Ethiopian Freight Forwarders and Shipping Agents Association

EFFSAA Weekly Newsletter Vol. 03 No. 106

EFFSAA Held Productive Talks with Djibouti Ports.

EFFSAA Held Productive Talks with Djibouti PortsEFFSAA Held Productive Talks with Djibouti Ports

The newly elected EFFSAA president, Dawit Woubishet, recently visited Djibouti to discuss challenges faced by Ethiopian freight forwarders and exploring potential cooperation and partnership opportunities with officials from Doraleh Multipurpose Port (DMP) and Société de Gestion du Terminal à Conteneurs de Doraleh (SGTD).

The President met with DMP’s General Manager, Mr. Djama Ibrahim Darar, and Port Operation Department Manager, Mr. Seid Idris Dohur. He also engaged with SGTD’s Chief Executive Officer, Mr. Abdillahi Adaweh Sigad, and Head of the Commercial Department, Mr. Abdi-Chakour Ali Houssein.

During his discussions, Ato Dawit openly addressed issues frequently encountered by Ethiopian freight forwarders, particularly those arising from port congestion. The port officials acknowledged these challenges and expressed their commitment to work collaboratively to find solutions.

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Freight Forwarders Vies To Host Largest Annual Global Logistics Event.

FIATA logo
FIATA logo

The Ethiopian Freight Forwarders and Shipping Agents Association (EFFSAA), a lobby organization for logistics, has made two attempts to secure the hosting rights for the International Federation of Freight Agencies (FIATA) World Congress. This prestigious event brings together over a thousand logistics stakeholders from around the globe.

Dawit Woubishet, the president of EFFSAA, presented Ethiopia’s proposal at the 2024 FIATA HQ Meeting Extended Board session held in Geneva two weeks ago. This session gathered more than 250 stakeholders from 60 countries to assess the state of the logistics industry. The proposal was reviewed by the Extended Board, which also included the Czech Republic as a finalist to host the 2027 congress.

Due to regional instability in the Middle East, Israel was ruled out as a nominee to host the 2027 event, leaving Brazil as the remaining contender, which later withdrew its bid.

Dawit stated, “If we have sponsors, which we have already secured some huge potentials and sustainable security situation, hopefully we will be chosen to host the event.” He expressed the expectation of government support, as hosting such an event would be beneficial for promoting the country’s tourism potential.

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Ethiopian Vessel MV Abbay II Docked at the Port of Lamu.

Ethiopian Vessel MV Abbay II Docked at the Port of Lamu
Ethiopian Vessel MV Abbay II Docked at the Port of Lamu

Ethiopian Vessel MV Abbay II Docked at the Port of Lamu with a Consignment of 60,000 Metric Tons of Fertilizer. The maiden call by the Ethiopian ship marks the inaugural cargo destined to the transit market through the Port of Lamu. This milestone signifies a significant advancement in the utilization of the Port of Lamu by partner states, in line with the Lamu Ports South Sudan Ethiopia Corridor Project.

The vessel docks at the port barely a month since Kenya Ports Authority acquired three ship to shore Gantry cranes which are expected to boost operations at the second commercial port. The fertilizer aboard the ship will be unloaded and packaged at the quayside before being transported by road through the corridor to Moyale town at the border and further onward to Ethiopia.

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China Hands Running of Ethiopia-Djibouti Railway to Locals.

Six years after it entered service, officials from Ethiopia and Djibouti have taken over the management of the China-funded 752km railway Addis Ababa to Djibouti’s port on the Indian Ocean. A handover ceremony took place in Addis Ababa.

Until now, the line has been operated by the Chinese companies that built it, China Railways and the China Civil Engineering Construction Corporation. They have been preparing Ethiopian and Djiboutian engineers, managers and service staff employed by the Ethiopia-Djibouti Railway Share Company (EDR) to take over. Based in Addis Ababa, EDR was formed in 2017 to operate the railway.

The railway is Ethiopia’s main access to world markets, and carries around 90% of its exports.

According to the Chinese operators, it has so far run more than 2,500 passenger trains carrying some 680,000 people. It has also operated around 7,700 freight trains, with a cargo volume of 9.5 million tonnes.

The line is still loss-making. It cost $4.5bn to build, and has faced problems ranging from expensive electricity to collisions with animals. But the indirect benefits to Ethiopia’s economy and society are also likely to have been substantial.

It has cut the travel time to the port of Djibouti from more than three days to less than 20 hours, and reduced the cost of the journey by at least a third.

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Djibouti Hit as Ethiopia Shifts Transit Cargo to Port of Lamu.

Djibouti Hit as Ethiopia Shifts Transit Cargo to Port of Lamu
Djibouti Hit as Ethiopia Shifts Transit Cargo to Port of Lamu

Djibouti faces a major setback as Ethiopia shifts its transit cargo operations to the Port of Lamu, providing a substantial boost to the LAPSSET project.

Last week, Ethiopia’s MV Abbay II arrived at the Port of Lamu, laden with 60,000 tonnes of fertiliser, marking inaugural transit goods through Kenya’s second-largest maritime hub.

This initial cargo bound for Addis Ababa highlights the growing importance of the LAPSSET initiative, amplifying its regional significance.

In a bid to decrease reliance on Djibouti, Ethiopia, a primary importer through that port, has specified that Lamu Port will handle shipments of fertiliser and livestock.

While originally conceived as Kenya’s transshipment hub for neighboring countries and Indian Ocean island nations, Lamu Port regains prominence with Ethiopia’s decision.

Nonetheless, the current underperformance at Lamu Port presents challenges for the LAPSSET Corridor project, which relies on vibrant business activities at the harbor.

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Transshipment Business Thrives Amidst Regional Challenges.

