Ethiopian Freight Forwarders and Shipping Agents Association

EFFSAA Weekly Newsletter Vol. 02 No. 099

The Mombasa Route: A Growing Trend in Ethiopian Freight Logistics

In response to the logistical challenges plaguing the traditional trade routes through the Red Sea and Gulf of Aden, Ethiopian freight operators are increasingly turning to the Mombasa route as a viable alternative. Despite initial concerns from logistics operators, recent months have seen a surge in the use of Mombasa Port in Kenya, signaling a significant shift in Ethiopia’s freight transportation landscape.

The catalyst for this shift stems from delays experienced by inbound and outgoing cargo at ports in Djibouti, attributed to vessel operators reducing their operations along the Red Sea route. With vessels navigating the Red Sea and Gulf of Aden facing security risks, including attacks by Houthi militants in Yemen, shipping corporations have been compelled to seek alternative routes to ensure the timely and safe delivery of goods.

Despite its higher operational costs compared to Djibouti, Mombasa has emerged as a preferred option for Ethiopian freight due to its relative stability and efficiency. Anteneh Alemu, CEO of Pave Logistics and Trading PLC, reports that approximately 15 trucks are now making the journey to Mombasa weekly, transporting goods vital for Ethiopia’s economy.

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FIATA Logistics Institute Updates Minimum Standards Document to Guide Members to Reach Highest Training Standards!

FIATA is excited to share that it has updated its FIATA Minimum Standards (FMS) for the FIATA Diploma in Freight Forwarding (FDFF), which plays a crucial role in ensuring excellence in education and professional development within the logistics industry.

The document, which has not been revised since 2017, incorporates the latest advances and best practices in the field. FIATA is also thrilled to introduce a brand-new module on sustainability to address the evolving landscape of the industry.

FIATA would like to express its sincerest gratitude to the dedicated volunteers from Task Force 1 of the FIATA Logistics Institute for their commitment and expert knowledge, which has been instrumental in shaping the updates. FIATA also appreciates the ongoing support and dedication to excellence in logistics education from its Association Members. For any FIATA Association Members who are interested in delivering the FIATA Diploma, or for any other inquiries or further clarification, please feel free to reach out to the training@fiata.org mailbox.

Red Sea Attacks: What Trade Experts are Saying about the Shipping Disruptions?

Red Sea Attacks - What Trade Experts are Saying about the Shipping Disruptions
Red Sea Attacks – What Trade Experts are Saying about the Shipping Disruptions

The Red Sea is wedged narrowly between Africa and the Middle East and connects the Indian Ocean to the Suez Canal and Mediterranean Sea. For centuries, the waterway has been vital for moving goods between Europe and Asia.

Yet since last fall, the Houthi group in Yemen has been attacking shipping vessels in the Red Sea, causing turmoil in one of the world’s most important waterways.

The Red Sea attacks, however, have already caused disruptions to commercial shipping operations. In the following statements, four trade experts detail how the attacks are impacting the shipping industry and the global economy.

Zera Zheng, Global Head of Business Resilience Consulting, Maersk

“The Red Sea has become a hotspot of geopolitical tension due to Houthi militants targeting commercial vessels, with over 33 attacks reported since 19 November 2023. These disruptions threaten a key maritime route essential for a significant share of global container traffic and over $1 trillion in annual merchandise.

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Suez Canal Shipping Volumes Drop 55% in a Week as Red Sea Crisis Continues

Suez Canal Shipping Volumes Drop 55% in a Week as Red Sea Crisis Continues
Suez Canal Shipping Volumes Drop 55% in a Week as Red Sea Crisis Continues

Shipping volumes through the Suez Canal more than halved last week, while volumes on the alternative route around the Cape of Good Hope surged, as attacks by Houthi rebels on commercial vessels force major operators to divert away from the key global trade artery.

Egypt’s Suez Canal shipping volumes in the week ending February 13 dropped 55 per cent from the same period a year ago, while volumes around the Cape of Good Hope rose nearly 75 per cent, according to the latest data from the International Monetary Fund’s PortWatch platform.

The latest figures underscore the continuing effects of the shipping crisis in the Red Sea, which has dragged on for three months with no end in sight.

Many shipping companies have rerouted their vessels away from the Red Sea to avoid the attacks, opting instead for the longer and more expensive route around the Cape of Good Hope in South Africa.

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Red Sea Crisis: Over 700% Rise in Freight Rates Give Exporters a Sinking Feeling

Red Sea Crisis - Over 700% Rise in Freight Rates Give Exporters a Sinking Feeling
Red Sea Crisis – Over 700% Rise in Freight Rates Give Exporters a Sinking Feeling

As the spectre of Houthi attacks engulf the Red Sea region, its repercussions on global trade are tightening the choke. Freight rates have risen 600%, insurance costs are higher and container shortage is becoming acute. SMEs, already worried that their goods may not reach the buyers, are feeling the pinch of these factors as well.

Shipping companies have increased by threefold the prices they charge to transport a container from Asia to Europe as they circumvent the Houthi menace by navigating an additional 4,000 miles around Africa. They say the detour results in extra fuel consumption, higher operational and manpower costs, and adds over two weeks to the travel time in each direction.

These shipments, with multiple transshipments, face a 600% increase in freight rates as shippers find it viable to reroute less-than-container load (LCL) — one of the two main categories of containerised transportation services popular among Indian traders — to Singapore and Egypt. This is putting pressure on Singapore port.

Some destinations remain relatively insulated from the Red Sea effect, like New Zealand and Australia. But consignments to these geographies go via Singapore, which is seeing vessel congestion and connectivity issues that are raising transit times.

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Ocean Carriers Determined to Hang Onto Containers as Supply Tightens

To facilitate the extra ships taken on charter due to the Red Sea crisis, ocean carriers have put a temporary moratorium on selling any containers, as well as pausing the return of equipment to lessors.

And carriers will not want to be commercially hobbled by equipment availability problems as and when the markets settle into the new ‘new normal’ of transits around the Cape of Good Hope.

When the Cape diversions began in earnest, it was estimated that shipping lines were sitting on a global surplus of around 5m TEU, accumulated during an ordering spree triggered by the huge spike in pandemic-induced demand, resulting in chronic port and landside congestion.

However, in its Container Equipment Forecaster report in November, Drewry said it expected the global fleet to have contracted by 2.6% last year, with a further decrease predicted for this year, as carriers ramped up efforts to retire some of their ageing boxes and return as much equipment as possible to leasing companies.

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