Maritime Authority Sets Big Boost to Containerisation

The target is to reach aggregate stuffing 30pc by year's end, save $121 per 20ft container

The Ethiopian Maritime Affairs Authority (EMAA), in concert with the Ministry of Trade (MoT), is planning to increase the country’s export stuffing from its current seven percent to 30pc by the end of the fiscal year 2014/15.

The stuffing of exportable items, which means containerising them, is done after the items arrive in Djibouti port for export, says Mekonen Abera, director general of the Ethiopian Maritime Affairs Authority (EMAA).

Export stuffing, which is one of the 18 major priority areas that the Authority plans to achieve within this fiscal year, has been discussed with exporters and logistic service providers. The other priority area is importing items without demurrage cost.

The Authority, which is to implement the stuffing starting from this year, has taken the experience from the Netherlands, a country that incorporates what is called the golden triangle. The golden triangle integrates the exporters, the government regulatory bodies and logistics service providers.

The new implementation plan was prepared on the basis of a study that the Authority conducted last year, which suggested that the country would save 121 dollars per 20ft container if the stuffing was done in Ethiopia rather than in Djibouti.

Containerising or stuffing is of two types: the first one is bulk stuffing and the other is pack stuffing. Bulk stuffing requires stuffing of export items in one large bag and container where as pack stuffing is containerising the items in multiple small bags.

“This will be good for the exporters as they will have confidence in what they are sending to their customers and it will also be good to avoid any kind of theft and dampness that might occur on the road,” Mekonnen told Fortune.

The major challenge that exporters in the country may face is shortage of containers and this will be dealt with in discussion with importers and the Ethiopian Revenue and Customs Authority (ERCA), he explained.

After importers in the country bring in their products, they send back the empty containers to the port paying 10,000 Br to 15,000 Br for the transportation only, a coffee exporter said.

“If exporters containerise their items in the country, the importers will get relief from the transportation cost to resend the container; this will be covered by the exporter who will use it,” said the coffee exporter.

The study had also proposed the duty-free importation of jumbo bags and craft papers that are used in containerising.

The World Bank’s (WB) index of logistics performance, which is based on the efficiency in Customs clearance, quality of infrastructure, competitively priced shipment, quality of logistics services, ability to track and trace consignments and frequency by which shipments reach the consignee within the schedule, indicates that Ethiopia’s index stood at 2.41 in 2010, 2.24 in 2012 and 2.59 in 2014. The index ranges from one to five with the largest number indicating better performance.

Another report from the WB, Ethiopia Economic Update II in 2013, indicated that the country ranked 141st in the world in the logistics sector. Five years before that, the figure was 114. Poor logistics were said to severely hinder trade and foreign direct investment (FDI) in the country.

“There will be challenges if bulk containerising is mandatory,” says this exporter as the receivers of the items have to be large companies that can process that whole container in their factories.

When imported, a 20ft container costs 2,400 dollars while the export is more by 200 dollars. Importing a container in Ethiopia takes 41 days and exporting it takes 40 days, indicated the report.

The cost of containerising, be it in Djibouti or Ethiopia, is inevitable as the process is the same. But the difference is whether the payment is made in dollars or Birr.

“The rental cost for the container is paid by the receiver together with the freight – this is 2,000 dollars,” said the exporter.

The costs for containerising is 30 dollars to 40 dollars for the forklift that carries the containers to the stuffing spot, 50 dollars to 60 dollars for labourers, and 30 dollars to 40 dollars for carrying the stuffed container back to shipment.

In order to solve the problem of container shortage, the Authority has agreed with the Ethiopian Revenues & Customs Authority to repay the importers the money that they put as collateral for the container they import, said Mekonen.

“The directive for the implementation is not mandatory and the place of stuffing will be by the exporters’ preference,” Mekonen told Fortune.

Priority items for now will be pulses and oil seeds because opposed to coffee, they are not sensitive items for stuffing and exportation, Mekonen said.


Published on March 30, 2015 [ Vol 15 ,No 778]



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