The transshipment business continues to expand despite the unstable conditions in the region, according to the Djibouti Ports and Free Zones Authority (DPFZA), a governmental organization that oversees and operates the Port of Djibouti, as well as several other sizable facilities in the country.

When Aboubaker Omar Hadi, Chairman of DPFZA, met with Dana Purcarescu, the French Ambassador in Djibouti, they discussed the most recent developments in the port industry.

Despite the difficulties caused by the circumstances in the Red Sea region, DPFZA saw a noteworthy 35 percent rise in transshipment activity, according to a statement released after the meeting.

The statement said, “This significant rise is evidence of the DPFZA’s operations’ adaptability and tenacity in the face of challenging geopolitical conditions.”

According to the statement issued by DPFZA, more ways to strengthen cooperation were discussed, with an emphasis on implementing comprehensive training programs for the environment protection unit, bathymetric survey unit, hazardous cargo IMDG management, ballast water, and contaminated water/oil treatment facility.

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Ethiopia, Djibouti Establish Technical Committee to Review Port Use Agreements.

A technical committee was established by Ethiopia and Djibouti to examine agreements pertaining to port use that were signed twenty years ago. During the most recent meeting between the chief logistics delegations of the two countries, the multimodal issue was high on the agenda.

The two sides reviewed a range of topics during the most recent Ethio-Djibouti Joint Ministerial Commission (JMC) meeting, which took place in Djibouti a week ago.

The results of the agreements made at the 16th Joint Ministerial Meeting, which took place in Addis Ababa in October of last year, were also assessed by the delegation headed by Alemu Sime, Minister of Logistics and Transport on the Ethiopian side.

The logistics sector, in which the two countries cooperate, is one of the primary subjects that will be discussed during the ministerial conference, according to sources who spoke with Capital a week ago.

Prior to the joint meeting, experts predicted that modernization and the entry of new companies into the logistics industry would be among the issues brought up.

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Tracing the Ascendancy of African Aviation and Air Cargo.

Africa’s aviation and air freight sectors are experiencing a remarkable upswing, propelled by the continent’s economic expansion, urbanisation trends, and increasing global trade links. Projections indicate the African air transport market will see 5.7% annual growth over the next 20 years, surpassing worldwide averages. While challenges like insufficient infrastructure, connectivity gaps, and regulatory disparities exist, initiatives to enhance air cargo capabilities and catalyse regional integration are gaining momentum to harness Africa’s immense prospects.

The African aviation and air cargo industry is undergoing a remarkable renaissance, fueled by rapid economic growth, urbanisation, and the continent’s increased integration into global trade networks. As more Africans embrace air travel and businesses look for efficient logistics solutions, the sector is on track for unprecedented growth, resulting in a new era of connectivity and opportunity across the continent.

The International Air Transport Association (IATA) has recently announced that global air cargo demand continued its robust growth for the fourth consecutive month, with Africa experiencing significant expansion in March 2024, The IATA figures show that African airlines saw a 14 % year-on-year growth in air cargo demand in March 2024. The growth in air cargo demand, particularly in Africa, has been influenced by various factors. According to IATA, the moderate increase in global cross-border trade and industrial production has contributed to the growth in air cargo demand.

The rise in e-commerce activity has also played a significant role in boosting air cargo demand globally, including in Africa. Furthermore, a notable shift from sea freight to air freight has been observed, especially for cargo moving from the Middle East to West Africa, as shippers opt for air freight to avoid the longer sea route. This longer sea voyage has become necessary due to the ongoing crisis in the Red Sea region, forcing ocean carriers to reroute their ships around the Cape of Good Hope instead of transiting through the Suez Canal. As a result, shippers are turning to air freight as a more-timely alternative for cargo bound to West African ports from the Middle East.

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As the Red Sea crisis continues, pressure on consumer prices follows in its wake.

The Suez Canal, through which 12% of global trade used to pass, saw traffic drop by 66% at the start of April, when compared with a year earlier. Many shipping firms are now diverting vessels on to the safer, but much longer and more costly, route around the tip of southern Africa, passing the Cape of Good Hope. This can add 10 days to a journey and increase fuel costs by 40%.

The few ships that use the Red Sea route are still under threat, however. This was underlined last week when shipping line Maersk said attacks had intensified, and the risk zone was now bigger. Maersk said it would continue to send its ships around Africa for the foreseeable future, but that that would result in a 20% drop in capacity in the second quarter of the year, and additional costs. Last week, it trebled the surcharge on containers travelling between Asia and Northern Europe from $250 to $750.

For huge companies like Maersk to small businesses in the UK and elsewhere reliant on goods from Asia and the Middle East, the crisis continues to have an impact.

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Red Sea Crisis Could Bring Early Start to Peak Shipping Season.

Red Sea Crisis Could Bring Early Start to Peak Shipping Season
Red Sea Crisis Could Bring Early Start to Peak Shipping Season

New data projects more than two million twenty-foot equivalent units (TEUs) worth of ocean imports to the U.S. in May, signaling an early start to the peak shipping season.

According to data from the National Retail Federation, monthly U.S. ocean imports are expected to crest the two million TEU mark by the end of May, before topping out at 2.1 million TEUs in August. The peak shipping season tends to kick off in August in a typical year, as retailers begin preparing for the holiday shopping season. This year, though, that ramp-up appears slated to arrive months earlier.

Shipping rates have also risen steadily as the situation in the Red Sea has continued. According to Freightos, ex-Asia rates to Northern Europe bumped up from $4,000 forty-foot-equivalent units (FEUs) to $4,151 between May 8 and May 15. Ex-Asia rates to the Mediterranean increased from $5,000 FEUs to $5,179 FEUs over that same period.

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