A Giant on the Sailing

A variety of issues is leading to a backlog of shipping containers at the Modjo Dry Port. Although some blame the inefficiency of the processing services, others suggest that low costs lead businesses to take advantage of the space as storage. Currently, businesses are given plenty of leeway before being punished for failing to collect their goods. This is set to change, however, with new tough confiscation rules soon to be introduced, reports MIKIAS MERHATSIDK, FORTUNE STAFF WRITER..

Daniel Wolde, 36, has been involved in a family import business since he finished high school, selling textiles imported from Asia at his father’s store in Merkato.

Two 20 feet containers of cargo he imported reached the Modjo dry port, 73kms outside of Addis Abeba, on April 31, 2014. When Fortune found him at the facility on May 21, he was still waiting to receive his containers.

“Most of the workers at the Ethiopian Revenue and Customs Authority (ERCA) in the compound are on training, so it has taken me this long to process my commodity,” Daniel said.

Such problems, which importers and those in the logistics business say are the result of inefficiency at the ERCA, and other problems on the side of the importers themselves, are leading to a huge pile of overdue containers, some having stayed at the dry port for as long as 900 days.

Normally, the process used to take Daniel around seven days, and he is looking forward to getting his cargo over the next few days as the paperwork has at long last been finished.

But not everyone seems eager to get their containers from the compound. Around 1,365 containers, out of a total of 7,000, have been lying in the facility of the dry port for over two months; 1,261 of them are privately owned. Four hundred of the containers, occupying the part of the port that they call Red Ash, have already been there for six months, and are facing confiscation unless the owners claimed them in time.

The Modjo Dry Port was established in 2008 and became operational the following year. It was initially handling government cargo on a 3.5ha sandy plot as a pilot for the multi modal system. Now the dry port, which occupies 62ha of land, has a 16.5 ha cargo terminal and warehouse. The port is soon to be expanding by an additional 42ha. A new 5,440sqm warehouse is almost completed, with four more like it expected to follow soon.

Currently, there are 305 workers and 50 machines, including reach stackers and forklifts to handle the cargo.

The ERCA uses the warehouses at the port for inspection. There are also banks at the facility. Boasting a carrying capacity of 50,000 twenty-feet Equivalent Unit (TEU) containers at a time, with four levels stacking upwards, the time a container takes before it is ready for ERCA inspection has been cut from 25 days, in 2012, to two days.

A bonded warehouse service is also being given, through the multi modal system, to some 11 companies, most of which are engaged in the manufacturing sector.

Besides expiration and depreciation cost, the owners of the overdue containers will incur a cost of six dollars and 11 dollars, respectively, for daily container rent for 20 feet and 40 feet containers. In addition to this, the importers will pay 15Br-229Br a day for storing their products in the compound, depending on the number of days the container stays there.

“We call and text the owners of the containers when their commodity arrives at the compound,” Mihiretab Teklu, Director of the Modjo Dry Port Branch Office, explains.

The country has spent around 2.5 Billion Br on its dry port facilities to date.

Currently, almost 80pc of the commodities that pass through the multi modal system pass through the Modjo dry port, which is serving Addis Abeba and central parts of the country. The overall capacity of the seven dry ports that are currently operational in the country is 19,822 TEUs. There is also a bonded warehouse service, whereby inputs for manufacturing are delivered to the importers, who will pay  the taxes due after they have sold their product, according to the specific modality. The director blames problems like a mismatch between documents, a shortage of finance and doubts about the profitability of the commodities. The problems of public institutions are associated with bureaucratic glitches, according to Mihretab.

Others mention the relative low cost of keeping the commodities at the dry port, rather than storing them in rented warehouses, as the main reason for the owners of the commodities leaving their goods at the facility. But one can access a warehouse that can accommodate two 40 feet containers for about 12,oooBr,  according to a rental Broker that Fortune talked to.

“We have talked to the importers of the commodities, most of whom are private business, and tried to help them in facilitating finance, but there are still numerous containers in the compound that are waiting for their owners,” said Mihretab.  “There are some who don’t even know they have commodities in the dry port and this is creating a bottleneck in the multi modal system that encompasses services extending from shipping to on-land transportation.”

It was in 2000 that the government decided that products bought from countries that the national shipping line give services to must be transported by the enterprise alone, giving the organisation a monopoly to transport the imports of the country.

And after 2012, the Ethiopian Shipping and Logistics Services Enterprise (ESLSE) was formed and started giving multi modal transport services by joining three independent organisations – Ethiopian Shipping Lines S.C, Maritime Enterprise and Dry Ports Enterprises. Nine new vessels have joined the fleet of the enterprise, pushing the carrying capacity of the ESLSE to close to 400,000tns.  The enterprise serves main sea routes that follow the main international trade destination and departure of the country, including North West Europe, Mediterranean areas, the Far East, the Gulf and the Middle East and the Indian sub continent.

The Netherlands based Steder Group was commissioned to establish and start the operation of the Modjo dry port, but was later let go because it was not able to deliver the results required, according to documents from the ESLSE. The number of containers processed through the multi modal system reached 67,389 TEUs in the last year, up from 12,337 three years earlier. The number processed through the seven dry ports is 18,284 in the current fiscal year – more than a four-fold increase from a mere 4,000 three years before.

Currently, the share of the multi modal system from the overall commodity traffic of the country has reached 43pc.

But the back-log of containers is creating problems.

Palm Ethiopia, a soap and detergent company, is one of the companies that has had 10 containers at the port for 900 days and counting. The containers it is keeping there are evidence against a fraud committed against it by a Chinese supplier, which it says sent it containers full of soil when the order was for caustic soda. The Ethiopian soap and detergent maker opened only two containers and left the rest sealed, says Elias Gizaw, general manager of the company. Its attempts to communicate its problem to the Ethiopian Ministry of Foreign Affairs and the Chinese Embassy have fallen on deaf ears, Elias says.

Other problems include unprofessional and unfair assessors deployed by the ERCA, according to a forwarder who requested anonymity.

“It may take the port two days to present the container for the ERCA, but this is not reciprocated by the flow of service by the Authority,” this forwarder said.

The Pharmaceuticals Fund & Supply Agency is another organisation that has three containers that have spent more than 90 days at the facility. Ashenafi Hussien, director of procurement at the Agency, blames the cumbersome process to get clearance from the ERCA and certification from the Ethiopian Food, Medicine & Healthcare Administration & Control Authority. There are also problems at the bank when it comes to processing the documents, according to Ashenafi.

As part of a solution to the overload of containers, the ERCA is now about to confiscate the 326 containers that spent more than six months at the facility and have been isolated at the Red Ash. At the moment, the owners could come before the confiscation, and ensuing auction, to claim their containers. But in the near future, containers that have stayed at the port for two months will be confiscated, says Desalegn Gebrehiwot, deputy CEO of the ESLSE. Until now, there was no property confiscation of this kind in the country, except for contraband projects. The two month deadline for confiscation is practiced by countries such as India, says Mihiretab.

“The Authority will move the commodities to its warehouse, where it will sort them out and ready them for auction,” says Efrem Mekonnen, Public Relation head of the ERCA. “This law was already in place, we are just implementing it now.”

But this is too short a time for people like Kassahun Aberu (PhD), co-founder and logistics division manager of Akakas Logistics, who says “in normal circumstances it takes more than a month to process a commodity in the facility”.

They want the government  to focus instead on increasing its cargo handling efficiency.


Published on May 25, 2014 [ Vol 15 ,No 734]



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