon being hit, the crude oil tanker sent out a distress call to a US warship in the area.

The Gabon-owned tanker MV Saibaba reported no injuries from the strike, the US Central Command said in a social media post. Indian Navy officials too confirmed that the 25 Indians on board are safe.

Earlier, the US Central Command claimed that of the two warships that came under fire from Houthis, one was India-flagged. However, the Indian Navy issued a statement clarifying that the vessel is Gabon-flagged and that it had received a certification from the Indian register of shipping.

The incident marks the 15th attack on commercial shipping by Houthi militants since October 17.

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Maersk to Restart Sailing Through Red Sea

Danish carrier Maersk will restart sailing through the Red Sea “both eastbound and westbound.”

“We are currently working on plans for the first vessels to make the transit and for this to happen as soon as operationally possible. While doing so, ensuring the safety of our employees is of the utmost importance and our number one priority in handling the challenging situation in the Red Sea / Gulf of Aden area,” says an official update.

Maersk had earlier announced diverting ships via Cape of Good Hope, and increased surcharges to account for an extra 10-21 days. Maersk also cautioned that although security measures are in place “to enable the transit “of the Red Sea/Gulf of Aden for our vessels, the overall risk in the area is not eliminated at this stage.

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MSC Containership Attacked in Red Sea Amid Liners’ Gradual Return to Strategic Waters

MSC Containership Attacked in Red Sea Amid Liners’ Gradual Return to Strategic Waters
MSC Containership Attacked in Red Sea Amid Liners’ Gradual Return to Strategic Waters

MSC United, a Post Panamax containership owned by Swiss-based Mediterranean Shipping Company (MSC), was attacked while transiting the Red Sea.

The attack was confirmed by the Yemeni Armed Forces’ Spokesperson Yahya Sare’e, saying that the ship was targeted by naval missiles. The statement reiterated that the attack is part of the strategy of targeting ‘all Israeli ships or those heading to the ports of occupied Palestine, with their full concern for the continuation of safe maritime traffic to all destinations except the Israeli’.

MSC confirmed the incident adding that following the attack the vessel informed a nearby coalition task force warship and, as instructed, engaged in evasive maneuvers.

The establishment of the operation has prompted industry majors the likes of Maersk, CMA CGM, and COSCO to partially resume transiting through the Red Sea both eastbound and westbound.

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Red Sea Conflict Seen as a Wasted Opportunity for South African Ports

Due to the conflict in the Red Sea, there are reportedly more than 100 ships rerouting via the Cape of Good Hope. However, due to the ongoing issues with berthing delays, blockages, and inefficiencies in the ports of Durban, Cape Town, and Ngqura, South Africa is missing out on potential “gains” from this “loss” of traffic in the Red Sea.

As of 21st Dec 2023, just in terms of container ships, over 14 ships are waiting for a berth at Durban anchorage with the longest waiting for a berth for 27 days!!! And the shortest is already at 8 days.

Marine Traffic maps show a flurry of activity around the Cape of Good Hope with a large number of ships passing. While all of these may not be the rerouted vessels, South Africa is definitely missing out on some of the opportunities that these ships might provide.

Transnet, the custodian of South African ports does not expect vessels to anchor or call at South African ports during the reroute as per a News24 article quoting Transnet Port Terminals spokesperson “The vessels bypassing the Red Sea are on different rotations. As a result, they would not have any cargo destined for South Africa“.

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