Doraleh Ports reduces its price, task force formed to reduce logistics costs

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In response to complaints by Ethiopian exporters concerning tariffs when moving products to and from Ethiopia and Djibouti, the two countries have announced the formation of a Djibouti Transit Corridor Management Community which will attempt to simplify the export and logistical process.
Djibouti port also announced that it has discounted the price of using the Doraleh Multi-Purpose Port (DMP) starting the first day of 2018.
At a forum organized by the Ethiopian Maritime Affairs Authority (EMAA) and Djibouti Ports and Free Zones Authority (DPFZA) at Capital Hotel on Friday February 2, representatives speaking for exporters said they face many logistical challenges and expenses.
The Djibouti authority, which is responsible for overlooking logistical activity in their country, attended the first session to offer solutions and hear challenges from Ethiopian representatives related to the logistical process, and the Chairman, Aboubacar O. Hadi said that such sessions should be undertaken monthly.
One of the participants at the meeting who exported livestock said that Ethiopia has many resources and hence should be exporting more.
He went on to say that Djibouti ports are not taking full advantage of the resources Ethiopia has because the ports are not well utilized. Instead products are exported via informal trades at other ports in Somaliland, Puntland and other places. It has caused Ethiopia to not earn as much as it could from exports and Djibouti to lose part of the market.
“Modification to accommodate livestock at the old port of Djibouti has been delayed so we need your response to speed up the logistics process with the goal of reaching the potential Middle Eastern market,” he said.
The export tariff at Djibouti for livestock is a bit exaggerated and needs to be reconsidered, according to the participant.
Aboubaker Omar Hadi, Chairman of DPFZA, said that that the old port, (Port of Djibouti), is fully dedicated to exporting livestock until the new one is ready at Damerjog.
“We want accurate figures that indicate Ethiopia’s livestock market share and its potential market. This will help us utilize the new port by providing the proper capacity,” Omar Hadi said.
Our prices have not gone up in ten years, but people sometimes confuse the port tariff with the fees of freight forwarders, according to the Chairman.
“You can discuss what you pay to your agents and we will also make recommendations to the private sector about how to negotiate with them. We have an office in Addis and you can meet with the representatives about this,” Omar Hadi suggested.
Capt. Clarence Rodrigues, CEO of Doraleh Container Terminal, who presented a report about port operations at the forum, told Capital that the exporters have to focus on the process and artificial price increases that are imposed for service by freight forwarders.
“Our operation is very clear and we haven’t increased the price in the last ten years and we have even issued E invoices so they can see directly what the port is doing,” Capt. Clarence said.
Fassil Taddesse, President of the Ethiopian Textile and Garment Association, said that the textile and garment sector is very competitive so the Ethiopian exporters have to take price into consideration because the manufacturers are not making a lot of profit due to the port handling charges. If logistical charges are high they won’t be able to stay in business. “Your support is important,” he said.
“If Djibouti is very expensive we will use other ports,” he added.
In his response Omar Hadi underlined that there is no customs duty on Ethiopia’s exports or imports.
Omar Hadi advised that exporters should not accept higher fees than the normal charges imposed by the freight forwarders in Djibouti. He said it is possible they may be exaggerating the charges.
One issue raised by the representatives of the freight forwarders was the difference in business days between Ethiopia and Djibouti. (Djibouti’s work week is Sunday-Thursday). They say this negatively impacts their business. The logistics chief in Djibouti acknowledged the problem, stating his concern that Djibouti is only working 4 days with Ethiopia and that they are looking into the need to adopt international weekends to resolve this issue. However, he reminded the stakeholders that the port operates seven days a week and 24 hours a day.
Experts in the Ethiopian logistics sector said the major problems with regard to logistics occurs in Ethiopia. A freight forwarder who requested anonymity told Capital that the Ethiopian officials and stakeholders have to use innovation and hard work to become competitive as opposed to simply imposing regulations.
He criticized the government’s decision, saying that monopolizing the majority of the operations under the Ethiopian Shipping and Logistics Services Enterprise (ESLSE), is the main problem. This has been a common concern of people working in logistics in Ethiopia.
He believes that the container handling should be managed by freight forwarders as opposed to the state enterprise, which has to focus on the shipping operations. He said that the price escalation for exporters is mainly due to the government’s policy.
