28 May 2022
Ethiopia’s import volume through Djibouti’s Port dropped by 14.62 percent over the past ten months, with the portion shifting to new port venues including Tadjoura, Berbera and Moyale ports.
Following the government’s port diversification strategy employed since last year, the shipment congestion on Addis Ababa-Djibouti main trade route is easing. Over 95 percent of Ethiopia’s total imports have been shipped through Djibouti Port.
The Ministry of Transport and Logistics has managed to save 2.3 billion birr through the port diversification process, in the past ten months, according to the Ministry’s report to the Parliament presented this week.
During that time, while 86 percent of Ethiopia’s import was managed through Djibouti port, 9.16 percent was handled through Tadjoura, five percent at Berbera and 0.02 percent at Moyale. The port of Berbera has so far only been used for the World Food Program and bulk cargo.
Djibouti, which has about seven ports, is relatively more expensive than Sudan, Massawa, Assab, Berbera, Mogadishu, Mombasa, Tanzania and Mozambique. A competitive price can be obtained by using these discounted ports.
Djibouti’s port price escalated, as the Djiboutian government slashed the stay of cargos on its port from 45 days to eight. With this, Ethiopia’s port diversification is also expected to affect Djibouti’s national revenue, which largely comes from Ethiopia’s port fees, followed by revenue from leasing military bases to global superpowers.
Even though Djibouti Port is the nearest port for the landlocked Ethiopia, the price remains expensive, compared to ports located further like Port Sudan and Kenya’s Lamu port.
However, countries like Kenya, Somalia and Sudan are trying to compete with Djibouti by cutting prices, which is quickly becoming an advantage for Ethiopia. The government is also trying to diversify its import routes to Assab, among others.
The diversification is also fueled by growing security threats that arise from being dependent on only Djibouti Port.
However, Kasahun Aberu (PhD), founding partner and director at Akakas Logistics Plc, said there are bottlenecks to the port diversification.
“The port diversification is highly recommended because it can reduce the high expense of using Djibouti’s Port. Yet, other fresh routes to newly accessed ports lack services for freighters and transport service providers. These new port routes have no services like fuel stations, garage, and spare part shops for trucks, storage, and other services, including customs services,” said Kassahun.
“If we leave Djibouti for Berbera, we will not have access to road services such as gas stations and garages. By shifting to other ports, port costs could be reduced by up to 20 percent," added Kassahun.
If an export product remains at the port, the first eight days is free of charge and then will cost USD eight to 10 per day.
Ethiopia’s port diversification also envisaged boosting FDIs to participate in port construction, according to Tatek Negash, communication director at the Ministry. In the Ministry of Transport’s 10-year development plan, it is necessary to expand the neighborhood ports by using only one port.
“The use of the Tadjoura port in Djibouti started recently and a study should be done to use the ports of all neighboring countries,” said Tatek, adding, “Development will be done after a study is done and an agreement is reached with the countries.”
Ethiopia’s import constitutes 21.8 percent of its GDP, while the export is around five percent.