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Ethiopia: The Cost of Being Land-Locked – Terrestrial Access to Red Sea Is Inevitable

It is not infrequent where people used to speak laud as “construction of rood infrastructure, building of integrated rail terminal, placement of cool wagon, construction of large warehouse and container depot would reduce the cost of being landlocked and logistics bottleneck”. The Cool Port Addis is the case in point, it is a green logistics Hub funded by Dutch Ministry of Foreign Affairs (2021) in Mojo Dry Port, identified as a key solution to a number perishable logistics and trade glitches.

Despite the importance of constructing cool chain facility in dry port is vital, recent study (Gael Rogaland, 2007); reveals that condition of roads and related structure are not the main reason for low participation in global world trade. Infrastructure improvements that have been built far away from seacoast, like Cool Port Addis, alone won’t solve the foreign trade and logistics problem. According to this study most important problem lies on terrestrial access to sea and how to get goods out of it.

In Ethiopia, export of perishable horticultural product has been considered as the most important driver of economic growth. According to recent estimate, annually, the small holder farmers produce and provide nearly an average of 830,000 tones, 753,000 tones of marketable surplus of vegetables and fruits crops respectively (CSA, 2014). However, less than 12% of it is supplied to global market due to limited access to sea.

Out of the total volume horticultural products exported in 2022/2023 only 96% (17,000 tones) are exported to neighboring countries (to Djibouti and Somalia) through inland transport system. The current dependency of perishable horticultural export to Djibouti and Somalia market is not due to the fact that the making trade with these neighboring countries is much more profitable than other countries but it is due to lack of access to other potential market through any other or cheap alternative transport means.

Despite its importance, the total trade turnover with these neighboring counties (Djibouti and Somalia) in fruits and vegetables sector did not exceed 100 million USD per annum.The demand for fruits and vegetables of other neighboring counties like Kenya, Sudan and south Sudan are very limited. Thus the only options to gain access to other regional market require either air transport or sea transport

Indeed, the Ethiopia Air Lines has good Cargo Freighters to transport agricultural products to potential market across the globe (4 Boing 737 Freighter with air Craft capacity of 20 tone, 2 Boing 767 Freighter with air Craft capacity of 45-50 tone, 10 Boing 777 Freighter with air Craft capacity of 95 tone). But due to its limited capacity of Air Craft to load bulk volume of perishable products, like sailing ship, and high tariff rate (the $1,69-1,76/kg) limit the opportunity to use Air Transport as cost effect and sustainable means transport for the time to come, except for limited and high value crops like flowers.

To date Port of Djibouti is becoming Ethiopia’s main gateway to access global trade after the 1998. About 96 percent of the country’s main bulk export and import has been shipped through this port, which has well-functioning transport facilities. The port was connected by 869 km road to Addis Ababa. Port of Djibouti have been constructed and reconstructed for many decades.

Despite this, the cost of using Djibouti port is becoming more expensive overtime. According to recent survey (Emenat Assefa.2016) Ethiopia consume around 16% of its foreign trade value for port transit cost in Djibouti. The country also spends nearly 2 million USD per day for transit cost and pays more than 1.5 to 2 billion Dollars to Djibouti as port fees. Hence, Ethiopian trade flow is subjected to huge emolument for using Djibouti’s sea port. This high costs continue to be greatest impediment to the countries’ trade competitiveness, equitable access, global markets and overall welfare of people

Being land Locked has becoming a penalty for many countries like Ethiopia. In costal countries like Kenya the number of shipping lines offering sea freight has increased since 2020 and journey times are now below 30 days. The Port of Mombasa has become a crucial landing point for goods, and links to the Northern Corridor that runs west across the country to the neighboring countries markets of Uganda, Rwanda, Burundi and the Democratic Republic of Congo.

Good results for sea freight shipment are seen for avocados, pineapples and flowers (specifically- carnations, roses, chrysanthemums and summer flowers). The primary fresh product shipped by sea from Kenya has significantly grown avocados (representing around (9,000 containers per year). This represents an import value in the Netherlands of € 66.2 million and based on the plan and will increase 25% over the 10 years. The shipment of flowers by sea is steadily increasing but was still only around 200 containers in 2020.

As stated on government official document, it is time for Ethiopia to work out its right to build and exploit the potential ports, ensure access to the Red Sea, as well as the Eden and Gulf Peninsula regions, and exercise its right to port development and utilization.

The Horn of Africa and the Red Sea region has become a magnet to super powers competing for their geopolitical, geo-economic, and geostrategic interests, according to the document. Therefore, Ethiopia should engage with other nations in the area to ensure its access to the ports and be able to overcome geostrategic impediments in this respect, the draft document noted, before such actions start to impede the development of the region.

Preservation of the country’s territorial integrity, enhancing regional influence, promoting peace and security, effectively advancing Ethiopia’s interests in the Red Sea and Gulf Peninsula area, and fostering pan-African development alleged to be the government priority.

Establishing principled bilateral and multilateral relationships, ensuring access to ports, and maximizing the utilization of untapped natural resources, are also listed as priorities.

Considering its proximity to the Red Sea, coupled with its growing population and economy, Ethiopia should promote its security, geopolitical, and economic interests in the Red Sea.

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