Ethiopian Freight Forwarders and Shipping Agents Association

EFFSAA Weekly Newsletter Vol. 03 No. 105

Ethiopia to Divert 30% of its Cargo to Berbera Port of Somaliland

Ethiopia is going to divert 30% of its cargo to Berbera port of Somaliland, says Somaliland Ports Authority. Saeed Hassan Abudulehi, the Director General of the Somaliland Ports Authority, has shared details of an imminent agreement between Ethiopia and Somaliland about port use. He said, “Ethiopia is our neighbor. We want to do business with them. We are currently preparing a port use agreement or transit agreement. Once we sign the agreement, we will handle 30% of Ethiopia’s cargo in the first year.”

It has been reported that the Somaliland authorities are planning to handle 30 percent of Ethiopia’s cargo at Berbera Port, which is managed by the DP World of the United Arab Emirates and Somaliland government. For this, an agreement regarding port usage and customs procedures should be signed between Ethiopia and Somaliland.

Ethiopia, a landlocked country, has been relying solely on Djibouti ports for its cargo. But since last year, the Ethiopian government has been making it clear that it would diversify its use of port.

Ethiopia is expected to start using Kenyan Lamu port this year. Senior Ethiopian delegations have visited Lamu port this year. Kenya is reportedly offering reduced tariffs to the Ethiopian government.

Djibouti’s economy is heavily reliant on port tariffs generated from Ethiopian cargo. Diversion of Ethiopian cargo to Somaliland and Kenyan ports is set to impact on Djibouti’s economy.

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Air Cargo Continues Double-Digit Growth in Africa

The International Air Transport Association (IATA) has reported a fourth consecutive month of robust growth in global air cargo demand, with Africa witnessing significant expansion in March 2024.

According to the latest data released by IATA, total demand for air cargo, measured in cargo tonne-kilometers (CTKs), surged by 10.3% compared to March 2023 levels. This marks the fourth consecutive month of double-digit year-on-year growth, signaling a positive trajectory for the air cargo industry.

Despite the challenges posed by fluctuating demand and capacity, the air cargo industry in Africa continues to demonstrate resilience and growth potential, contributing to the region’s economic development and global trade facilitation.

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Logistics Enterprise Battles Unsettled Payments

Several government institutions hold over 7.5 billion Br unpaid bills on Ethiopian Shipping & Logistics Services Enterprise. Ethio-Engineering Group, formerly known as Metals & Engineering Corporation (METEC), takes the 1.5 billion Br share. The Enterprise is currently in a lawsuit with three banks which delayed payments for its services.

Mihertab Teklu, who manages ports and terminals for the company, quelled rumours of the suspension of Kombolcha port construction by revealing that the half a billion Birr in compensation required for relocated households in the site was stalling the construction. Executives indicated that foreign currency shortages arising from half of the payment in dollars for their services to importers being withheld by the central bank had been a setback.

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Maersk Raises Profit Guidance on Strong Demand and Red Sea Disruption

Shipping group Maersk (MAERSKb.CO), opens new tab raised its full-year profit guidance after reporting first-quarter earnings, citing strong demand and higher freight rates as ships sail for longer to avoid conflict in the Red Sea.

The company, viewed as a barometer of world trade, said that shipping disruptions caused by Houthi militants’ attacks on vessels in the Red Sea were expected to last at least until the end of the year, adding that growth in demand for container shipping had been stronger than forecast.

“The container volumes we see today are quite high compared to GDP growth in the world economy,” said CEO Vincent Clerc. “At one point or another, we will see a normalisation of volumes.”

Maersk and rivals have diverted ships around Africa since December to avoid Houthi attacks in the Red Sea, sending freight rates higher because of the longer sailing times.

“We have only seen an escalation of the situation in the area and therefore we can see that not only Maersk but all shipping lines have adjusted their networks more or less permanently,” Clerc said.

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Attacks on Red Sea Shipping Forces 66% Decline in Suez Canal Traffic – ONS

Shipping traffic through the vital Suez Canal artery in Egypt has plunged by 66% since cargo was forced to divert due to attacks on vessels, according to official figures.

The data, from the UK’s Office for National Statistics (ONS), covered the period from mid-December to the beginning of April.

It is important as it represents the scale of disruption to supplies through the artificial channel linking the Mediterranean Sea to the Red Sea since Iran-backed Houthi fighters started firing on ships in the run-up to Christmas last year.

There are fears that soaring costs for insurance, fuel and wages risk stoking a fresh wave of inflation as the diversion to Europe from destinations such as manufacturing powerhouse China, around the southern tip of Africa, adds up to 14 days to transit times.

Separate ONS data covering the pace of price increases is yet to show any real impact on the UK economy but the Bank of England is among institutions monitoring the situation as a number of companies report a hit from higher costs.

Container prices, for example, rose by more than 300% as the disruption gathered pace early this year.

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Maersk Says Red Sea Disruption will Cut Capacity By 15-20% in Second Quarter

The disruption to container shipping traffic in the Red Sea is increasing and is expected to reduce the industry’s capacity between the Far East and Europe by some 15%-20% in the second quarter, shipping group Maersk said.

Maersk and other shipping companies have diverted vessels around Africa’s Cape of Good Hope since December to avoid attacks by Iran-aligned Houthi militants in the Red Sea, with the longer voyage times pushing freight rates higher.

“The risk zone has expanded, and attacks are reaching further offshore,” Maersk said in an updated advisory to customers. “This has forced our vessels to lengthen their journey further, resulting in additional time and costs to get your cargo to its destination for the time being,” it added.

The Danish company, viewed as a barometer of world trade, last week said that shipping disruptions caused by the Red Sea attacks were expected to last at least until the end of the year.

The effects included bottlenecks and so-called vessel bunching, where several ships arrive at port at the same time, as well as equipment and capacity shortages.

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World’s Largest Electric Container Ship Launches in China

Worlds Largest Electric Container Ship Launches in China
Worlds Largest Electric Container Ship Launches in China

In China, the world’s largest battery-electric container ship has started regular operations between Shanghai and Nanjing. The route covers almost 1,000 kilometres along the Yangtze River – without stopping to recharge.

The ship named Greenwater 01, developed by the China Ocean Shipping Group (Cosco), is 120 metres long and 24 metres wide. It has a battery capacity of 50,000 kWh, which can be expanded to up to 80,000 kWh if required. This is possible because the batteries are housed in containers that can either be charged in the harbour or exchanged by crane. With the battery-electric drive, the container ship is expected to save 3,900 kilograms of fuel per 100 nautical miles (185.2 kilometres) and reduce CO2 emissions by 12.4 tonnes. Extrapolated to the usual 965-kilometre route across the Yangtze River between Shanghai and Nanjing, this means a calculated fuel saving of over 20,000 tonnes – in practice, of course, consumption in inland shipping depends on whether the ship is travelling with or against the current. The freight capacity of the Greenwater 01 is 700 TEU, with one TEU corresponding to a 20-foot standard container. According to Cosco, this means that the Greenwater 01 not only sets world records for the length, width and load capacity of a battery-electric ship, but also for container capacity.

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