Up to 200,000tn of steel that Ethiopia imported within the last three months through the Port of Djibouti is yet to be retrieved by importers, which could lead to congestion, Fortune learnt.
Most of the steel, 180,000tn of which belongs to private importers, failed to be picked up because of financial problems encountered by importers, according to the Ethiopian Shipping & Logistics Services Enterprise (ESLSE).
The goods were imported through a uni-modal arrangement, where once the goods arrive at the port, importers are responsible for handling the paperwork and transportation into the country.
Though officials from the two countries are discussing the issue, they have disagreements on its seriousness.
While officials from the Enterprise are pushing importers to collect their steel ‘soon’, officials at the Port are insisting that not only is it not in danger of congestion, but that it has the capacity to handle even more steel.
“Congestion happened for the last time in October 2012 and we sorted it out,” said Aboubaker Omar, chairperson of the Djibouti Ports & Free Zones Authority. “The issue of congestion does not worry us.”
The Port, which has the capacity to serve about 150,000tn at a time, charges fees for each day that goods stay on its premises.
“They tell us that they can serve up to 500,000tn, but we know a large amount of steel is left on the soil near the water because they do not have enough space,” Mesfin Teferra, freight-forwarding deputy CEO at the Enterprise, told Fortune.
These kinds of snags in importing goods are not new to Ethiopia, with reports by international organisations, such as the World Bank (WB), indicating that poor logistics is severely hampering trade and foreign direct investment. The country ranks 141 in the world in the logistics sector, according to the WB’s latest assessment released in June 2013, which is a drop from the 104th ranking the country had just five years ago.
The Enterprise, which launched a multimodal system in mid-2010 to streamline shipments from Djibouti Port through a door-to-door service, aims to handle 80pc of cargo through this method by the end of the current fiscal year – up from the 56pc at the end of the 2012/13 year.
That system, which was supposed to help avoid warehouse fees in foreign currency and the confiscation of imported goods, has, however, also been subject to numerous reports of congestions and delays since the beginning.
These recurrent logistical problems are currently being studied by Nathan Associates Inc, consultants hired by the government for one million dollars in June 2012, to develop an in-depth logistics and trade strategy for Ethiopia.
The diagnostics analysis that the consultants submitted to the government in late September, which is the first of four reports due by March 2014, assessed institutions and stakeholders involved in the transport sector. These included the Modjo Dry Port and truck drivers that transport goods by land on the Ethio-Djibouti corridor. They found that much greater collaboration by different institutions in the logistics sector is needed to overcome the problem.
In the meantime, however, the problems remain unresolved.
On the Tuesday, November 13, 2013 edition of Addis Zemen – a state-owned Amharic newspaper where government announcements are published – the Maritime Affairs Authority (MAA), which is under the Ministry of Transport, warned importers that they have to pick up their goods within the next three weeks.
Though that is the extent of the measures the Enterprise has taken so far to solve the backlog of imports at the Port, depending on the reaction of the importers, serious measures may soon follow.
“The Djiboutians are not the losers when this happens,” said Mesfin. “It is rather Ethiopian customers that will face the price hike that is likely to come when the importers attempt to compensate what they lost.”
Previously, imported goods would be picked up within 15 to 20 days of their arrival, but 50pc of the steel imported and available at the Port currently has stayed for more than 90 days, according to available data at the MAA.
The part that belongs to the government is expected to be picked up from the Port and transported into Ethiopia within a month, according to officials at the Enterprise.
The government’s steel was mostly stuck due to a shortage in transporters. The fact that the steel is needed to help the ongoing construction projects is the major drive for the government to insist it be transported soon, according to them.
Following truck congestion that happened at the Port previously, the Enterprise signed a Memorandum of Understanding (MoU) a month ago with seven private transporters to transport goods from the Djibouti Port and Modjo Dry Port to Addis Abeba.
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