“Inefficiency from the Ethiopian side is damaging the sector. For instance if the seal number of one of the containers has a problem, the cargo can’t move to Ethiopia. This consumes the country’s hard currency because there are demurrage and storage fees until the error is corrected, but it would be better if the cargo moved to Ethiopia and the correction was made in the country,” an expert in the freight forwarding sector added.
He advised that stakeholders who handle logistics should look at other landlocked countries in the continent and evaluate their experience. With regards to price he said the port charge is set by the government of Djibouti; while transport fees depend on the market.
“It is a free market so the agents have to charge the rate the market demands but the government has to facilitate services for the private sector so most of the cargo operations can be handled locally,” he added.
He argued that the government has to facilitate a yard,land or a lease to handle containers and stuffing locally as opposed to Djibouti.
He agreed that the price increase and cheating were major problems from freight forwarding companies in Ethiopia and Djibouti, but he argued, that can be easily solved if the operation includes every actor in this concept. “Sometimes agents purposely delay the containers at the demurrage and push the exporter to pay an additional charge for loading the vessel,” the sector actor explained.
“The government has stated that it would provide a subcontract or partnership in the multimodal operation but it is not yet operational, a policy that improves the sector has to be applied as opposed to just proposing,” the freight forwarders that Capital interviewed said.
The international trend in the logistics sector has to be adopted if the government wants improvements and efficiency with a competitive price, one stakeholder said.
“More partnership with the private sector is better than the current status, otherwise the industry will never improve,” the representative argued.
Ahmed Shide, Minister of Transport, also said that the major concerns are directly related with efficiency and tariffs and joint discussions will bring about solutions.
“We need global competitiveness to enhance exports,” the Minister said.
Mekonnen Abera, head of EMMA, said that a committee that includes all stakeholders from the government and the private sector shall be set up to look into all the problems raised.
“Everything will be solved by following the study’s recommendations. These will be carried out by the community along the corridor,” he told Capital.
According to Mekonnen, the community will include ports in Djibouti, customs officials of the two countries, logistics regulatory bodies of both, logistics service providers and customers represented by their associations.
In his closing remarks, Mekonnen said “it will implement the solutions recommended in the study that will take place under the oversight of the community,” he told Capital.
Omar Hadi told the media that the community will follow the efficiency in the corridor and address any issues regarding customs and transit of goods between Djibouti ports and Ethiopia.
In the discussion several issues were also addressed from both sides of the private sector and the regulatory bodies.
Omar Hadi told media that the tariff at the port handling was the same for the last ten years. “We are trying to monitor what the private freight forwarders are charging. Because the service they are providing for the customers is just documentation, they are not handling the containers so it is not normal to charge a very high price, sometimes up to USD 300 per container,” he said. “That is why we regulated it as of last year and reduced to USD 60 per container,” he added.
Omar Hadi stated that such joint discussions with customers will take place every three months.
Currently DCT is connected with the railway which recently commenced operation to connect central Ethiopia with ports in Djibouti.
Capt. Clarence told Capital that the distance of the DCT project is more than 3 km and the cost, which is over USD 50 million is being covered by the port owner.
Omar Hadi said that railway linking DMP to Ethiopia will be fully finalized in the coming month.
CCECC, which constructed the project in Djibouti and part of the line in Ethiopia, is the contractor for the lines that are linked with the ports.
Djibouti is the major gateway for Ethiopia’s international trade. They have been expanding their facilities and are preparing to launch even more new projects.

  • kib

    As far as my opinion is concerned, instead of simplifying the dispatching process, this port is becoming an obstacle for the Ethiopian transport companies. Many trucks strand everyday due to the serious mismanagement activities encountered there. Apart from this, we always incur duplicated cost in vain without any concrete justification. Modern system has already established at this port. But it is not properly implemented. Every activity is very cumbersome and traditional. Hence, the port authority of Djibouti and the government should solve these deep-rooted problems in order to efficiently utilize the port properly.
    Thank you.